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MaxCyte: Firing on all cylinders

MaxCyte: Firing on all cylinders

MXCT made outstanding progress in H1 20 across the business and is set to report revenue growth of c 30% to $10.9mln ($8.4mln in H1 19). Trading reflected the solid progress made in MXCT’s cell therapy business, which is focused on driving adoption of its nonviral cell engineering technology Flow Electroporation across its ExPERT instrument platform. Since the start of the year, MXCT has signed three out of 11 clinical and commercial licences with leaders in the cell therapy space. The company’s wholly-owned therapeutic subsidiary, CARMA, is on target for achieving independent funding in 2020, and this can crystallise its value, given the strong appetite and interest in the broader regenerative medicine space which attracted $9.8bn of global financing in 2019.

Multiple revenue streams: These include recurring revenues derived from technology access fees for cell therapy where the company has over 120 programme licences, 90 of which are licensed for clinical use, also generating recurring revenues from the consumable elements required for cell engineering using the ExPERT platform. MXCT’s 11 clinical and commercial partnerships represent aggregate potential pre-commercial milestones of over $800mln, which are only just starting to be released and which are set to be a key driver of top-line growth over the near term.

Gold-standard in nonviral cell engineering: MXCT boasts a client line-up including all the top ten pharma companies, including those in research and discovery. The company’s 11 clinical and commercial partners are well-funded front-runners in the gene and cell therapy space. Most recent partners include Allogene Therapeutics, Caribou Biosciences, and Apeiron Biologics. The attractions of Flow Electroporation include its versatility across many therapeutic modalities and its application to off-the-shelf and autologous therapies and to solid tumours as well as blood cancers. The positioning of the technology is supported by an FDA Master File (and similar documentation for EU) which helps simplify the regulatory aspects of drug development.

Financing for scale and growth: MXCT raised $30mln gross in May, attracting specialist life science crossover investors Sofinnova Partners and Casdin Capital, to support the route towards a dual-NASDAQ listing in 2021. MXCT remains committed to maintaining its AIM listing, but, at the same time, a NASDAQ IPO can provide significant exposure to an investor base in common with its key clients and indeed, where an estimated 70% of sector 2019 funding originated (according to the Alliance for Regenerative Medicine).

Advancing in parallel: As its partners’ clinical programmes progress and with a view to potential commercialisation, MXCT is executing a multi-pronged strategy to grow its sales and marketing, field support, and R&D infrastructure to meet demand for its technology. It also includes an expansion of the range of ExPERT disposables, the most recent addition being a 1ml cuvette to fill an existing gap, meeting high demand, and broadening the applications of the technology.

CARMA key milestones: MXCT’s wholly-owned CARMA cell therapy subsidiary is close to completing dosing of the fourth and final cohort in a phase I trial with lead candidate MCY-M11 in ovarian cancer and mesothelioma. No toxicities or adverse events were so far observed and preliminary data are due to be reported in H2 20. MXCT is on track to achieve independent funding for CARMA during 2020. Its differentiated nonviral mRNA based technology, one-day manufacturing capability, and the ability to target solid tumours are among the stand-out features. Locust Walk, the company’s specialist strategic advisor, has a track record of achieving successful transactions. Options include licensing, a capital raise, or partnering, any of which are likely to help crystallise the value of CARMA in the short term.

Uncovering value: MXCT is demonstrating its strong internal progress, and its recurring revenues help to insulate it from the pandemic uncertainty. With its technology established as the gold-standard in nonviral cell engineering, the prospects of continuing to benefit from the wave of innovation and buoyant investment look excellent. However, MXCT’s market valuation seems to underplay its prospects and is supported by its trading business alone based on peer group comparison, without including $800mln of risk-adjusted milestones. Its market capitalisation also suggests that CARMA is overlooked. On the other hand, the near term prospects of independent funding for CARMA can highlight the value of this pioneering therapeutic platform. Furthermore, the pricing of the recent IPO of preclinical stage cell therapy company Nkarta Therapeutics indicates a market valuation of over $250mln, illustrating the scope of interest in innovation in the therapeutic space.

Quick facts: MaxCyte Inc

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AIM:MXCT

Price: 1010 GBX

Market Cap: £1.02 billion

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on 29/4/21

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