Q3 2022 MaxCyte Inc Earnings Call

November 9, 2022

The conference will begin shortly to raise your hand during Q&A you can dial star one one.

[music].

Okay.

Good day, ladies and gentlemen, and thank you for standing by welcome to the Mac site third 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 this session you will need to press star one one on your telephone keypad.

At this time I would like to turn the conference over to Mr. Sha Monaco director of Investor.

Investor Relations Sir please begin.

Good afternoon, everyone. My name is Simon and I am.

The director of Investor Relations here at back site.

You all for participating in today's conference call on the call for that site, we are Doug <unk>, President and Chief Executive Officer, and not hopes interim Chief Financial Officer.

Earlier today <unk> released financial results for the third quarter ended September 32022, a copy of the press release is available on the company's website.

As 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 actual results may differ materially from those expressed or implied.

Any forward looking statements due to a variety of factors, which are discussed in detail 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.

That I will turn the call over to Doug.

Well, thank you Sean and good afternoon, everyone and thank you for joining <unk> third quarter earnings call.

I'll begin with a discussion of our business and operational highlights during the quarter followed by a detailed financial review for broad.

We will then open the call for questions.

I am very pleased with our third quarter results.

As our team continues to deliver other companies' financial and strategic objectives that excites platform continues to be the premier. So a generic technology for the industry, enabling the development of a growing set of advanced cell based therapeutics.

Throughout this year, we have invested in our people and capabilities as we seek to take advantage of the growing end markets and support our customers and partners growth.

Interest and investment in the cell and gene therapy market remain significant in the third quarter for cell and gene therapy, we saw an increase in dealmaking Hiller industry, both financing and partnerships compared to the previous quarter.

More specifically in our markets, we are seeing exciting private investments and new company formation focused on novel cell types and complex next generation approaches.

Ron will provide more details later in the call, but I want to highlight that we generated very strong third quarter 'twenty to result in our core business with those revenues up 22% year over year as a reminder, what we refer to our core business, we are including sales and leases of instruments and sales of disposables to sell <unk>.

Drug discovery customers the year over year increase in core business revenue was led by an increase of 27% and revenue from cell therapy customers, while revenue from drug discovery customers increased 4%.

Our global customer base has expanded across all stages of development and we are particularly encouraged by our traction with cell cell.

Cell therapy customers that early development stages, including leading academic clinical translational centers.

Our robust strategic platform license pipeline continues to strengthen and expand with potential partners at various stages of development across a wide variety of cell types approaches and indications.

Outside of our core business, we recognized $800000 of SPL program related revenue during the third quarter, which puts us at $2 8 million of milestone revenue through the end of Q3 and it gives us confidence that our full year milestone revenue guidance of $4 million.

Our partners' clinical programs continue to make exciting progress, although I note that due to the confidentiality of our partnership agreements. We are not able to answer specific questions related to SPL partners, the clinical progress or their respective development programs in.

In the third quarter, we announced a SPL partnership with vertex pharmaceutical global Biotechnology company that invests in scientific innovation to create transformative medicines for patients with serious diseases. You should note that this agreement does not support programs new to Mac site, because it is a transfer to vertex at <unk>.

<unk>.

<unk> under the CRISPR <unk> CBS partnership.

<unk> originally signed in 2017 included the rights to use <unk> technology to support gene edited cell therapy, Xsl, formerly known as <unk> zero, one for hemoglobin Occupancies all key elements of the Christopher <unk> CB agreement transferred to vertex, including the financial arrangements.

Our total number of strategic platform partnerships now stands at 17, and we are optimistic regarding the potential to add additional SPL partnerships. This year at a comparable economics to prior partnerships given the strength of our SPL partnership pipeline discussed earlier, we are confident in our ability to continue to add new partners as we look forward to $2000.

Three and beyond.

Expert platform as a core enabling technology and our partners therapeutic development strategies, our partners are well funded and leaders in the cell therapy industry developing a wide ranging set of innovative gene editing and cell engineering approaches.

A key element of our strategy in 2022 has been the ongoing investments, we're making to support our customers and partners success as well as Matt sites future success and financial growth.

These investments include growing our commercial teams expanding in house manufacturing.

Hansen, our process development capabilities as well as ongoing product development and reinforcing our business infrastructure.

Additionally, we continue to make investments in our application laboratories and teams to support our success in the rapidly growing next generation cell therapies market.

As the field expands across broader indications and into novel cell types.

In September we officially completed our move into our new headquarter facilities in Rockville, Maryland.

Our new facility is a major milestone in our growth critically this facility dramatically increases our instrument NPA manufacturing capacity to support our customers as they move from research and clinical scale to commercial therapeutic scale.

In September we formally launched our expert <unk> large scale transfection system at the Bioprocess International Conference in Boston.

