MaxCyte, Inc.

Good day, and thank you for standing by. Welcome to the MaxSight fourth quarter earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during a session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Sean Menarges, Senior Director of Innovation and Business Development. Please go ahead.

Well, thank you, and good afternoon, everyone. My name is Sean Menarges, and I'm the Senior Director of Innovation and Business Development here at MacSite. Thank you all for participating in today's conference call. On the call from MacSite, we have Meher Masood, President and Chief Executive Officer, and Douglas J. Sworsky, Chief Financial Officer. Earlier today, MaxSight released financial results for the fourth quarter and full year ended December 31, 2023. 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 other than statements of historical facts provided on this call, including statements regarding our future results of operations or financial condition, Business strategy and plans and objectives of management for future operations are forward-looking statements. These statements about us or our industry involve substantial known and unknown risks, uncertainties, and assumptions, including those that are discussed in detail in our annual report on Form 10-K and elsewhere in our SEC filings. That may cause our actual results, performance, or achievements to be materially different than any other futures results, performance, or achievements expressed or implied by such statements. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements. The company undertakes no obligation to publicly update any forward-looking statements, whether because of new information, future events, or otherwise, except as required by law. And with that, I'll turn the call over to Maher.

Thank you, Sean. Good afternoon, everyone, and thank you for joining MaxSight's fourth quarter and full year 2023 earnings call. As you know, I was appointed to the role of president and CEO of MaxSight effective as of January 1st of this year. It is an honor to lead MaxSight through its next phase of growth after working closely with the executive team and board over the last seven years. I would like to thank our founder, Doug Dorfler, for his contributions to MaxSight over the past 25 years. In my first couple of months as MaxSight CEO, we have continued to execute our core mission and strategy, to expand our strategic platform licenses, or SPL, portfolio, and support the next generation of cell-based therapies with our expert exploration platform. Our top priority remains supporting our customer success throughout the lifecycle of research, clinical development, and commercial launch. I believe we have substantial opportunities ahead of us in the cell therapy industry, and I am committed to leading our organization with a high level of focus, along with disciplined expense management and capital deployments. 2022 is a challenging but exciting year for MaxSight. We faced a difficult operating environment, along with many others in the industry, as our customer base saw conservatism in capital spending, lower than expected activity levels, and prioritization of programs. Despite these challenges, 2023 was a transformative year for MaxSight. Our technology supported the approval of Cash Chevy, the first non-viral cell therapy product approved by the FDA, developed by SPL clients CRISPR Therapeutics and Vertex Pharmaceuticals. MaxSight's expert platform is now the only electroporation platform to have supported a non-viral therapy through FDA approval and is now the only electroporation platform supporting a commercial therapy. We believe this is just the first of many potential approvals by MaxSight SDL clients over the coming years, and we are working hard to remain the platform of choice when it comes to electroporation. MaxSight reported $41.3 million of total revenue for the full year of 2023 at the high end of the revenue range we preannounced in January 2024. Our core business revenue was $29.8 million, also at the high end of our pre-announced range. We were pleased to see our business begin to stabilize in the fourth quarter and with a strong execution of our team in a challenging environment. In 2023, we grew our instrument install base to 683, as compared to an install base of 616 at the end of 2022. While our instrument install base expanded this year, both instrument sales and PA sales declined in 2023 compared to 2022 across cell therapy and drug discovery customers. As I mentioned, we are operating in a challenging environment where early-stage customers in cell therapy and drug discovery have limited access to capital, and some clinical customers have adjusted their spending and extended project timelines. This environment remained largely unchanged in the fourth quarter, though we are optimistic that the financing market for the cell therapy industry will improve over time. Non-viral cell therapy market trends continue to bode well for MaxSight's platform. Customers at various stages of development are pursuing different approaches and indications. Developers continue to move towards non-viral cell engineering approaches that encompass multiple steps and complexity of edits. Innovation and complexity in cell therapy development drives demand for MaxSight's electroporation technology. While we are cautiously optimistic about near-term market factors impacting our customers, the non-viral cell therapy opportunity and regulatory backdrop for cell therapies continues to improve. Outside core business, we generated $11.5 million of SPL program-related revenue for the full year of 2023 and $8.5 million during the fourth quarter. Both our full year 2023 and fourth quarter 2023 SPL program-related revenue came in at the high end of our pre-announced range, driven primarily by BLA approval milestones from our client in the fourth quarter of 2023. As a reminder, SPL program-related revenue includes development and approval milestone payments. as well as sales-based payments and or royalties from commercial clients. Across our 26 SPLs to date, there are many nuances to the SPL contracts, and the revenues associated with commercial products can vary. Generally, we receive 1% of product sales through either a royalty or sales-based payments, in addition to receiving revenue from lease instruments and PA sales to SPL customers, which is included in core revenue. As stated by Vertex in their fourth quarter 2023 earnings call, the commercial launch of Cash Chevy has commenced. As patients are screened and identified for treatment, they will enter the program at authorized treatment centers, in which they will undergo pretreatment, cell collection and manufacturing, and finally, treatment infusion. MagSci will only recognize revenue once the patient has been infused, which can take a