Q4 2024 MaxCyte Inc Earnings Call
Speaker Change: Thank you for standing by and welcome to MaxCyte's fourth quarter earnings conference call. At this time, all participants aren't always in only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. If your question has been answered, and you'd like to remove yourself from the queue, simply press star 1-1 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Erik Abdow. Thank you very much. Thank you very much.
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 I T SEC filings.
Speaker Change: Except as required by applicable law.
Speaker Change: The company has no obligation to publicly update any forward looking statements, whether because of new information future events or otherwise.
Speaker Change: And the Guy I will turn the call over to him or her.
Thank you Eric Good afternoon, everyone and thank you for joining <unk> fourth quarter and full year 2024 earnings call.
Speaker Change: 2024 has been a strong year for Mac site.
Speaker Change: Led by a return to core revenue growth strategic improvements to our team and operations and to support Castro, who has launched the first approved non viral cell therapy with our premier electroporation platform.
Speaker Change: Throughout the year, our team has worked diligently to assess ways in which the company can continually improve.
Speaker Change: We evaluated and implemented new strategic initiatives and process improvements with streamlined organization by increasing capital and operational efficiency.
Speaker Change: We invested prudently with an organic areas of the company that we believe promised the best return and will contribute to long term growth, while reducing spend and redundant or non core areas.
Speaker Change: We also announced the acquisition of secure Dx early this year, which I'm incredibly excited about and we will touch upon in a moment.
Speaker Change: Overall, I believe that the thoughtful and strategic changes at Max eight throughout 2024 enabled us to grow core revenue in a difficult environment and position us well for 2025.
Speaker Change: Now, let's start by discussing our recent acquisition of secure Dx.
Speaker Change: When we look at the evolving cell and gene therapy field safety is becoming increasingly paramount the therapies, which is exactly where security experts.
Speaker Change: <unk> exited services platform that provides a safety assessment of cell and gene therapy development early in the discovery process.
Speaker Change: With secured Dx now integrated to Mac site, we can offer our customers a comprehensive suite of assays that provide mohan and on target gene, adding assessments that are applicable across a variety of viral and non viral gene editing modalities.
Speaker Change: Our three assays screening nomination and confirmation for each utilize a different stages in development for both ex vivo and in vivo therapies, beginning into discovery stage and through preclinical development and IND, enabling studies.
Speaker Change: Not only does our target, adding profiling of programs improved the safety profile therapies that would also decrease is tied to clinic unexpected costs and potential delays.
Speaker Change: The increase in likelihood a program success.
Speaker Change: We see significant opportunities with secured Dx in our portfolio as Matt If I can now support both ex vivo in vivo cell and gene therapy developers.
Speaker Change: The acquisition has immediate cross selling opportunities with <unk> now able to work with customers earlier in discovery and able to offer security services to maximize existing customers as well.
Speaker Change: We are already seeing the benefits of adding secured dx to our product portfolio and have had great success integrating their team into Max site.
Speaker Change: We believe this acquisition is an important step forward in positioning <unk> to become a premier end to end cell and gene engineering platform with the ability to provide a range of offerings and services throughout the entirety of development.
Speaker Change: Turning to our results <unk> reported $38 6 million of total revenue for full year 2024, which included core business revenue was $32 $5 million at the high end of our pre announced range provided in January.
Speaker Change: We were pleased with our team's commercial execution over the course of the year, there is stable, but challenging environment.
Speaker Change: We grew our instrument installed base is 760 compared to an installed base of 683 at the end of 2023 <unk>.
Speaker Change: Instrument revenue for the year was $7 1 million, which was impacted by continuation of customer caution on capital expenditure.
Speaker Change: Though the operating environment remains challenging for our customers. We saw stability through 2024 and have seen some areas of improvement, including VA sales, which we reported very healthy revenue growth of 36% compared to 2023.
Speaker Change: As we head into 2025, we remain cautiously optimistic that the funding environment for our customers will improve in 2025 overall.
Speaker Change: Overall, we continue to be impressed by the evolution of our cell therapy towards new adding technologies and new indications.
Speaker Change: And believe <unk> is extremely well positioned within the industry.
Speaker Change: Customers continue to see the value of <unk> offerings, leading to an expansion of our scale portfolio at a record rate in 2024 with six new SPL signed throughout the year.
Speaker Change: As of the end of 2024, we had a total of 28 active STL customers, which includes 18 active clinical programs and one commercial program.
