TIDMMXCT TIDMTTM
RNS Number : 6377L
MaxCyte, Inc.
14 September 2021
MaxCyte announces filing of Form 10-Q for the quarterly period
ended June 30, 2021
GAITHERSBURG, MD, September 13, 2021 - MaxCyte, Inc., (NASDAQ:
MXCT; LSE: MXCT, MXCN), a leading commercial cell engineering
company focused on providing enabling platform technologies to
advance innovative cell-based research as well as next-generation
cell therapeutic discovery, development and commercialization ,
today announced that it has filed a Form 10-Q with the SEC for the
quarterly period ended June 30, 2021.
A copy of the Form 10-Q, is included in the appendix below and
has also been posted to the Company's website,
https://investors.maxcyte.com/ .
About MaxCyte
Maxcyte is a leading commercial cell engineering company focused
on providing enabling platform technologies to advance innovative
cell-based research as well as next-generation cell therapeutic
discovery, development and commercialization. Over the past twenty
years, we have developed and commercialized our proprietary Flow
Electroporation platform, which facilitates complex engineering of
a wide variety of cells. Our ExPERT(R) platform, which is based on
our Flow Electroporation technology, has been designed to support
the rapidly expanding cell therapy market and can be utilized
across the continuum of the high-growth cell therapy sector, from
discovery and development through commercialization of
next-generation, cell-based medicines. The ExPERT family of
products includes: three instruments, the ATx, STx and GTx; a
portfolio of proprietary related processing assemblies or
disposables; and software protocols, all supported by a robust
worldwide intellectual property portfolio.
MaxCyte Contacts:
MaxCyte Inc.
Doug Doerfler, Chief Executive Officer
Amanda Murphy, Chief Financial Officer +1 301-944-1660
US IR Adviser
Gilmartin Group +1 415-937-5400
David Deuchler, CFA ir@maxcyte.com
Nominated Adviser and Joint Corporate Broker
Panmure Gordon
Emma Earl / Freddy Crossley
Corporate Broking
Rupert Dearden +44 (0)20 7886 2500
UK IR Adviser +44 (0)203 709 5700
Consilium Strategic Communications maxcyte@consilium-comms.com
Mary-Jane Elliott
Chris Welsh
Appendix
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10--Q
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from___ to___
Commission file number: 333--257810
MaxCyte, Inc.
(Exact name of registrant as specified in its charter)
Delaware 52--2210438
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
22 Firstfield Road, Suite 110
Gaithersburg, Maryland 20878
(Address of principal executive offices)
Registrant's telephone number, including area code: (301)
944--1700
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
--------------------------------------- ----------------- -----------------------------------------
Common stock, par value $0.01 per share MXCT The Nasdaq Stock Market LLC
======================================= ================= =========================================
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (-- 232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company," and "emerging growth company" in Rule
12b--2 of the Exchange Act.
Large accelerated filer Accelerated filer Non-accelerated filer
Smaller reporting company Emerging growth company
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b--2 of the Exchange Act). Yes No
As of September 8, 2021, the registrant had 100,410,560 shares
of common stock, $0.01 par value per share, issued and
outstanding.
Table of Contents
Page
No
----
PART I. FINANCIAL INFORMATION 7
Item 1. Financial Statements (Unaudited) 7
Condensed Consolidated Balance Sheets 7
Condensed Consolidated Statements of Operations 8
Condensed Consolidated Statements of Changes in Stockholders'
Equity 9
Condensed Consolidated Statements of Cash Flows 10
Notes to Unaudited Condensed Consolidated Financial
Statements 11
Management's Discussion and Analysis of Financial
Item 2. Condition and Results of Operations 20
Quantitative and Qualitative Disclosures About Market
Item 3. Risk 32
Item 4. Controls and Procedures 33
PART II. OTHER INFORMATION 34
Item 1. Legal Proceedings 34
Item 1A. Risk Factors 34
Unregistered Sales of Equity Securities and Use of
Item 2. Proceeds 34
Item 3. Defaults Upon Senior Securities 34
Item 4. Mine Safety Disclosures 34
Item 5. Other Information 35
Item 6. Exhibits 36
Signatures 37
Risk Factors Summary
Our business is subject to numerous risks that you should
carefully consider. These risks are more fully described in the
section titled "Risk Factors" included in our Final Prospectus
filed with the SEC on July 30, 2021. A summary of these risks that
could materially and adversely affect our business, financial
condition, operating results and prospects include the
following:
-- We have incurred significant losses since our inception, we
expect to incur losses for the foreseeable future and we may never
achieve or maintain profitability.
