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Earnings call: MaxCyte sees stable Q2 revenue, maintains cautious outlook

EditorAhmed Abdulazez Abdulkadir
Published 2024-08-07, 10:58 a/m
© Reuters.
MXCT
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MaxCyte Inc. (MXCT), a global cell-based therapies and life sciences company, reported a steady performance in the second quarter of 2024, with total revenues reaching $10.4 million, marking a 15% increase from the same period last year. Despite a challenging macro environment, the company remains cautiously optimistic about future growth, particularly within its cell therapy sector.

MaxCyte's core revenue saw a slight decline of 9%, yet they anticipate a flat to 5% growth in core revenue for the full year of 2024. The company has also increased its year-end forecast for cash equivalents and investments to $180 million, up from $175 million.

Key Takeaways

  • Total Q2 revenue was $10.4 million, a 15% year-over-year increase.
  • Core revenue for Q2 declined by 9%, but the company expects a flat to 5% growth for 2024.
  • SPL Program-related revenue contributed $2.9 million in Q2.
  • MaxCyte signed five new SPL agreements this year, including one with Legend Biotech.
  • The company's installed instrument base grew to 723 units.
  • Operating expenses increased, primarily due to growth in sales and marketing.
  • MaxCyte is optimistic about the future of cell therapy and its revenue potential.
  • The company will not provide guidance for 2025 but sees potential for significant approvals in 2027 and beyond.

Company Outlook

  • MaxCyte expects SPL Program-related revenue to be approximately $6 million in 2024.
  • The company forecasts ending the year with $180 million in cash equivalents and investments.
  • MaxCyte is focused on disciplined spending to ensure long-term growth.

Bearish Highlights

  • Core business performance in cell therapy and drug discovery met expectations, but the funding environment remains stable and cautious.
  • Core revenue experienced a 9% decrease in Q2 compared to the previous year.

Bullish Highlights

  • MaxCyte sees significant revenue opportunities as SPL clients progress through the clinic and reach commercialization.
  • The company is working with a broad range of cell therapy companies, indicating a diverse customer base.
  • MaxCyte has raised its year-end cash equivalents and investments expectations due to unexpected milestone revenue and prudent spending.

Misses

  • No specific guidance for 2025 has been provided.
  • The company acknowledges lengthening sales cycles for their instruments.

Q&A Highlights

  • MaxCyte executives emphasized their commitment to partnering with cell therapy companies of all sizes.
  • They are confident in meeting revenue goals despite longer sales cycles.
  • There is a focus on R&D to develop products that complement current offerings.
  • MaxCyte expects three to four programs to enter pivotal trials in 2025, with potential approvals starting in 2027.
  • The probability of success for upcoming approvals is not quantified, but confidence in the efficacy of their cell therapies remains high.

MaxCyte's steady performance amid a stable yet cautious funding environment for cell therapy developers reflects the company's resilience and adaptability. With a growing instrument installed base, new strategic partnerships, and a focus on disciplined spending, MaxCyte is positioning itself for sustainable growth in the dynamic field of cell-based therapies. As the company continues to navigate the complexities of the cell therapy space without concentration on a particular cell type or target, it remains committed to expanding its reach and capitalizing on future opportunities in the sector.

InvestingPro Insights

MaxCyte Inc. (MXCT) has shown a robust performance in terms of revenue growth, as indicated by a 15% year-over-year increase in the second quarter of 2024. This aligns with the company's steady financial progression, as reflected in the real-time data from InvestingPro. Here are some insights that are particularly relevant to MaxCyte's current financial health and future outlook:

  • The company's market capitalization stands at $458.46 million, suggesting investor confidence in its business model and growth prospects.
  • A remarkable gross profit margin of 88.43% over the last twelve months as of Q2 2024 highlights MaxCyte's efficiency in managing its production costs and maintaining profitability at the gross level.
  • Despite the high gross profit margin, MaxCyte is not yet profitable, with analysts not expecting profitability this year. This is further evidenced by a negative P/E ratio of -12.37, indicating that the company is currently operating at a loss.