Speaker Change: Previously we had discussed the total pre commercial milestone potential across our SPL agreements as being greater than $2 billion.
Speaker Change: As this metric includes both existing SQL programs currently in clinical development and future SPL programs are encompassed in our SPL agreements. We thought it would be very helpful to provide a new metric on the potential value creation from the existing active SPL programs currently in development under our scale agreements.
Speaker Change: Of the 18 active clinical programs under our STL agreements. The total pre commercial milestone potential is greater than $220 million, including about $10 million of milestone revenue that has already been received.
Speaker Change: These 18 programs have cleared IND or equivalent and range from phase one trials to programs entering pivotal trial. This year we.
Speaker Change: We see tremendous value potential from these programs over time.
Speaker Change: To further highlight the tremendous potential of our portfolio at the time of our IPO in late 2021, where we're enabling 12 active clinical programs and now with 18 active poker programs. This represents a 50% growth in the number of active clinical programs, we enable while the overall market for non viral clinical programs.
Speaker Change: 95% during the same time period.
Speaker Change: We are continuing to strengthen our SPL portfolio. We recently signed our first Spi 2025, TG Therapeutics in February.
Entered into an agreement with precision biosciences to acquire or license to as yourself.
Speaker Change: Following the addition of <unk>, we now have 29 active SPL customers.
Speaker Change: TG therapeutics as a commercial biopharmaceutical company focused on novel treatments for B cell diseases and is currently advancing towards a phase one clinical trial for <unk> cel and progressive forms of Ms.
Speaker Change: <unk> pipeline is very healthy as we enter 2025, and we believe we will continue to sign new spl's at our historical rate of three to five new agreements this year.
Speaker Change: The opportunity in the cell and gene therapy industry continues to grow with supports Max sites opportunity to expand its SPL portfolio.
Speaker Change: We believe there are approximately 201 cell and gene therapy biotechnology companies as of the end of 2024 of which there exists approximately 83, non viral cell and gene therapy, biotechs that Max eights potential design and SPL width.
Speaker Change: This SP opportunity has grown over 50% since the time of our IPO and signifies a tremendous potential for non viral cell therapies to help patients we have capitalized on the growing SP opportunity at the time of our IPO by more than doubling our ESCO portfolio over this period.
Speaker Change: We finished the year with approximately $6 1 million an SPL program related revenue ahead of our initial guidance provided a year ago.
Speaker Change: Several programs whereby Max ice platform progressed through the clinic in 2024 and achieved new milestones.
Speaker Change: A small amount of ESCO program led revenue in 2020 for it with some commercial royalty revenue related to cash Debbie following completion of patient dosing.
Speaker Change: We remain excited about opportunity of cash <unk> strongly believe in its potential to benefit patients around the world.
Speaker Change: <unk> fourth quarter earnings call in February the company reported that there are now approximately 50 patients who have completed cell collection.
Speaker Change: Up from approximately 30 patients noted under third quarter earnings call.
Speaker Change: We are pleased by the continued momentum in cash IV and expansion of access globally to highlight <unk> secured regulatory approvals in Bahrain Kingdom of Saudi Arabia, and the United Arab Emirates and indicate that we also secured a reimbursement agreement with NHS, England, resulting in access to cash JV in England for eligible in sickle cell disease.
Speaker Change: In beta thalassemia patients. Additionally, the cell and gene therapy access model was highlighted by vertex as a mechanism for states to voluntary participate in CMS negotiate agreements for Medicaid patients. We believe that this model has the potential to expand patient access to cell and gene therapies overtime, which we view as a positive for patients cash.
Speaker Change: And future therapies enabled by Maxon.
Speaker Change: Our teams worked diligently to provide regulatory scientific and technical support to our customers as they progress through the clinic.
Speaker Change: We have become increasingly excited by the potential for multiple therapies come to market beginning next year and beyond.
Speaker Change: In 2027, and 2028, we see an opportunity for a potential approved programs for lymphoma leukemia, sickle cell disease and genetic disease indications as we approach 2029% to 2031. We believe there is potential for additional 12 approved programs with indication expansion to solid tumors multiple myeloma.
Speaker Change: Auto immune diseases.
Speaker Change: And our fourth wave of potential approvals in 2030 and beyond we see potential for approvals within neuro degenerative disease indications as well.
Speaker Change: Opportunity for approved therapies within our current <unk> portfolio is vast and growing as we continue to add new SPL customers in.
