MaxCyte Q2 2024 Earnings Call Transcript

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Provided by Quartr
August 6, 2024

Key Takeaways

  • Total revenue for Q2 reached $10.4 million, a 15% increase year-over-year, driven by a strong uptick in SPL program related revenue.
  • Core revenue fell 9% year-over-year to $7.6 million as customers remained cautious on capital equipment purchases, particularly impacting instrument sales.
  • Management signed five new SPL agreements in H1 2024, including with Legend Biotech, expanding MaxSight’s SPL portfolio to 28 partners and future milestone potential.
  • The company ended Q2 with $199.8 million in cash, cash equivalents and investments, no debt, and raised its year-end cash guidance to $180 million, reflecting disciplined expense management.
  • MaxSight reaffirmed its 2024 guidance of flat to 5% core revenue growth and expects approximately $6 million in SPL program related revenue, excluding any new milestones or royalties.
AI Generated. May Contain Errors.
Earnings Conference Call
MaxCyte Q2 2024
00:00 / 00:00

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to MaxCyte's second quarter earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Scott Feinberg, Finance and Investor Relations Associate. Please go ahead.

Scott Feinberg
Scott Feinberg
Senior Director, Investor Relations and Corporate Communications at MaxCyte

Good afternoon, everyone. My name is Scott Feinberg, and I'm responsible for investor relations here at MaxCyte. Thank you for participating in today's conference call. Joining me on the call from MaxCyte, we have Maher Masoud, President and Chief Executive Officer, and Doug Swersky, Chief Financial Officer. Earlier today, MaxCyte released financial results for the second quarter, ended June 30, 2024. A copy of the press release is available on the company's website. Before we begin, I need to read the following statement: Statements or comments made during this call may be forward-looking statements within the meaning of federal securities laws. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements.

Scott Feinberg
Scott Feinberg
Senior Director, Investor Relations and Corporate Communications at MaxCyte

Actual results may differ materially from those expressed or implied in any forward-looking statements due to a variety of factors, which are discussed in detail in our SEC filings. The Company has no obligation to publicly update any forward-looking statements, whether because of new information, future events, or otherwise. With that, I will turn the call over to Maher.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Thank you, Scott. Good afternoon, everyone, and thank you for joining MaxCyte's second quarter 2024 earnings call. MaxCyte reported $10.4 million of total revenue in the second quarter, including core revenue of $7.6 million and SPL program-related revenue of $2.9 million. We are excited with the progress that we have made so far in 2024, afforded by our commercial execution, the continued demand for our ExPERT platform, and the efforts we have made to continue to provide differentiated end-to-end support to our customers. We are also encouraged by the five new SPLs that we have signed this year, which includes the most recently signed Legend Biotech. Our core business performance was solid in the second quarter, with the results in cell therapy and drug discovery that were in line with our expectations.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Our performance remains tied to the funding environment for cell therapy developers, which remained stable in the second quarter, but has not significantly changed or improved since the first quarter or the time in which we provided initial guidance for 2024. Amidst this current backdrop, we continue to see our customers operate with a cautious capital spending mindset. Despite this, the overall market optimism in cell therapy and general scientific evolution in the space leaves us incredibly optimistic about MaxCyte's long-term opportunities. We continue to believe cell therapy will change the paradigm of medicine over the years, and we are in the early stages of the future growth of cell therapy. The non-viral cell therapy market continues to move towards engineering approaches that involve more complex therapies across an expanding variety of cell and disease types.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

This bodes well for MaxCyte, given that our technology can support the complexity of new cell therapies to be developed by current and prospective SPL customers in autologous and allogeneic settings. We remain in a strong position to meet our outlook for 2024 and are very optimistic about the future of our business and the cell therapy industry as a whole. Provide some context on our core revenue performance in the second quarter, which Doug will cover in more detail. We grew our instrument install base to 723 as of June 30. Instrument revenue continues to be impacted by customer caution on capital equipment purchases. However, we were pleased with PA revenue of $3 million and lease revenue of $2.6 million. Both declined slightly year-over-year but remained stable from the first quarter of 2024.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

51% of our core revenue in the second quarter of 2024 was derived from SPL clients, speaking to contribution from both early-stage customers and customers in the clinic. As I mentioned before, we reported $2.9 million of SPL program-related revenue in the second quarter, putting us at $6 million in the first half of the year. We are encouraged by SPL clients' continued progress through the clinic, resulting in milestone revenue for MaxCyte. We are also continuing to expand our SPL portfolio, as evidenced by two new SPLs signed in the second quarter, Be Biopharma and Legend Biotech, bringing our total signed SPL so far in 2024 to five. Our most recently signed SPL that we announced in May, Legend Biotech, is a global leader in the cell therapy industry, developing new cell therapies to target life-threatening diseases.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