InvestingPro Tips for MaxCyte underscore the company's financial strengths and challenges:

1. MaxCyte boasts impressive gross profit margins, which is a positive sign for its operational efficiency.

2. Although analysts anticipate a sales decline in the current year, the company's liquid assets exceed short-term obligations, suggesting a strong liquidity position.

For investors looking for a deeper dive into MaxCyte's financials and future potential, there are additional InvestingPro Tips available at https://www.investing.com/pro/MXCT. These tips provide a comprehensive analysis that can help investors make informed decisions about their investment in MaxCyte.

Full transcript - MaxCyte Inc (MXCT) Q2 2024:

Operator: Ladies and gentlemen, thank you for standing by. Welcome to MaxCyte Second Quarter Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would like now to turn the conference over to Scott Feinberg, Finance and Investor Relations Associate. Please go ahead.

Scott Feinberg: Good afternoon, everyone. My name is Scott Feinberg and I am responsible for Investor Relations here at MaxCyte. Thank you for participating in today’s conference call. Joining me on the call from MaxCyte we have Maher Masoud, President and Chief Executive Officer; and Doug Swirsky, Chief Financial Officer. Earlier today, MaxCyte released financial results for the second quarter ended June 30, 2024. A copy of the press release is available on the company’s website. Before we begin, I need to read the following statement. Statements or comments made during this call maybe 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 in any forward-looking statements due to a variety of factors which are discussed in detail in our SEC filings. The company has no obligation to publicly update any forward-looking statements, whether because of new information, future events or otherwise. And with that, I will turn the call over to Maher.

