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spk03: Good day, ladies and gentlemen, and welcome to the MaxSight Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touchtone telephone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Shawn Minargis.
spk08: Good afternoon, everyone. My name is Shawn Minargis, and I'm an analyst on the MaxSight team. Thank you all for participating in today's conference call. On the call from MaxSight, we have Doug Dorfler, Chief Executive Officer, and Amanda Murphy, Chief Financial Officer. Earlier today, MaxSight released financial results for the third quarter ended September 30th, 2021. A copy of the press release is available on the company's website. Before we begin, I need to read the following statement. Statements or comments made during this call may be forward-looking statements within the meaning of federal securities laws. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. Actual results may differ materially from those expressed or implied in any forward-looking statements due to a variety of factors which are discussed in detail in our SEC filings. The company undertakes no obligation to publicly update any forward-looking statements, whether because of new information, future events, or otherwise. And with that, I will turn the call over to Doug.
spk06: Well, thank you, Sean, and good afternoon, everyone, and thank you for joining MagSight's third quarter earnings call. I will begin with a discussion of our business and operational highlights during the quarter, and then We'll follow with a detailed financial review from Miranda. We'll then open up the call for questions. I'm very excited with our performance in the third quarter of 2021, our second time reporting as a NASDAQ listed company. During the quarter, we continue to deliver on all financial and strategic aspects of our plan as the premier cell engineering platform technology, supporting the development of advanced cell-based therapeutics. Amanda will provide more details later in the call, but I note that we realized very strong third quarter results, as outlined in the press release published earlier today, driven by strong performance in our core cell engineering business, as well as substantial SPL, which is strategic platform license, program-related revenue recognized during the quarter. To summarize, total revenue was just over $10 million, representing a 50% growth compared to the same period in 2020. Our core instruments and disposables business grew 25% in the quarter, which lines up with our historic five-year CAGR of 25%. We also recognized $2 million in pre-commercial clinical milestone revenues from our strategic platform licensed commercial partners. This was well above our expectation for $1 million in SPL-related revenue for the remainder of the year, which we communicated last quarter. Revenue recognized from our SPL partners in the quarter was a result of multiple clinical milestones recognized in the quarter, some of which were recognized earlier than we initially anticipated as our partners achieved clinical development progress. So to preempt any specific questions about the specific drivers of milestone revenues during the Q&A session, and as we have previously indicated, to ensure the confidentiality of our partnership agreements, we will be unable to answer any questions related to the SPL partners and progression of their program specifically. We believe the key takeaway is that this quarter's performance shows the power of our business model and our ability to share in the economics of our partner's ongoing clinical success. Investment into and innovation in next-generation cell therapies has been explosive and continues at a high level throughout 2021. We have all seen the reality of regulatory uncertainty in the space, as developers navigate a new world of advancing novel cell therapy approaches through the clinic. But we have also seen powerful data updates and progression toward approvals for next-generation cell therapies, and consequently, this quarter's results show the potential for MaxSight to participate in that progress. While we expect our partners to evolve their broader pipelines over time, more importantly, we have not seen any change by our partners in their intentions to invest in cell therapies ex vivo cell therapies. To support this, we have seen continued growth in our SPL partner base, as we believe MaxSight's proprietary electroporation platform provides both scalability and high performance that is essential in supporting the development and manufacture of complex, next-generation engineered cell therapies in a CGMP-compliant environment. MaxSight's value continues to be further validated by our expanding customer base. including the ongoing success we have had in signing SPLs, with four of these arrangements signed year-to-date, as well as the value of our FDA master file and equivalent technical files outside the U.S. We now have signed 15 SPLs, signed after adding SANA biotechnology in the third quarter, and Encarta Therapeutics announced earlier this month. we continue to build a burgeoning pipeline of SPL partner opportunities across a variety of cell types, approaches, and indications in ex vivo cell therapy. From an investment and growth acceleration perspective, we're committed to investing in the business, and as such, I've focused on refreshing and refining our long-term strategic plan. We intend to ramp investments in our research and development and sales and marketing competencies to take advantage of opportunities we see in this space to provide added value to our customer base. This includes expanding our manufacturing footprint as our partners move closer to potential commercialization. We are moving into a 67,000 square foot facility in 2022 and are working to further insource key elements of our manufacturing process, particularly around processing