Speaker Change: In summary, we are pleased with our 2024 results driven by the execution of our global sales team are differentiate technology and customer support and our process improvements across the organization, we increased our operational focus while making strategic investments in areas of high growth, resulting in a year end cash position that exceeded our initial guidance.
Speaker Change: We look forward to continuing this momentum in 2025 and truly believe that our value proposition remains highly differentiated into durable relationships with current and prospective clients.
Speaker Change: Our investment strategy remains unchanged and that we continue to focus on the organic and inorganic investments that offer the best outcomes for our customers and for Mac side, while preserving a healthy balance sheet.
Speaker Change: We are investing in the development of additional capabilities and products that our customers will need in the future while simultaneously and carefully evaluating inorganic opportunities that we believe would benefit Max site, we are committed to being diligent and disciplined in our approach to make decisions that position Mac site to become the premier comprehensive enabler of cell and gene therapies within the industry.
Speaker Change: With that I'll now turn the call over to Dr. <unk> to discuss our financial results Doug.
Doug: Thank you Mark here total revenue for the full year was $38 6 million compared to $41 3 million in 2023, representing a 6% decline.
Doug: Total revenue in the fourth quarter of 2024 was $8 7 million compared to $15 $7 million in the fourth quarter of 2023, representing a 45% decline total revenue declined due to multiple approval milestones received and recognized in the fourth quarter of 2023.
Doug: In the fourth quarter of 2024, we reported core revenue of $8 6 million compared to $7 2 million in the comparable prior year quarter, representing an increase of 20%.
Doug: Within core revenue instrument revenue was $1 6 million compared to $2 $3 million in the fourth quarter of 2023 license revenue was $2 6 million compared to $2 4 million in the fourth quarter of 2023 and processing Assembly or <unk> revenue was $4 2 million compared to $2 2 million in the fourth quarter of 2023.
As I have discussed earlier, our instrument revenue was impacted by difficult operating environment in 2024, which led to customer caution around capital equipment purchasing.
Doug: We were pleased with our strong revenue along with stable revenue from licenses, which we believe demonstrates the strength and our revenue from clinical stage SPL customers.
Doug: For the full year of 2024, we reported core revenue of $32 5 million compared to $29 8 million in 2023, representing an increase of 9%.
Doug: Within our core revenue instrument revenue was $7 1 million compared to $8 3 million in 2023 license revenue totaled $10 3 million compared to $10 3 million in 2023, MPA revenue totaled $14 million compared to $10 3 million in 2023.
Doug: Of note, 55% of our core business revenue was derived from SPL customers in 2024, which compares to 48% in 2023, we believe that the percentage of core business revenue from Sps will remain at a healthy level of year over year increase can be attributed to more customers entering the clinic and continued <unk>.
Doug: Execution on signing new SPL agreements.
Doug: We recognized <unk> 1 million of SPL program related revenue in the fourth quarter of 2024 compared to $8 5 million in the fourth quarter of 2023.
Doug: The full year, we recognized $6 1 million an SPL program later revenue as compared to $11 5 million in 2023, well ahead of our initial guidance provided early last year.
Doug: <unk> program later revenue includes a small amount of revenue from cash heavy in the second half of the year.
Doug: Before I continue down the P&L I would like to point out that we will no longer be disclosing core revenue by cell therapy, and drug discovery, but rather focusing on instruments licenses and other revenue as the components of our core revenue disclosure internally, we focus on these components of revenue across customers and forecast crack and understand our business performance.
Doug: And as updated level of disclosure is more closely aligned with how we think about the planning of our business moving.
Doug: Moving down the P&L gross margin was 74% in the fourth quarter of 2024 compared to 90% in the fourth quarter of the prior year, excluding inventory provisions and STL program related revenue non-GAAP adjusted gross margin was 84% in the fourth quarter of 2024 compared to non-GAAP adjusted gross margin of 86% in the fourth.
Doug: Quarter of 2023.
Doug: Total operating expenses for the fourth quarter of 2024, or $19 3 million compared to $22 2 million in the fourth quarter of 2023. The overall decrease in operating expenses was primarily driven by operational changes made in 2024 as coherent discussed the company plans to continue to make targeted and disciplined investment.
Doug: To drive long term growth, which include investments in new products and product enhancements for our customers our commercial sales team and investments to scale secured yes.
We ended 2024 with combined total cash and cash equivalents and investments of $190 3 million and no debt.