The <unk> system expands the magistrate expert I'd like to operation platform to offer greater scale of the development and manufacturer across a broad range of applications such as transient protein manufacturer.

<unk> offers key benefits, including shorten development timelines broad compatibility workflow integration and flexibility to support the bio processing market needs during preclinical development and clinical trials.

X system opens up a new market opportunity for Mac site, which supports our confidence in our long term revenue growth participants of the bio processing market often take a conservative approach to the new process adoption and as a result, we are initially focused on early access customers.

Many of whom are existing customers of our current smaller scale platform as we work to build the capabilities and reputation in this market that have allowed us to capture the value of our technology in other markets.

The investments, we're making in 2022 will advance our ability to support new and expanding markets engaged successfully with emerging therapeutic development programs in companies and support our partners as they move through the clinic towards commercial launch the therapeutic products. We remain confident in the value of these investments to our existing and potential partners and <unk>.

Customers.

As Rod will describe in more detail. We finished the third quarter, well funded and you need to have a strong balance sheet to support our expected growth.

In summary, we are pleased with our third quarter 2022 results and remain excited about the future, especially in the cell therapy market as we continue to execute on our financial and strategic goals and make investments to drive growth across the business in the long term.

I'll now turn the call over to Rod to discuss our financial results.

Thanks, Scott and Hello, everyone as Doug mentioned, we reported core revenue of $9 9 million in the third quarter compared to $8 1 million in 2021, representing 22% growth.

This includes revenue from cell therapy customers at $7 9 million, which grew 27% year over year, while revenue from drug discovery customers was $2 million up 4% year over year.

Growth in sales with the key driver of growth in cell therapy revenues for the quarter.

We recognized $8 million of SPL program related revenue in the third quarter of 2022 as compared to $2 million in the third quarter of 2021.

Remain on track with our forecast and milestone revenue of $4 million for the full year.

Moving down the P&L gross margin was 87% in the quarter versus 91% in the third quarter of the year. Prior margins are heavily influenced by the highly variable level of milestone revenues as well as the mix of products and customer types and we saw those effects this quarter.

Total operating expenses for the third quarter of 2022 were $17 million compared to $11 6 million in the third quarter of 2021.

Overall increase in operating expenses was primarily driven by increased staff and field sales field science and manufacturing as well as product development expenses and the increase also included growth in sales and marketing expenses stock based compensation and occupancy expenses compared with the same period a year ago.

Hi.

Furthermore, we have a healthy balance sheet with a combined total cash cash equivalents and short term investments of $233 million as of the end of the third quarter and no debt.

As communicated last quarter. Our uses of cash include investments in operating expenses and capital equipment.

Approximately $12 million and investments in our new headquarters this year.

Based on the growth year to date and our robust pipeline. We are reiterating our revenue outlook for 2022, we expect revenue from our core but approximately.

And compared to 2021 core business revenue.

And as we discussed previously the timing of SPL revenues is predicated on our customers clinical and regulatory progress and therefore is fundamentally more difficult to predict in quarter revenues, which we manage directly noting that we continue to expect SPL milestone revenue of approximately $4 million for 2022.

Lastly, we believe that our modest cash burn and debt free balance sheet will support our future plans for profitable growth. We expect to end this year with more than $220 million in cash cash equivalents and short term investments.

Now I'll turn it back over to Doug.

Thank you Ron in summary, we are encouraged by our third quarter achievements and remain optimistic about the opportunity to lead the industry forward as the Premier cell engineering platform technologies supporting the development of advanced cell based therapeutics for patients who may not otherwise have treatment options.

As always we want to take this opportunity to thank our team board suppliers investors partners and the amazing industry that we have the honor of serving.

Ladies and gentlemen at this time, we are starting to Q&A session. If you have a question or comment at this time. Please press star one one on your telephone keypad again, if you have a question or comment at this time. Please press.

Star one one on your telephone keypad, please standby, while we compile the Q&A roster.

Our first question or comment comes from the line of Julie Simmonds from.

Your line Alright.

Alright.

Your line is now open.

Yes, good evening, whatever time of day does that.

Sure.

Couple of questions Firstly on.

On the.

Collaborations that you're doing.

Clearly, it's a larger number than <unk>.

A growing number and you talked earlier about these stay today's collaboration some of them being yes.

Academic partners now you've always had a number.

Are you finding that there's an increase in that.

As youll products, the latest Ais products targeting closer to market is that encouraging people to use the technology and the right I'm just trying to get a feel for sort of the top part of the funnel.

Paul.

Thanks for the question.

<unk> from Panmure Gordon.

Sure.

Yes.

She is.

The pipeline is good.

Okay.

Two areas.

Really what it is.

So there are companies that are.

Late stage preclinical development.

We're also seeing an increase in the.

<unk> issued or allowed.

More.

More complex.

And we've been talking about.

Building.

Medical centers, which are also seeing some.

I'll stick to that as well.