They currently have one commercial asset and eight pipeline programs, with revenue from marketed products, partnerships, and licensing. MaxCyte's platform provide Legend Biotech with technical, scientific, and regulatory expertise to support the development of the company's therapies across a variety of cell types and modalities. The addition of Legend Biotech brings our total number of signed SPLs in our portfolio to 28. It is important to remember, these SPL relationships provide us with the opportunity to participate in the success of our customers' programs. With unparalleled access to our expression technology, trained field sales and application scientists support, and our FDA Master File and regulatory know-how, we firmly believe that MaxCyte remains the platform of choice within our industry.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

We have strong relationships with our current SPL clients and a robust pipeline of prospective SPL clients, all of which are working vigorously to develop innovative cell and gene therapies for patients in need. As you likely know, MaxCyte supported its SPL customer, Vertex, in the FDA approval of Casgevy, the first non-viral cell therapy approved in the U.S. Now, midway through 2024, we are confident the commercial opportunity for Casgevy remains strong. With approval in the United States, Great Britain, European Union, Saudi Arabia, and Bahrain, Casgevy has the capability to enable life-changing treatment to patients worldwide. We are encouraged by the recently presented long-term data for Casgevy from global clinical trials for over 100 patients with transfusion-dependent beta thalassemia.... The efficacy demonstrated consistency with primary and secondary endpoints from prior exa-cel studies.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Vertex recently reported they continue to see a growing number of patients begin the treatment journey, and approximately 20 patients have already had cells collected, with patients initiating the treatment journey in every region where Casgevy is approved, the U.S., Europe, and the Middle East. There are now 35 activated centers, and Vertex continues to expect to activate approximately 75 total centers globally, with the view that Casgevy represents a multibillion-dollar opportunity. Currently, and as previously communicated, we do not have visibility into the timing of patient dosing or completion of infusion, given the lengthy process associated once patient enrollment begins. As such, we continue to exclude Casgevy-related commercial milestone revenue from our 2024 outlook and plan to provide you with updates as they come from Vertex. We remain very excited by the potential of Casgevy to benefit patients as the first and only approved CRISPR gene-editing therapy.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Over the near, medium, and long term, we see significant revenue opportunity from our SPL clients as they progress through the clinic and reach commercialization. The next wave of potential commercial opportunities includes approximately five programs across five SPLs, with launch potential in 2027. These therapies have the potential to address solid tumors, lymphoma, leukemia, sickle cell disease, and beta thalassemia. Beyond this, we see opportunity for 10 approved programs across additional indications of multiple myeloma and autoimmune disease between 2028 and 2030. As we continue to sign new SPLs and our existing SPLs grow and expand, the basket of commercial opportunities in the future grows larger. For the remainder of 2024, we'll remain focused on investing in areas of high growth that align with MaxCyte's core competency, advancing cell therapy innovations.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Over the first half of this year, we have reviewed our portfolio of opportunities and investments and reallocated resources towards high-impact projects that promise the best return on investment and long-term growth. Commensurate with our realignment, we are reducing our investment in and moderating our expectations for the VLx. We will maximize the investments previously made in the VLx, continuing to work with early adopters and future customers. Our portfolio realignment focuses on prioritizing operational efficiencies and sales and marketing reach in cell therapy, which continues to be a large and sustainable growth opportunity for MaxCyte. To wrap up, we are pleased with our solid second quarter results and believe that we remain on track to deliver on our goals for 2024.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

MaxCyte's value proposition and the support that we provide to our customers and clients is truly differentiated, and I continue to believe that we are the premier cell engineering platform of choice within the cell and gene therapy industry. With that, I will now turn the call over to Doug to discuss our financial results. Doug?

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

Thank you, Maher. Total revenue in the second quarter of 2024 was $10.4 million, compared to $9 million in the second quarter of 2023, representing an increase of 15%. We reported core revenue of $7.6 million, compared to $8.3 million in the comparable prior year quarter, representing a decline of 9%. This includes revenue from cell therapy customers of $6.2 million, which declined 6% year-over-year, and revenue from drug discovery customers of $1.4 million, which declined 18% year-over-year. Within core revenue, instrument revenue was $1.8 million, compared to $2.1 million in the second quarter of 2023.

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

Lease revenue was $2.6 million, compared to $2.7 million in the second quarter of 2023, and processing assembly, or PA revenue, was $3 million, compared to $3.3 million in the comparable prior year quarter. As Maher mentioned, instrument revenue continues to be most impacted by the cautious capital spending environment for our customers. At the same time, lease revenue has remained stable, indicating strength in our revenue from clinical SPL partners. PA revenue remains solid in both year-over-year and sequential performance, which we were pleased to see. We recognized $2.9 million of SPL program-related revenue in the second quarter of 2024, compared to $0.8 million of SPL program-related revenue in the second quarter of 2023. Year to date, we have achieved $6 million in SPL program-related revenue.