Maher Masoud: Thank you, Scott. Good afternoon, everyone, and thank you for joining MaxCyte second quarter 2024 earnings call. MaxCyte reported $10.4 million of total revenue in the second quarter, including core revenue of $7.6 million and SPL Program-related revenue of $2.9 million. We are excited with the progress that we have made so far in 2024, afforded by our commercial execution, the continued demand for our ExPERT Electroporation platform and the efforts we have made to continue to provide differentiated end-to-end support to our customers. We are also encouraged by the five new SPLs that we have signed this year, which includes the most recently signed Legend Biotech. Our core business performance was solid in the second quarter with the results in cell therapy and drug discovery that were in line with our expectations. Our performance remains tied to the funding environment for cell therapy developers, which remained stable in the second quarter, but has not significantly changed or improved since the first quarter or the time at which we provided initial guidance for 2024. Amidst this current backdrop, we continue to see our customers operate with a cautious capital spending mindset. Despite this, the overall market optimism in cell therapy and general scientific evolution in the space leaves us incredibly optimistic about MaxCyte’s long-term opportunities. We continue to believe cell therapy will change the paradigm in medicine over the years and we are in the early stages of the future growth of cell therapy. The non-viral cell therapy market continues to move towards engineering approaches that involve more complex therapies across an expanding variety of cell and disease types. This bodes well for MaxCyte given that our technology can support the complexity of new cell therapies to be developed by current and prospective SPL customers in autologous and allogeneic settings. We remain in a strong position to meet our outlook for 2024, and are very optimistic about the future of our business and the cell therapy industry as a whole. To provide some context on our core revenue performance in the second quarter, which Doug will cover in more detail, we grew our instrument installed base to 723 as of June 30th. Instrument revenue continues to be impacted by customer caution on capital equipment purchases. However, we were pleased with PA revenue of $3 million and lease revenue of $2.6 million. Both declined slightly year-over-year, but remained stable from the first quarter of 2024. 51% of our core revenue in second quarter of 2024 was derived from SPL clients, speaking to contribution from both early stage customers and customers in the clinic. As I mentioned before, we reported $2.9 million of SPL Program-related revenue in the second quarter, putting us at $6 million in the first half of the year. We are encouraged by SPL clients’ continued progress through the clinic, resulting in milestone revenue for MaxCyte. We are also continuing to expand our SPL portfolio as evidenced by two new SPLs signed in the second quarter, BE Biopharma and Legend Biotech, bringing our total signed SPLs so far in 2024 to five. Our most recently signed SPL that we announced in May, Legend Biotech, is a global leader in the cell therapy industry, developing new cell therapies to target life-threatening diseases. They currently have one commercial asset and eight pipeline programs, with revenue from marketed products, partnerships and licensing. MaxCyte’s platform provides Legend Biotech with technical, scientific and regulatory expertise to support the development of the company’s therapies across a variety of cell types and modalities. The addition of Legend Biotech brings our total number of signed SPLs in our portfolio to 28. It is important to remember, these SPL relationships provide us with the opportunity to participate in the success of our customers’ programs. With unparalleled access to our electroporation technology, trained field sales and application scientist support and our FDA Master File and regulatory know-how, we firmly believe that MaxCyte remains the platform-of-choice within our industry. We have strong relationships with our current SPL clients and a robust pipeline of prospective SPL clients, all of which are working vigorously to develop innovative cell and gene therapies for patients in need. As you likely know, MaxCyte supported its SPL customer, Vertex (NASDAQ:VRTX), in the FDA approval of CASGEVY, the first non-viral cell therapy approved in the U.S. Now, midway through 2024, we are confident that commercial opportunity for CASGEVY remains strong. With approval in the United States, Great Britain, European Union, Saudi Arabia and Bahrain, CASGEVY has the capability to enable life-changing treatment to patients worldwide. We are encouraged by the recently presented long-term data for CASGEVY from global clinical trials for over 100 patients with transfusion-dependent beta-thalassemia. The efficacy demonstrated consistency with primary and secondary endpoints from prior XSL studies. Vertex recently reported they continue to see a growing number of patients begin the treatment journey and approximately 20 patients have already had cells collected, with patients initiating the treatment journey in every region where CASGEVY is approved, the US, Europe and the Middle East. There are now 35 activated centers and Vertex continues to expect to activate approximately 75 total centers globally, with the view that CASGEVY represents a multi-billion dollar opportunity. Currently and as previously communicated, we do not have visibility into the timing of patient dosing or completion of infusion, given the lengthy process associated once patient enrollment begins. As such, we continue to exclude CASGEVY-related commercial milestone revenue from our 2024 outlook and plan to provide you with updates as they come from Vertex. We remain very excited by the potential of CASGEVY to benefit patients as the first and only approved CRISPR gene editing therapy. Over the near, medium and long-term, we see significant revenue opportunity from our SPL clients as they progress through the clinic and reach commercialization. The next wave of potential commercial opportunities includes approximately five programs across five SPLs, with launch potential in 2027. These therapies have the potential to address solid tumors, lymphoma, leukemia, sickle cell disease and beta-thalassemia. Beyond this, we see opportunity for 10 approved programs across additional indications of multiple myeloma and autoimmune disease between 2028 and 2030. As we continue to sign new SPLs and our existing SPLs grow and expand, the basket of commercial opportunities in the future grows larger. For the remainder of 2024, we’ll remain focused on investing in areas of high growth that align with MaxCyte’s core competency, advancing cell therapy innovations. Over the first half of this year, we have reviewed our portfolio of opportunities and investments and reallocated resources towards high impact projects that promise the best return on investment and long-term growth. Commensurate with our realignment we are reducing our investment in and moderating our expectations for the VLX. We will maximize investments previously made in the VLX, continuing to work with early adopters and future customers. Our portfolio realignment focuses on prioritizing operational efficiencies and sales and marketing reach in cell therapy, which continues to be a large and sustainable growth opportunity for MaxCyte. To wrap up, we are pleased with our solid second quarter results and believe that we remain on track to deliver on our goals for 2024. MaxCyte’s value proposition and the support that we provide to our customers and clients is truly differentiated and I continue to believe that we are the premier cell engineering platform-of-choice within the cell and gene therapy industry. With that, I will now turn the call over to Doug to discuss our financial results. Doug?