So some recent work.

Had published by.

Number.

Investigators.

So.

Again, you see.

With the pipeline.

Sure.

Yes that is very good news and then just second question on the.

<unk>.

Is there a difference between a early access customer and somebody who has been beta testing it with Delta and then those early access customers are they helping you win the regulatory pathway for this because my understanding is that with the Vale because essentially youre using youre, creating trend in cell lines that sort of the.

Big change in manufacturing.

And then the regulators need to get the head round and is that what the early access partners, helping you bet.

So the early access partners are in fact.

We've been working with.

They are they are helping us understand more about regulatory.

Some of the opportunities we see.

They are helpful.

But we also have our own team.

Got it.

As soon as issues.

The guidance is around using single cell lines.

Cereals for clinical trials.

Is that video and so we are seeing some potential for recoveries.

Use translate produced material.

Sure.

There are three patients.

The changes were most of these vaccines are made.

So there is.

Yes.

Excellent. Thank you very much.

Sure.

Thank you. Our next question or comment comes from the line of Matt Larew from William Blair Mr.

Mr. <unk> Your line is open all.

Hi, This is actually model enrollment on for Matt Larry. Thanks, So much for taking my question.

You've emphasized how well capitalized you are and how minimal cash burn I was just wondering as you think about your capital allocation plans going forward. If there are any specific areas or adjacencies you were looking into looking to me. Thank you.

So I think.

Thanks for the question.

So I think we're interested in is we have a lot of opportunity as we go forward.

Customers and partners.

They want us to.

Products to all of this would be the answer.

Benches through our product line is one of them or we've also seen is the.

A number of new.

Disposables and revolver configurations.

Important for customers we have.

This program going on.

Downstream analytics and process analytics.

And also some of the pre and post merger integration process.

Sure.

Adoption of our technology.

But again I think it's important to note that.

Although we do have significant.

Now recently.

And the urgent need to be investing right now.

Your homework make sure we're finding those opportunities are there for physical occupancy.

Great. Thank you.

Yeah.

Thank you. Our next question or comment comes from the line of Dan Arias from Stifel. Mr. <unk>. Your line is now open.

Afternoon, guys. Thanks for the questions here, Doug did I hear you right.

Are you, saying that there will be additional Sps to be added this year, meaning that that number moves higher in the next six weeks here.

Yes.

Okay great.

And then just maybe.

On the installed base and the growth that you've seen there Doug Iran. Any chance you can maybe update us on just placement growth I think it was right around 25% last year, a 500 or so up from 400 or so how is the placement rate or the growth rate in placements this year tracking relative to last.

Years number if you'd be willing to speak to that.

Yes.

<unk> been healthy and we're pleased with the growth this year lower quarter full year number.

Yeah.

So.

Okay.

Sales.

Okay.

Right.

Okay.

Program.

Great.

End of the year.

Okay.

If I could stick one more in here, Doug interesting comment on the New company formation.

I'm just curious what youre hearing from these sort of.

De novo opportunities so to speak where they may not have a history with a viral approach or a non viral approach I mean, how is electric operation being viewed by these folks is there anything that's sort of standing out as you're learning about these new entities that are popping up I think.

And as a group.

What we see is.

Really novel exciting new approach.

Sure.

Great.

Let's do that.

Quite complex.

So when we announced.

Typically they're.

We really don't have an alternative.

Okay.

This was kind of a box or to help them.

All of our strategies.

Okay. Thank you very much guys.

Okay.

Thank you. Our next question or comment comes from the line of Max Masucci from Cowen Mr. <unk>. Your line is now open.

Okay.

First of all on yeah.

Just looking back on the Aerie consistently beat.

Revenue expectations.

NASDAQ IPO.

Clearly a testament, both operational execution and appropriate managing expectations. So just as we turn our sights to next year is there a reasonable or even potentially conservative.

Baseline growth rate for for your core business that we can anchor our 2023 numbers two or should we stay tuned.

Yes.

I think the right answer is stay tuned.

Okay.

Our Q4 and finishing out the year.

Detail on your planning.

For next year.

In the quarter, when we announced.

Thanks.

As a result.

Okay.

Got it.

Next next question just.

Again, reflecting on 2022.

It'd be great to hear whether your expectations around <unk>.

<unk> 2023, SPL pre commercial milestone revenue opportunity I guess that's evolved throughout 2022.

And then any additional color just to help.

Our modeling.

Program revenues year over year.

Let's talk quantitatively.

Okay.

It's pretty straightforward.

Al.

They come to us and they're great.

Great great.

Thanks, Eric.

Okay.

The milestone.

So.

Moving from where we started this year.

Et cetera.

Yeah.

Yes.

Potential.

Set of milestones.

Good morning.

There is also we're also seeing some progress.

Some of our partners.

<unk>.

Oh should progress.

So the programs.

As we've discussed.