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

Moving down the P&L, gross margin was 86% in the second quarter of 2024, slightly higher than 85% in the second quarter of 2023. Total operating expenses for the second quarter of 2024 were $20.9 million, compared to $20.7 million in the second quarter of 2023. The overall increase in operating expenses was primarily driven by growth in sales and marketing expenses. Going forward, the company continues to be disciplined, making moderate and targeted investments in high-growth areas that offer long-term returns. We finished the second quarter with combined total cash, cash equivalents, and investments of $199.8 million and no debt.

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

We are increasing our expectations for year-end cash equivalents and investments and now expect to end the year with $180 million, up from our previous estimate of $175 million. This is a result of greater-than-expected SPL program-related revenue in the first half of 2024, as well as disciplined expense management, including the realignment of resources that Maher discussed. Continuing with our full year 2024 revenue guidance, we are reiterating our core revenue guidance and updating our SPL program-related revenue outlook. We continue to expect core revenue to be flat to 5% growth compared to 2023. We now expect SPL program-related revenue to be approximately $6 million in 2024. Our SPL program-related revenue is difficult to predict and subject to the timing of partner development programs.

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

Our base case expectation for the year indicates we will not receive additional milestones in 2024. As a reminder, our 2024 outlook also does not include royalty revenue from Casgevy. To close, MaxCyte remains in a great position to execute on our 2024 outlook, with a continued focus on exercising disciplined spend to deliver long-term growth.... Now I'll turn the call back over to Maher.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Thank you, Doug. We are proud of our progress thus far in 2024 and look forward to supporting our customers as they progress through the clinic. I would like to thank our MaxCyte team for their dedicated work to our company and customers each and every day. With that, I will turn the call back over to the operator for the Q&A. Operator?

Operator

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. The first question comes from Jacob Johnson with Stephens. Your line is now open.

Hannah Hefley
Hannah Hefley
Senior Research Associate at Stephens Inc

Hey, it's actually Hannah on for Jacob. Thanks for taking my question. Have you seen any benefit from commercial volumes on the PA or lease revenue, lease instrument side of things?

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Hannah, this is Maher.

Hannah Hefley
Hannah Hefley
Senior Research Associate at Stephens Inc

I'm sorry.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Yeah, I apologize. Can you repeat the question again? It broke up there for a second.

Hannah Hefley
Hannah Hefley
Senior Research Associate at Stephens Inc

Yeah. As it relates to the base business, have you seen any benefit from commercial volumes on the PA or leased instrument side of things?

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

So you're asking about whether or not Casgevy is having a material impact on our core revenue?

Hannah Hefley
Hannah Hefley
Senior Research Associate at Stephens Inc

Uh, yes.

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

Yeah. So, I mean, we don't break that out separately. I think they, they keep in mind that, the components that we get from participating in the commercialization of that product do include, potentially incremental lease revenue, do include, obviously, the PAs that are used, used in a commercial setting. We do not really break that up. The best I could direct you to is sort of customer concentration information that's in the 10-Q, but unfortunately, we're really not in a position for a variety of reasons, including maintaining, you know, confidentiality, since we only have one commercial stage partner at this point, to break it out. Talk about how many PAs we're using in a commercial setting is probably not something that, we are going to do at this point.

Hannah Hefley
Hannah Hefley
Senior Research Associate at Stephens Inc

Okay, thanks. And then one more follow-up. It looks like cell therapy and drug discovery both declined a little bit sequentially. Was this just seasonality? Is there anything else you would call out about that?

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Do you want me to take that one, Doug? Let me take that one, Hannah. So obviously, it declined, you know, year-over-year, but over the course of the year, it's been very consistent. So from Q1-Q2, we have very consistent, you know, sales for both in drug discovery and cell therapy. Drug discovery itself is a smaller revenue line for us. It's tied more a bit to, you know, a few customers that, you know, we might have some lumpiness with a few customers putting orders in in certain quarters versus other quarters. But overall, we're very happy with the solid core that we have, consistent with our Q1 as well, you know, and not really comparing it to, you know, Q2 of last year, which is a bit of an abnormality.

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

Yeah. I think the one thing that we tried to make a point of earlier this year is we talked about sort of a lack of seasonality in our business going forward. We are gonna see occasional lumpiness. That's just the nature of the business. You occasionally see, you know, customers put in a big order and influence things. But in general, we feel pleased where we are at this point with, on both drug discovery and cell therapy.

Hannah Hefley
Hannah Hefley
Senior Research Associate at Stephens Inc

All right, thanks. I'll leave it there.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Thank you, Hannah.

Operator

Our next question comes from Julie Simmonds with Panmure Liberum. Your line is now open.

Julie Simmonds
MD and Senior Equity Research Analyst at Panmure Liberum

Hi. Thanks so much for taking the question. A couple of things. Firstly, just in terms of SPL agreements, clearly you did 5 last year. You've done 5 this year already. I notice there's no more guidance on what you might do for the rest of this year. Are we really gonna have to wait more than 6 months for another one?