Doug: Turning to our initial 2020 guidance, we expect core revenue growth up 8% to 15% compared to 2024 inclusive of revenue from secured Dx, which we expect to be at least $2 million for the full year.
Doug: We are not assuming any change in the current macroeconomic environment experienced by our customers within our guidance. We continue to remain in close discussions with our customers and how that might change throughout the year <unk> navigated well through the continuation of a difficult operating environment in 2024, and we are very confident in our ability to commercially.
Doug: Execute on our outlook for 2025.
Doug: SPL program related revenue is expected to be approximately $5 million in 2025, which includes both the expected revenue from pre commercial milestone payments and commercial royalties and sales based payments, we will not breakout the components of SPL program related revenue due to confidentiality agreements with our customers. Additionally.
Doug: Additionally, we would like to note that our SPL program related revenue outlook is a risk adjusted forecast that is achievable under a variety of potential outcomes across our Sps and planned clinical progress and commercial success of our customers.
Doug: Finally, <unk> remains a solid financial position and expect to end 2025, with approximately $160 million in cash cash equivalents and investments on our balance sheet.
Doug: I'd like to close by stating that <unk> is well positioned to deliver on our 2025 goals. We continue to remain dedicated to modest cash burn and operating in a streamlined organization to best support maximize long term vision and growth outlook.
Bob: Now I'll turn the call back over to Bob here.
Bob: Thank you Doug we are proud of our progress thus far in 2025 and are in a great position to deliver high quality support for our customers I would like to thank our team at <unk> site for their dedication to the company and our customers every day with that I will turn the call back over to the operator for the Q&A operator.
Operator: Certainly and our first question for today comes from the line of Matt Larew from William Blair. Your question. Please.
Matt Larew: Hi, good afternoon.
Matt Larew: I wanted to ask on on the guidance for the core business Alright.
Speaker Change: Alright back out security acts looks like something around 9% growth just maybe give us a sense for what that reflects in terms of end market dynamics as well as where it is versus where you expect kind of a normalized our longer term growth for the core business demand.
Matt: Yes, Matt.
Matt: Nice to hear you again and good talking so let me take that for a second I can Thompson, Doug as well. So we're still seeing continued growth across our customer base. Both on the research side as well as the clinical side.
Matt: As we saw throughout 'twenty four we saw increased usage as well, which is a very good side that we talked about we see that market recovery and really a lot of it. After the fact that we continue to believe the operational changes that we've made the execution that we believe we can continue to make throughout the year should give us the year over year growth that we had in 24 versus 23 as well so really it's across the board.
Matt: Yes.
Matt: Not any one particular area and just the greatest accretion of the commercial team scientific team.
Matt: The organization as a whole to understand where the market's going and really have those precise call points that we did it we were able to take all in 'twenty four and continue that 25, Doug anything else to add there Matt.
Matt: Instruments did tick down in 2024 versus 2023, we see opportunities to start rolling that in the right direction obviously.
Matt: Sales were strong last year versus 2023, and so we expect or hope that will continue and that's built into our forecast is looking at a run rate that is aligned with our rolling forecast are rolling experience on upholstery basis.
Matt: Looking at our forecast for instruments. So I think as Mary mentioned this is across the board we expect.
Matt: To see some growth this year, but we're being a little bit conservative in the guidance.
Matt: Okay understood and then on.
Matt: On Security X you mentioned $2 million included this year.
Matt: Can you maybe give a sense for like sort of what the geographic and track record is there how much they have in growing and expanding customer and if theres any.
Matt: Yes business model.
Matt: <unk> is our bundling youre anticipating.
Matt: Okay.
Matt: Just be helpful in terms of framing how that's going.
Matt: To fit in and scale up throughout the year.
Matt: Yes, Matt.
Matt: Question. So secured Dx began commercializing really in 'twenty four is the first full year of commercialization. So it's very early in the process. We see we see great growth for secured Dx.
Matt: We're being fairly modest in our growth projections for them in 'twenty five as well obviously this is <unk>.
Matt: Greater revenue this year than they had in 'twenty four and we feel as though we can continue to grow that the business model that they have released more services based business model with a highly differentiated service that truly only they can do and there is not much competition there that can meet with.
Matt: Their service capabilities and lab costs of IP that they are building around their assets, whether it's their guide seek assays or once he gas stays where they are screening assays as well.
Matt: The business really fits into what we do which is a highly scientific highly differentiated where we know and can work with developers to really ensure their timeline to the clinic as faster and a safer more consistent manner thats what secured the <unk> does that.