Milestones.

Sure.

But.

That's great.

I appreciate it.

The graphic on slide 12.

So final question.

Core business is performing exceptionally well.

Our view the downstream revenue opportunities we're seeing.

A ton of credit.

Wanted to ask.

The rise in interest rates this year.

Have you sort of attempted to recalibrate the weighted average NPV estimate current SPL customer.

But we haven't really done that analysis.

Our weighted average cost of capital is.

Dan.

Yeah.

Got to spend a lot of time.

Sure.

Calibrating that aligned with IHS.

Yeah.

Okay got it thanks a lot.

Thank you again, ladies and gentlemen, if you have a question or comment at this time. Please press star one one on your telephone keypad. Our next question or comment comes from the line of Jacob Johnson from Stephens. Mr. Johnson. Your line is now open.

Hi, its Hannah on for Jacob Good afternoon. Thanks for taking my question.

Alex do you have any updated thoughts on the business model here will this be a product sale or lease to customers and what are the key applications that you're initially focused on correct me Alex.

So the initial application will be for medical and automotive production.

And Thats precisely what our early adopters.

And.

In terms of business model Thats evolving as one of the reasons why we work so closely with these companies.

I would agree.

I think we've discussed.

Some real real benefits that we provide to these.

The whole process will be.

Looking to reduce.

The timelines versus improvement in Florida.

Even more valuable with occur financial situations.

As companies.

Technology that needs to be broadly comparable number of difference.

Input and output workflow.

Great.

Sure also is flexible and so all those things are components of how we will determine the value that we bring to the market.

We'll do our best.

To ensure that we gave as much value.

Appropriate.

LNG.

But we haven't.

In terms of what exactly.

Thank you.

Thanks, I'll leave it there.

Thank you.

Our next question or comment comes from the line of Mark Massaro from BTG. Mr. Massaro. Your line is now open.

Hey, guys. This is maybe an on for Mark Thanks for taking our question.

Yes, Brian .

The updated view on the addressable market.

In the past you've highlighted potential first in class FBL.

So just wanted to get your thoughts there considering the launch of the CLS Wow.

Really opening up some more accurate.

So the vehicle.

As far as the initial application focus will be.

Proceeds in production.

On the drug discovery side of our business.

Got it.

So every part of our business so to speak.

Fair enough.

Is that a number that we came out with the IPO.

More than two.

It is fair to say that we believe that number has gone up.

There's more to that.

We're really not reported yet.

Only to say qualitatively.

Larger than it was.

Okay. Thanks for the clarification.

Just a quick housekeeping question. So can you just remind us.

We're overall head count.

I think in Q2 Youre actively investing.

And as far as the move to that New headquarters I know you also cited.

A potential benefit from in house manufacturing.

Just curious how that's progressing.

And then your contribution to gross margins there.

Yes.

We're above a 108.

Brands.

Yes.

Okay.

Right.

Okay.

<unk>.

Sure.

Zero.

All of his future.

Yes.

As far as future demand.

Critical to our ability.

Yes.

Towards the customers.

Okay.

The primary reason.

Because automation is critical.

Okay.

Correct.

Linda.

Ancillary benefit.

FERC.

Automation.

Good morning.

Yeah.

Okay.

Right.

We'll run through the process that you would expect anywhere.

Turning operation margins.

Profit.

Additionally.

Right.

Sure.

Our.

As we build up our capabilities in Germany.

Yes.

Kramer.

Okay.

On the margin side.

Eric.

Yeah.

Okay.

Good morning.

Sure.

Got it thanks for taking the question.

Thank you. Thank you I'm showing no additional questions in the queue. At this time I would like to turn the conference back over to Mr. Doug <unk> for any closing remarks.

Thank you and thank you all for your interest and are excited to continue to support its truly an honor to be part of our important.

Exciting therapeutic modalities, we're developing partners.

We look forward to answering your questions.

This presentation.

Investors during the day.

So thank you again for.

Excellent. Thank you very much.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program you may now disconnect everyone have a wonderful day.

Goodbye.

Yeah.

[music].

Okay.

[music].

Okay.

Thanks.

[music].

Sure.

Okay.

Yes.

[music].

Yes.

Okay.

Hum.

[music].

Yes.

Okay.

[music].

Yes.

Okay.

[music].

Yes.

[music] okay.

Thank you.

Okay.

[music].

Okay.

[music].

Okay.

Yes.

Okay.

Sure.

[music].

Yes.

[music].

Thank you.

Yes.

[music].

Yes.

Okay.

Sure.

Yes.

Okay.

[music].

Yes.

Okay.

Yes.

Okay.

Thank you.

Okay.

Yes.

[music].

Yes.

[music].

Yes.

Okay.

Yes.

Thanks.

Okay.

[music].

Okay.

Sure.

[music].

Okay.

[music].

Okay.

[music].

Yes.