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Good question, Julie. Good to hear from you again. Obviously, you know, 3-5 has been historically what we feel comfortable we can sign on a regular basis. The sales cycle for signing an SPL can take anywhere from 3 months, 6 months, 9 months, 12 months, right? A little bit longer, sometimes, depending on the relationship. We don't speak to when those can happen. You know, obviously, if there's another one happens, we'd have to update, you know, that we now have 6. We can't comment until, you know, the, you know, the, the SPL is signed. But I will say this, we have a healthy SPL funnel, a healthy opportunity with SPL customers that, that will sign, you know, over the years.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Our focus is more on just ensuring that we're signing those 3-5 on a regular basis and not necessarily the timing of whether it happens over the next six months or a few months thereafter. So I guess that's a long way, Julie, of saying we can't promise this year, but we're, you know, we have a healthy 3-5 on a regular basis that we feel very confident in, you know, especially on the funnel that we have and opportunity list that we have, that we can continue to grow our SPLs from 28 to, you know, to a much larger amount over the years to come.

Julie Simmonds
MD and Senior Equity Research Analyst at Panmure Liberum

Lovely. Thank you. Didn't think you'd say anything, but I had to try. Then just on the growth margin, if you look at that on a core business basis, it's still a little bit lower than where it's been historically. Is that because of you're now doing the manufacturing in-house, and you've yet to get the volumes up to the point where it sort of starts to rebalance a little bit, or should we be looking at this sort of level going forward?

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

That's certainly a big part of it, Julie. So what we've established here is a manufacturing facility that can support multiple commercial stage customers. And so when, you know, with that much capacity ready to go to support our customer base, you know, we do have some excess capacity. It does change some of the absorption rates. It does impact our margins to have that. We also, you know, we're manufacturing quite a bit last year, and so as with the, I guess, down year we had last year, you know, we definitely had manufactured more than we need. We wanna make sure that we maintain appropriate levels of inventory. And so I think we, you know, these are margins that have the potential to go back to where they are.

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

But again, we've said it before, we feel really good about the margins we're delivering, even if as they back down to this level, because they're still very substantial and somewhat industry-leading at this point and continue to be so.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

... Can I add something there as well? So, Julie, when we brought in manufacturing in-house, we knew that we could potentially take a short-term hit on margins, but that was it was a positive in our view, because we can start controlling the quality and then the capacity of how much we can produce on an annual basis. So in our mind, that the short-term hit that we're taking is well worth the long-term benefit that we're getting out of bringing manufacturing in-house, both for us and then also for our customers and partners that we support. Especially, you know, as our customers get to the clinic, go through pivotal stages, and they get to commercialization, that quality and capacity that we're going to have in-house will be, you know, crucial for our success as well.

Julie Simmonds
MD and Senior Equity Research Analyst at Panmure Liberum

Excellent. Thank you. And just one final one from me. On the VLx, where you're sort of clearly pulling back a little bit from some of the additional spending that was going there, is it going to be sort of that all comes off the cost line? Because I noticed, you know, there is a slightly lower expenses than maybe we've seen in the previous quarter. I'm just wondering whether that continues or whether there's a sort of reallocation back to the more sort of traditional cell therapy spend.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Yeah, obviously, we're always, and I'll let Doug speak to this as well. We're always looking at our expenses and looking where we can reallocate, where we believe that we have the most growth potential. Right now, that is in cell therapy. Julie, we see that as a long sustainable business for us. You know, the minimization of spend to VLx. Let me speak to the VLx itself a bit more there as well. So the VLx does have a use case study, a very good use case study for us as the cell therapy market grows and allogeneic therapies become, you know, have more of a stay in the market.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

The scale and the transfection that we can provide with the VLx is unmatched by anything else currently, you know, out in terms of transfection and electroporation platforms. So for us, it's refocusing the VLx as to where the use case is best there. We're continuing to work with the VLx in the bioprocessing space with those early adopters and future customers, where there is a need for the scale that provides for transient parts of production. But we've minimized spend there because obviously, there's not a need for us continuing to spend as much as we have in the past to support those early customers or future customers.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

But to your point, we're always going to be looking at, you know, allocation of our spend, ensuring that we're focusing our spend where we can have the greatest return on investment, and where we believe that we have the greatest, you know, future growth potential. You know, what that means for the bottom line, I'll let Doug speak to that.

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

Yeah, I mean, I think Maher said it perfectly. The only thing I'd add is just to, you know, emphasize what we've already said here, which is that we've raised our expectations for how much cash equivalents and investments we'll end the year with, just to reflect the fact that, again, we've had some unexpected milestone revenue come in that we talked about in the previous call, as well as the fact that we're being more prudent with our expenditures, both in terms of VLx and reprioritizing some of that spending, but in other areas as well.