Matt: And that in essence, an extension of what <unk> has built our company around but we feel confident in that two plus number it's at least $2 million that we can continue to grow it at a fairly fast rate based on their under current infrastructure and then also integrating into them oriented them into us into our commercial team as well.
Matt: Anything else to add there I just wanted to just reiterate or sort of point you to the press release and what we start our comments really core revenue is expected to grow 8% to 15% that is inclusive of revenue from security accident, which are not breaking out specifically.
Matt: Other than we think it's going to be at least $2 million, but how we get to that 8% to 15% growth rate how much secure makes of that how much of that is leases versus instruments versus processing assemblies, we're not breaking it down at this point in the year, but we will obviously start to scale things back when we reported in May.
Matt: Okay. Thank you.
Pat: Thanks Pat.
Speaker Change: And our next question comes from the line of Julie Simmonds from.
Speaker Change: Your question please.
Speaker Change: Hi, yes.
Speaker Change: Answer here again I was just wondering how much in the way of cost.
Speaker Change: Great.
Speaker Change: A set of Max as a whole because I'm guessing in terms of sort of some of the basic infrastructure you can you can.
Speaker Change: Take out some of the costs involved with that business Sandy swiftly.
Sandy: That's right Julien that the cost to our to our continuing operations.
Speaker Change: Operating expenses is fairly immaterial.
Sandy: We have that the entire commercial infrastructure to support them. So.
Sandy: So it's immaterial cost and it's also part of our guidance in terms of our end of year cash includes any security Dx operating expenses. So.
Sandy: We feel very confident that the <unk>.
Sandy: <unk> secured Dx can leverage when we built here over the past few years, especially since our IPO, where the team that we've built can commercialize.
Sandy: The assays for secured Dx with very immaterial operating expenses attributable secured yes.
Obviously, there are some cost structure associated with operating that.
Sandy: That line of business, there's a facility in Waltham.
Sandy: And that will be continuing to make some investments there, but it's not going to be a material part of our burn and I think that in terms of their ability to contribute on a cash flow basis, we feel very optimistic that that can happen in relatively short order one of the things we like about that business is one of the things we like about what we've done here is we've made investments that are extremely scalable and so we.
Sandy: Look forward to.
Sandy: Seeing growth really hit the bottom line eventually as we continue to see hopefully return to some.
Sandy: Better conditions out there for end users and then.
Sandy: Execution of our plan. So I think again, there's the leverage ability of the cost structure. We have here is significant.
Sandy: Excellent. Thank you and just another one on sort of your exposure to the academic market.
Spending because I know that has been an area, where you sell a reasonable amount of instrumentation in the past. So I was just wondering whether you've noticed any any change in that environment at the moment.
Sandy: Actually it has been somewhat significant part of our business in terms of where we can directly link it to Jay to a grand. So we don't think this is going to have material impact in the short term. Obviously, we want to see continued robust investment in cell and gene therapy.
Sandy: And that.
Sandy: That includes on the front end and so long term it can be challenging, but I don't expect it to have an impact in the short term.
Sandy: Doug If you mentioned the exposure to NIH brands is really very very little.
Sandy: So.
Sandy: We'll get the exact number we're talking about $3000 here, it's almost it's really immaterial. If you look at Julian the way we've built this organization.
Sandy: And really everything we've done has been focused on ensuring that we're working with those biotech companies and later stage companies that are getting ready for the clinic. So the exposure to NIH.
Sandy: Immaterial at best.
Sandy: Excellent that's very good news and then just to start off with the STL environment is concerned are you still seeing customers wanting to sign up to similar to participate in that.
Sandy: The pre IMD level or are they looking at.
Sandy: Sort of any any early assets when they sign those agreements.
Sandy: No Thats great question, Julian it's still at that pre IV level.
Sandy: As I mentioned on previous call. We work with these customers oftentimes for a year before really going in there showing our differentiated technologies showing our differentiation scientific support and when they are where they are closer to our pre IND.
Sandy: So when they begin to have those negotiation with us and we're still confident that we can guide to three to five per year. It's a sign of the health of our business as a sign of the health of our differentiated platform.
Julien: Along the same timeline Julien.
Speaker Change: Thank you very much we are on track.
Julien: We've got one one in the box.
Julien: Were not repeated in the first quarter that's right.
Julien: Okay.
Brands Smith: Thank you and our next question comes from the line of brands Smith from TD Cowen Your question. Please.