Sure.

[music].

Okay.

[music].

Yes.

[music].

Okay.

Yes.

Sure.

Okay.

[music].

Great.

Yes.

Okay.

Yes.

Okay.

[music].

Sure.

Yes.

Thanks.

Okay.

Yes.

Okay.

Yes.

Okay.

Sure.

Yes.

Sure.

Okay.

Yes.

Thanks.

Thank you.

Okay.

Yes.

Okay.

Thanks.

Okay.

Thanks.

Okay.

Yes.

Okay.

Thank you.

Yes.

Okay.

Yes.

Okay.

Sure.

Thank you.

Yes.

Okay.

Yes.

Okay.

Sure.

Yes.

Okay.

[music].

Okay.

[music].

Thank you.

Okay.

Yes.

Okay.

Right.

Okay.

[music].

Okay.

Thank you.

Okay.

[music].

Okay.

Yes.

Okay.

Yes.

Okay.

Yes.

[music].

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

[music].

Yes.

[music].

Sure.

Okay.

Sure.

Okay.

Yes.

Okay.

Yes.

Thanks.

[music].

Okay.

Yes.

Okay.

Yes.

Sure.

Okay.

Sure.

[music].

Sure.

Okay.

[music].

Okay.

Yes.

Okay.

Thanks.

[music].

Hum.

Okay.

Yes.

Thank you.

Okay.

Yes.

Okay.

Thank you.

Okay.

Yes.

Thank you.

Yes.

Okay.

Thank you.

Yes.

Thank you.

[music].

Okay.

Yes.

Okay.

Sure.

[music].

Sure.

Yes.

[music].

Yes.

[music].

Okay.

[music].

Yes.

Okay.

[music].

Yes.

Okay.

Yes.

[music].

Yes.

Sure.

Okay.

[music].

Okay.

Tom.

[music].

Okay.

Yes.

Sure.

Okay.

Yes.

[music].

Yes.

[music].

Good day, ladies and gentlemen, and thank you for standing by welcome to the Mack sites third 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 keypad at this.

Tom I would like to turn the conference over to Mr. Sean <unk> director of Investor.

Investor Relations Sir please begin.

Good afternoon, everyone. My name is <unk> and I'm, the director of Investor Relations here at Max site. Thank you all for participating in today's conference call on the call for Maxx site, we are Doug <unk>, President and Chief Executive Officer, and Ron <unk> interim Chief Financial Officer.

Earlier today <unk> released financial results for the third quarter ended September 32022, a copy of the press release is available on the company's website.

Before we begin I need to read the following statements statements or comments made during this call may be forward looking statements within the meaning of federal securities laws.

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 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 undertakes no obligation to publicly update any forward looking statements, whether because of new information future events or otherwise and with that I'll turn the call over to Doug.

Well, thank you Sean and good afternoon, everyone and thank you for joining <unk> third quarter earnings call.

I will begin with a discussion of our business with operational highlights during the quarter followed by a detailed financial review for broad we will then open the call for questions.

I am very pleased with our third quarter result.

As our team continues to deliver on the company's financial and strategic objectives.

<unk> platform continues to be the premier So engineering technology for the industry, enabling the development of a growing set of advanced cell based therapeutics.

Throughout this year, we have invested in our people and capabilities as we seek to take advantage of the growing end markets.

Our customers and partners growth.

And investment in the cell and gene therapy market remains significant.

In the third quarter for cell and gene therapy, we saw an increase in dealmaking hit our industry, both financing and partnerships compared to the previous quarter more specifically in our markets. We are seeing exciting private investments and new company formation focused on novel cell types and complex next generation approaches.

Ron will provide more details later in the call, but I want to highlight that we generated very strong third quarter 42 results in our core business with those revenues up 22% year over year. As a reminder, we'll be referred to our core business, we are including sales and leases of instruments and sales of disposables to sell.

Therapy or drug discovery customers the year over year increase in core business revenue was led by an increase of 27% and revenue from cell therapy customers, while revenue from drug discovery customers increased 4% or.

Our global customer base has expanded across all stages of development and we're particularly encouraged by our traction with sell through or.

Cell therapy customers that early development stages, including leading academic clinical translational centers.

Although I'd note that due to the confidentiality of our partnership agreements, we are not able to answer specific questions related to SPL partners, the clinical progress for their respective development programs.

In the third quarter, we announced a <unk>.

Our partnership with vertex pharmaceutical a global biotechnology company that invests in scientific innovation to create transformative medicines for patients with serious diseases. You should note that this agreement does not support programs new to Mac site, because it is a transfer to the vertex our programs previously under.

The CRISPR <unk> partnership.

FPL originally signed in 2017 included the rights to use <unk> technology support gene edited cell therapy, Xsl, formerly known as <unk> for hemoglobin apathy.

All key elements of the CRISPR <unk> CB agreement transferred to vertex, including the financial arrangements.

