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MaxCyte: THE INVESTMENT CASE

‘More of the same, please’: MaxCyte poised for continued growth after solid first half

The US-based, London-listed healthcare group topped expectations with its latest results and analysts are tipping it for more success this year
cancer cells
INVESTMENT OVERVIEW: MXCT The Big Picture
MaxCyte is developing treatments that use a patient's own immune system to help fight cancer

US-based cell engineering technology firm MaxCyte Inc (LON:MXCT) is poised for continued growth after a solid first half of the year.

Revenues in the first six months of 2017 rose 13.5% to US$6.2mln from US$5.5mln a year earlier, with progress seen across all areas of the business.

READ MORE: Growth across all areas in first half of 2017

WATCH: CEO Doerfler on 'incredibly exciting' opportunities for MaxCyte

A particular focus this year has been the commercial licence agreement with CRISPR Therapeutics (NASDAQ:CRSP) and investment in the company’s commercial platform.

The company now has 15 programmes licensed for clinical stage use.

What it does…

MaxCyte is essentially two companies in one: It sells and licenses its cell engineering technology to some of the world’s largest pharma and biotechnology companies. This part of the business generated the sales.

And it is also using said technology to develop treatments for cancer that incite the body’s own immune system to tackle the killer disease. That’s a hot area at the moment.

It has developed a technology called CARMA, which is funded from its income and cash reserves.

This is being developed to tackle cancer and it is hoped the platform will be spawn the next-generation immuno-oncology treatments that use the body’s own immune system to fight the disease.

What’s new and innovative, even for this very new and innovative strand of research, is that CARMA is being designed to grapple with solid tumours.

The breakthroughs in this field, such as CAR T-cell immuno-therapies, fight blood-borne illness, and yet 90% of cancers are solid tumours.

Early results from pre-clinical research carried out by the world famous Johns Hopkins Hospital in Baltimore have been encouraging. It also has a collaboration with Washington University in St. Louis.

On course to submit the first IND application from its CARMA platform by end of 2017

It remains focused on advancing its CARMA immuno-oncology programme and is on course to submit its first investigational new drug (IND) application from the programme by the end of the year.

“For this year, given the timing of certain contracts, we expect an increase in the normal seasonal weighting of revenues as compared to the prior year,” revealed Doug Doerfler, MaxCyte’s chief executive officer. 

“Other business highlights have included the signature of a commercial licence agreement with CRISPR Therapeutics and Casebia Therapeutics, MaxCyte's cooperative research and development agreement ("CRADA") with the National Institute of Health's ("NIH") National Institute of Allergy and Infectious Diseases ("NIAID"), and recently presented and published scientific data.

"MaxCyte's proprietary technology is now uniquely positioned as an enabler for the clinical and commercial application of cutting-edge treatments in immuno-oncology and gene editing. Having implemented several key global sales and marketing initiatives in support of the instrument business in the first half of the year, the company remains focused on building momentum and on continuing to deliver significant growth,” Doerfler added.

A US biotech listed in London…

As UK biotechs are beating a trail to the US craving greater understanding and higher valuation, Doerfler and his team have opted to go in the opposite direction.

But why did it go for a listing on a junior stock market 3,640 miles from home?

The answer relates to market perception.

As noted above, MaxCyte is essentially two companies in one. One arm sells and licences cell engineering technology while the other focuses on developing immuno-therapies.

While the Europeans seem to like this hybrid model of self-sustaining development, the Americans would have preferred MaxCyte to have simply focused on the cancer innovation.

The thinking behind the move was that investors on this side of the pond would ‘get’ the company a little better and subsequently back it a little better, too.

Recently raised £20mln to develop its technology…

Back in March, the drug developer unveiled ambitious plans to raise £20mln, which it will use to accelerate the development of its CARMA immuno-oncology platform.

The cash will be targeted at pre-clinical and clinical studies, including its investigational new drug application for its acute myeloid leukaemia programme. It also wants to continue and expand some of the high profile collaborations it has.

New funds will help MaxCyte expand into new indications, while it plans to invest in its sales and marketing efforts for the cell engineering technology it sells and licences to big pharma companies.

“The funds raised during this proposed placing will enable us to accelerate the development of this promising technology, which we believe has potential in solid tumours and haematological malignancies which have been difficult to address with current CAR approaches,” said Doerfler at the time.

What the brokers are saying…

“MaxCyte completed an exceptional first year as a publicly-listed company with a £20m capital raise at a slight premium,” wrote Trinity Delta analyst Mike Cooper recently.

“The additional capital allows MaxCyte to fully execute its dual strategy of developing a pipeline of CARMA products, while also exploiting its leading position in the field of flow electroporation.

“The extra cash will allow MaxCyte to expand the number of CARMA programmes from two to five and fund a total of three clinical trials. Recently presented data at the AACR meeting confirms the potential of its CAR therapy.”

Copper thinks the stock can add another pound or so in the coming months and has a target price of 351p a share.

The share price…

The only way is up so far for the MaxCyte share price, well almost.

The company listed last March at 70p a pop but that number has more than trebled since then. Much of that growth has come recently too, with the stock jumping from 85p last October to around 305p in May.

It’s fallen back ever so slightly from those highs and currently trades around the 245p mark, giving MaxCyte a market capitalisation of close to £140mln.

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