MaxCyte(MXCT) - 2022 Q4 - Annual Report

Part I Business MaxCyte is a commercial-stage cell engineering company providing its proprietary ExPERT platform for cell therapy discovery and commercialization, generating revenue from instruments, disposables, and strategic licenses with potential $1.55 billion in milestone payments Overview and Technology Platform MaxCyte's core ExPERT platform, based on Flow Electroporation® technology, enables scalable cell engineering from research to cGMP manufacturing, supported by over 150 patents - The company's core offering is the ExPERT platform, based on proprietary Flow Electroporation® technology, which facilitates complex cell engineering for next-generation cell therapeutics[21][25] - The ExPERT platform is designed to be scalable, supporting the entire cell therapy development continuum from initial discovery to commercialization[25][31] - The platform is supported by a robust intellectual property portfolio with over 150 granted patents and is used by top-tier biopharmaceutical companies and academic institutions[25][26] - The cell therapy market's shift towards complex, non-viral delivery methods due to the limitations of viral vectors (e.g., payload capacity, toxicity concerns, cost) presents a significant growth opportunity for MaxCyte's electroporation technology[44][45] Customer Agreements and Business Model MaxCyte's business model relies on tiered licenses, with Strategic Platform Licenses (SPLs) providing recurring fees, disposable sales, and significant potential pre-commercial and commercial milestone payments from over 125 programs - The company utilizes a tiered licensing model: Research Licenses for preclinical work, Clinical Licenses for human trials, and Strategic Platform Licenses (SPLs) for clinical development and commercialization[49][50][51] - SPLs provide recurring revenue through annual license fees and disposable sales, supplemented by significant potential upside from program-related pre-commercial milestone payments and commercial sales-based payments[53][55] Strategic Platform License (SPL) Status | Metric | Value | | :--- | :--- | | Number of SPL Partnerships | 19 | | Potential Programs Covered | > 125 | | Programs Active in Clinic (IND-cleared) | 16 | | Potential Pre-commercial Milestone Payments | > $1.55 billion | Products and Manufacturing MaxCyte's product portfolio includes the ExPERT instrument family (ATx, STx, GTx, VLx) and proprietary disposable Processing Assemblies, manufactured at its ISO 9001 facility with third-party support for risk mitigation - The ExPERT instrument family includes four models: ATx (research), STx (drug discovery), GTx (clinical cGMP), and the new VLx (very large-scale bioprocessing)[62][65] - In September 2022, the company launched the ExPERT VLx system, designed for very large volume cell-engineering, capable of transfecting up to 200 billion cells in under 30 minutes[73] - The company designs and manufactures its instruments and single-use PAs at its ISO 9001 compliant facility in Maryland, while also using a third-party manufacturer for a portion of its PA supply for risk mitigation[90] - The company manages supply chain risk for key components by qualifying multiple suppliers and maintaining sufficient inventory levels. Approximately 34% of inventory at year-end 2022 was from a single supplier[94] Competition, IP, and Regulation MaxCyte competes in the life sciences market, protecting its technology with over 150 patents and leveraging FDA Master Files to streamline partner regulatory submissions, while adhering to relevant data privacy laws - Key competitors include Lonza Group AG, Thermo Fisher Scientific Inc., Miltenyi Biotec, and Bio-Rad Laboratories, Inc., some of whom have substantially greater financial resources[95][96] - The company's intellectual property portfolio includes over 150 granted U.S. and foreign patents and over 95 pending applications, with protection for its instruments and methods extending through at least 2028[97][98] - A key part of the company's offering is its FDA Master File and equivalent Technical Files in foreign jurisdictions, which partners can reference to support their own regulatory submissions, potentially accelerating development[100][108] Risk Factors The company faces significant risks including a history of net losses, revenue dependence on limited products and unpredictable milestone payments, reliance on partner success, intense competition, supply chain disruptions, and intellectual property protection challenges - The company has a history of significant net losses, reporting a net loss of $23.6 million in 2022 and an accumulated deficit of $137.9 million, and expects to incur losses for the foreseeable future[124] - Revenue is highly dependent on a limited number of products and is prone to quarterly fluctuations due to long sales cycles and the unpredictable timing of large, one-time milestone payments from SPL partners[130][131] - The company's success is heavily reliant on its partners' ability to advance therapeutic candidates through clinical development and achieve regulatory approval, which is a lengthy, expensive, and uncertain process[166][178] - A significant portion of revenue comes from a limited number of partners. In 2022, one cell therapy partner accounted for 23% of total revenue, and the six largest customers accounted for approximately 40%[186] - The company relies on a limited number of suppliers for key components, with approximately 34% of inventory at year-end 2022 purchased from a single supplier, creating supply chain risk[200] Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None[348] Properties In 2022, MaxCyte relocated its headquarters, R&D, manufacturing, and distribution to a new 67,000 square foot leased facility in Rockville, Maryland, with the lease extending through August 2035 - The company leases approximately 67,000 square feet in Rockville, Maryland for its headquarters, R&D, and manufacturing operations[349] - The current lease term runs through August 31, 2035[349] Legal Proceedings The company is not currently a party to any material legal proceedings and is unaware of any pending or threatened actions that would materially adversely affect its business - The company is not currently a party to any material legal proceedings[351] Mine Safety Disclosures This item is not applicable to the company - Not applicable[352] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities MaxCyte's common stock trades on