Q4 2021 MaxCyte Inc Earnings Call

Thank you for standing by and welcome to <unk> fourth quarter, and full year, 2020 One earnings conference call.

At this time all participants are in a listen only mode.

After the speaker presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone. Please be advised that todays call may be recorded excuse you require any further assistance. Please press star zero I would now like to hand, the call over to Sean Monarchists Investor Relations. Please go ahead.

Thank you Latif and good afternoon, everyone. Thank you all for participating in today's conference call on the call from X sight, Doug Doerfler, Chief Executive Officer, and Amanda Murphy Chief Financial Officer.

Earlier today <unk> released financial results for the fourth quarter and full year ended December 31, 2021, 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 maybe forward looking statements within the beating 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 actual results may differ materially.

Most expressed or implied in any forward looking statements due to a variety of factors, which are discussed in our SEC filings. The company undertakes no obligation to publicly update any forward looking statements, whether because of new information future events or otherwise and with that I will turn the call over to Doug.

Well, thank you Sean and good afternoon, everyone and thank you for joining <unk> fourth quarter and full year earnings call I'll begin with a discussion of our business and operational highlights during the quarter followed by a detailed financial review from Amanda We will then open the call for questions.

I'm very excited with our team's performance in 2020 , one as we became a NASDAQ listed company.

If you need to deliver on all of our financial and strategic objectives of our plan.

<unk> platform remains the Premier So engineering technology supporting the development of advanced cell Therapeutics, and we continued to invest in our people and capabilities at a measured but healthy rate.

Randall will provide more details later in the call, but I note that we generated very strong fourth quarter and full year 2020 results as outlined in the press release published earlier today driven by robust performance in our core so engineering business to both cell therapy and drug discovery customers.

Fourth quarter revenues.

$10.2 million up 19% over the fourth quarter of 2020.

We saw very strong growth in our core business with growth in revenue customers and cell therapy, or 43% and drug discovery of 32%.

For the full year of 2021 .

Total revenue was $33 $9 million representing growth of 30% compared to 2020.

Our core instruments and disposables in cell therapy, and drug discovery grew 37% in the year.

Ahead of our historical five year CAGR of approximately 25%.

Our installed base of instruments, both sold and leased grew to over 500 by the end of 2021 compared to over 400.

End of 2020.

During the year, we also recognized $2 $5 billion and three commercial clinical milestone revenues from our strategic platform license or S. P O commercial partners.

As we have previously indicated we take the confidentiality of our partnership agreements very seriously. So we'll be unable to answer any specific questions related to our SPL partners and their respective development programs.

However, I can say that we are generally excited about the progress our partners have been making in the clinic over the past year. We continued to see additional S. P. O programs enter the clinic and I've seen our existing clinical SPL portfolio progress into later stages, including pivotal trials, suggesting that we may see our first commercial.

<unk> product is.

I think it's 2023, we're extremely proud to be able to support our partners and their efforts to bring advanced therapeutics to patients.

We have continued to see our partners invest in ex vivo cell therapies and expand the scope of their research, including new cell types modalities and indications, which if successful would be positive for banks like over the long term.

In addition, our value continues to be further validated by our expanding customer base, including the ongoing success, we have had in signing spl's.

With four new U S. B O agreements in 2021, and one agreement with <unk> Biosciences.

In early 2022.

We now have six U S. P. L partners covering more than 95 programs of which more than 15% I've entered the clinic. This.

This compares to our last update in January 2021 of 12, Spl's covering over 75 programs.

Which more than 15% have entered the clinic.

The total pre commercial revenue potential from our total S. P. L programs is now greater than $1 $2 billion up from 950 million at the end.

'twenty 'twenty.

In the near term, we are optimistic about the potential for our SPL partners to generate meaningful revenue from both the research and production progress as well as clinical milestones over the next 12 to 24 months.

Our partners continue to achieve both scientific and clinical success, particularly in moving their next generation product candidates into pivotal trials.

We also see the potential for several new Anda filings by our existing SPL partners for novel ex vivo engineered cell therapies. This year.

Amanda will share more details around the progression of potential pre commercial milestones that we'd expect to see over the next few years.

With ongoing investment in the ex vivo engineered cell therapy space, we continue to see strengthening of our STL pipeline across a variety of geographies cell types approaches and indications and expect additional SPL partnership announcements later this year.

Yesterday that mix of our recent spo partnerships remain comparable to prior partnerships representative of the value back site brings to the relationships and the customer's commitment to a long term partnership.

Much of our focus in 2021 was investing in the business and refining our strategic plan.

One of our investments has been in the real exits, which were released under the expert Brett in 2020 one.

After alpha testing your product for several years with select customers and receiving valuable feedback the viola has entered the marketplace.