assemblies. We're also making significant investments in our process development lab, which will benefit both our cell therapy and biomanufacturing markets, and customers. We are also focused on further developing our expert product portfolio. We're on track for release of our new VLX platform under the expert brand by the end of the year. While the market expansion opportunities for the VLX and the large-scale bioprocessing applications will take time to evolve, we're encouraged by the preliminary interest from initial customers. We are constantly evaluating potential market opportunities for the VLX, and look forward to updating investors on the evolution of the VLX product roadmap over time. We launched the R50x8 processing assembly in September 2021. This exciting portfolio expansion will allow scientists to do more transfections in less time and at a reduced cost per transfection, which will open up new applications for research on our platform and accelerate optimization. We believe this product can attract new customers to the technology and new applications at an earlier stage on their programs, helping us to establish relationships earlier and growing our customer base. We are also investing meaningfully in people and hiring at a fast pace. This year we have made key hires and announced important internal promotions discussed on the previous call. We have added resources to our alliance management team as a reflection of increased interest on the part of commercial cell therapy developers to work with us on a more strategic basis. As we look to the fourth quarter and into 2022, I continue to expect MaxSight to invest and grow headcount in all major areas of the organization. We have a bright future and are investing in the people who will help get us there. For example, our sales and marketing team is growing as we see opportunities to move into new applications and geographies. Investing and growing our sales and marketing team includes the hiring of James Lovegren as Senior Vice President of Global Marketing. James brings deep experience in cell therapy to the role, and we look forward to his efforts to grow adoption of an expert platform in cell-based research and next-generation drug development. In addition to Jim, we look forward to expanding the commercial team to support market development and customer engagement. We announced that our board of directors has appointed Richard Douglas as chair of the board. Richard Douglas has been a board member since February 2018, He succeeds J. Stark Thompson, who will remain as a consultant to MaxSight. I look forward to Richard's leadership in his new role, and thanks Stark for setting the global foundation as we built MaxSight. It's been a true honor to work with him, and we thank him for his dedication and perspective. In closing, we have had a strong third quarter as we continue to execute on our financial and strategic goals. We are very excited about our opportunity going forward, particularly in the cell therapy market, and believe we are making the right investments to drive growth across the business. I will now turn the call over to Amanda to discuss our Fancher results. Amanda?
spk04: Thanks, Doug, and hello, everyone. As Doug mentioned, we saw very strong revenue growth this quarter with total revenue of $10.1 million, which was up 50% over the third quarter of 2020. This growth was driven primarily by strength in our underlying cell therapy business, as well as SPL program-related revenue, which I'll dive into in more detail in just a minute. Cell therapy revenue of $6.2 million grew 38% over the third quarter of 2020. Just as a quick background, cell therapy represents the sales or licenses of instruments and sales of disposables to customers that are using the expert platform to manufacture ex vivo-based cell-based therapies for human use. whether that be in preclinical, clinical, or ultimately commercial use. Despite a more difficult year of your comparison relative to the third quarter, given COVID-related dynamics, we reported growth in the core cell therapy business that's exceeding our historical run rate. Instrument purchases in cell therapy can often act as a precursor to SPLs as customers first purchase platforms and early-stage programs. So that's encouraging in terms of the potential growth for STLs in the future, and we've talked about our burgeoning pipeline in that area. Notably, our cell therapy customers are also less tied to CapEx spending, so to speak. So we're seeing a dynamic where revenue from our core business is less weighted to the fourth quarter, as we have seen in the past, given the strong performance we saw this quarter. And that's particularly driven by our cell therapy customers ramping clinical trials. In terms of drug discovery, as a reminder, drug discovery represents sales of instruments and disposables to customers using the export platform for smaller scale biomanufacturing applications, such as transient protein production and the manufacturing of proteins, such as monoclonal antibodies, viral vectors, vaccines, and for small molecule discovery. And those sales are primarily made to large pharma. Drug discovery revenue in the quarter was 1.9 million, which was down 5% over the third quarter. is slightly up on an absolute basis over the second quarter. Drug discovery revenue was notably strong in the third quarter of 2020 as people got back to work after the lockdowns of post-COVID. So we also had a more difficult year-over-year comparison in that segment as well. Ultimately, drug discovery has become a smaller part of our overall revenue mix, given the strong growth in cell therapy. The shift in revenue mix towards cell therapy has been consistent over the past five years, and we saw that again this quarter. with cell therapy representing 77% of revenue excluding milestones, and drug discovery representing just over 23% of revenue excluding