Doug Swirsky: Thank you, Maher. Total revenue in the second quarter of 2024 was $10.4 million compared to $9 million in the second quarter of 2023, representing an increase of 15%. We reported core revenue of $7.6 million compared to $8.3 million in the comparable prior year quarter, representing a decline of 9%. This includes revenue from cell therapy customers of $6.2 million, which declined 6% year-over-year, and revenue from drug discovery customers of $1.4 million, which declined 18% year-over-year. Within core revenue, instrument revenue was $1.8 million compared to $2.1 million in the second quarter of 2023. Lease revenue was $2.6 million compared to $2.7 million in the second quarter of 2023, and processing assembly or PA revenue was $3 million compared to $3.3 million in the comparable prior year quarter. As Maher mentioned, instrument revenue continues to be most impacted by the cautious capital spending environment for our customers. At the same time, lease revenue has remained stable, indicating strength in our revenue from clinical SPL partners. PA revenue remained solid in both year-over-year and sequential performance, which we were pleased to see. We recognized $2.9 million of SPL Program-related revenue in the second quarter of 2024 compared to $0.8 million of SPL Program-related revenue in the second quarter of 2023. Year-to-date, we have achieved $6 million in SPL Program-related revenue. Moving down the P&L, gross margin was 86% in the second quarter of 2024, slightly higher than 85% in the second quarter of 2023. Total operating expenses for the second quarter of 2024 were $20.9 million compared to $20.7 million in the second quarter of 2023. The overall increase in operating expenses was primarily driven by growth in sales and marketing expenses. Going forward, the company continues to be disciplined, making moderate and targeted investments in high growth areas that offer long-term returns. We finished the second quarter with combined total cash, cash equivalents and investments of $199.8 million and no debt. We are increasing our expectations for year-end cash equivalents and investments and now expect to end the year with $180 million, up from our previous estimate of $175 million. This is a result of greater than expected SPL Program-related revenue in the first half of 2024 as well as disciplined expense management, including the realignment of resources that Maher discussed. Continuing with our full year 2024 revenue guidance, we are reiterating our core revenue guidance and updating our SPL Program-related revenue outlook. We continue to expect core revenue to be flat to 5% growth compared to 2023. We now expect SPL Program-related revenue to be approximately $6 million in 2024. Our SPL Program-related revenue is difficult to predict and subject to the timing of partner development programs. Our base case expectation for the year indicates we will not receive additional milestones in 2024. As a reminder, our 2024 outlook also does not include royalty revenue from CASGEVY. To close, MaxCyte remains in a great position to execute on our 2024 outlook with a continued focus on exercising disciplined spend to deliver long-term growth. Now, I’ll turn the call back over to Maher.

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

Operator: Thank you. [Operator Instructions] And the first question comes from Jacob Johnson with Stephens. Your line is now open.

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

Maher Masoud: Hannah, this is Maher.

Hannah Hefley: I’m sorry.

Maher Masoud: Yes. I apologize. Can you repeat the question again? It broke up there for a second.

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

Maher Masoud: So, you’re asking about whether or not CASGEVY is having a material impact on our core revenue?

Hannah Hefley: Yes.

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

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

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

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

Hannah Hefley: Alright, thanks. I’ll leave it there.

Doug Swirsky: Thank you, Hannah.

Operator: And our next question comes from Julie Simmonds with Panmure Liberum. Your line is now open.

Julie Simmonds: Hi. Thanks very much for taking the question. A couple of things; Firstly just in terms of SPL agreements clearly you did five last year. You’ve done five this year already. I notice no more guidance on what you might do for the rest of this year. Are we really going to have to wait more than 6-months for another one?

Doug Swirsky: Good question, Julie. Good to hear from you again. Obviously, three to five has been historically what we feel comfortable we can sign on a regular basis. The sales cycle for signing an SPL can take anywhere from 3 months, 6 months, 9 months, 12 months. Right. A little bit longer sometimes depending on the relationship. We don’t speak to when those can happen. Obviously, if there’s another one that happens, we have to update then we now have 6. We can’t comment until the SPL is signed, but I will say this, we have a healthy SPL funnel, healthy opportunity of SPL customers that will sign over the years. Our focus is more on just ensuring that we’re signing those 3 to 5 on a regular basis and not necessarily the timing of whether it happens over the next 6 months or a few months thereafter. So, I guess, that’s a long way, Julie, of saying we can’t promise this year, but we have a healthy 3 to 5 on a regular basis that we feel very confident in, especially on the funnel that we have and the opportunity list that we have that we can continue to grow our SPLs from 28 to a much larger amount over the years to come.