And we believe will be a disruptive technology and large scale bio processing applications.

In 2022, we plan to work with several beta customers on the expert via Lex buildup applications data to support our expansion into the large scale bio processing market and we have been encouraged by the interest we've seen from customers participating in the deal that beta testing program.

While the market expansion of the opportunity for the <unk> and the large scale bioprocess applications will take time to evolve. We are encouraged by the progress to date and look forward to updating investors on yamal.

<unk> of the <unk> product roadmap over time.

Finally, we launched three new processing assemblies or single use disposables in 2021 which continued to strengthen the core business for the full year and.

Particularly in the fourth quarter.

We are also investing in manufacturing and process development as our partners move closer to the commercial launch of therapeutic products.

We are on track with our plans to move into a new facility this year, which more than triples, our manufacturing space and expands our process development capabilities.

We also continue to further in source key elements of our manufacturing process, particularly around processing assemblies.

Additionally, we are investing meaningfully in sales and marketing and made substantial progress in 2021 scaling our commercial organization, including our field scientists team.

We are hiring at a strong pace and remain committed to maintaining <unk> strong culture of excellence.

We are also excited to announce drink Suman joined US earlier this month as Max <unk> Chief Scientific Officer.

Jay brings deep experience in the allergy applications and platform assessments.

Development of commercial partnerships, and leading collaborations to accelerate scientific and technical innovation.

As we look more into 2022 weeks.

I'd like to continue to grow its team across most areas of the organization, particularly in research development and sales and marketing.

In closing we have had an excellent 2021 as we continue to execute our financial and strategic goals. We are very excited about our opportunity going forward, particularly in the cell therapy market and believe we are making the right investments to drive growth across the business.

I will now turn the call over to Mandy to discuss our financial results Amanda.

Thanks, Doug and good afternoon, everyone focusing on the first quarter as Doug mentioned, we're happy to report, we realized record revenue and growth in our core business in the fourth quarter.

Sales in cell therapy customers in our core business grew by about 43% over the same quarter last year, while sales in fact discovery customers Alpha grew a strong 32%.

We saw a broad growth across the business with strength in insurance tells you about cell therapy in fact discovery customers.

I was trapped in assembly in part aided by the new processing Assembly lines at that that has mentioned earlier.

We did not recognize any S. Cal program related revenue in the fourth quarter of 2021 , although we recognized <unk> 5 million for the full year.

We do appreciate however, they need to provide more transparency on our program economics near term and long term I'll provide more details on that front and then later in the call.

Moving down the P&L and looking at the fourth quarter gross margin was 88% in the quarter versus 89% over the quarter prior.

Decrease in gross margin was driven by the lower STR program related revenues, excluding the dynamic growth.

Gross margin was relatively unchanged.

Total operating expenses for the fourth quarter airplanes, anyone where 14 million compared to $10 million in the fourth quarter of 2020 as Doug mentioned, our current strategy is continuing to make meaningful investments in R&D and sales and marketing.

Take advantage of the many opportunities we see to accelerate organic growth over the next few years.

The increase year over year was primarily driven by increased headcount across all areas of our business as well as an increase in stock based compensation that'd be outlined in the press release.

Ultimately, we came into 2022 with a very healthy balance sheet with total cash and cash equivalents and short term investments of 255 million.

The end of the fourth quarter and no debt.

Moving to our outlook for 2020 two as we outlined in our press release, we expect revenue from our core business, which include sales of instrument and hurtful for cell therapy, and drug discovery customer lease revenue to I thought therapy petsmart to grab at June 22, and 25% over the prior year.

As Doug mentioned.

<unk> optimistic about the prospects for our business and believe our SCR partners are well capitalized plenty times Huntington three.

It does send the business momentum we saw in 2021 continued into the first quarter of plenty of things to that that'd be believe we've captured a more prudent outlook and our guidance given the current broader macro environment ongoing fluctuating COVID-19 dynamics.

Turning to rest gel program economics.

As we've discussed in our previous call and also in discussions with investors and analysts.

Planning of our S. T. All revenue recognition is predicated on our customers clinical and regulatory process.

This isn't making which obviously we have limited visibility into that said, we do appreciate the need for can you provide some important visibility and transparency externally.

Over the past year, we've seen.

Strong progression in our customer pipeline, an increasing number of potential milestones added into the mouth on stack.

The Admiral scale partner.

We expect the timing of milestone revenue.

You can see lumpy over the near term Court square as our pipeline continues to mature.

We do however, based on current information expect plenty coming to U S steel milestone revenue of approximately $4 million.

And it does tend to.

To help provide some context on the STL milestone revenue opportunity for Max It over the next couple of years, we've added an additional sides of our corporate sector. We wanted to call your attention clear, which can be found on our website at www dot Max at that time.

