MaxCyte, Inc. — Form 10-Q Summary
Reporting period: Quarter and six months ended June 30, 2021. The unaudited statements cover MaxCyte, a life sciences company providing cell-engineering instruments, processing assemblies, licenses and related services for cell therapy, drug discovery and biomanufacturing.
Financial Results and Key Metrics
| Metric | Three months ended June 30, 2021 | Six months ended June 30, 2021 | Comparable change |
|---|---|---|---|
| Revenue | $7.1 million | $13.6 million | Up 38% and 25%, respectively |
| Gross profit | $6.3 million | $12.1 million | Up 35% and 24%, respectively |
| Gross margin | 89% | 89% | Down from 90% in both comparable periods |
| Operating loss | $(4.4) million | $(10.8) million | Wider than $(2.8) million and $(5.8) million |
| Net loss | $(4.4) million | $(11.5) million | Wider than $(3.0) million and $(6.1) million |
| Basic and diluted loss per share | $(0.05) | $(0.14) | Six-month loss increased from $(0.10) |
- Six-month revenue consisted of $9.5 million from cell therapy, $3.6 million from drug discovery and $0.5 million of program-related revenue.
- Six-month operating expenses were $22.9 million, including research and development of $9.3 million, sales and marketing of $5.7 million and general and administrative expenses of $7.9 million.
- Cash used in operating activities was $9.0 million for the six months, compared with $6.0 million in the prior-year period.
- Cash used in investing activities was $21.2 million, primarily reflecting $20.0 million of net purchases of short-term investments and $1.2 million of capital expenditures.
- Cash provided by financing activities was $48.9 million, including $51.8 million of net equity proceeds and $2.1 million from option exercises, partially offset by repayment of the MidCap loan.
- Cash and cash equivalents were $37.4 million at June 30, 2021; cash, cash equivalents and short-term investments totaled $73.4 million.
- The company had no outstanding debt facility at June 30, 2021 after repaying its $5.0 million MidCap term loan in March 2021. Total liabilities were $14.3 million, including lease liabilities and deferred revenue.
- Accumulated deficit was $106.7 million at June 30, 2021. The company has incurred significant losses since inception and expects further losses.
Material Changes Versus the Prior Comparable Period
- Revenue growth was driven primarily by higher instrument and disposable sales and licenses, particularly in cell therapy. Program-related revenue declined because of variability in milestone-triggering events.
- Cell therapy revenue increased 53% for the six months, while drug discovery revenue increased 22%; program-related revenue declined 71%.
- Research and development expense increased 11% for the six months, despite the wind-down of CARMA-related activities, primarily because of higher compensation, product development and laboratory costs.
- Sales and marketing expense increased 46% as the company expanded headcount, commissions and commercial activities.
- General and administrative expense increased 135%, primarily due to higher compensation, stock-based compensation, legal and professional fees, and preparation for operating as a U.S.-listed public company.
- Gross margin remained high at 89% but declined from 90%, reflecting revenue mix and higher costs associated with product sales.
- Stock-based compensation increased to $3.2 million for the six months from $1.1 million in the prior-year period.
- CARMA activities were discontinued in the first quarter of 2021. Six-month CARMA-related expenses totaled $4.3 million, including $1.8 million of severance, legal and other cessation costs.
Guidance, Outlook, Risks and Unusual Items
- Management expects revenue to increase over time as the cell therapy and drug discovery markets expand, the installed base grows and additional Strategic Platform Licenses are secured. No quantitative revenue or earnings guidance was provided.
- Management expects revenue and program-related milestone revenue to fluctuate because of product-sale timing, partner development decisions and the timing of clinical milestones.
- Management expects continued investment in research and development, sales and marketing, manufacturing capacity and public-company infrastructure, which is expected to increase operating expenses and losses.
- Management stated that milestone revenue could be meaningful over the next 12 to 18 months, but timing and realization depend on partners’ regulatory progress and clinical success.
- The company entered into a new office, laboratory and manufacturing-space lease with approximately $24.5 million to $24.6 million of incremental non-cancellable payments over the lease term, which is estimated to extend to 2035.
- COVID-19 may continue to disrupt manufacturing, supply chains, customer operations, installations, shipments, clinical trials and sales cycles. The filing does not quantify its impact on first-half 2021 revenue or future periods.
- Customer and supplier concentration remain material: one customer represented 18% of six-month revenue and 22% of accounts receivable at June 30, 2021; a limited group of suppliers accounted for 48% of six-month inventory purchases.
- The company relies on partners for milestone and other program-related revenue, and partners may delay, discontinue or fail to achieve development milestones.
- After the reporting date, the company completed its U.S. IPO on August 3, 2021, issuing 15.525 million shares at $13.00 per share and receiving approximately $184 million of net proceeds. Management expects these proceeds and existing cash to fund operations and capital expenditures for the foreseeable future, subject to execution and spending assumptions.
- After the reporting date, the MidCap warrant was settled cashlessly for 64,603 shares of common stock.
- Disclosure controls and procedures were assessed as effective as of June 30, 2021. The filing reports no material legal proceedings and no material changes to previously disclosed risk factors.
Investor Verification Priorities
- Verify the sustainability of revenue growth excluding volatile program-related milestones and assess the mix of instruments, disposables, licenses and lease revenue.
- Monitor operating-expense growth, stock-based compensation and the pace at which revenue growth can offset continued losses.
- Reconcile post-IPO cash, share count, dilution and the company’s projected cash runway against actual operating cash burn.
- Assess customer and supplier concentration, supply-chain availability and the effect of COVID-19 on customer programs and manufacturing.
- Track Strategic Platform License additions, partner clinical milestones and the timing and probability of related revenue.
- Evaluate the financial impact and execution requirements of the new long-term facility lease and planned manufacturing expansion.
- Review the cessation of CARMA activities and confirm that related costs do not recur materially.