milestones. That said, we are encouraged by the sequential uptick in the drug discovery business versus the second quarter of this year. It's a business that's been more challenged over the past couple of years, driven by COVID, and also a more challenging environment. So we're cautiously optimistic regarding the impact of some of the multi-well PA introductions that we've made over the past couple of years, that served to lower the per transaction cost for customers and also have had active efforts to expand academic collaborations with translational centers that seem to be gaining traction. We reported 2 million in program-related revenue from our SPL customers in this quarter as compared to 0.3 million in the third quarter of 2020. As Doug mentioned earlier, we recognized SPL program-related revenue from some of our customers earlier than we had anticipated. And these were made up of multiple milestones from customers. Surprises like this are encouraging and, again, in our view, a testament to the value that MaxSight provides to our partners and the uniqueness of our revenue model and our ability to participate in downstream economics of our customers' programs. It does also demonstrate the difficulty we face in predicting the timing of SPL revenues. as these are predicated on our customers' clinical successes and regulatory process, given the early stage nature of our cell therapy customers' pipeline. So we do expect timing of milestone events to be lumpy for the near term, until we see SPL partner pipelines mature, and as the number of SPL partners and active programs continues to expand. We'll do our best to provide visibility into SPL-related revenue potential over time as the milestone stack continues to grow, We continue to be encouraged, however, by the potential of SPL-related program revenue over the next 12, 18, 24 months, particularly as our partners progress and enter and move through the clinic and given the potential for approvals even in the next couple of years. So we anticipate a growing and more broad-based revenue stream related to the SPLs over the long term. Moving down the P&L, gross margin was 91% in the quarter versus 89% in the third quarter. with the difference being driven almost entirely by milestone revenue. So excluding milestone-related revenues, gross margins were flat relative to the second quarter of last year. Total operating expenses for the third quarter of 2021 were $11.6 million compared to $8.9 million in the third quarter of 2020. This increase was primarily driven by increases in headcount. As Doug mentioned, we are expanding in many areas in the business in terms of adding resources as well as stock-based comp, which was driven primarily by the increase in our stock price. And as a reminder, there were no meaningful karma-related expenses in this quarter. As Zach mentioned, we are making and plan to continue to make increases in investment in many areas of the business. And we saw that this quarter, R&D was up 36% over the last year's quarter, and that's excluding karma-related expenses. Sales and marketing was up 58% over a year ago. And again, the primary goal here is to take advantage of the opportunities we see to accelerate organic growth over the next few years that we've talked about. We expect this investment to continue to ramp into 2022, primarily driven by additional headcount and overall investment in operations, particularly around investment in manufacturing and marketing product development. And we can talk about this more in the Q&A. We are coming into the end of 2021 and into 2022 with a very healthy balance sheet. We have total cash and short-term investments of $256 million as of the end of the third quarter and no debt. Lastly, we wanted to update our fiscal year 2021 revenue guidance given the strength we are seeing in the core cell therapy business and drug discovery markets year-to-date. The success of our cell therapy partners this year has shifted the typical seasonality we normally see, as I mentioned, where we normally see revenue heavily weighted to the fourth quarter, which is more driven by CapEx and end-of-year budget cycles. As you can imagine, clinical trial timelines are less correlated to these dynamics, and we've seen some of our partners ramping ahead of progression in the clinical trial progression, and so we are encouraged by that. progression, but it does change the seasonality a little bit for this year. As a result, we expect total revenue growth for the year to be greater than 33 million. This implies growth of roughly 26 million, so slightly ahead of where the beat in the quarter would put the numbers for the year, versus our prior target of greater than 30 million. This does include SPL program-related revenue. As it relates to our expectations for program-related revenue in the fourth quarter, we would guide you to think about the magnitude as closer to what we saw in the first and the second quarters. Again, timing of these SPLs, milestone recognition, that data point can be hard to pinpoint. So we continue to track above our five-year 25% revenue CAGR for the full year, and we're encouraged by the strength in our core cell therapy business. I will just note cautionary language around any meaningful changes in COVID. We obviously are assuming status quo as it relates to COVID, and I'm sure many companies are making the same comments but wanted to make that caveat. With that, I'll turn it back over to Doug.
spk06: Thank you, Amanda. We remain excited about the opportunity to lead the industry forward as the premier cell engineering platform technology, supporting the development of advanced cell-based therapeutics. Following the successful completion of our NASDAQ IPO, we were pleased to report strong third quarter results and update full year client guidance. MaxSight remains well positioned for growth and we are excited about the opportunities ahead.