Brands Smith: Great. Thanks for taking the questions and congrats on the progress guys.
Brands Smith: I appreciate the color on the thinking that went into 2025 guidance. So maybe just kind of one more with respect to the secure integration.
Brands Smith: Can you just kind of maybe remind us a bit how should we should think about kind of the combined company gross margins, where you think those could go over the near and maybe a little bit longer term that kind of get ramped up there.
Brands Smith: And then any potential or even maybe likely or opportunities for upside to topline numbers that you would maybe call out for 2025, I know youre not necessarily baking in.
Brands Smith: Recovery just into the guidance itself.
Brands Smith: And then maybe I'll just have a follow up after that thanks.
Speaker Change: Yes, I think what Youre asking Brandon if I hear your question correctly.
Speaker Change: First the first question in terms of secure as integration how they can contribute if I heard you correctly Brendan how they can contribute to our guidance is that what youre getting out just to make sure I clarify your question.
Speaker Change: So I think first take care of really just how we should think about kind of the combined gross margins there and then separately.
Speaker Change: Potential opportunities for upside that you guys would want to call out just for this year, specifically independent of that so the combined gross margins, Doug how do we win.
Speaker Change: I think that.
Speaker Change: Without getting too granular here on what that cost structure looks like because were not breaking that out separately right. Now we have healthy gross margin as we look at it obviously, an unadjusted basis, we take out that revenue that is that SPL revenue which comes in.
Speaker Change: Without any costs associated with that as well. So we've adjusted for any inventory provisions. We've made I think we're going to continue to enjoy high margins.
Speaker Change: In a low to mid eighties.
Speaker Change: Even with secure here without.
Speaker Change: Right I mean to your question on the combined.
Speaker Change: Part of why secure.
Speaker Change: Really made sense in terms of integration has that helped the gross margins that they have and exactly what Doug said, we feel confident in the foreseeable future. The combined gross margins will remain at the very very healthy and debt.
Speaker Change: Low to mid <unk> gross margins and then in terms of the question on the topline is opportunity for us.
Speaker Change: That $8, 15% in regarding to <unk>.
Speaker Change: Obviously, we guided here somewhat conservative right, we have to ensure that they are in case there are headwinds out there.
Speaker Change: As we know we're not completely pervious or we can untether ourselves.
Speaker Change: The overall global market in terms of what we see there in the biotech funding.
Speaker Change: But in terms of.
Speaker Change: The health of our business, assuming there is no further deterioration to overall global markets. We see we've guided very because we've got a conservative guidance if that makes sense Brendan we're not really baking in any improvement or further deterioration of the market. There is obligation shades of gray in there. If you look at the range, we're providing it's probably a combination of.
Speaker Change: How healthy the operating environment is sort of within the current ex of it as well as our ability to execute against the opportunities are in front of US I think when you start to look at potential.
Speaker Change: Coming out outside of those ranges, if it's probably going to be mark to market.
Speaker Change: Independent and that could provide for further upside we see some recovery there.
Speaker Change: Okay, great. Thanks, guys very helpful.
Speaker Change: Yes, Thanks Brendan.
Speaker Change: Thank you and our next question comes from the line of Mark Massaro from <unk>. Your question. Please.
Mark Massaro: Hey, guys. Thanks for taking the questions.
Mark Massaro: So I think the secure acquisition is pretty interesting.
Mark Massaro: Sensitive broadens out your pipeline I think beyond.
Speaker Change: You talked about both ex vivo and in vivo as well as viral and non viral is there any way that you could share.
Speaker Change: I think you talked about 201 cell and gene companies with 83, I think that maybe opportunities for you.
Speaker Change: Can you just give us a sense of the overlap of customers between secure and Mac site prior and what the incremental opportunities you are leveraging secures product offerings.
Mark Massaro: Yes, Great question, Great question, Mark I mean, obviously the exciting on ACA secure.
Mark Massaro: I'm not so sure it's coming across just yet the opportunities are enormous in terms will ctrip provides to us as we've talked about the barrel and none of our programs. So when you think about the second we have 84, none of our programs that we match site with our transfection platform can target.
Mark Massaro: So secure can also target dose, but what secure also does as the entire clinical that buyer nine programs as well even non viral programs. We now have opportunities against the target and then in terms of even a larger number here. We have preclinical programs of 383 programs of 193 of which are non viral programs, which.