Julie Simmonds
MD and Senior Equity Research Analyst at Panmure Liberum

Lovely. Thank you very much.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Thank you, Julie.

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

Thank you.

Operator

Our next question comes from Steven Mah with TD Cowen. Your line is now open.

Steven Mah
Steven Mah
Senior Equity Research Analyst at TD Cowen

Oh, great. Thanks for taking the questions. Maybe just a couple of follow-up questions on SPLs. So, you know, notice that the five SPLs signed this year or they tend to be on the kind of the mid- to smaller size companies. Maybe if you could give us a little bit of color on how BD discussions with larger players are going, and, you know, maybe any color on how, you know, maybe BD discussions are evolving, you know, between maybe smaller companies, mid-sized companies, and larger companies, and, you know, maybe your thoughts on how that mix might change.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Good question, Steve. Let me speak to that a little bit, give you some color. In the sense, obviously, Legend is a bigger company there that you know is obviously a bigger company that we've signed and really they've taken their non-viral approach you know based on what traditionally they were pursuing viral approaches to cell therapies. That being said, our focus is really not so much on whether we're working with smaller companies or bigger companies. It's really ensuring that we're that company that and you know we'll say it again, we're working with as many cell therapy companies as we can, whether they're small or big.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

All right, I want to bring you back to kind of, you know, we worked with a, what was considered a small company back in 2013. It was called Inception Therapeutics, and that company is CRISPR now. So if we had tried to select which company is a big company or a small company, we would not be working with CRISPR Therapeutics, which licensed their product to Vertex, which is now Casgevy, right? Which is the first non-viral cell therapy approved. So our focus is really it's small, medium, big, it's all of them that we're trying to go after. The cell therapy space is gonna continue to grow.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

I think what is a small company now can become a big company, and what is a program now for a small company can become part of a bigger company as well. We want to make sure we're working with all of them, Steve. That's, that's our goal.

Steven Mah
Steven Mah
Senior Equity Research Analyst at TD Cowen

Yep. No, that makes sense, and I appreciate the color.

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

Yeah. So I just going to add, Steve, we know this is a portfolio. We're just trying to build a portfolio, really a good, good client roster that's using the platform in a clinical setting with a good potential to generate, develop, and milestones and ultimately commercialize a product. And then, we can... We're spreading our bets, if you will, and selling to, you know, all companies that we believe are quality companies in this space. Some of them, you know, won't succeed, and we wanted to support as many of them as possible so that many of them can.

Steven Mah
Steven Mah
Senior Equity Research Analyst at TD Cowen

Yep, yep, understood. And then, if I can squeeze one more in, maybe on your instrument side of your business. You know, could you give us some color on what you're seeing in the marketplace? It is, you know, sounds like maybe sales cycles are lengthening or taking longer. You know, maybe if you could provide some color on how things are looking from the instrument side. You know, given that some companies in the cell and gene therapy and bioprocessing have stated there is some signs of some green shoots or improvements. Maybe kind of square away what others are saying with what you're seeing in the marketplace.

Steven Mah
Steven Mah
Senior Equity Research Analyst at TD Cowen

If you could add also a perspective from, you know, maybe larger-sized customers versus early-stage customers, how those discussions on instrument sales or leasing, you know, are going? Thank you.

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

... Thank you, Steve. So with regards to instruments, you know, clearly, and to break out the difference between the larger companies and the smaller companies, a lot of the capital that's come into the industry has been more focused on the larger companies, has been more focused on the public companies. So certainly, some of these sales cycles have elongated. And so I think there is a difference there. You know, for us, instrumentation is one area where we're able to really build that forecast from the ground up. This is sort of a opportunity by opportunity, you know, that we're tracking closely through our system as we work with the commercial team, both the sales team, and the FASs, to really understand which of these have the best likelihood of converting, what's the probability?

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

We've really tightened up our forecasting, and that's why, you know, today we're very comfortable that we're going to be able to, you know, unless something changes, to reach the objectives we set for ourselves, which is that 0%-5% guidance on core revenue. So we feel good about where we stand today. You know, there is some occasional lumpiness, and we saw, like, a big second quarter last year in terms of total core revenue, but this year we're not seeing that lumpiness. We are on track to meet our goals. Maher, want to add anything here?

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

No, I think, you know, one thing to add is, you know, you know, Steve, so we're one month into the third quarter, and we still feel very confident in terms of what we guided previously in the year. Again, we're seeing consistent performance throughout the year. We're seeing it one month into the third quarter as well. We feel very confident in what we previously guided to. And as Doug mentioned, we're doing this on an opportunity-by-opportunity basis, we have where we've taken a new and fresh look in terms of how we forecast and we look at the opportunity. So we feel very confident in the rest of the year, Steve.

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

Yeah, and just the one thing we do want to say is our guidance continues to not be based on some type of improvement in the overall market conditions that we're living through right now. So, that represents some upside if things, you know, if those green shoots do manifest, but we're feeling good for where we are at this point in the year.