spk03: Ladies and gentlemen, if you have a question at this time, please press the star and then the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. And our first question is from Julia Simmons from Panmure Garden. Your line is open. Hello.
spk01: Well done on an excellent quarter. Quick question on, firstly, the VLX. Just wondering in terms of sales, because clearly it's got sort of application in both drug discovery and cell therapy applications. Is that going to be a sale or a license opportunity when you get that to market?
spk06: Well, Julie, thanks for your continued support, and I appreciate your comments. So the VLX is on track to release it by the end of this year, December of 2021. You're right, it's going to be in both the cell therapy space for allogeneic cell therapy and also in the drug development space for rapid production of monotonals and also for certain bile vectors production in suspension cells. We're working through the value pricing model for those applications. They may in fact be different. I would expect that we will have kind of a hybrid model, some sales and some leasing, and some licensing, really, depending upon the application. But we're kind of working that through, and we'll be rolling that out as we become more comfortable with the full product launch in 2022. Okay.
spk01: Brilliant. Thank you very much. And another one just on recruitment. Clearly, you're sort of scaling up various different parts of the business following the NASDAQ IPO, which is all very encouraging. Are you finding there are any areas where it's more difficult to recruit than others? And is that a limitation on how fast you can grow at the moment?
spk06: Yeah, it's a challenge. Obviously, having a NASDAQ symbol now moves us up in the up in the popularity, if you will. So I think people are recognizing us and they can find out more information about us, which is good. You know, most of our work is in, you know, we're hiring in process development. We're hiring in sales and marketing. And fortunately, over the years, we've been able to, you know, garner a really excellent reputation in the field. So it's never easy to find the right kind of people, but we're building out our recruiting resources. To answer your question specifically, I think, you know, in the process development area, it's tough to find people. I think, you know, the sciences are difficult because we're seeing quite a bit of investment coming into this space and there aren't a lot of, you know, people with a lot of experience in cell therapy. I think that plays to our strength because we have a very, very strong team from a commercial perspective. So on one hand, it's a challenge from a, Recruiting perspective, on the other hand, from a marketing and sales perspective, we think that's an advantage that we can bring to the marketplace by helping customers solve their problems.
spk01: Brilliant. Thank you very much.
spk03: And our next question is from Max Masucci with Cowan & Company. Your line is open.
spk10: Hi. Thanks for taking the questions. Nice quarter. Um, so just to start, you know, nice to see that the sales leadership hire along with some other hires in the commercial organization in recent quarters, the Q3 product revenues beat, and you've now signed four SPLs this year above the original expectation of three. So can you give us your latest view on the sales targeting strategy, you know, in terms of customer types, applications, and the amount of focus that you're committing? to new customer wins versus same customer growth?
spk06: So, Max, I think our view is it's just more of the same. We're expanding our ability to market more specifically in this digital world. I think that's one thing. I think we're also finding a lot of opportunities with our existing partners as they expand their programs into indications and applications, so that's exciting. You'll be seeing some work that we're doing in attracting earlier stage cell therapy assets onto the MagSight platform. I think you saw some of that with the release of the ATX about two years ago and the launch of a number of additional disposables, which reduce the transfection costs for these earlier stage companies. allows them to come under our platform at a more academic level for them to be able to afford in their early stages of development. So I don't think we're really focused on any one particular area. I think we've got a really robust pipeline, and part of our job really is to nurture those companies in the pipeline and find the new assets that are being developed both in universities and in a number of these early stage incubators.
spk10: Great. On PAs, you launched the R50 by 8 PA in September. You've also launched a number of other processing assemblies in the past, say, six months. Understanding it's still early, can you speak to the demand you've seen for some of the more recent PA launches and maybe just any tests that drove the strength in the razor blade model during the quarter? Sure.
spk06: Yeah, so one thing we do do when we launch disposables or process in some ways is we do, you know, we're careful in terms of the rollout to ensure that we can support the customers and we have the complimentary and we can build out that business. And so we're doing quite a bit of that, which is important. You know, we're seeing pretty much across the board increases in PA sales. So, I mean, if you have any further thoughts about that split, but... I think just across the board, we're seeing really strong growth in the business, both in PAs and in instruments and in licenses.