Our total number of strategic platform partnerships now stands at 17, and we are optimistic regarding the potential to add additional SPL partnerships. This year at a comparable.

Economic prior partnerships given the strength of our SPL partnership pipeline discussed earlier, we are confident in our ability to continue to add new partners as we look forward to 2023 and beyond.

That's great expert platform is a coordinating technology and our partners therapeutic development strategies, our partners are well funded and leaders in the cell therapy industry developing a wide ranging set of innovative gene editing and cell engineering approaches.

A key element of our strategy in 2022 has been the ongoing investments, we're making to support our customers and partners success as well as Max sites future success and financial growth.

These investments include growing our commercial teams.

Spanning in house manufacturing.

Enhancing our process development capabilities as well as ongoing product development and reinforcing our business infrastructure at.

Additionally, we continue to make investments in our application laboratories and teams to support our success in the rapidly growing next generation cell therapies market.

As the field expands across broader indications and into novel cell types.

In September we officially completed our move into our new headquarter facilities in Rockville, Maryland.

New facility is a major milestone in our growth.

Critically this facility dramatically increases our instrument.

Manufacturing capacity to support our customers as they move from research and clinical scale to commercial therapeutic scale.

In September we formally launched our expert <unk> large scale transfection system at the Bioprocess International Conference in Boston.

<unk> system expands the Max rate expert I'd like to operational platform to offer greater scale for development and manufacturer across a broad range of applications such as transient protein manufacturer.

X system opens up a new market opportunity for that site, which supports our confidence in our long term revenue growth participants of the bio processing market often take a conservative approach to the new process adoption and as a result, we are initially focused on early access customers.

The appeal of our existing customers about current smaller scale platform as we work to build the capabilities and reputation in this market that have allowed us to capture the value of our technology in other markets.

Customers as.

As Rod will describe in more detail. We finished the third quarter, well funded and you need to have a strong balance sheet to support our expected growth.

In summary, we are pleased with our third quarter 2022 results I remain excited about the future, especially in the cell therapy market as we continue to execute on our financial and strategic goals and make investments to drive growth across the business in the long term.

I'll now turn the call over to Rod to discuss our financial results.

Thanks, Scott and Hello, everyone as Doug mentioned, we reported core revenue of $9 9 million in the third quarter compared to $8 1 million in 2021, representing 22% growth.

This includes revenue from cell therapy customers of $7 9 million, which grew 27% year over year, while revenue from drug discovery customers was $2 million up 4% year over year.

Growth in sales with the key driver of growth in cell therapy revenues for the quarter.

We recognized $8 million of SPL program related revenue in the third quarter of 2022 as compared to $2 million in the third quarter of 2021, we remain on track with our forecasted milestone revenue of $4 million for the full year.

Total operating expenses for the third quarter of 2022 were $17 million compared to 11 6 million in the third quarter of 2021.

The overall increase in operating expenses was primarily driven by increased staff and field sales field science and manufacturing as well as product development expenses and the increase also included growth in sales and marketing expenses stock based compensation and occupancy expenses compared with the same period.

A year ago.

Furthermore, we have a healthy balance sheet with a combined total cash cash equivalents and short term investments of $233 million as at the end of the third quarter and no debt.

As communicated last quarter. Our uses of cash include investments in operating expenses and capital equipment, plus approximately $12 million and investments in our new headquarters this year.

Based on the growth year to date and our robust pipeline. We are reiterating our revenue outlook for 2022, we expect revenue from our core business of approximately.

And compared to 2021 core business revenue.

And as we discussed previously the timing of SPL revenues is predicated on our customers clinical and regulatory progress and therefore is fundamentally more difficult to predict and core revenues, which we manage directly noting that we continue to expect SPL milestone revenue of approximately $4 million for 2022.

Lastly, we believe that our modest cash burn a debt free balance sheet will support our future plans for profitable growth. We expect to end this year with more than $220 million in cash cash equivalents and short term investments.

Now I'll turn it back over to Doug.

Thank you Ron in summary, we are encouraged by our third quarter achievements and remain optimistic about the opportunity to lead the industry forward as the Premier cell engineering platform technology supporting the development of advanced cell based therapeutics for patients who may not otherwise have treatment options.

As always we want to take this opportunity to thank our team board suppliers investors partners and the amazing industry that we have the honor of survey.

Ladies and gentlemen at this time, we'll start the Q&A session. If you have a question or comment at this time. Please press star one one on your telephone keypad again, if you have a question or comment at this time please.

Press Star one one on your telephone keypad. Please standby, while we compile the Q&A roster.

Our first question or comment comes from the line of Julie Simmonds from.

Tom Your line Sir your.

Your line is now open.

Yes, good evening whatever type of data.

Sure.

Couple of questions Firstly on.

On the <unk>.

Collaborations that you're doing.