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

Doug Swirsky: That’s certainly a big part of it Julie. So, what we’ve established here is a manufacturing facility that can support multiple commercial stage customers. And so with that much capacity ready to go to support, our customer base, we do have some excess capacity. It does change some of the absorption rates. It does impact our margins to have that. We also were manufacturing quite a bit last year. And so, as with the – I guess, down year we had last year, we definitely had manufactured more than we need. We want to make sure that we maintain appropriate levels of inventory. And so, I think, we – these are margins that have the potential to go back to where they are. But, again, we’ve said it before, we feel really good about the margins we’re delivering even as they back down to this level because they’re still very substantial and somewhat industry-leading at this point and continue to be so.

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

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

Maher Masoud: Yes. Obviously, we’re always – and I’ll let Doug to speak to this as well. We’re always looking at our expenses and looking where we can reallocate, where we believe that we have the most growth potential right now that is in cell therapy. Julie, we see that as a long sustainable business for us. Obviously, the minimization of spend, the VLX, let me speak to the VLX itself a bit more there as well. So, the VLX does have a use case study, a very good use case study for us as cell therapy market grows and allogeneic therapies become – have more of a stay in the market. The scale and the transfection that we can provide with the VLX is unmatched by anything else currently out in terms of transfection in electroporation platforms. So, for us, it’s refocusing the VLX as to where the use case is best there. We’re continuing to work with the VLX in the bioprocessing space with those early adopters and future customers where there is a need for the scale that it provides for transient protein production. But we’ve minimized spend there because, obviously there’s not a need for us to continue to spend as much as we have in the past to support those early customers or future customers. But to your point, we’re always going to be looking at allocation of our spend ensuring that we’re focusing our spend where we can have the greatest return on investment and where we believe that we have the greatest future growth potential. What that means for the bottom line, I’ll let Doug speak to that.

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

Julie Simmonds: Lovely. Thank you very much.

Doug Swirsky: Thank you, Julie.

Maher Masoud: Thank you.

Operator: And our next question comes from Steven Mah with TD (TSX:TD) Cowen. Your line is now open.

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

Doug Swirsky: Good questions, Steven. Let me speak to that a little bit, give you some color in the sense, obviously, Legend is a bigger company there that is not – a bigger company that we’ve signed. And really, they’ve taken their non – they’re taking a non-viral approach based on what traditionally they were pursuing, viral approaches to cell therapies. That being said, our focus is really not so much on whether we’re working with smaller companies or bigger companies. It’s really – it’s ensuring that we’re that company that, and we’ll say it again, we’re working with as many cell therapy companies as we can, whether they’re small or big. I want to bring you back to kind of, we worked with what was considered a small company back in 2013. It was called Inception Therapeutics. And that company is CRISPR now. So, if we had tried to select which company is a big company or a small company, we would not be working with CRISPR Therapeutics, which is now – which licensed their product to Vertex, which is now CASGEVY right, which is the first non-viral cell therapy approved. So, our focus is really small, medium, big, it’s all of them that we’re trying to go after. The cell therapy space is going to continue to grow. I think what is a small company now can become a big company, and where the program now for a small company can become part of a bigger company as well. We want to make sure we’re working with all of them, Steve, that’s our goal.

Steven Mah: Yes. That makes sense, I appreciate the color.

Doug Swirsky: Yes. I was going to add Steve this is a portfolio. We’re just trying to build a portfolio of really a good client roster that’s using the platform in a clinical setting with potential to generate development milestones and ultimately commercialize a product and we’re spreading our bets, if you will, and selling to all companies that we believe are quality companies in this space. Some of them won’t succeed and we want to support as many of them as possible, so that many of them can.