Steven Mah
Steven Mah
Senior Equity Research Analyst at TD Cowen

Okay, great. Thanks for that.

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

Thank you, Steve.

Operator

The next question comes from Matt Larew with William Blair. Your line is open.

Matt Larew
Matt Larew
Partner and Senior Equity Research Analyst at William Blair

Hi, good morning, afternoon. We're in the afternoon. So with, you know, VLx, You know, sort of being deprioritized, I wanted to ask about future areas of priority for R&D and business development. Obviously, your, your core technology has had quite a, a gap over the field, perhaps even as others have tried to catch up, but you're also just one part of a, you know, much broader process, to do cell engineering, and there, there are others out there that are perhaps trying to create automated or integrated solutions. Most of the R&D on, on the core platform, at least in the last several years, has been, you know, I would humbly describe as iterative and, and PA-focused. What are the things that you can do, if not VLx, to become a bigger company in this space?

Matt Larew
Matt Larew
Partner and Senior Equity Research Analyst at William Blair

Does that largely revolve around improvements to your system, your consumables, or does it involve creating new technologies or acquiring new technologies?

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Yeah, good, good question, Matt. Let me, let me take that one. So obviously, we've been working on product development internally over the past year. We actually have hired a new head of engineering. His name is Jeremy Jeremy Kollenbrander. He joins us from 25+ years at, formerly Terumo and then Sartorius as well. Obviously, our focus is on ensuring that we, we, we begin to, as you said, you know, have, have a focus on those new products that are complementary, that provide complementary workflows to our current customers, and, and provide tangential, the tangential needs that they need in terms of the cell therapy workflow, that we can begin to provide those type of opportunities and, and solutions for them.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

You know, obviously, without getting into what we're working on for, you know, for competitive reasons, you know, the R&D focus is one of the priorities for us, and that is part of the reason why we're taking a very focused approach as to how we run the organization as well, to make sure that we can, you know, focus on that R&D, doing it in a sustainable way as well, where our financial profile remains very healthy as we focus on the R&D. You know, our balance sheet remains healthy as well. And again, the main focus will be in cell therapy. We see that as a long and sustainable driver for MaxCyte. We believe in cell therapy.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

I truly believe that cell therapy is going to change the landscape of medicine over years to come. So there's a huge growth driver there for us. And like you said, in the past, it's been iterative, but we're trying to be more than just that, right? And that's why there is a focus on bringing in the head of engineering and creating those complementary workflows and, you know, taking and really starting to provide solutions for those tangential needs of our customers.

Matt Larew
Matt Larew
Partner and Senior Equity Research Analyst at William Blair

Okay, thank you. And then you've obviously described having the manufacturing capability and capacity, I should say, to support multiple commercial therapies. In terms of pursuing the, you know, broader placement opportunity for your technology with, you know, future or current SPL partners, do you have the broader organizational infrastructure in place, be it sales and marketing, field application specialists, et cetera, to support not just multiple commercial therapies, but really to penetrate in the way that you want to the total addressable market that you have?

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Yeah, great question. That, that's one of our strengths is the support that we provide to our current customers, where we have a very built-out sales organization, sales and marketing organization, with, you know, sales reps and then field application scientists. Many of them we have, you know, with PhDs and years of experience in this space. So we feel as though, you know, the current organization that we have, we can leverage for the growth that we believe we can drive towards over the next 3, 5, and plus years, you know, beyond that. That allows us to penetrate in the current addressable market, you know, compared to other competitors, especially smaller competitors, that don't have that type of infrastructure and that scientific support or regulatory support that we have.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

You know, so, yes, we feel very confident, Matt, you know, to your question, whether we have the appropriate sales organization to begin to, you know, take advantage of the opportunities ahead of us.

Matt Larew
Matt Larew
Partner and Senior Equity Research Analyst at William Blair

Great. Thank you.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Absolutely. Thanks, Matt.

Operator

The next question comes from Paul Cuddon with Deutsche Numis. Your line is open. Paul, your line now is open. Our next question, it will come from Jack Sebrow with Craig-Hallum Capital Group. Your line is now open.

Jack Sebrow
Jack Sebrow
Equity Research Analyst at Craig-Hallum Capital Group

Hey, guys, this is Jack. I'm from MaxCyte. Can you hear me all right?

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

We can hear you, Jack. Absolutely.

Jack Sebrow
Jack Sebrow
Equity Research Analyst at Craig-Hallum Capital Group

All right. Just when looking at the overall macro environment, so far throughout Q2 earnings, we've kinda heard from others participating in the pharma and biotech industry that the funding environment is improving. Could you just provide some more color from what you're hearing from your customers? I know in your prepared remarks that some of them are still being cautious with how they deploy their capital. Just kinda interested what you guys are seeing or hearing. Thanks.