This new slide number 14 attempts to provide a snapshot of how milestones trended over the past five years in terms of number and say and how we expect them to trend through 2024.

Over the past five years, we've received approximately 20 milestones, which have been comprised of early stage milestones such as I N E filing and phase one as you would expect.

Looking forward however, based on the information. We currently have you can see the total potential of approximately 15 outbound pre commercial.

Which is almost three times as much as we had over the past five years.

These milestones are also increasingly related to later stage development.

We estimate about a quarter of their 50 or pivotal or later and 40% of our phase one.

These numbers are based on our current STL partnerships. You don't include any future STL agreements when they sign.

As Doug mentioned, there are several opportunities in front of Max eight and we continue to plan on making necessary investments in R&D and sales and marketing perp license opportunities.

Can we expect those investments to increase throughout the year in 2022 as we see the full year impact of head count added in 'twenty, one and continued to invest in those areas. Thank you now I'll turn it back over to Doug.

Thanks, Amanda in summary, we remain excited about the opportunity to lead the industry forward as the Premier So engineering platform technology supporting the development of advanced cell based therapeutics.

We were pleased to report strong fourth quarter and four year results as well as said our outlook for 2022.

<unk> remains well positioned for growth that we were excited about the opportunities ahead.

What would it take the special opportunity to recognize our entire global team and board for their full commitment to providing unparalleled technology products and support to bringing the new generation of cell based products to patients providing them additional treatment options.

Was that with people like to open this up for Q&A.

Yeah.

Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key once again Thats star one on your Touchtone telephone to ask a question.

Please standby, while we compile the Q&A roster.

Okay.

Our first question comes from Jacob Johnson of Stephens. Your line is open.

Hey, good evening.

Our afternoon <unk>.

Maybe following up on the comment you just made about the progression of <unk>.

S T L as.

As customers ramp and thanks for the new slide I guess thinking about it from the core business perspective can you just frame up what.

The scale up for these customers it looks like in terms of the number of instruments in the amount of consumables.

Okay.

Somebody moving into pivotal tenant needs and what that looks like potentially if they move into commercialization just kind of what that at scale.

And kind of the core business looks like from those customers.

Yeah, I'll take a first stab at that and then when I turn it over to Doug for more comments I mean, we haven't really given that level of context.

At this point and obviously it is variable depending on.

Yeah, the approach an indication and all that type of thing.

And what we have said, though is that we've consistently seen the same.

Trends, meaning.

From a preclinical perspective, we tend to see a lot of usage with our lower scale processing assemblies.

Obviously, they're working on optimizing and things like that and then as you work through the clinic.

Clinical trial process.

You, Tennessee had a bit of a depth from a unit perspective, because typically the faith widen.

Ah trials are smaller again, depending on the indication and it can be variable there and.

Then.

No ramp over time as as the customer's needs through them through the regulatory.

Process into pivotal and beyond so.

We've kind of laid that out but that's that's pretty much what we've given at this point I don't know if you have anything else out there.

Yes.

Algorithm here, we're trying to build and it's still low numbers Jacob.

No certainly aldo versus although one of its although its going for both of them. It is going to be heavily manufacturing sites, they have and that would.

Also be driven by how many locations are running clinical trials.

So some of our customers partners shoes ballroom type manufacturing processes, where other use manufacturing trains.

We're seeing also that as customers get more comfortable with our technology and they put products into the clinic they add more preclinical.

Colin.

Non clinical programs.

So their own so we ended up with additional product sales for that purpose. So I don't think theres any real clear algorithm.

Table to build I think we're still building it.

Obviously, they do increase over over the course of the relationship with the partner.

Thanks, Thanks for that that's.

That's helpful context, and then on the.

Beta testing with CLS Ax.

A wide range of use cases for that instrument for maps viral vectors and maybe more most interesting.

The allogeneic side of things can you just talk about.

In those kind of areas, where you're seeing the most initial interest you know understanding that it's pretty early innings for me Alex.

Yes, I think it is still pretty early I think the one that were focused on initially would be the mass production because I think that theres a immediate need in the marketplace for that abroad I think it's abroad.

Tam expansion opportunity for the company.

And we do quite a bit of that in smaller scale with the rest of the extra day. So it's a natural progression for our company for our partners to one of the skills the SPX up the larger volumes.

I think theres still work that has to be done and the beat on the <unk> applications.

Doctors are still biology, I mean, what are the reasons. We brought joined US was to help but kind of across the board and really figure out what sort of use cases, we had to ensure we had in place in order to.

Commercialize that in the proper way the way the next site likes to do that and as I think I've mentioned in prior calls there's quite a bit of work in <unk>.

Are you sure that this technology.

Although its very disruptive it does require a significant pre and post electroporation.