-- We are highly dependent on a limited number of product
offerings that require a substantial sales cycle and as a result we
are prone to quarterly fluctuations in revenue. If we fail to
maintain significant market acceptance in existing markets or fail
to successfully increase our penetration in new and expanding
markets, we will not generate expected revenue and our prospects
may be harmed.
-- We operate in a highly competitive market characterized by
rapid technological change, evolving industry standards, changes in
customer needs, emerging competition, new product introductions and
strong price competition. Our success depends, in part, on our
ability to maintain a competitive position in the development of
technologies, enhancements and products for use by our
customers.
-- Our business currently depends significantly on research and
development spending by biopharmaceutical companies and academic
institutions, a reduction in which could limit demand for our
products and adversely affect our business and operating
results.
-- We must develop new products, as well as enhancements to
existing products, and adapt to rapid and significant technological
change to remain competitive.
-- If we cannot maintain and expand current partnerships and
enter into new partnerships, including internationally, that
generate marketed licensed products, our business could be
adversely affected.
-- The failure of our partners to meet their contractual
obligations to us could adversely affect our business.
-- Our partners may not achieve projected discovery and
development milestones and other anticipated key events in the
expected timelines or at all, or may discontinue some or all of
their programs, which could have an adverse impact on our
business.
-- In recent periods, we have depended on a limited number of
partners for our revenue, the loss of any of which could have an
adverse impact on our business.
-- We depend on continued supply of components and raw materials
for our ExPERT instruments and PAs from third-party suppliers, and
if shortages of these components or raw materials arise, we may not
be able to secure enough components to build new products to meet
customer demand or we may be forced to pay higher prices for these
components. As such, we must also accurately forecast customer
demand for our products and manage our inventory.
-- Our FDA Master File, and equivalent Technical Files in
foreign jurisdictions, are an important part of our strategic
offering which allows our partners to expedite their cellular
therapies into and through the clinic. Delays in filing or
obtaining, or our inability to obtain or retain, acceptance of such
filings in individual countries could negatively impact the
progress of our partners if they intend to run clinical trials in
such countries, and as a result, could negatively affect our
reputation and revenues or require disclosure of confidential
information to our partners.
-- We may need additional funding and may be unable to raise
capital when needed, which would force us to delay, reduce,
eliminate or abandon our commercialization efforts or product
development programs.
-- The COVID--19 pandemic has had and could continue to have an
adverse impact on our business, operations, and the markets and
communities in which we, our partners and our customers
operate.
-- Our common stock is traded on two separate stock markets and
investors seeking to take advantage of price differences between
such markets may create unexpected volatility in our share price;
in addition, investors may not be able to easily move shares for
trading between such markets.
Part I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
(Unaudited)
MaxCyte, Inc.
