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Kornit Digital (KRNT, NASDAQ)
March 7, 2018 updated October 25, 2020
For the garment, apparel, and home textile industries, Kornit’s digital printers are likely the biggest game-changer in a century. Kornit is an obvious opportunity, and their digital printers will continue to take market share from analog textile printers for the following key reasons:
- Pollution: Some say the textile industry is the world’s 2nd largest polluter. It consumes an extraordinary amount of water, creates gaseous emissions, and generates a huge volume of toxic chemicals;
- Compared to screen printers, Kornit saves time and money. Pre-production setup time can be reduced by 90%. Clothing retailers (the ones still in business) are shifting to online orders and “fast fashion.” That means small batch orders. Kornit is now more cost-competitive on order sizes below 500 pieces;
- Infinite design flexibility and speed to market. A new supply chain is developing – “demand leads supply.” Then there’s “reverse logistics” – people are buying online, and if they don’t like the product, they return it.
Kornit’s digital printers are eco-friendly. It isn’t a wet process, so no water is needed. And the dyes used are non-toxic. Importantly, this is a patented process.
Kornit employs a razor/razor blade business model – they sell the systems (cost is between $60,000 and $800,000), and they sell the ink.
Therein lies a key point – Kornit printers only work properly with Kornit ink, which provides for significant operation leverage!
Customers wouldn’t want to use a “fake ink” product in Kornit’s printers, and how it should maintain this lucrative recurring business since the warranty would expire, fake ink risks damaging the system and will clog the inkjet heads, and an RFID software system on each Kornit printer will recognize the imposter ink and slow it down.
Obviously, Kornit has gone to great lengths to protect its business's ink side, which represents 40% of revenues and growing.
The shift toward digital is underway, but we’re still early in the process.
How do we know Kornit has the best digital printers?
For one, according to Kornit, its competitors (Epson and Brother) are not capable of providing a printing process that does not require multiple steps and pre-treatment. Another indication would be that Amazon is its largest customer.
“Customer demand for graphic t-shirts offered through Merch by Amazon continues to grow rapidly, and more developers and content creators join the service every day,” said Miguel Roque, Director, Merch by Amazon. “Kornit’s ability to deliver solutions and support that meet our high quality and high volume manufacturing requirements will help us to continue expanding program capacity to meet customer requests.”
As per the agreement, Amazon will spend $150 million with Kornit over a 5-year period. In return, Amazon will get 2.9 million warrants to buy KRNT at $13 per share.
With help from Amazon and a growing list of customers around the world, sales to Asia and Europe were up 30% last year. The company has eclipsed $100 million in sales (20% CAGR since 2014).
In addition to the business opportunity and price, I like the chart! KRNT is in a well-established uptrend yet sitting very close to strong support around $12 per share.
From just under $14 per share (March 2018), KRNT traded up to a new all-time high of $73.18 by October 2020.
Everything remains the same for Kornit in terms of long-term growth potential. Still, just the 2nd or 3rd inning, to use a baseball analogy.
From $14 to $73.18
From just under $14 per share (March 2018), KRNT traded up to a new all-time high of $73.18 by October 2020.
Everything remains the same for Kornit in terms of long-term growth potential. Still, just the 2nd or 3rd inning, to use a baseball analogy.
Hot Cell Therapy Space Needs This Company’s Cold Solution
By Daniel Cook for Bull Market Run March 9, 2018
What is “cell therapy"?
According to the Medical Dictionary, cell therapy is the transplantation of human or animal cells (typically by infusing or injecting them into the patient) to replace or repair damaged tissue.
The purpose of cell therapy is to introduce cells into the body that will grow and replace damaged tissue. This process could lead to the commercialization of important treatments for cancer, diabetes, vision loss, stroke, and many other health problems.
A unique challenge facing the development of cell therapies
Obviously, there are a litany of challenges facing pharmaceutical and biotechnology companies throughout the drug development and approval process. Reaching the finish line often takes years or decades worth of time and the cost can reach into the hundreds of millions. All without any guarantee the outcome will be successful.
Compared to other biologics, cell therapies are more fragile and sensitive to physical and environmental stresses. This creates another unique challenge for drug developers.
By definition, cell therapies utilize living cells. Due to the fragile nature of these biologic materials (such as bone marrow, peripheral blood, or adipose tissue) and limited shelf life outside the body, cold chain technologies are being used more frequently with an aim toward reducing temperature. Maintaining a consistently cold temperature helps to slow or stop metabolic activity during transport (a similar concept to organ donation).
Extending the shelf life of source material should be the goal of every biotechnology and drug development company.
So what?
Biopreservation and cold storage solutions will make or break the next generation of cell therapies and regenerative medicine.
Assuming there’s a large opportunity emerging, a little company based out of Bothell, Washington, called BioLife Solutions (BLFS, NASDAQ) looks like the best way to play it, as we see the landscape now.
BioLife‘s mission is to become the leading provider of biopreservation tools for cells, tissues, and organs.
To date, “CryoStor” and “ThermoSol” – BioLife’s 2 flagship biopreservation (freeze media) products – are embedded into more than 250 clinical stage trials (of approximately 802 cell therapy clinical stage trials total ending 2016).
Upon regulatory approval and scale up to commercial manufacturing, BioLife‘s revenues generated as it relates to that particular drug would increase dramatically relative to revenues generated during the trial period.
In other words, BLFS offers exposure and leverage to successful cell therapies developed by the biotechnology and pharmaceutical industry but limits the downside associated with any particular clinical trials failure.
The combination of CryoStor, ThermoSol, and BioLife’s high-performance insulated shipping containers greatly improves the chance for success during clinical trials. Therefore, for a tiny expense, relative to the overall cost of developing a drug, the odds of regulatory approval and large-scale commercial production are improved.
Excluding its distributor relationships (via the “evo” line of smart shippers), BioLife has 530 customers in 33 countries.
BioLife has executed 10 year-supply agreements with more than one of its marquee customers.
Sizing up the “shipping container” competition
Amazingly, considering the precious cargo, the most commonly used insulated container in the healthcare industry is made from polystyrene (eg. beer coolers!). Packs of ice or dry ice are wedged inside the cooler in an attempt to stabilize the temperature, but there is no external or internal monitoring capability.
BioLife‘s smart shipping containers are a step forward in an area that was badly in need of innovation.
Combined with a cloud-based management system, the evo smart shipper is ideal for transporting time and temperature sensitive drugs, vaccines, biologics and other delicate life-saving materials.
Just in case you were wondering why BioLife could improve the chance for success during clinical trials (because that’s a big claim), the company provides a visual example (see image on right).
While we are no experts in cell therapy, common sense would lead one to believe healthy cells would perform better and more reliably than dead cells amidst a clinical trial setting (by the way, BioLife‘s management team agrees with that line of common sense thinking).
How large is the prize?
The IMARC Group forecasts that the demand for cold chain packaging and instrumentation services will grow from $3.2 billion in 2013 to $5.1 billion in 2018. BioLife believes its addressable market for small payload shippers and related monitoring devices is several hundred million dollars. And the market potential for biopreservation media is better than $400 million last year.