Engineering work that process engineering work that has to be done and that's one of the reasons that we're investing in process development as a company moving into a new facility. So that we can better mirror, what our our beta testers are using the technology for it.

Got it thanks for taking the question I'll leave it there.

Thank you.

Thank you. Our next question comes from Julie Simmonds Panmure. Your line is open.

Thank you very much.

Scott.

Just a question following up on the VL acts as to whether you have any idea as to what the business model. So that it's going to look like is this going to be another licensing model or is it going to be an outright sale of its consumable type of model.

Julien so part of the the beta testing is that really.

Spend the time testing that model.

I think it will vary based on the application and vary based on the <unk>.

Value, we bring to the customer I think it's fair to say that our mindset around this has been to work closely with partners and understand where the pain points are and it worked to solving those and then sharing in that upside with them as we do that so I think that maybe the same mindset whoa whoa whoa.

It will be valuable for us.

The company and our partners frankly, as they see the long term opportunities for this technology.

Excellent. Thank you and just the only expenses side and taking somebody going to step up since the old NASDAQ IPO as expected.

How much more of on a quarterly basis do we expect that to go up I mean can we use Q4 as a sort of indication as to what it was like going forward. The only is moving to the new site and the continued recruitment going to mean that we're going to see continual step up going into <unk>.

Yeah, I'll take a first crack at that I mean I think.

As you know as you mentioned, we are we see quite a bit of opportunity from a investment perspective in terms of.

Driving further growth in cell therapy and so.

We were investing quite a bit in headcount, particularly in R&D and sales and marketing.

So I would expect that to increase just because obviously, we have hired quite a few people and then you'll see that full year as I was saying the full year impact of that in 2020 two and then in addition, we're continuously hiring as well.

So you know, we're not giving specific guidance so to speak but that's how I would think about it in terms of our investments.

The investments.

Lovely thank you very much.

Thank you.

Thank you. Our next question comes from Paul <unk> of Numis. Your line is open.

Paul Please make sure your line is immediate and if you're in a speakerphone lift your handset.

Oh, Hi, Doug Amanda sorry is that work now.

Yes, Sir.

Okay very good.

Yes.

And congratulations on 2021, and I was just hoping for a little bit more color on sort of growth within <unk>.

Cell therapy in particular.

Any major differences between them and drug discovery actually between capital sales and the processing assemblies in the leases.

With over 500 instruments in the installed base now.

Are you finding customers that managing and happy with the machines. They go to where you are having so little bit more support so alongside those to keep them running smoothly.

I'll answer the last part of that Paul I mean, these instruments are built.

The last and theirs.

Very little work that has to be done.

Two.

Had the operational so we really don't have that as an issue we don't have to really invest much to do that.

We can't give specifics, but I will say that.

The business is performing.

Brother, just really well across the board.

Leases product sales.

<unk>.

Every aspect of the business was really.

But particularly strong.

Okay superb.

In terms of applications.

We've seen the importance of technology to cell therapy, we've spoken about so viral vectors and potentially use of bio manufacturing and the cost.

I think this year has seen so quiet my the last two years.

Realogy has become quite lucrative if they see the virus kind of assays sort of happening within drug discovery say I'm just wondering whether there.

With that kind of avenues, where youre finding early interests within the expert system.

There are emerging that could complement where it's historically been very strong.

Well I think in two areas I can comment on directly for me one is that.

There was a lot of work that's being done on identifying new pathways themselves right for for engineering and <unk> cell types. When we did the intima deal which is until so.

And we're knocking them as such.

Pathway, which.

Which is apparently an important one so theres a lot of basic research I think that's being done.

Translational researches speak of the cell therapy space. So we're seeing a lot of interest in that.

In the drug discovery side.

On the bioprocess, but small molecule drug discovery.

Theres still quite a bit of early stage work, that's being done to identify.

New ion channels new ways.

Hum, creating Ips sea salt Lettings for the identification and screening goes.

Of targets for instance, so.

That's an area that we keep we keep it active well.

Part of it but.

It's just a it's across the board what we want to be careful but I think we've talked about before there's we don't want to get pulled into that.

The academic research partners.

Life Sciences business, we really want to focus our attention on more business based commercial directed.

Clinical director of eventually commercial totally directed.

The therapeutic development.

Okay excellent and just finally on the I think I've got slide.

Slide 12 of the corporate presentation. The example, SPL NPV.

You've got six programs.

Agreement.

Launching one year two filing preclinical four into clinical one recent commercial okay. So I mean that would be sort of a typical sort of example, within the cell therapy applications that you're in and the weighted average NPV of $85 million.

I mean that would be sort of a standard calculation that you've run.

So Paul let me take a first after we did so that was part of that actually what I'm often asked one and what we're trying to really do there is.

Not giving a specific R.

Or rather given example, SPL so of course each individual.