Clearly, it's a larger number than <unk>.

Growing number and you talked earlier about the stages collaboration some of them being.

With academic partners now you've always had a number.

Are you finding that there's an increase in that.

As Youll products. The latest today's protocol getting closer to market is that encouraging people to use the technology and I will be around H I'm, just trying to get a feel for sort of the top part of the funnel versus the Bulks and Paul.

Paul.

Okay.

Thanks, Thanks for the question.

Julie's from Panmure Gordon.

Sure.

Yes, I think what we're seeing is.

The pipeline is building.

Two areas.

It's really one is.

So companies that are.

Late stage preclinical development.

We're also seeing an increase.

<unk> issued or around.

More.

More complex cell therapy.

We've been talking about.

Building out these translational centers, but youre also seeing so.

I'm thinking of that as well.

Recent.

Our recent work that.

We had published by <unk>.

Number.

Investigators.

So.

Again, you see.

Growth in the pipeline.

Across.

So this is very hard for us.

Yes that is very good news and then just second question on the <unk>.

Is there a difference between a early access customer and somebody who has been beta testing it with Delta and then those early access customers are they helping you with sort of the regulatory cost right. Because my understanding is that with the VA, Alex because essentially youre using youre, creating trendy in cell lines that sort of the.

Big change in manufacturing that both the customer and the regulators need to get the hedge round and is that what the early access partners are helping us.

So the early access partners are in fact, we've been working with.

They are helping us understand more about regulatory challenges.

The opportunities we see so they are helpful.

We also have our own team.

Trying to understand those issues as well.

The guidance is around using stable cell lines for the production.

Materials for clinical trials.

And so we are seeing some potential for recoveries.

Use translate produce material.

Sure.

And for patients.

Most of the <unk>.

Yes.

Are these themes related to transient and so there is.

Excellent. Thank you very much.

Sure.

Thank you.

Next question or comment comes from the line of Matt Larew from William Blair.

Mr. <unk> Your line is open all.

Hi, This is actually Madeleine moment on for Matt Larry. Thanks, So much for taking my question.

You've emphasized how well capitalized you are and how minimal cash burn I was just wondering as you think about your capital allocation plans going forward is there any specific areas or Adjacencies you were looking into looking into thank you.

So I think thanks for the question.

So I think what we're interested in is we have a lot of opportunity as a result of our customers and partners about areas they want us.

Products through all of this would be accurate.

This is through our product line.

Alex is one of them.

The number of new.

Those balls and revolver configurations.

Both are important for customers.

We have an active program going on will be good.

Downstream analytics and process analytics.

And also some of the pre and post election process.

Good.

Adoption.

Yes.

But again I think it's important to note.

Although we do have.

You may begin.

No.

Don't view of that recovery.

And the urgent need to be right now.

Our work make sure refining those opportunities that are perfect fits.

Yeah.

Great. Thank you.

Thank you. Our next question or comment comes from the line of Dan Arias from Stifel. Mr. <unk>. Your line is now open.

Afternoon, guys. Thanks for the questions here, Doug did I hear you right and you're saying that there will be additional SPL to be added this year, meaning that that number moves higher in the next six weeks here.

Yes.

Okay great.

And then just maybe.

The installed base and the growth that you've seen there Doug Ron any chance you can maybe update us on just placement growth I think it was right around 25% last year 500, or so up from 400 or so how is the placement rate or the growth rate in placements this year tracking relative to that.

Last year's number if you'd be willing to speak to that.

Yes.

In healthy and we're seeing good growth. This year will report a full year number.

Yes.

Right.

Thank you.

Ill.

Lisa.

Great.

Okay.

Eric.

Okay.

Thanks, Greg.

Okay.

End of the year.

Okay.

If I could stick one more in here, Doug interesting comment on the New company formation.

I'm just curious what youre hearing from these sort of.

De novo opportunities so to speak where they may not have a history with a viral approach or a <unk>.

Non viral approach I mean, how is electroporation being viewed by these folks is there anything thats sort of standing out as you're learning about these new entities that are popping up.

Dan It's a great question I think what we're seeing is.

Really exciting.

Exciting new approaches to companies.

Yes.

Regulated networks in certain pathways to do that.

When it complex.

We will now.

Yes.

We really don't have alternative.

Yes.

Kind of a box.

That helps.

But all of them.

The strategies.

Okay. Thank you very much guys.

Okay.

Thank you. Our next question or comment comes from the line of Max Masucci from Cowen Mr. Masucci. Your line is now open.

Okay.

First one just looking back on the Aerie consistently beat.

Revenue expectation.

Does that IPO, yes.

Clearly a testament, both operational execution and appropriate managing those expectations. So just as we turn our sights to next year is there a reasonable or even potentially conservative baseline growth rate for for your core business that we can anchor.

Our 2023 numbers, two or should we stay tuned.