Steven Mah: Yes. Understood. And then if I can squeeze one more in, maybe on your instrument side of your business, could you give us some color on what you’re seeing in the marketplace? It sounds like maybe sales cycles are lengthening or taking longer. Maybe if you could provide some color on how things are looking from the instrument side, given that some companies in the cell and gene therapy and bioprocessing stated there is some signs of some green shoots or improvements, maybe kind of square away what others are saying with kind of what you’re seeing in marketplace. And if you could add also perspective from maybe larger size customers versus early stage customers, how those discussions on instrument sales or leasing are going? Thank you.

Doug Swirsky: Thank you, Steve. So, with regards to instruments, clearly to break out the difference between the larger companies and the smaller companies, a lot of the capital that’s flow – that’s come into the industry has been more focused on the larger companies, been more focused on the public companies. So, certainly some of these sales cycles have elongated. And so, I think there is a difference there. For us, instrumentation is one area where we’re able to really build that forecast from the ground up. This is sort of opportunity-by-opportunity that we’re tracking closely through our system as we work with the commercial team, both the sales team and the FASs to really understand which of these have the best likelihood of converting, what’s the probability. We’ve really tightened up our forecasting. That’s why today, we’re very comfortable that we’re going to be able to – unless something changes, to reach the objectives we set for ourselves, which is that zero to up 5% guidance on core revenue. So, we feel good about where we stand today. There is some occasional lumpiness. We saw like a big second quarter last year in terms of total core revenue, but this year, we’re not seeing that lumpiness. We are on track to meet our goals. Maher, want to add anything here?

Maher Masoud: No, I think one thing to add is Steve, so we’re 1-month into the third quarter and we still feel very confident in terms of what we guided previously in the year. Again, this is – we’re seeing consistent performance throughout the year. We’re seeing it one month into the third quarter as well. We feel very confident in what we previously guided to. And as Doug mentioned, we’re doing this on an opportunity-by-opportunity basis, where we’ve taken a new and fresh look in terms of how we forecast and we look at the opportunity. So, we feel very confident in the rest of the year, Steve.

Doug Swirsky: Yes. And just one thing we do want to say is our guidance continues to not be based on some type of improvement in the overall market conditions that we’re living through right now. So, that represents some upside if things – if those green sheets do manifest. But we’re feeling good for where we are at this point in the year.

Steven Mah: Okay, great. Thanks for that.

Doug Swirsky: Thank you, Steve.

Operator: And the next question comes from Matt Larew with William Blair. Your line is open.

Matt Larew: Hi. Good morning – afternoon. We’re on the afternoon. So, with VLX sort of being de-prioritized, I wanted to ask about future areas of priority for R&D and business development. Obviously, your core technology has had quite a gap over the field, perhaps even as others have tried to catch up, but you’re also just one part of a much broader process to do cell engineering. And there are others out there that are perhaps trying to create automated or integrated solutions. Most of the R&D on the core platform, at least in the last several years, has been, I would humbly describe as, iterative and PA focused. What are the things that you can do, if not VLX, to become a bigger company in this space? And does that largely revolve around improvements to your system, your consumables, or does it involve creating new technologies or acquiring new technologies?

Maher Masoud: Yes. Good question, Matt. Let me take that one. So, obviously, we have been working on product development internally over the past year. We actually have hired a new Head of Engineering, his name is Jeremy Kolenbrander. He joins us from 25-plus years at formerly Terumo and then Cellares as well. Obviously, our focus is on ensuring that we begin to, as you said, have a focus on those new products that are complementary that provide complementary workflows to our current customers and provide tangential – the tangential needs that they need in terms of the cell therapy workflow that we can begin to provide those type of opportunities and solutions for them. Obviously, without getting into what we are working on for competitive reasons, the R&D focus is one of the priorities for us, and that is part of the reason why we are taking a very focused approach as to how we run the organization as well to make sure that we can focus on that R&D, doing it in a sustainable way as well, where our financial profile remains very healthy as we focus on the R&D, our balance sheet remains healthy as well. And again, the main focus will be in cell therapy. We see that as a long and sustainable driver for MaxCyte. We believe in cell therapy. I truly believe that cell therapy is going to change the landscape of medicine over years to come. So, there is a huge growth driver there for us. And like you said in the past, it’s been iterative, but we are trying to be more than just that, right? And that’s why there is a focus on bringing in the Head of Engineering and creating those complementary workflows and taking – and really starting to provide solutions for those tangential needs of our customers.