Partnership is.

And there is different and different number of programs.

They were trying to get some perspective on.

If you apply some of our clinical risk.

To add to it and Spi, which.

It's averaged in fixed program for partner, but obviously that in.

Reality, very and then just thinking thrill.

I mean, one gets to commercial and then you know the others dropped out.

Obviously apply whatever clinical risk you feel comfortable with it.

Just trying to provide an example of what what.

Each.

Partnership could be worth.

In terms of pre commercial milestones which are.

Addressing pretty consistent across the Permian, given they're more related to regulatory timing.

And versus the commercial side, which.

Yes, I think what you can see from there is that it could be meaningfully higher but obviously more variable because you have been talking about indications and.

That type of thing we did only use the first five years and theoretical commercial revenue.

And in that.

Analysis.

For that perspective, but it was just a way to give US. An example of the value potential from a revenue perspective.

Very useful thank you.

Thank you. Our next question comes from Dan Arias of Stifel. Your line is open.

Hi, guys. Thank you for the questions.

Doug I wanted to just ask about drug discovery revenues, if I look back the last couple of years you've been in.

A pretty tight seven to seven and a half million dollar range for a while but you did step up this year.

To closer to eight or to overeat.

And I remember you talking.

About the VL X system is having a pretty good opportunity in drug discovery in fact, I think you just mentioned it on this call.

We think about that I mean is it is it likely that with with the step up that we're seeing here and with <unk>, having a nice opportunity and that portion that we could start to see the drug discovery revenue kind of consistently ticked higher in the in the $8 million to $9 million range going forward, maybe not this year as much of a 2023.

I'll leave them in and talk about the specific numbers, but.

As I have been as we've been talking for the last couple of years.

Sure.

We recognize that there's a couple of issues going on one is that the drug discovery market is a huge opportunity for us.

We've been able to show I think.

More value to our customers on the cell therapy side, So I think that theres, a theres been more attention being paid for itself therapy group. We've also had the opportunity since we had more capital we really start to expand out our.

Commercial team.

Part of that expansion.

Is providing us the ability to go a bit deeper into drug discovery and bioprocess with partners like I say I think that.

That's what you're seeing as a result.

The concerted effort.

But really we'll rebuild that business from where it was several years ago. So.

Not sure we're going to land from a numbers perspective, but.

The folks we're bringing in.

Most recently.

Come out of that world as well so.

We're trying to really balance the cell therapy opportunities.

Process.

Drug discovery.

Hopefully that helps.

Yeah.

Yeah, just a couple of things and so.

As he mentioned, we introduced some new processing assemblies, and which I think.

Benefited the Czech discovery.

Part of the business in terms of.

Multi well.

P as I know that that sort of help.

Lowered the transaction at the parent transaction costs I think that's been a driver.

Maybe ill extra effective.

Where as you mentioned seeing very strong interest in the beta customer perspective, but again you know this is a new market for as it turns out.

And not necessarily the application to the SBA that found.

And then with pharma customers now but.

Certainly need to build out the use cases and the supporting data for their overtime. So.

I think what we've been saying and continue to say is that we're very.

Very excited about the market opportunity, there and as I talked about that.

But again this is kind of a.

Longer term and two to three year type revenue drag.

Driver for the company.

Okay, I mean, I don't want to I don't mean to be overly picky on the numbers per se, because it's a million a million or so.

But I guess the.

Essence of the question was just do you think that drug discovery the trajectory for drug discovery can start to tick up a little bit as you work through some of your new products and as you know to Doug's point I've, just the opportunity set in front of it.

That in a couple of years, maybe you do find that that's a double digit million number.

Endorsed the number I guess I'm, just I'm, just thinking about whether I should start to be a little bit more incrementally positive on on where that line.

Yeah, I mean again, we're not giving specific guidance by market, but I think we yeah.

We.

You are encouraged by what we have seen to date in terms of the adoption of some of these new.

Yes, as we mentioned there is some sort of yeah, obviously with the growth on the growth side of it your.

The comparison dynamic, but I think.

You know, obviously, where the run rate now.

We have as it is not but the with the VL accident and the large scale market. So that's sort of our current business.

And and the team continues to to look at.

New P as that.

Can help continue to meet customer needs and I think we saw success there on both sides of the equation. This here in this quarter, so, especially this quarter so.

Im just kind of leave at that.

Yes, okay.

I'd add to that Dan is that.

We mentioned that we did see some.

Some compression on the drug discovery side because of the pandemic.

Ability to really get into some of these bigger companies because they were they weren't operating at full capacity and I think youre seeing now.

The big pharma companies, the big biotech companies are which I'm coming back in a big way and I think that's what it would be helpful for that segment.