spk04: Yeah, I would just add that the new PA launches in the past couple of years have really been focused on the drug discovery side of the market, as Doug mentioned, in terms of their multi-well lowering transaction costs, and we have more to come there. And so I think that's contributed to... better results on the drug discovery side, and we mentioned we're cautiously optimistic there in terms of the impact. We have a roadmap that obviously we're working on, but we haven't disclosed per se in terms of cell therapy as it relates to PAs and trying to find the sweet spot for the various applications. You had asked earlier about some of the SPLs that we've added. This year, we continue to expand the types of cells we're using. So a couple of the folks that we added, for example, are working in NK cells. And so we're always thinking about that in terms of our PA launch planning going forward. You can imagine that we're keeping that close to our chest at this point as it relates to cell therapy. On the cell therapy side, the strength came, you know, it was a strong quarter generally, but we saw particular strength on the instrument side between the sales and the leases. So the leases is encouraging in that that's recurring revenue, right, because once you're part of the SPL, then that becomes an annual access fee, so to speak. So the more that makes up of our install base, sort of the better from a visibility recurring revenue standpoint. And then on the sales side, it does give us visibility into – future SBLs, meaning a lot of our partners are buying initially, and then, you know, as they move forward into the clinic, getting tied into enabling studies, that's where they start to convert. So encouraging all around, and I think, you know, stay tuned on the cell therapy side as it relates to some newer PAs there. Again, thinking about sweet spots of applications.
spk10: That's great. If I could just maybe sneak one more in. Is there any feedback you can share from users of the first generation BLX instrument that's being used during the early access period? And then second, if you look at the roadmap to getting that instrument launched, are the final adjustments to the interface to standardize the instrument sort of done and just gearing up for the launch, or are there still some technical factors that you're solving for ahead of the launch.
spk06: Can you rephrase the second part of the question, Max? Is that around the PAs or is that something different?
spk10: Yeah, so just the roadmap between now and when the VLX is officially launched broadly. Just curious if there are still some technical factors or final adjustments you're making to the technology or if it's just gearing up ahead of the commercial launch.
spk06: So the first part, I mean, we spend a tremendous amount of effort with voice of customer. So our team is out there really understanding in a very intimate basis what our customers need to do their work and expand the applications for our technology. And I think we've been quite successful in frankly nailing it, finding out exactly what the customer needs are and delivering it to them in a timely manner so they can utilize the PAs. On the VLX side, we haven't released yet, and I think I have to tell you that there's always some last-minute changes that you're making when you're about to release a product. I don't think any of these are major technical issues. It's more fine-tuning for manufacturing management and for supply more than the basic PAs themselves for VLX.
spk04: Max, if I could just add one thing and just, you know, your typical CFO here. So the VLX has been, just so we're clear, the VLX has been on the market. What we're doing now is bringing it under the expert brand, which involves things like improving the user interface and, you know, thinking about design and whatnot. And it really puts us in the potential for entering new markets entirely in large-scale bioprocessing applications. So I would think about this as more of a release of that under the expert umbrella. And then from there, you know, we've got to build out data to support, you know, large-scale applications like transient protein production and viral vector manufacturing. So we're encouraged by the interest there from early customers and have been. I mean, otherwise we wouldn't have. made the choice to bring it into the expert brand in the first place. But it's definitely a longer-term revenue vector, so to speak, for us since it's newer markets. And as Doug said, it could be something that could play a role in cell therapy as those businesses scale. But, again, those markets are still early stage. So just not so that we get ahead of ourselves. We're excited about the product. have seen obviously early interest or we wouldn't have been investing in it. And I think we can see some addressable market expansion from it, but just to put that caveat on there.
spk10: Super helpful. Thanks for the caller.
spk03: And our next question is from Dan Arias with Stifel. Your line is open.
spk02: Hey, this is actually Evan Stamper on for Dan. Thanks for the question. obviously when you spoke to this, there were a couple of data points that came out in the quarter that clearly kind of spooked the market in terms of, you know, the outlook for cell therapy. Just kind of wondering if, like, in your conversations with your customers or just people in the industry, if you've seen any slowdown or even acceleration in activity or kind of any change in sentiment in the near term and then kind of longer term If you think that, I mean, I guess these were, you know, people kind of always predicted that there would probably be some kind of, you know, ups and downs. But, you know, longer term, I mean, do you envision this having any, you know, impact on not the outlook, but the potential for, you know, longer timelines to market and then potentially just kind of a longer, you know, timeline for you guys actually getting milestones just because of the regulatory backdrops?