Speaker Change: What Max said with our transfection platform targets secured Dx can target the entire landscape.
Speaker Change: Youre looking at 383 programs preclinical 249 programs clinical.
Speaker Change: Yes.
Speaker Change: It gives us a footprint in the entire cell and gene therapy space, whether it's borrowing nonmoral truly showcase best in class solutions that we provide on the ex vivo side as well as best in class solutions on the security side for the entire landscape. So you can tell the breadth that we have now so there isn't the overlap of the 84 programs that we currently know can target that.
Speaker Change: Security acts gives us that a 1 billion target through and then an additional 249 clinical alternative 83 preclinical programs as well and the entire enviable extra space.
Speaker Change: Yes, that's very helpful. And then can you perhaps go into a little more detail about.
Speaker Change: Secures.
Speaker Change: <unk> revenue opportunity.
Speaker Change: I guess, what I'm really asking is.
Speaker Change: How do they monetize I know, it's a services company so.
Speaker Change: Is this like a fee for service or is this.
Speaker Change: I'm just curious how the revenue gets recognized if it's like a subscription.
Speaker Change: Trying to figure out how lumpy. It is as we think about going out a couple of years.
Speaker Change: Yes, so right now.
Speaker Change: Exactly you said, it's a fee for service with opportunity for us.
Speaker Change: As we build them out we take out that great potential that they had for US there is opportunity to also we're looking at that for a subscription based model as well as certain parts of their assets depending on the development timeline, whether it's early discovery early or later in the clinical development, but right now it's a fee for service with a highly differentiated services for that fee. So.
Mark Massaro: That's the basic bar right now Mark.
Mark Massaro: Okay, and I think I heard you guys.
Mark Massaro: <unk> that the guidance for 2025 does not assume any change to to the environment and I think.
Mark Massaro: The environment is broad, but I just want to make sure you are assuming.
Mark Massaro: Capital raising environment macro environment.
Mark Massaro: All basically all potential risk factors at this time.
Mark Massaro: Sure. So we're obviously, providing a range for revenue is going to be made up of the various components.
Mark Massaro: By the way, we think secure has had a significant.
Mark Massaro: The growth opportunities, we are looking forward to seeing that business.
Mark Massaro: If you can provide.
Mark Massaro: Growth opportunities in terms of whether we see this year I just want to be clear, we don't we're not counting on a recovery or the market changing significantly. However, when you look at that range is probably at the current environment. We're in their shape. So think of it as we are.
Mark Massaro: Light is yellow there shades of yellow, but work.
Mark Massaro: Things go greater things go read that probably falls outside the range and of course in addition to fluctuations of where the market's actually is how we're going to execute on the opportunity Thats really where the range comes in modeling it out I'd, probably look towards the middle of that but I would say I.
Mark Massaro: I think we're being conservative.
Mark Massaro: It sounds good I will hop back in the queue.
Mark Massaro: Thank you Mark.
Speaker Change: Thank you and as a reminder, ladies and gentlemen, if you do have a question at this time. Please press star one on your telephone. Our next question comes from the line of Dan Arias from Stifel. Your question. Please.
Mark Massaro: Thanks for the question. This is Paul on for Dan.
Just touching on the guide for core revenue, you talked about not including any not baking in any kind of.
Mark Massaro: <unk> throughout the year.
Mark Massaro: Even though there is some upside there as you said you are cautiously optimistic that there will be better funded environment, but just in terms of.
Mark Massaro: Baking that in how does that play into what the quarterly cadence is going to be from a guidance perspective can you just give us some color there.
Mark Massaro: Yes, so just to reiterate what the components of our core revenue and obviously secured is going to be part of that but.
Mark Massaro: I don't expect Lumpiness there in terms of the breakdown between the license revenue that's pretty that's pretty stable you can model that out throughout the year and even basis.
Mark Massaro: <unk>.
Mark Massaro: What we're doing in terms of the processing Assembly as we model that out we're looking at a rolling run rate of pull through across the installed base and using that to model that out we don't expect significant lumpiness there Aldo.
Mark Massaro: Historically, sometimes the third quarter is weaker than the fourth quarter, we do see that occasionally play out although we don't consider our business one that significantly seasonal if you will I think if there is a lumpy component to this as instruments, because that's where we're looking at that on specifically identified opportunities identified and validated opportunities using historical conversion.
Mark Massaro: Rates and coming out with estimates and I can't say that those are actually.