Yes that is definitely good to hear Okay, and then Amanda on the gross margin line is there anything you would call out from a cadence perspective over the course of the year, just given the impact of milestones and royalties out there.

Yeah, I think likely outside of the royalties the milestones or I.

Dynamics, we're seeing it's pretty consistent I mean, it may there may be some puts and takes there.

But it's been it's been fairly consistent over the past several years at D. A.

The quarterly cadence.

Cadence at the milestone that's really hard to pin down and as you can imagine just given.

It's sort of out there control right, it's our customers regulatory timelines and FCA decision, making.

It's pretty hard for us to.

Pin down outside of that I think we expect gross margins to be to be fairly consistent I don't know, Doug if you have anything to add there.

Just all else equal with aircraft defense waste.

No I mean, the band is pretty tight.

As you look at it.

One or two points right. So it's.

So I think I think a bit to hit it.

We're comfortable with.

That level of gross margins in the business and as I also mentioned.

The milestones are going to help push that that gross margin number up a little bit and as we become more basic manufacturing certainly the earlier days for word manufacturing Morris that use you for this.

See some.

Yes.

A little bit of erosion of gross margins I think they're going to all of a sudden talk to each other.

Okay very good thank you guys.

Thank you. Our next question comes from Matt Larew, William Blair. Please go ahead.

Hi, good afternoon.

In terms of the future market opportunity I think at the time of the NASDAQ IPO characterize SPL pipeline around 50, and I think growing to somewhere like 130 or 40 over the next five years, just curious if theres been any.

Change.

Those thoughts and then I guess part two would be just thoughts around your ability to participate in those opportunities for more of a competitive question I know there's been a couple of reasons.

A competitor product announcements, maybe just get your take on that.

Well I'll, let me just I'll take the first part in terms of the market.

And how we calculated that and then turn it over to Doug.

So that's why it's in the deck.

And essentially it.

Instead of a point in time analysis, where we looked at the pipeline.

And we said alright.

Yeah, obviously, we don't know.

The fact that we read.

Partner with companies that we looked at the pipeline.

That that's in our current that within our current market, where we're seeing a lot of success. So I owe an inherited disorders, and we said alright, how many of those.

Should be S job opportunities and that's where we came up with the 50.

We have seen incremental.

Interest outside of those markets as our indications so autoimmune.

As an example, and then let me factored in the forward.

Five year grass.

We made an estimate around.

The impact of current investment and adoption of non biotechnology. So.

It was really that was really our take at the time I think as team.

Yeah, well, we're continuously seeing increased complexity in the market in terms of cell type in engineering.

Or how how much engineering at the South and companies are doing so that would all play.

T O.

Increased adoption of other non viral and non viral delivery technologies I think the other thing I would say there is that.

We are also seeing interests outside of.

Kind of that the U S and Europe , as well and so that.

It wasn't factored into that analysis.

So we haven't updated that honestly since the IPO, but we're just trying to give a perspective I would say if anything.

The market sort of larger at this point, Doug do you want to take that.

So comment on that and any comment on that and the second part of the question.

Right.

So first off with strong cell therapy.

If we're selling or leasing instruments into non SPL customers.

That's a good indication of the strengthening of the pipeline of potential SPL customers cause anyone who's.

Acquiring the technology license he take that let's either license they get through all the attributes that we have the benefits we provide to our customers. So that's using the baseball analogy because hopefully we'll start seeing some baseball again.

On deck circle for us so we want to really make sure. We've got a lot of a lot of people in the pipeline companies in the Olympics circle. So when they come up for the SPL deals, where we've got them captured until we just continue to focus our attention on capture.

Capturing.

These companies at the early stage.

In terms of competition.

A lot of noise out there, but I think that we're not we're not seeing that how big of an impact on our close rate frankly.

And.

We've often talked about kind of the four pillars of.

Our our offering which is high performance.

The system in terms of efficiencies.

Flexibility in terms of being able to use.

Use of <unk>.

A buffer for instance, you preloaded library of validated smoke cell specific products that have.

I have to mention that that's becoming a bigger and bigger issue with CMC issues, where the FDA the.

Scalability is still key as we stand alone in that aspect it with the <unk>.

<unk> just extended extended the game by basic.

Basically 10 times that.

The USD extra gtx than the quality.

Cgmp, it's single use disposables, it's the masterful in all four of those things we sell in each of those four and there is no one out there that can touch any of those four so.

We're not going to be complacent continuing to push the envelope.

But we're not seeing.

It impacted the business.

Okay, that's great and then.

Another year for strong instrument placements.

Just be curious if you can give us any.

Sort of color around.

Instrument.

Placement location in terms of cell therapy for drug discovery or how many of those placements were driven by.

Current customers scaling up their efforts verses new.

Customers are adopting the technology.

Yeah, I don't think we can give any guidance on that.