spk06: Let me take a crack at this first and then we can fill in the blanks. First off, we're still in the very early stages of these advanced cell therapies. I think we could establish that. Secondly, focus on manufacturing is huge. Our sense is that that has been the tone of the last year or so that we need to make sure that we're better characterizing these products. that we're being able to measure potency more, and we can manufacture them on a consistent basis. So those are three important aspects of manufacturing that we think that NYXI can actually contribute to. And we think that those issues will be a good way way for MagSight to continue to build our business out because we think that's a good trend for us to help enable the industry. We're seeing a lot of interest from our partners in making sure they get this right and spending more time on product characterization, which again benefits MagSight. I haven't seen very many folks move away from programs. I think we're trying to rationalize what they have in the clinic. There's clearly a lot of self-therapy is going after some of the same targets. I think there's going to be not only a clinical rationalization but also a commercial rationalization with some of these products coming through.
spk04: Yeah, Evan, I would just add, you know, as Doug said, it's early, but we've also seen some positive surprises. I mean, we obviously spoke to some of the milestones we received this quarter. while we can't speak to them specifically, we weren't expecting them. So that would imply that at least some of our partners are moving forward more quickly than we thought. And I think if you look at some of the PR in this space around investments that are being made, there's still quite a lot going on, especially partnerships between even some of our own SPL partners. So not to... not take, you know, clinical hold seriously as, as we should, but I mean, it happens. It's happened before with other players. Um, and so I think there's puts and takes here just given the early stage nature, but I think, you know, certainly we aren't seeing, um, any change in priorities. I mean, we continue to sign the SBLs and I think to us, that's our key scorecard, right. In terms of, um, Is the space moving forward? Are we generating downstream economics? And are we seeing that pipeline continue to grow, which we are? So, if that's helpful.
spk02: Yeah, no, that's super helpful. Thanks. And just, I guess, maybe an easier question for you guys. Just for the quarter, you mentioned kind of the strength in the instruments, which I saw In terms of kind of pull-throughs in the quarter, I mean, how did that kind of trend versus 1Q and 2Q? And then in terms of the mix between leased and sold, is there anything notable there or any change there? Thanks.
spk04: I'll take a stab. We haven't changed the ranges that we've put out there in terms of pull-through. So, you know, generally, as we said in the commentary, cell therapy continues to be a bigger part of our business. It's faster growing and generally has a higher pull through. And that can really fluctuate, though, depending on where our partners are in the development cycle. And, you know, with, I think we've said, we'll update these metrics, you know, towards the end of the year, at the end of the year, where we talked about 75 programs and 15% of those, give or take, are in the clinic, obviously, with three new SPLs. those numbers are likely to be higher. But, you know, so our N is still relatively small. And so, again, we've talked about high usage in the preclinical setting with lower volume PAs. And then that sort of pulls back with phase one, where obviously the patient population is smaller, depending on the indication, of course, and that ramps up. And we're seeing that same trend. And over time, that starts to normalize. So I would say we're still within the ranges that we've given, but we haven't really formally updated anything there. And in terms of the leases, just with the SPLs we sign and given that the instruments that fall under those SPLs are leased, and they're not leased in the traditional way, but it's more of like we talked about an access fee. Those are becoming a bigger portion of the installed base, so to speak, as a percentage, and we saw that again. But, yeah, it's slow but sure, right, because obviously, again, there's a smaller N of folks that are in the clinic, if that's helpful. So we haven't given specific numbers, and we'll update some of that information at the end of the year, as we did last year. But those are the sort of qualitative trends we're seeing.
spk02: Okay. And if I just sneak one more in here, I know you're not going to talk about the program-related revenues for the quarter, but not really giving specifics, but can you just kind of go back and I guess just repeat kind of what you said. I think you said, did you give the number of customers that the revenues came from? And I think you also talked about having some of them, your customers actually had multiple milestone payments. Can you just kind of clarify or? really just what you said already.
spk04: Yeah, I'm sorry if that was confusing. What we were just trying to say was that the program-related revenue didn't come from one customer. So we didn't specifically say whether there was multiple revenue received from the same customer. We just said it's not all from one. So there was more than one milestone received in the quarter. That's kind of the extent of it. Obviously, we just have to be careful what we say there. And we did say that we weren't, I mean, I think last quarter we said we were expecting a million for the year, which would have implied about half a million, you know, whether you put it in this quarter or next quarter. And so obviously, you know, we saw a bigger number. That was a surprise to us in terms of the progress that some of our partners are making. And that's definitely encouraging. And then we said that we're expecting something similar in Q4 relative to Q1 and Q2. So kind of similar numbers that you saw in the first half of the year each quarter. So still seeing progress from our partners, maybe not quite as much as we saw this quarter. And then next year, again, as we see the stack build, I think we're, depending on how this how our visibility trends, and it is difficult because you're talking about partners in the FDA, and you can imagine that's not easy for a company like us to predict exactly where that falls per quarter, so to speak. But the more we sign, the more programs are stacked within each time period, and so we'll be able to guide, I think, moving more so as we go along here, just because there'll be you know, less risk of something moving quarter to quarter, but that's just the reality we face, as you can imagine in serving a biotech world.