Nasdaq and AIM, the company has never paid dividends, and its 2021 US IPO net proceeds of $184.3 million were used for business expansion as planned - The company's common stock trades on both the Nasdaq Global Select Market and the AIM under the ticker 'MXCT'[355] - The company has never paid dividends and does not plan to in the foreseeable future[357] - The August 2021 US IPO generated net proceeds of $184.3 million, which have been used for business operations and expansion as described in the prospectus[359][361] Management's Discussion and Analysis of Financial Condition and Results of Operations In 2022, MaxCyte's revenue grew 31% to $44.3 million, but net loss widened to $23.6 million due to increased operating expenses, while maintaining a strong liquidity position of $227.3 million in cash and investments Results of Operations For 2022, total revenue increased 31% to $44.3 million, driven by cell therapy and program-related milestones, but significant increases in R&D, Sales & Marketing, and G&A expenses led to a $27.4 million operating loss Revenue by Market Segment (in thousands) | Segment | 2022 | 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Cell therapy | $30,546 | $22,984 | $7,562 | 33% | | Drug discovery | $9,100 | $8,395 | $705 | 8% | | Program-related | $4,616 | $2,515 | $2,101 | 83% | | Total revenue | $44,262 | $33,894 | $10,367 | 31% | Key Financial Results (in thousands) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Total Revenue | $44,262 | $33,894 | | Gross Profit | $39,163 | $30,247 | | Gross Margin | 88% | 89% | | Operating Loss | ($27,361) | ($18,189) | | Net Loss | ($23,571) | ($19,082) | - The increase in operating expenses was driven by higher compensation from increased headcount, increased stock-based compensation, higher marketing and travel expenses, and costs associated with being a Nasdaq-listed public company[435][437][438] Liquidity and Capital Resources As of December 31, 2022, MaxCyte maintained a strong liquidity position with $227.3 million in cash and investments, sufficient to fund operations for at least the next 12 months, with no debt obligations Cash and Investments (in millions) | Date | Amount | | :--- | :--- | | Dec 31, 2022 | $227.3 | Summary of Cash Flows (in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Operating Activities | ($14,783) | ($10,680) | | Investing Activities | ($24,823) | ($195,013) | | Financing Activities | $2,889 | $234,720 | - The company believes its existing cash and investments will be sufficient to fund operations for at least the next 12 months[443] Quantitative and Qualitative Disclosures about Market Risk The company is exposed to interest rate, foreign currency, and inflation risks, but management does not anticipate a material financial impact and does not currently use hedging instruments - Primary market risks are interest rate fluctuations on investments, foreign currency exchange rates (Euro and British Pound), and inflation[473][474][475] - The company does not expect these risks to have a material impact on its financial results in the foreseeable future and does not currently engage in hedging[473][474] Financial Statements and Supplementary Data This section presents the audited consolidated financial statements for 2022 and 2021, showing total assets of $286.7 million, total revenue of $44.3 million, and a net loss of $23.6 million, with detailed accompanying notes Consolidated Balance Sheets As of December 31, 2022, MaxCyte reported total assets of $286.7 million, current assets of $252.3 million (primarily short-term investments), total liabilities of $32.7 million, and total stockholders' equity of $254.0 million Consolidated Balance Sheet Data (in thousands) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $11,065 | $47,782 | | Short-term investments | $216,275 | $207,261 | | Total Assets | $286,653 | $284,120 | | Total Liabilities | $32,686 | $21,223 | | Total Stockholders' Equity | $253,967 | $262,897 | Consolidated Statements of Operations For 2022, MaxCyte reported $44.3 million in total revenue, $39.2 million gross profit, $66.5 million total operating expenses, resulting in a $27.4 million operating loss and a $23.6 million net loss, or ($0.23) per share Consolidated Statement of Operations Data (in thousands) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Total Revenue | $44,262 | $33,894 | | Gross Profit | $39,163 | $30,247 | | Total Operating Expenses | $66,524 | $48,435 | | Operating Loss | ($27,361) | ($18,189) | | Net Loss | ($23,571) | ($19,082) | | Net Loss Per Share | ($0.23) | ($0.21) | Consolidated Statements of Cash Flows In 2022, net cash used in operating activities was $14.8 million, investing activities used $24.8 million, and financing activities provided $2.9 million, leading to a $36.7 million net decrease in cash, ending with $11.1 million Consolidated Cash Flow Data (in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($14,783) | ($10,680) | | Net cash used in investing activities | ($24,823) | ($195,013) | | Net cash provided by financing activities | $2,889 | $234,720 | | Net (decrease) increase in cash | ($36,718) | $29,027 | | Cash and cash equivalents, end of year | $11,065 | $47,782 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants regarding accounting principles, financial disclosure, or auditing scope - None[597] Controls and Procedures Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with no independent auditor attestation included as permitted for emerging growth companies - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[598] - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2022[599] - No attestation report on internal control from the independent auditor is included, as permitted for emerging growth companies[600] Part III Directors, Executive Officers, Corporate Governance, Compensation, and Security Ownership Information for Part III (Items 10-14) is incorporated by reference from the forthcoming 2023 Proxy Statement - Information for Part III (Items 10, 11, 12, 13, and 14) is incorporated by reference from the forthcoming 2023 Proxy Statement[604][605][606][607] Part IV Exhibits and Financial Statement Schedules This section lists the financial statements and provides an index of all exhibits filed with the annual report - This section contains the list of financial statements and an index of exhibits filed with the annual report[608][610] Form 10-K Summary The company has not provided a summary for the Form 10-K - None[616]