Mark Massaro: But theres not differences between some quarters in that but I don't think they were prepared to break that down in terms of the guide at this time I don't think it'll be significant but I think if there is some lumpiness there will probably be in instrument sales.
Speaker Change: Okay. That's helpful. And then just the one follow up.
Speaker Change: Talked about kind of the.
Mark Massaro: The conservatism in the guide for secure.
Speaker Change: And I think when the acquisition came out you.
Speaker Change: You had said that the business transitioned over towards the service revenue I think it was in March of 2024.
Speaker Change: To what extent can you kind of touch on to what extent the growth this year.
Speaker Change: Just kind of lapping that transition and getting that.
Speaker Change: Higher service revenue in the first quarter versus integration into your overall commercial infrastructure versus just kind of expansion of the business and penetrating more customer accounts.
I think it's important to realize just how early that business in terms of when they came out of style, but we're actually operating the business. So I think that that's part of that yes, I think it's a good question Paul in the sense of right now we are going to that just based on the fact that.
Speaker Change: The expansion of the business that they began to rollout last year, whereas we have more full integration of secured dx into the Mexican market and throughout the year, we see even more expansion opportunities and they currently have so that $2 million plus is really an expansion of what they did last year on the services side, that's rolling into Q1 of this year and we.
Speaker Change: Feel confident at the beginning continuing to integrate to our commercial team, we can expand their portfolio as well on the services business that they rolled out in 2024.
Speaker Change: Great. Thanks for the questions I'll jump back in the queue.
Speaker Change: Yes.
Speaker Change: Thank you and our next question comes from the line of Matt Hewitt from Craig Hallum. Your question. Please.
Matt Hewitt: Good afternoon, thanks for taking the questions maybe first upon secure.
Speaker Change: Is the sales and marketing effort has that been integrated yet or when do you anticipate that could occur.
Speaker Change: It has to have a good to hear your voice. It has been integrated actually from day, one upon the acquisition roughly a little over a month ago, the marketing and sales integration has happened from day, one and vehicle fuel costs over the course of the year that integration from day, one to begin to give us the traction and the exposure of the secret Dx's offerings, obviously theres more.
Speaker Change: There is more marketing.
Speaker Change: We secured the actually make sure that all the major conferences ensure that web application notes are highlighting there are different highly differentiated assay.
Speaker Change: That integration happen from day, one that.
Speaker Change: Got it and then maybe just kind of taken a step back on the macro.
Speaker Change: As you've had conversations over the past call. It three four months have you noticed or heard any change in.
Speaker Change: The conversations that youre, having with customers.
There's been a lot of noise here over the past couple of weeks tariffs budget cuts all that kind of stuff, but what are you hearing from customers has that changed at all or are these kind of feels still feeling like it's steady as she goes and progressing.
Speaker Change: 55% of our revenue was from SPL customers. So those things are progressing through the clinic and so.
Speaker Change: It's been for the most part ordinary course of business.
Speaker Change: Everything is chugging along there.
Speaker Change: Yes.
Speaker Change: If you look outside that I think opinions vary but.
Speaker Change: Where we are in the year here.
Speaker Change: Two months and change into the into the 2025 and we're getting we're comfortable the guidance, we're providing based on.
Where things are today, even as even with sort of a little bit more headwinds than we probably expected earlier in the year, but let me let me add to that Matt is well. It's obviously last year, we saw that the population of programs.
Speaker Change: Leveled off so it's and that's what we are now where our customers.
Speaker Change: The product is programs had more focus on what programs they want to take it to the clinic that continue throughout the year.
Speaker Change: And now it's stabilized as Doug had mentioned obviously.
Speaker Change: <unk>.
Speaker Change: Macro environment is same as it was 90 days ago.
Speaker Change: Not the same but in terms of our customer base. It's the same we saw that the population we saw with what we call that all the way through last year. That's now stabilized and Thats utilization has stayed all the way through the first quarter in terms of what we're seeing so far so what we're seeing now is really execution of the current market, where it is and it's another year of returning back to growth as we did in 2004.
Speaker Change: That's great. Thank you very much.
Mike: Absolutely. Thank you ma'am. Thank you and this does conclude the question and answer session of today's program I'd like to hand, the program back to Mike for any further remarks.
Mike: Thank you operator, and thank you everyone for joining us on today's call. We look forward to speaking to you again on our next earning call earnings call in a few months. Thank you.
Speaker Change: Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.
Mike: Goodbye.
Mike: Okay.
Mike: [music].