spk02: Yeah, no, awesome. Thanks so much for answering the questions.
spk03: And our next question is from Matt Leroux with William Blair. Your line is open.
spk05: Hi, good afternoon. It was interesting to see the NCARI SBL because I think there was the first confirmed MK cell therapy program. And I was curious, you referenced the burgeoning pipeline on the SPL partner side. So just curious if there's been any notable changes to the composition of that pipeline with respect to cell types, approaches, or indications.
spk06: Yeah, so I think we mentioned the last time that that pipeline's never been more robust than it is. It just continues to build and grow. I think that The way that I kind of look at it, I think we look at it, if you look at companies, I think I mentioned this before, that have been financed in the last couple of years, and their approaches, whether that be different cell types or different loading molecules, different indications, I think we're tracking pretty well to the broad array of approaches that are going on in these advanced cellular therapies. So that's pretty exciting for us, right? It's a lot more alginic than it was a few years ago. We're seeing different kinds of cell types moving into, you know, moving into non-oncology indications, which are going to be quite exciting. And so I think from just a broad view, we're tracking pretty consistently where this entire field is moving.
spk04: And then... Cellularity also has an NK-based approach as well as part of their pipeline.
spk05: Okay, got it. I guess we can see that that was confirmed. Okay, and then just, you know, thinking about the pacing of the team additions here over the next 12 to 18 months, obviously the new sales that are in place, but I guess anything to think about in terms of next year in terms of pacing of team addition throughout the year?
spk06: Well, we are building the marketing team. We mentioned that Jim Wilkert just joined us about a month or so ago. He comes with just a tremendous amount of experience and energy and understanding of the global markets. So we're quite excited for him to be on. And part of what his remit is to help us build a scalable marketing organization that would line up with Tom Ross'. you know, leadership in building a global and scalable sales organization. So we're in the process of doing both of those things. I mentioned that we're building out process development labs inside a Mac site to better line up with what our customers are using our products and as they move both in cell therapy and bio-processing. So we're excited about that. There's obviously some SG&A that we're needing to build just because we're now a public company. And another major area of investment will be in the manufacturing. So we see a real opportunity for us to become more basic in certain elements of the process in assembly and manufacturing. We want more flexibility in instrumentation. As you likely know, we're pretty basic in instrument manufacturing. So we want to bring more of that in-house, which will allow us to have better control over quality and also more flexibility as this as this field just continues to develop over the course of the next several years.
spk05: Okay. Thank you.
spk03: And our next question is from Mark Massaro with BTIG. Your line is open. Hey, guys.
spk07: This is Vivian on for Mark. Thanks for giving the questions. So can you discuss pipeline initiatives as it pertains to updated disposables? I know you had touched on cell therapy, and if there's any room to improve on transfection efficiency or any other unmet demand you're sensing on the customer side. Thanks.
spk06: I think we've got – that's a great question. I think we're always pushing to improve the efficiency of our process. the scalability of the process, both the instruments and the disposables. We're also spending quite a bit of time to ensuring that they have more utility. Our R50 by 8 is a really unique product that can do, it's a strip for 8, but it can also turn into a 96-well plate with extraordinarily high consistency across from well to well, which is really important in certain aspects of discovery, both in small and large molecule discovery, but also in South Africa development. Another area that we're focused in right now, and I think we talked about this in our use of proceeds, is how we can better integrate the work that we're doing with pre- and post-electroperation processes so that we can provide more of a plug-and-play, if you will, solution to our partners and have them integrate our unit operation into a larger If you look closely, which many, many companies are able to do in the near term.
spk07: Okay, great. And if I could just add a quick follow-up. Given the revenue mix shift towards cell therapy, what types of cell therapy clinical trials are you involved with or enabling at the moment? And how do you see this space evolving moving forward?