number of months from the time the patient enrolls in therapy. Our visibility into the timing of patient dosing is quite limited, and we will rely on Vertex to provide us and the markets with updates on patient enrollment status as they come. At this time, we do not have enough information on timing of patient dosing, to forecast expected commercial royalty revenue from the sale of Cashevi for 2024. As we move throughout the course of the year, we hope to have better insight into the patient journey and dosing timelines. We remain very optimistic about the long-term prospect for Cashevi and look forward to many patients receiving the treatment in the years to come. As I mentioned earlier, we continue to lay the groundwork for long-term growth at MaxSight, just as we did several years ago with CRISPR to support what is now Cashevi. In 2023, we signed five new SPL clients, bringing the total number of SPLs to 23 as of December 31st, 2023. These 23 SPLs represent over 160 programs, of which 16 are programs in clinical development along with one commercial program. The total pre-commercial revenue potential for SPL programs is now greater than $1.95 billion, up from $1.55 billion at the end of 2022, an increase of over $400 million in potential milestone payments. As you've probably already seen thus far in 2024, we have signed three additional SPLs, bringing our total assigned SPLs to 26 as of today. We believe the breadth of our expanding SPL portfolio continues to demonstrate the unique and valuable technology at MaxSight used across cell types and editing tools. By way of example, Lion TCR, one of our SPL customers, which we announced this year, is a Singapore-based clinical stage biotechnology company focused on the development of T-cell receptor therapies for solid tumors and life-threatening viral infections. Our SPL-aligned TCR has allowed us to expand our global presence into Asia to support the development of new therapies for patients with solid tumors. We also signed an SPL with Imogene, a clinical stage immuno-oncology company that is developing a range of new treatments that seek to activate the immune system of cancer patients to identify and eradicate tumors. Our platform technology was officially transferred from Precision Biosciences when global rights for Azacel were obtained by Imogene in August of last year. And we look forward to supporting Imogene as they move towards a potential Phase II Registrational Trial for AIDS of Cell and Cancer, an allogeneic CAR-T candidate. Our most recent signed SBL client is with WooGen, a clinical stage biotechnology company developing allogeneic off-the-shelf cell therapies to treat a broad range of hematological and solid tumor malignancies. Importantly, their WooCAR-T007 lead asset is currently in a global Phase I-II clinical trial for the treatment of relapse or refractory T-cell acute lymphoblastic leukemia, lymphoblastic lymphoma in adolescent and adult patients, and has received orphan drug, fast track, and rare pediatric disease designations from the FDA for the treatment of such conditions. We are encouraged by these recent SPLs and are excited to witness the clinical progress that we believe our clients may make in the upcoming months and years with the support of our platform. The SPL agreements that were signed earlier this year have been many months or even years in the making. our team works very hard with customers to understand and optimize their research and development processes and objectives. This relationship often starts in research where customers utilize our expert ATX and then seamlessly scale to the GTX prior to entering the clinic. As companies make progress towards entering clinical development, there's dynamic discussion around the SPL relationship that takes quarters to negotiate and arrive at the final agreement. Following the success of our ability to enter into new SPLs over the past couple of years, we are continuing to build and expand the SPL pipeline. As time progresses, we believe that having the only commercial non-viral therapy which utilizes our platform to engineer the cells will generate additional interest in finalizing a number of new SPL agreements, which have been in discussion for some time, and that new discussions can begin to support continued SPL signings in the years to come. We believe that there is opportunity for substantial clinical milestone and commercial revenue as our SPL clients programs move towards late-stage clinical development and commercialization. As we look ahead in 2024, we have a robust SPL pipeline, which we will continue to execute on. Over the past two years, MaxSight has strategically invested to support the growth opportunity ahead of us. Notably, we have made investments to ensure that we have the strongest manufacturing, regulatory, and quality capabilities to support our customers throughout development and commercialization. We have added to our teams across the organization in order to scale the business. and we have made targeted product development enhancements, including development of the BLX. We have developed disruptive technology in the BLX that will enable rapid production of transiently expressed proteins at large scale for preclinical and early clinical use that we believe will offer a much more efficient manner for research. We believe the commercial opportunity in the bioprocessing market is large, but will take some time to develop. Following feedback from industry and a more detailed evaluation of the opportunity for the BLX, We are taking a more measured approach to developing applications and understanding customer needs before launching a robust commercial offering for the VLX. We remain committed to taking the time necessary to deliver the most efficient platform for our customers, starting with the evaluation of our beta customer feedback throughout 2024. In 2024, we will be measured in our investments and focus on areas that we believe will deliver significant returns to our customers and MaxSight in the long term. The key areas of moderate investment may include improvements to our best-in-class electroporation systems, building additional application know-how, building capabilities to work with customers earlier in the continuum of development, and selling into new applications for electroporation. In summary, we have entered 2024 well-positioned to deliver on our financial and strategic goals. This year, Maxell will continue to navigate the operating environment methodically, recognizing that the challenges we experienced in 2023 were felt industry-wide, and staying vigilant of changing dynamics in our industry. I firmly believe in the long-term opportunity for MaxSight as the premier enabler of non-viral cell therapies. With that, I will now turn the call over to Doug to discuss the financial results. Doug?