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

Maher Masoud: Yes, great question. That’s one of our strengths is the support that we provide to our current customers, where we have a very built out sales organization, sales and marketing organization with sales reps and then field application scientists. Many of them we have with PhDs and years of experience in the space. So, we feel as though the current organization that we have, we can leverage for the growth that we believe we can drive towards over the next 3 years, 5 years and plus years, beyond that. That allows us to penetrate in the current addressable market compared to other competitors, especially smaller competitors that don’t have that type of infrastructure and that scientific support or regulatory support that we have. So, yes, we feel very confident, Matt, to your question whether we have the appropriate sales organization to begin to take advantage of opportunities ahead of us.

Matt Larew: Okay. Thank you.

Maher Masoud: Absolutely. Thanks Matt.

Operator: And the next question comes from Paul Cuddon with Deutsche Numis. Your line is open. Paul, your line now is open. Our next question, it will come from Jack Siedow with Craig-Hallum Capital Group. Your line is now open.

Jack Siedow: Hey, guys. This is Jack on for Matt. Can you hear me, alright?

Doug Swirsky: We can hear you, Jack, absolutely.

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

Doug Swirsky: I think the market is improving a little bit. Obviously, you have a day like yesterday, makes you question that a little bit, but it’s only one day. For us, we are looking at our detailed forecast, we are feeling very good where we are versus the objectives we set for ourselves, and we are just not building in any improvement in that, significant improvement in the landscape for the industry. Does that mean, again, there is not some green shoots out there, some reasons to be optimistic, I think certainly, but it’s anecdotal. We are seeing some financings. We are hearing some things. But at this point, our goal here is to execute against the plan. And if the markets improves, then I think that we will raise the bar for ourselves.

Maher Masoud: Yes. Let me add something there as well. I mean so nothing has changed from the previous quarter in the sense of we are still seeing our customers rationalize their products and their pipeline, focusing on what their lead assets and what they believe has the highest likelihood of going through the clinic and having commercial success. I see that as a good sign, right. That’s what you want to see. You want to have that healthy rationalization. We are still cautiously optimistic. As Doug mentioned, we are seeing some green shoots here and there, but at the same time, it’s still – we are tied to the macro environment. It’s still somewhat of a challenging macro environment for many companies out there, but we are still seeing the same stability that we saw towards the end of last year going to Q1 as well. That stability is there, which is – we see that as a positive.

Jack Siedow: Alright. That makes sense. Thanks for taking our question.

Operator: And the next question comes from Paul Cuddon with Deutsche Numis. Your line is now open.

Paul Cuddon: Yes. Good afternoon, guys. Can you hear me okay this time?

Maher Masoud: Yes.

Paul Cuddon: Okay. Sorry about before. Just a quick question, I mean PA is sort of a step up on Q4 gain. So, I am just wondering, if you are seeing any areas of kind of particularly sort of high consumption thinking, sort of non-T-cell cell types, different targets and some of your new customers coming through there?

Doug Swirsky: Yes. Obviously, we are seeing – so, our customer base is a variety of customers, different cell types. It’s always been the case. That hasn’t changed for us, Paul. I guess is your question getting towards, is there a concentration of certain sales towards one particular type of modality, is that what you are alluding to, Paul?

Paul Cuddon: Yes, absolutely.

Doug Swirsky: Yes. No, again, I think it’s across the range, whether it’s T-cells or TILs or TCRs. For different targets, you see, obviously, you have a lot of companies out there pursuing CD19 or CD70s. But I would say it’s across. There is not one particular indication or modality or cell type that we are seeing. In fact, what we are seeing is more of complexity in the cell therapy space, where you are seeing some of our customers and partners really begin to have three, four, five edits. Whether they are reducing exhaustion of the T-cell or creating persistence in the T-cell, so it’s – we are seeing more complexity. We are seeing an evolving market itself in the cell therapy space. I wouldn’t tie it down to any one particular cell type or target itself.

