We have BioLife (NASDAQ:BLFS) in the SHU portfolio already for a year or so but grosso modo, the shares haven't really done too much:
We bought in the aftermath of the spike in 2018, so we're up a little, but not all that much. Yet there are obvious reasons we like the shares:
- The market for cell and gene therapy is still in the very early innings and company revenue grows with:
- New customers (16 for their preservation media with another 13 FDA master file cross-reference request processed (which will become additional customers).
- Existing customers moving to the next, bigger phase of clinical trials.
- Customers getting FDA clearance for commercial launches, producing a big jump in revenues.
- The profits and cash the business already generates enable it to acquire companies which supply adjacent products and services, leveraging its sales force and creating revenue and cost synergies.
While BioLife earns a decent buck from the companies that are in the bigger late stage clinical trials, the real money is for their clients to get to commercial. This is simply a percentage game. As the company has ever more customers (400+ at the moment), the chances are steadily increasing that some of these get cleared by the FDA and start selling commercially.
That will happen, and then things will start to add up in a serious way. The company has just two customers which have been FDA cleared, but another seven that could reach that this year (depending on the outcome of the Phase 3 trials, of course).
But even with just few big customers (commercial and late stage clinical trials), the company's business model affording it to make a decent living and to generate cash enabling it to acquire suppliers of adjacent products and services.
We discussed these in a