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

Yeah, I think the market's improving a little bit. Obviously, you have a day like yesterday, makes you, you know, question that a little bit, but it's only one day. You know, for us, you know, we're looking at, you know, our detailed forecast. We're feeling very good where we are versus the objectives we set for ourselves, and we're just not building in any, you know, any improvement in that, a significant improvement in the landscape for the industry. Does that mean, again, you know, there's not some green shoots out there, some reasons to be optimistic? I think certainly, but it's anecdotal.

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

We're seeing some financings, we're hearing some things, but at this point, you know, our goal here is to execute against the plan, and if the market improves, then I think that we will raise the bar for ourselves.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Yeah, let me add something there as well. I mean, so nothing has changed from the previous quarter in the sense of, we're still seeing our customers rationalize their products and their pipeline, you know, focusing on what their lead assets and what they believe has the highest likelihood of going through the clinic and having commercial success. I see that as a good sign, right? That's what you wanna see. You wanna have that healthy rationalization. You know, we're still cautiously optimistic. As Doug mentioned, we're seeing some green shoots here and there, but at the same time, it's still, you know, we're tied to the macro environment. It's still somewhat of a challenging macro environment for many companies out there.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

But we're still seeing the same stability that we saw towards the end of last year going to Q1 as well. That stability is there, which is, you know, we see that as a positive.

Jack Sebrow
Jack Sebrow
Equity Research Analyst at Craig-Hallum Capital Group

All right, that makes sense. Thanks for taking our question.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Yeah.

Operator

The next question comes from Paul Cuddon with Deutsche Numis. Your line is now open.

Paul Cuddon
Director and Equity Research Analyst at Deutsche Numis

Yeah, good afternoon, you guys. Can you hear me okay this time?

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Yes.

Paul Cuddon
Director and Equity Research Analyst at Deutsche Numis

Okay, sorry about before. Just a quick question. I mean, PA is a sort of a step up on Q4 again. So I'm just wondering if you were seeing any areas of kind of particularly sort of high consumption thinking, sort of non-T cell, cell types, different targets, and some of your new customers coming through there?

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Yeah, obviously, we're seeing a variety. So our customer base is a variety of customers, right? Different cell types, it's always been the case. That hasn't changed for us, Paul. I guess, is your question getting towards, is there a concentration of certain sales towards one particular type of modality? Is that what you're alluding to, Paul?

Paul Cuddon
Director and Equity Research Analyst at Deutsche Numis

Yes, absolutely.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Yeah, no, again, I think it's across the range, you know, whether it's T-cells or TILs or TCRs for different targets. You see, obviously, you have a lot of companies out there, you know, pursuing CD19 or, you know, or CD70s. But I would say it's across. There's not one particular, you know, indication or modality or cell type that we're seeing. In fact, what we're seeing is more complexity in the cell therapy space, where you're seeing, you know, some of our customers and partners really begin to have, you know, 3, 4, 5 edits, you know, whether they're reducing exhaustion of the T-cell or creating persistence in the T-cell. You know, so it's. We're seeing more complexity.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

We're seeing an evolving market itself in the cell therapy space. I wouldn't tie it down to any one particular cell type or, you know, target itself.

Paul Cuddon
Director and Equity Research Analyst at Deutsche Numis

Excellent. Thank you. And secondly, for me, just going back to the drug discovery side, obviously a fairly weak quarter. Is this sort of a level that you think you can sustain now, or should we kind of anticipate sort of continued step downs with VLx, so moving back a little bit?

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

So I don't think we're, you know, guiding specifically by line, right? So we did see a dip in Q2. You know, when we forecast the rest of the year, you know, we're looking at the PA run rates. We're looking at the specific instrument opportunities. We're looking at the leases that are in place and renewing. So, you know, regardless of sort of how cell therapy and drug discovery individually evolve, which again, we don't guide separately, we feel confident about the guidance we've set for ourselves. Is there some noise quarter to quarter? There always is. So, you know, let's check back in a couple of months here, or a few months here and see where we stand. But we're certainly not panicking.

Doug Swirsky
Doug Swirsky
CFO at MaxCyte

We do know there's great applications for our technology on both the cell therapy and drug discovery side. But as we've mentioned, the focus of the company where we see the biggest opportunity to participate in the downstream economic success of our customers is on the cell therapy side.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

That's right, Doug.

Paul Cuddon
Director and Equity Research Analyst at Deutsche Numis

Thank you very much.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

... Yeah. Thank you, Paul. Thank you.

Operator

Our next question comes from Mark Massaro with BTIG. Your line is open.