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

Doug Swirsky: So, I don’t think we are guiding specifically by line, right. So, we did see a dip in Q2. When we forecast the rest of the year, we are looking at the PA run rates, we are looking at the specific instrument opportunities, we are looking at the leases that are in place and renewing. So, regardless of sort of how cell therapy and drug discovery individually evolve, which again, we don’t guide separately, we feel confident about the guidance we have set for ourselves. Is there some noise quarter-to-quarter, there always is. And so, let’s check back in a couple of months here, a few months here and see where we stand. But we are not certainly panicking. We do know there is great applications for our technology on both the cell therapy and drug discovery side. But as we have mentioned, the focus of the company, where we see the biggest opportunity to participate in the downstream economic success of our customers, is on the cell therapy side.

Maher Masoud: That’s right, Doug.

Paul Cuddon: Thank you very much.

Maher Masoud: Yes. Thank you, Paul.

Doug Swirsky: Thank you.

Operator: And our next question comes from Mark Massaro with BTIG. Your line is open.

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

Doug Swirsky: Yes. Thank you. So, first off, we are not in a position to provide guidance on 2025. Are we expecting to receive milestones in 2025 and SPL program related revenue to include both milestones and royalties, absolutely are we in a position to guide today, no. The reason why we are suggesting that we won’t have any the rest of the year is there were some things that occurred earlier in the year than we expected. And in some cases, which we discussed on the last earnings call, there are things that we didn’t think would happen this year, really speaks that to the lumpiness of this, the difficulty to predict when these development milestones will occur. One of the benefit of having a growing roster of SPL customers is that at some point that lumpiness can smooth out a little bit, but it can be very difficult to predict when a particular milestone is going to be achieved. We are taking a conservative view here as we look at what could hit this year, and we – probability weight things, we say let’s assume that we have gotten done what we were going to this year and we are just going to focus on running our business. That milestone money, sort of mailbox money, we don’t have to think about it. We are not going to set guidance for 2025. Something else gets pulled into 2024, that’s some upside. We are not counting on it – it’s not impacting how we are thinking about the business for the rest of the year.

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

Maher Masoud: Yes, absolutely. You are right. So, these are regulatory approvals. That would be whether it’s in the U.S. or in Europe, whichever occurs first. But most likely, it’s always in the U.S. Let me walk you through a little bit. So, for 20 – the reason we are saying in ‘27 we could have potentially five approved therapies is there are three programs currently about to enter potential pivotal start in ‘25 and then we have actually, it’s almost four programs that will be pivotal starting ‘25, and we have one program currently in a Phase 3. So, when you look at it and you do the timeline as to what potentially they can be approved in, conservatively, I think we are looking at ‘27 for those programs. Same thing thereafter, we have other programs. They will be entering into pivotal a few years thereafter. Some of them 1 year, ‘26, or ‘27 is when they are entering into pivotal. So, that’s where we are projecting that we would have additional approvals back 2 you s or 3 years after that, so to speak. But really, if you look at the near-term, you are looking at three to four programs in a pivotal start in ‘25, one program right now in a Phase 3. If you do the math, you are looking at approvals starting in ‘27. Now, in terms of the probability of success, that’s tough for us to do, very tough for us to do because, obviously, if we could do that, we would be in a different line of business, I guess. But it’s – the one thing that we talked about, I think on our last earnings call, the beauty of the cell therapy market is, you will get insight as to whether there is efficacy possibly sooner than other modalities, right. You can see efficacy with patients and, oftentimes, with a fewer number of patients. So, we will – hopefully, we will get more clarity when these – when the therapies begin their pivotal starts in ‘25. If we see efficacy, obviously, then we will see it sooner than anticipated. But we feel confident that there are five potentially in ‘27 and then, thereafter, we can have an additional five going into a few years after that.

Mark Massaro: Excellent. Thanks guys.

Maher Masoud: Absolutely.

Operator: I show no further questions at this time in the queue. I would now like to turn the call back to Maher for closing remarks.

Maher Masoud: Yes. Thank you, operator, and thank you everyone for joining us on today’s call. We look forward to speaking to everyone again during the next earnings call in a few months.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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