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MaxCyte: THE INVESTMENT CASE

MaxCyte defying the odds as it gears up for pivotal year

£1,000 invested at float two years ago would now be worth just north of £3,500
t-cell
INVESTMENT OVERVIEW: MXCT The Big Picture
The company is developing treatments for cancer that incite the body’s own immune system to tackle the killer disease

The life sciences sector can often be a graveyard for investors. That’s because the likelihood of success of drug candidate entering Phase I clinical trials is 9.6%, according to the Bio Innovation Organisation, or just under 12% if the failure rates in the oncology sector are factored out of the equation.

In short, you’d be better off spending your money at the local casino.

However, once in a while, a company comes along that defies the odds and provides a decent return for investors along the way.

A case in point is MaxCyte Inc (LON:MXCT), where £1,000 invested at float two years ago would now be worth just north of £3,500. Not a bad payback.

WATCH: MaxCyte gearing up for trial 

At this stage it should be pointed out that MaxCyte isn’t the typical, binary, heads-you-win, tails-you-lose drug developer you find traditionally on AIM. It has a hybrid business. So, it sells and licenses its cell engineering technology to some of the world’s largest pharma and biotechnology companies.

It is also using its platform, called CARMA, 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.

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 (chimeric antigen receptor) T-cell immuno-therapies, fight blood-borne illness, and yet 90% of cancers are solid tumours.

READ: MaxCyte appoints biotech pioneer as independent director

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.

The advance in MaxCyte's share price, which has risen to around 250p today from 70p at IPO in March 2016, has closely followed the progress the company has made as its first drug candidate has edged closer to the clinic.

Last month, MaxCyte told investors it was in active discussions with the US Food & Drug Administration (FDA) to begin the study of MCY-M11, which is based on its CARMA technology.

MaxCyte believes its discovery will address some of the most significant issues with current CAR-T therapies, including challenging side-effects and time-consuming manufacturing process that are involved.

CAR-T is a promising new way of getting T cells (white blood cells that helps ward off disease) to fight cancer by changing them in the lab so they can find and destroy cancer cells.

Funds available for growth

Financially the firm has the wherewithal to achieve its aims. As at 31 December 2017, MaxCyte’s total assets were US$31.4mln, up from US$16.1mln a year earlier, with its cash and cash equivalents totalling US$25.3mln, up from $11.7mln in 2016, boosted by its successful fund raise of US$25.5mln in April 2017.

MaxCyte's full-year results showed its investment in CARMA in 2017 was US$7.5mln, up from US$1.3mln in 2016 as the company prepared and completed that first investigational new drug application with the US FDA.

The group’s revenue for the year to 31 December 2017 increased by 14% to US$14.0mln, up from US$12.3mln a year earlier, with gross margins unchanged at 90%, while its net loss before the CARMA investment was US$2.4mln in 2017, wider from the US$2.0mln net loss in 2016, and adjusted underlying earnings (EBITDA) before CARMA investment was a loss of US$1.2mln in both 2016 and 2017.

READ: MaxCyte reports strong growth in cash and total assets in 2017

Commenting on the annual results, Doug Doerfler, MaxCyte’s CEO said: "Our core markets, cell therapy and immuno-oncology, are growing very rapidly. With our unique technology, we remain at the forefront of a wide variety of programmes across this exciting and increasingly valuable area of healthcare.”

Attracting attention

MaxCyte appears to be at that stage where it is attracting the attention of senior figures in the industry.

In fact, one of those movers and shakers, Richard Douglas, has joined the company as an independent director.

Douglas is one of the pioneers of biotechnology, having been vice president of corporate development and corporate officer at Genzyme from 1989 until its sale to Sanofi in 2011.

“Richard's wealth of expertise in business and corporate development and his deep life sciences industry experience will bring invaluable perspective to the MaxCyte board,” said Doerfler.

Experience like that will count for a great deal as the company attempts to keep up the current pace of development.

 -- Updates with latest results --

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