MaxCyte: 2020 revenues up 21% as industry enters new growth era
MaxCyte (MXCT) is maintaining excellent commercial momentum across its cell therapy business, which led to 21% year-on-year top-line growth to US$26.2mln in fiscal (FY) 2020. This included three new strategic licences with high profile cell therapy developers, a fourth signed post period, a rise in recurring revenues from instrument leases and disposable sales in cell therapy, accelerated by the receipt of milestone payments from partners. MaxCyte’s proprietary flow electroporation technology is cited as the gold standard in non-viral cell engineering by its industry-leading partners and is central to the value proposition of their therapies. Management states that its end-2020 pipeline comprised the largest number of potential strategic partners to date. If its partners’ clinical trials run to plan, there are several new drugs likely to reach the market over the next 5-10 years that can provide royalty income streams, in addition to the US$950mln of aggregate potential pre-commercial milestones.
Top-line year-on-year revenue growth of 21% was driven by lease payments for its expanded and optimised ExPERT instrument range (which leverages the company’s proprietary cell engineering technology flow electroporation) as well as sales of disposable elements. Notably, this included a boost from milestone payments triggered by the advances in clinical programmes of its 12 strategic cell therapy platform licences, which flowed straight through into an 89% gross margin. FY 2020 earnings before interest, taxes, depreciation and amotization (EBITDA) prior to investment in its CARMA platform stood at US$2.9mln, up from US$1.3mln a year earlier, driven by top-line growth as well as COVID-related reductions in travel and marketing expenses.
MXCT signed three new strategic licences in FY 2020; one with off-the-shelf CAR-T pioneer Allogene Therapeutics (ALLO); a second with CRISPR gene editing innovator Caribou Biosciences, co-founded by Nobel Prize in Chemistry 2020 winner Dr Jennifer Doudna; and a third with APEIRON Biologics, which focuses on novel cancer immunotherapies. MXCT added a fourth deal post-period with Myeloid Therapeutics, which leverages the properties of myeloid cells to treat cancers. These partnerships as well as the growing pipeline, demonstrate the acceptance by leading companies in cellular and gene therapies, as a gold standard non-viral technology provider and partner.
Versatile and unique non-viral electroporation technology; the capability to deliver any therapeutic molecule into cells, at any scale, reproducibly, is driving commercial momentum. This has been one of the key factors behind the adoption of the technology. Indeed, the breadth of the therapeutic approaches and indications developed by its partners in cell and gene editing indicates that MXCT continues to develop new capabilities and applications. MXCT’s customer base, which includes its drug discovery business, includes all the top ten pharma companies. The company has in total granted licences for more than 140 cell therapy programmes, with over 100 licences for clinical use. The aggregate potential pre-commercial milestones under its clinical licences amount to more than US$950mln. MXCT is also eligible for low single-digit post commercial sales-based payments for the majority of programmes, so if these clinical programmes come to fruition, it is also set to derive returns during the commercial lifecycle of the products.
A switch is underway from viral engineering towards non-viral engineering; MXCT’s flow electroporation technology is employed to insert or transfect therapeutic molecules directly into cells across its proprietary instrument platform. Efficient transfection is linked intrinsically to the efficacy, manufacturability and ultimately the value of the drugs being developed. This is particularly significant in the nascent cell therapy arena where manufacturing processes continue to face challenges in scale-up and efficiency and therefore cost.
Source: Proactive Investors, Company data
The rationale for MXCT’s technology includes reducing cost, improving speed and cell viability and potentially enabling therapies to reach critically ill patients much faster. MXCT provides support to its partners, combining know-how, field support, technology and provision of a clear regulatory pathway to help accelerate clinical development.
The macro-environment saw record levels of investment in 2020; despite the economic challenges and uncertainty presented by the pandemic, according to the Alliance for Regenerative Medicine (ARM), the regenerative medicine sector's financing levels reached around US$20bn in 2020, doubling year-on-year. Oncology is by far the largest category of disease under development, including solid and blood tumours, as well as inherited disease, areas in which MXCT has established expertise.
Funding and specialist life sciences crossover investors in place.
MXCT raised gross proceeds totalling US$55.3mln in February 2021 in an over-subscribed private placement of 5.74 million new shares at 700p per share, bringing in an array of crossover investors ahead of its NASDAQ initial public offering (IPO) targeted in 2021. These included D1 Capital Partners; funds and accounts advised by T. Rowe Price Associates, Inc.; ArrowMark Partners; Baron Capital Group; and First Light Asset Management, with existing cornerstone investors, Casdin Capital and Sofinnova Partners also participating. This was in addition to US$30.5mln raised in May 2020 in which the latter two led the round. MXCT seeks to access larger capital pools and to increase its exposure in the largest client market - roughly 70% of cell and gene therapy companies worldwide are located in the US.
Deployment of capital to scale up and respond to industry requirements
As its partners advance in preparation for product approvals, MXCT is scaling up. This might mean rolling out its technology to a much wider base to get medicines through development and to patients faster, by broadening the capital equipment base, disposable processing assemblies and capabilities, including through its ultra-high scale VLX benchtop platform, which can transfect up to 200 billion cells in less than 30 minutes. Capital will also be used to help enable the commercial launch of its partners’ therapeutics, as well as evaluating ways to move upstream and downstream in cell therapy either through partnerships or acquisitions.
The route for CARMA monetisation is being defined; the RNA-based CAR platform was spun out in 2020. MXCT seeks to maximise value via a non-exclusive strategy by licensing the one-day CARMA manufacturing processes, existing preclinical and clinical data, and/or the intellectual property developed, as well as potentially seeking partners to advance new CARMA candidates. MXCT will make no further investment in CARMA after a US$4mln exceptional charge in the first half of 2021 to conclude its ongoing development programmes.
Conclusions
The outlook is for sustained high top-line growth in FY 2021. The landscape is evolving fast, based on the exciting promise of the field of medicine, yet the industry is still in relative infancy and only a handful of first-generation cell therapies have achieved marketing approval reflecting the enormous potential to come. If its partners’ clinical trials run to plan, there are many new drugs likely to reach the market over the next 5-10 years that can provide royalty income streams, in addition to the aggregate potential US$950mln pre-commercial milestones. For this reason, MXCT is placed to continue to leverage its position, with a range of income streams providing, near term, and longer-term returns, and being an enabling technology embedded in these future clinical therapies, it has a unique and broad exposure to the field.