Mark Massaro
Mark Massaro
MD and Senior Equity Research Analyst at BTIG

Hey, guys. Thank you for taking the questions, and, congrats on the strong quarter. You guys came in above, at least my estimates on both the core and the SPL side. But I wanted to start by asking about the SPL. So, you know, you started the year with a $3 million target, you raised it to $5 million. You've already done $6.1 million or, yeah, a little over $6 million, in the first half. Can you maybe just talk about the types of things that you might have pulled forward in Q2? And, you know, it's a little surprising that there's nothing in the back half. Should we consider that upside? And maybe just walk me through what the potential opportunity could be, you know, as we think about 2025.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Yeah. Thank you. So first off, we're not in a position to provide guidance on 2025. Are we expecting to receive milestones in 2025 and SPL program-related revenue to include both milestones and royalties? Absolutely. Are we in a position to guide today? No. You know, the reason why we're suggesting that we won't have any the rest of the year is there were some things that occurred earlier in the year than we expected, and in some cases, which we discussed on the last earnings call, there were things that we didn't think would happen this year. Really speaks to the lumpiness of this, the difficulty to predict when these development milestones will occur.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

One of the benefits of having, you know, a growing roster of SPL customers is that at some point, that lumpiness can smooth out a little bit. But it can be very difficult to predict when a particular milestone is going to be achieved. We're taking a conservative view here as we look at what could hit this year, and we, you know, probability weight things. We say, you know, let's assume that we've gotten done what we're going to this year, and we're just gonna focus on running our business. You know, that, that, that milestone money is sort of mailbox money. We don't have to think about it. We're not gonna set guidance for 2025. Something else gets pulled into 2024, that's some upside. But we're not counting on it.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

It's not impacting how we're thinking about the business for the rest of the year.

Mark Massaro
Mark Massaro
MD and Senior Equity Research Analyst at BTIG

Okay, got it. Appreciate that. You know, you guys talked about five programs with launch potential in 2027, and then you talked about an opportunity for 10 approved programs across indications of Multiple Myeloma and autoimmune disease between 2028 and 2030. Can you maybe just walk me through some of the assumptions in those estimates? Maybe talk about probability of success, or other assumptions that went in. And I assume that the 10 approvals, you're talking about regulatory approval, not just U.S., but, you know, full commercial launch globally. Can you maybe just clarify that?

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Yeah, absolutely. You're right. So these are regulatory approvals that would be, you know, whether it's in the U.S. or in Europe, whichever occurs first, but most likely it's always in the U.S. Let me walk you through a little bit. So for 2027, the reason we're saying in 2027 we could have potentially five approved therapies is there are three programs currently about to enter potential pivotal start in 2025. And then we have, actually, it's almost four programs that'll be pivotal start in 2025, and we have one program currently in a phase III. So when you look at it and you do the timeline as to what potentially they can be approved in, you know, conservatively, I think we're looking at 2027 for those programs. Same thing thereafter.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

We have other programs that'll be entering into pivotal a few years thereafter. Some of them, you know, one year, you know, 2026 or 2027 is when they're entering into pivotal. So that's where we're projecting that we would have additional approvals back, you know, two or three years after that, so to speak. But really, if you look at the near term, you're looking at 3-4 programs in a pivotal start in 2025, 1 program right now in a phase IIone. If you do the math, you know, you're looking at approval starting in 2027. Now, in terms of the probability of success, that's tough for us to do. Very tough for us to do because, you know, obviously, if we could do that, we'd be in a different line of business, I guess. But, you know, it's, you know, it's...

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

The one thing that we talked about, I think, on our last earnings call, the beauty of the cell therapy market is you'll get insight as to whether there's efficacy, possibly sooner than other modalities, right? You can see efficacy with patients and oftentimes with a fewer number of patients. So we'll hopefully get more clarity when these therapies begin, you know, their pivotal starts in 2025. If we see efficacy, obviously, you know, then we'll see it sooner than anticipated. But we feel confident that, you know, there are five potentially in 2027, and then, you know, thereafter, we can have an additional five going into the, the, the, you know, the, a few years after that.

Mark Massaro
Mark Massaro
MD and Senior Equity Research Analyst at BTIG

Excellent. Thanks, guys.

Maher Masoud
Maher Masoud
President and CEO at MaxCyte

Absolutely.

Operator

I show no further questions.

Executives
    • Doug Swirsky
      Doug Swirsky
      CFO
    • Maher Masoud
      Maher Masoud
      President and CEO
    • Scott Feinberg
      Scott Feinberg
      Senior Director, Investor Relations and Corporate Communications
Analysts
    • Hannah Hefley
      Senior Research Associate at Stephens Inc
    • Jack Sebrow
      Equity Research Analyst at Craig-Hallum Capital Group
    • Julie Simmonds
      MD and Senior Equity Research Analyst at Panmure Liberum
    • Mark Massaro
      MD and Senior Equity Research Analyst at BTIG
    • Matt Larew
      Partner and Senior Equity Research Analyst at William Blair
    • Paul Cuddon
      Director and Equity Research Analyst at Deutsche Numis
    • Steven Mah
      Senior Equity Research Analyst at TD Cowen
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