spk06: So I think, Amanda, can I talk about some of these public ones? I think we have talked about our relationship with CRISPR, our relationship with Precision and products that are being developed by both those companies and made by KnifeSights Technology. We've worked with Pettitas and one of their products is also identified with us more. And also up here, obviously, a company in Indiana. And so we're seeing progress across the board in all those all those programs. We really don't get specific about any programs that are not publicly disclosed by our partners, and so the ones I talked about are publicly disclosed by our partners.
spk07: Okay, great. Thanks for getting the questions.
spk03: Again, if you have a question at this time, please press the star and then the number one key on your touchtone telephone. And our question is from Jacob Johnson with Stevens. Your line is open.
spk09: Hey, good afternoon. Congrats on a nice quarter. Maybe, Doug, going back to something you mentioned earlier, you talked about working with earlier stage customers. Can you just talk about your efforts to work with large academic medical centers and maybe how important that is for you to kind of build out the beginning of the funnel?
spk06: Great question, Jacob. It's always been important for us, as you can imagine. Most of the advanced therapies related to self-care have come out of academic centers. And we're continuing to see that that can try and continue. So what we have been doing is more formalizing those relationships with these groups. We've had long-standing relationships with some of the major academic translational medical centers, but we also see the opportunity for us to expand our footprint into a number of newer ones that have kind of gotten on the bandwagon, if you will, building out centralized facilities, core facilities for self-therapy, a lot more interest, again, as I mentioned before, in new applications of self-therapies outside of oncology, which is really, really exciting. And so we're hiring people to better understand self-therapy how we can build those alliances with the large translation academic centers globally, what their requirements are, and I think we've got a pretty good handle on that. And part of our expansion process is really to make sure that we've got that properly resourced so we can work with these companies, work with these PIs when they're really getting very early in the ideation, if you will, of these new cell therapies. The trick to this is that you also don't want to get involved in kind of pure academic research. So there's a fine line there that we're really working through to make sure that we don't get into that whole academic research area, but really focusing on translational therapeutic centers and the work that they're doing directed toward a potential commercial product.
spk09: Got it. Thanks for that, Doug. And then just, Amanda, two kind of nitpicky financial questions. R&D ticked down sequentially this quarter. I assume that's related to some karma expenses rolling off, and I would assume that should start growing from here. Can you just kind of confirm that? And then also I think CapEx ticked up a little bit this quarter. Is that kind of a good run rate to think about going forward, given the capacity build-out that you're pursuing right now?
spk04: Yeah, good question. So we did, as we've mentioned, have the roll-off of CARMA complete in the first half. So that's part of it. I mean, from here, just generally, I would think about, you know, obviously we've talked about a number of areas of investment, particularly in headcount, across all three buckets of operating expenses. Stock-based comp is year over year also something to think about just as the stock has moved. And then as we build out some other areas in R&D. So I think I would think about it as not necessarily a run rate from here, but investment from here, particularly on the headcount side, which is becoming obviously – a key for us as we think through our strategic planning. And we've talked a lot about how we see the potential to accelerate organic growth and growth in general. And obviously that all starts right with building out the team. So I don't know if that's helpful, but that's how I would think about it. We also had obviously a pickup, not in R&D, but in Pubco expenses and things like that. So I would kind of look at this quarter as the base with further investment from here given the opportunities we see. I'm trying to think if there's anything else in the OPEX expense that would be like not recurring. You know, there's probably some small stuff, but I would think about it as growing. And then in terms of CapEx, yeah, so we're obviously investing in manufacturing quite a bit. We haven't guided to what that looks like for next year, but we're expanding on the manufacturing side, and to the extent that we think about it in a three- to five-year or three-long-term horizon, even some of the initiatives that we have talked publicly about as far as moving up and downstream, whether that be internal build or buy, obviously that likely will affect CapEx to some degree. So, again, it's sort of I would kind of think about this quarter as a good base outside of karma and then stock-based comp being a factor that you have to kind of think through. And then from there, just investment across the board. That's helpful.
spk09: That's great. Thanks for that, Amanda. Thanks for taking the questions.
spk03: I am showing no further questions at this time. I would now like to turn the conference back to Mr. Doug Dorfler.
spk06: Well, thanks, everybody, for joining us today. Again, an exciting time for our company, and we appreciate your support and your excellent questions. And we look forward to updating this group on our Q4 progress when it makes our next call. So thank you very much. Stay safe and enjoy Thanksgiving. Thank you.
spk03: Thanks, everyone. Ladies and gentlemen, This concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.
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