MaxCyte, Inc. — FY2021 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2021. The filing is an annual Form 10-K, not a standalone fourth-quarter report.
Business Context
MaxCyte is a commercial cell-engineering and life-sciences company. Its ExPERT platform uses proprietary Flow Electroporation technology to engineer cells for cell therapy, drug discovery, biomanufacturing and related applications. Revenue is generated from instrument sales and leases, processing assemblies and buffers, recurring license fees, and milestone payments under Strategic Platform Licenses (SPLs).
- More than 500 instruments were installed globally at year-end, compared with more than 400 at December 31, 2020.
- The company had 15 active SPLs covering more than 95 potential clinical programs; more than 15% were in the clinic.
- Potential pre-commercial milestone payments under current SPLs exceeded $1.25 billion, although these amounts are contingent on customers’ clinical and regulatory success.
- The VLx very-large-scale system was introduced in December 2021.
- MaxCyte had 84 full-time employees at year-end and operated primarily from Maryland.
Financial Highlights
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue | $33.9 million | $26.2 million | +30% |
| Gross profit | $30.2 million | $23.4 million | +29% |
| Gross margin | 89% | 89% | Flat |
| Operating loss | $18.2 million | $11.1 million | Loss increased |
| Net loss | $19.1 million | $11.8 million | Loss increased |
| Basic and diluted loss per share | $0.21 | $0.17 | Loss per share increased |
| Cash used in operating activities | $10.7 million | $8.8 million | Higher use |
- Cell therapy revenue increased 46% to $23.0 million; drug discovery revenue increased 18% to $8.4 million.
- Program-related revenue declined 23% to $2.5 million because milestone timing is variable.
- Research and development expense decreased 13% to $15.4 million, primarily because CARMA-related spending declined as the program was wound down.
- Sales and marketing expense increased 56% to $13.0 million, while general and administrative expense increased 153% to $18.7 million, reflecting headcount growth, stock-based compensation, public-company costs and professional fees.
- Stock-based compensation expense was $8.0 million, compared with $2.5 million in 2020.
- International customers represented approximately 35% of revenue.
Liquidity, Cash Flow and Capital Structure
- Cash and cash equivalents were $47.8 million and short-term investments were $207.3 million at December 31, 2021, for approximately $255.0 million of combined liquidity.
- The August 2021 U.S. IPO generated $201.8 million of gross proceeds and $184.3 million of net proceeds. The company also raised $51.8 million net in a February 2021 equity offering.
- Net cash used in investing activities was $195.0 million, primarily reflecting purchases of short-term investments of $191.2 million and capital expenditures.
- Net cash provided by financing activities was $234.7 million.
- The MidCap term loan was repaid in full in March 2021. No debt was outstanding at year-end, excluding operating lease liabilities.
- Total liabilities were $21.2 million and stockholders’ equity was $262.9 million at year-end.
- The company had an accumulated deficit of $114.3 million and expects continued operating losses.
Material Changes Versus the Prior Comparable Period
- Revenue growth accelerated through higher instrument sales and leases and increased processing-assembly sales, particularly from cell therapy customers.
- Profitability deteriorated despite revenue growth because operating expenses rose 41%, led by general and administrative and sales and marketing costs.
- CARMA internal research and clinical development was discontinued in the first half of 2021. MaxCyte intends to focus on licensing CARMA manufacturing processes and intellectual property rather than further internal development.
- The company became U.S.-listed on Nasdaq in July 2021 while continuing to trade on AIM, increasing compliance, insurance, investor-relations and other public-company expenses.
- Instrument capacity and facilities are being expanded. MaxCyte entered a long-term lease for up to approximately 67,000 square feet of new Maryland facilities, with total incremental non-cancellable lease payments of approximately $29.9 million.
- Revenue concentration remained significant: one cell-therapy customer accounted for 21% of FY2021 revenue, and the six largest SPL customers accounted for approximately 40%.
Outlook, Commentary and Key Risks
Management expects revenue growth from expansion of the ExPERT installed base, recurring processing-assembly and license revenue, additional SPLs, broader international operations and potential customer milestones. The company also expects research and development, sales and marketing, infrastructure and public-company expenses to increase, and therefore expects continued net losses for the foreseeable future.
- Milestone and future commercial-payment revenue is uncertain because it depends on customer clinical progress, regulatory approvals and commercialization; MaxCyte has not received commercial payments from SPL customers to date.
- The company’s sales cycle can extend six to twelve months or longer, creating quarterly volatility.
- MaxCyte is transitioning processing-assembly manufacturing in-house, with commercial-scale capacity targeted by the end of 2022 and initial full capacity during 2023. Execution, quality and capacity risks could affect margins and supply.
- Approximately 33% of inventory at year-end was purchased from one supplier, creating single-source and supply-chain exposure.
- COVID-19 continued to affect customer research, clinical programs, travel, demonstrations, manufacturing and supply chains. The filing states that the ultimate impact cannot be quantified clearly.
- Competition includes larger companies such as Lonza, Thermo Fisher, Miltenyi Biotec, Bio-Rad and Harvard Bioscience.
- Clinical, regulatory, product-liability, intellectual-property, cybersecurity, data-privacy, foreign-exchange and geopolitical risks could adversely affect the business.
- The company reported no material legal proceedings and effective disclosure controls as of December 31, 2021. As an emerging growth company, it was not required to provide auditor attestation of internal control effectiveness.
Investor Verification Checklist
- Reconcile FY2021 revenue growth with the mix of instrument sales, leases, disposables and milestone revenue.
- Assess customer and partner concentration, including the 21% customer contribution and approximately 40% contribution from the six largest SPL customers.
- Track the number and clinical status of SPL programs and determine whether potential milestones are converting into recognized revenue.
- Evaluate the pace, cost and quality of the transition to in-house processing-assembly manufacturing and the new Maryland facility.
- Monitor operating cash burn, discretionary investment spending and the period for which the approximately $255 million liquidity balance can fund planned losses and expansion.
- Review dilution from stock-based compensation, outstanding options and future equity financing needs.
- Verify the effect of COVID-19, supply-chain constraints, geopolitical events and regulatory developments on customer programs and product availability.