Okay.

I think the right answer is stay tuned.

Okay.

Q4, and finishing out the year.

E Mail on your planning for next year.

Some quarter, we announce.

Okay.

Results.

Okay.

Got it.

Next next question just.

Again, reflecting on 2022, it would be great to hear whether your expectations around <unk>.

<unk> 2023, SPL pre commercial milestone revenue opportunity I guess that's evolved throughout 2022.

And then any additional color just to help.

Our modeling.

Program revenues year over year.

We'll talk quantitatively.

Thank you.

Yes.

It's pretty straightforward.

Al.

They come to us and they're great great progress.

Eric.

Yes.

The milestone.

Makes sense.

Yes.

Okay.

Great.

Okay.

Yes.

Sure.

Yes.

Potential.

Our second milestone.

Yes.

Great.

Yes.

There's also we're also seeing some progress with.

Some of our partners.

<unk>.

Obviously progress.

Sure.

Yes.

As we've discussed.

Those tend to be larger.

Sure.

But.

That's great.

Sure.

Graphic on slide 12.

So final question.

Core business is performing exceptionally well.

In our view the downstream revenue opportunity at scale.

Seeming a ton of credit so just wanted to ask with the rise in interest rates this year.

Have you sort of attempted to recalibrate the weighted average NPV estimate for SPL customer.

Okay.

We haven't really done that analysis.

Weighted average cost of capital is.

Yes.

I agree with Dan.

Yes.

Yeah.

Got it.

Hi.

We are calibrating that align with that strategy.

Okay got it thanks a lot.

Hi, it's Anna on for Jacob Good afternoon. Thanks for taking my question on <unk> do you have any updated thoughts on the business model here will this be a product sale or lease to customers.

And what are the key applications that Youre initially focused on Kirby Alex.

So the initial application will be for medical and automotive production.

And Thats precisely what our early adopters.

With us.

In terms of business model that is one of the reasons why we work so closely with these companies to understand.

Really great.

I think we've discussed.

There is some real real benefits that we provide.

Whole process will be.

We're looking to reduce.

So the timelines, which is critically important.

Even more valuable with occurred financial situations.

These companies.

The technology that needs to be broadly comparable number of difference.

Input and output workflow.

Integrated.

You should also expect so all those things.

We will determine the value that we bring to drop through the <unk>.

Yes.

Sure.

To ensure that we gave.

The appropriate technology.

But we haven't been public.

In terms of what the exact model.

Thank you.

Thanks, I'll leave it there.

Thank you.

Our next question or comment comes from the line of.

Mark Massaro from BTG Mr. Massaro. Your line is now open.

Hey, guys. This is <unk> on for Mark Thanks for taking our question.

Yes, Brian .

Any updated views on the addressable market.

The cross you've highlighted potential first in class FBL.

So just wanted to get your thoughts there considering the launch of the BLA as well.

Essentially opening up.

Thanks.

So the deal.

As far as the initial application focus will be.

Protein production.

On the drug discovery side of our business dominant.

Ali.

So every part of the business so we feel about that.

Is that number that we came out with.

More than 50.

To say that we got in the first.

First on that.

More than that.

A recording.

For the future, but only to say qualitatively.

Larger than it was.

Okay. Thanks for the clarification.

So just a quick housekeeping question. So can you just remind us.

We're overall head count.

Q2, Youre actively investing.

As far as the move to that New headquarters I know you also cited.

A potential benefit from in house manufacturing.

Or just curious how that's progressing.

And any contribution to gross margin there.

Yes.

We're about 100 days and on the brand.

Yes.

Okay.

Yes.

Right.

Okay.

We'll.

Thank you.

Okay.

To support future.

Yes.

Alright.

Demand is critical.

Critical.

Our ability.

Correct.

Yes.

Okay.

The primary reason.

Sure.

Yes.

Is critical.

Okay.

Dan.

Ancillary benefit.

Okay.

Automation.

Hello.

Yeah.

Okay.

We'll run through the process that you would expect.

Anyone.

Operation margin.

Alright.

Initially.

Right.

Sure.

R R.

As we build up our capabilities in Germany.

Sure.

Kramer.

Yes.

Marty.

Eric.

Okay.

Good morning.

Sure.

Got it thanks for taking the question.

Thank you. Thank you I'm showing no additional questions in the queue. At this time I would like to turn the conference back over to Mr. Doug <unk> for any closing remarks.

Thank you and thank you all for your interest in that side of your continued support of truly an honor to be part of our important exciting therapeutic modalities, we're developing partners.

We look forward to answering your questions.

After this presentation.

Investors during the day.

So thank you again for <unk>.

Thank you very much.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program you may now disconnect everyone have a wonderful day.

Goodbye.

Q3 2022 MaxCyte Inc Earnings Call

Request a DemoDemo

MXCT

MaxCyte

Earnings