I do those things.

I think we mentioned in the.

And the.

And the earnings call earlier that we're seeing an uptake in other geographies.

Which I think is quite important for the company and I think quite important for the whole industry.

So we're seeing the fruits of.

Our labor and.

So they got beachheads in Asian countries.

Throughout Europe , and the U S is starting to starting to pay dividends. It takes time, we're a small company, but I think you're starting to see.

The flywheel effect as we put.

As we build out our sales and marketing team, we'd go live or field application scientists were able to so ridiculous.

Customer problems and.

Locations that we Couldnt really touch before we had the cable.

The capability and capacity and capital to do so that we can do that so I think we're gonna ceiling increase across the board.

Most of the business.

Okay. Thanks, and then just the last one for me in terms of.

Bring more manufacturing in house I guess could you remind us is the intention that.

At the conclusion, all P. A assembly will be done internally and how much at that point.

We still need to be in sourced in terms of the components versus largely assembled currently.

Well.

It's always wise to keep a balance of <unk>.

External and internal manufacturing and tickets.

It's always prudent from a manufacturing perspective, the multiple sites at least you're able to rely on multiple sites. If you run into an issue with either.

Capacity or something were to happen. Besides that so I don't I don't see us putting all their eggs in one basket.

We're not going to be basic in and.

Injection molding process, we think that's better left for companies that are out there doing that on a daily basis, but what we're really focused on is making sure we have better control over all the components and better control over.

The assembly.

Nicole Corporation of the products for our customers because what.

What we want to ensure there is obviously some commonality amongst these.

Disposables, and we want to control them.

We will be able to control better.

The mix of finished goods based on the.

The ability to leverage certain individual components and so I think it is going to help us to build inventories become more flexible and as our customers move toward commercialization I think it's going to be.

Even more importantly, we've got excess capacity in their manufacturing.

Capabilities to support them because.

As you know what.

The therapeutics business.

Can be rather significant variations in terms of EMEA.

Demand for these products and we want to make sure that we're able to support that.

Great Thanks for that.

Thanks, Matt.

Thank you. Our next question comes from Max Masucci of Cowen and company. Your question. Please.

Hi, Thanks for taking the question congrats on the continued momentum in the business first one.

That's the <unk> released some new dropped car T product development guidance last week covers a range of topics the ideal time to implement manufacturing changes and call to action for better monitoring of critical quality attributes, but comprehensive draft guidance, but from a bird's eye view.

Doug that would be great to hear your perspective.

You've had a chance yet to review it just in the context of your SPL business and your non SPL core business.

Well sure.

A lot of that guidance is focused on CMC and manufacturing control right.

And so there's also been some comments about.

The ability to use.

Information around certain manufacturing processes that could be.

Eventually use for cross shoppers into a BLA close and so I think that the.

The ports favorably from that site features also.

I think.

More interest in ensuring that.

The consistency of each of these processes is important in that.

Again, you can manufacture the same product or the same instrument from one room to another and then from one instrument to another instrument and for one location to another location and I think we've been working for the last couple of decades to make sure that we can do that.

So our sense is that we would be but.

This is a this is a welcome validation of what we've been really focusing our attention over the last.

Least decade to ensure that we can provide our partners with.

What they need to move all the way into the clinic all the way through the clinic with her.

Basketball I think eventually they will have <unk>.

Over 40 clinical trials associated with them so.

So we feel like we're in the we're in the right.

We're doing the right stuff. We think also that guidance provides us with additional opportunities to build the business.

Because what we've learned I think.

We can.

Learned with our partners that consistency.

Product characterization are important.

And I think our company is really set up to look at new.

New potential technologies and potential solutions to these problems as <unk>.

Partners move closer to commercialization and again, where we're working.

With pleasure.

As you've recognized with some of the leaders in the commercialization of cell therapy. So I think we've got a hell of an inside view of what's going to be important so.

Our sense is that guidance was was.

What's a good validation theres, a theres, a really important interface between industry and FDA whether that.

<unk> through <unk> or through our <unk>.

And that site is actively involved in all of those organizations to ensure that that we can help too.

Help to provide the standardization for the industry. So that's an investment that we read.

Quietly made can spend time, ensuring that the industry is.

So it was well supported by technology providers effects right.

That's great maybe just.

A follow up there it seems like the FDA is nothing car T developers to at least attempt to lock down manufacturing methods a bit earlier in development. So just curious if.

That would be that that nudge that urge them from the FDA would be could spur a tailwind for some GMP grade closed platforms, our GMP grade.

In the core razor razor blade business.

The P eight portfolio is.

It's continuing to expand round out.

Do you have.

I believe the three processing assemblies are being sold to both research in GMP customers. So it would be great to hear if you're if you're seeing that shift to GMP products occurring.

Earlier in the process and if that could be a tailwind.

Yes.

Our view with our customers have been get involved with US early because we can we can provide you the same platform.

Same product same electroporation settings.

All the way through IND, enabling studies, all the way through scalability, all the way through to commercialization.

I think that does play well I think we.

Good.

But the let's say the forefront, but I think we recognize that.

The need and the opportunity I think we changed that so I think we're pretty good pretty good shape.

Great. Thanks for taking the questions I appreciate it.

Thanks Max.

Thank you once again to ask a question. Please press star one and you touched on telephone again Thats star one on your Touchtone telephone to ask a question.

Our next question comes from the line of Mark Massaro BT hygiene. Please go ahead.

Hey, guys. Thanks for the question and congrats on the strong end to the year I guess your business is nice and stable you signed for S. P. L. A in 2021.

Wanted here in 'twenty, two I think at the time of the IPO you talked about a goal of signing three or four spl's per year.

Are you still confident you can sign three or four this year and I guess, what I'm really trying to get at is just your comfort level.

In.

Your funnel.

Near term.

Well the funnels number until has never been stronger continues to strengthen I think that's it.

That's evidenced by.

The strong quarterly.

Quarter over quarter growth in cell therapy again.

<unk> builds pipeline for the USPS.

We don't control the SPL. So obviously, that's something that we have to do with the partnership.

But we see no reason why the dynamics are changing.

In a negative way for us.

We've provided any further guidance on.

But what 'twenty two will bring although I think our track record has been pretty consistent.

Thank you.

We're able to sign three or four or five years over the last several years and that's something that we continue to work towards.

Okay, Great and Yeah go ahead a minute. So I was just going to add just one quick.

Comment there obviously.

The and these are negotiations and contracts are long term of course, so it's sort of hard you know again, you're putting putting that you've been.

Putting a December to December timeframe, it is difficult right, but to doug's point.

We have.

And an ever increasing pipeline.

I think it's been driven by a lot of things you know assessing Jesse the clinical support that we continue to tell but the master file and that type of thing.

So just to reiterate.

That at that point.

And I can go through the numbers you know offline in terms of historical.

Signings, but.

And again, we still have the same comment around the pipeline being.

You know really strong.

And building.

Okay, Yeah, that's that's encouraging I guess.

As analysts, we we see that there's been a little bit of a shift in capital market dynamics in the last several months.

Some of your customers admittedly are startups. So it would just be curious to ask about.

Access to cash access to capital.

And whether or not you're seeing any.

Softer demand from some of your customers as it relates to.

Maybe some customers trying to preserve capital.

Well I think you know.

What they're working on and with US is probably central to what their business model is all about right.

Right. So if they're working on a product that's in.

Willing toward a pivotal.

Probably not going to be backing away from that from a from an investment perspective.

So.

We obviously track the cash.

Our partners have.

But we're not we're not seeing any.

Any softening in demand based on the cash requirement cash needs.

Cash and dates.

We do pay attention to other quarters.

Yeah.

And just to just to kind of wrap up both of your questions. We're also not seeing any change and the economics as it relates to the partnerships.

So.

Saturday, they've been fairly consistent and.

You know in terms of the pre commercial.

Southeast payment structure.

Sarah just to kind of tie both of your questions together, we're not seeing any any change there either.

Okay. Okay. That's great and then if I can ask one last one.

You've talked about the V L Ax really.

Being additive into new indications like monoclonal antibodies in viral vector production.

You know I think you've addressed this before but is it safe to say that youre not expecting customers to return.

T X S TX Gtx and in exchange for the V L X.

So any comments about that and I know, it's early days now, but I'm curious if you could just speak to that over the next year or two.

I don't see this as the.

Cannibalizing any of those products in fact, I think it's just going to do the opposite.

When you talk to these customers in bio processing.

The <unk> is actually a scaling down of their process to some extent working itself into 2000 liter bioreactors theyre scaling down and as they scale down.

Even more flexibility at the lower end do their design of experiment so.

We were at least by my optimistic view right pragmatic optimistic view is we're going to do.

That's the cannibalization, we're actually going to see more opportunities because now these companies will be we'll be able to convince the process of all the folks on the larger scale side that they can move from the SPX <unk> and that will I think open up.

Frankly, new opportunities for moving yes, yes, yes.

Yes, that's the Gtx and these companies because hopefully bore well.

More products that they can develop knowing now what they can scale up even further with the deal but that makes sense.

Yep that makes perfect sense, alright, thanks, guys.

Thank you all and just.

Just thank you again for all your participation in today's call and in.

And your interest in <unk> great questions.

I'll look forward to talking to you all individually. Thank you very much.

Thank you and this concludes today's conference call. Thank you for participating you may now disconnect.

Yeah.

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