Condensed Consolidated Balance Sheets
June 30, December 31,
2021 2020
--------------- --------------
(Unaudited) (Note 2)
Assets
Current assets:
Cash and cash equivalents $ 37,423,200 $ 18,755,200
Short-term investments, at amortized cost 35,968,700 16,007,500
Accounts receivable, net 5,719,200 5,171,900
Inventory, net 4,169,500 4,315,800
Other current assets 1,345,700 1,003,000
-------------- -------------
Total current assets 84,626,300 45,253,400
Property and equipment, net 5,472,200 4,546,200
Right of use asset - operating leases 1,173,900 1,728,300
Right of use asset - finance leases 170,700 218,300
Other assets 1,704,100 33,900
-------------- -------------
Total assets $ 93,147,200 $ 51,780,100
============== =============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 644,700 $ 890,200
Accrued expenses and other 4,518,300 5,308,500
Operating lease liability, current 616,500 572,600
Deferred revenue, current portion 6,754,800 4,843,000
-------------- -------------
Total current liabilities 12,534,300 11,614,300
Note payable, net of discount, and deferred fees - 4,917,000
Operating lease liability, net of current portion 606,700 1,234,600
Other liabilities 1,185,000 788,800
-------------- -------------
Total liabilities 14,326,000 18,554,700
-------------- -------------
Commitments and contingencies (Note 7)
Stockholders' equity
Common stock, $0.01 par value; 200,000,000 shares authorized, 84,719,345 and
77,382,473 shares
issued and outstanding at June 30, 2021 and December 31, 2020, respectively 847,200 773,800
Additional paid-in capital 184,723,700 127,673,900
Accumulated deficit (106,749,700) (95,222,300)
-------------- -------------
Total stockholders' equity 78,821,200 33,225,400
-------------- -------------
Total liabilities and stockholders' equity $ 93,147,200 $ 51,780,100
============== =============
See accompanying notes to unaudited condensed consolidated
financial statements.
MaxCyte, Inc.
Unaudited Condensed Consolidated Statements of Operations
Three Months Ended June 30, Six Months Ended June 30,
------------------------------- -----------------------------
2021 2020 2021 2020
---------------- ------------- -------------- -------------
Revenue $ 7,108,100 $ 5,150,400 $ 13,602,900 $ 10,892,400
Costs of goods sold 784,500 466,300 1,477,600 1,125,300
------------ ------------ ------------- ------------
Gross profit 6,323,600 4,684,100 12,125,300 9,767,100
------------ ------------ ------------- ------------
Operating expenses:
Research and development 3,205,500 4,090,400 9,283,200 8,335,100
Sales and marketing 2,912,900 1,843,900 5,702,000 3,894,000
General and administrative 4,622,400 1,594,400 7,930,400 3,370,900
------------ ------------ ------------- ------------
Total operating expenses 10,740,800 7,528,700 22,915,600 15,600,000
------------ ------------ ------------- ------------
Operating loss (4,417,200) (2,844,600) (10,790,300) (5,832,900)
------------ ------------ ------------- ------------
Other income (expense):
Interest and other expense (13,200) (164,700) (755,500) (281,800)
Interest income 8,600 5,200 18,400 48,700
------------ ------------ ------------- ------------
Total other income (expense) (4,600) (159,500) (737,100) (233,100)
------------ ------------ ------------- ------------
Provision for income taxes - - - -
------------ ------------ ------------- ------------
Net loss $ (4,421,800) $ (3,004,100) $ (11,527,400) $ (6,066,000)
============ ============ ============= ============
Basic and diluted net loss per share $ (0.05) $ (0.05) $ (0.14) $ (0.10)
============ ============ ============= ============
Weighted average shares outstanding,
basic and diluted 84,706,516 65,834,978 82,865,526 61,619,280
============ ============ ============= ============
See accompanying notes to unaudited condensed consolidated
financial statements.
MaxCyte, Inc.
Unaudited Condensed Consolidated Statements of Changes in
Stockholders' Equity
Total
Common Stock Additional Accumulated Stockholders'
----------------------
Shares Amount Paid-in Capital Deficit Equity
----------- --------- ----------------- -------------- -------------
Balance January 1, 2020 57,403,583 $ 574,000 $ 96,433,700 $ (83,405,900) $ 13,601,800
Stock-based compensation
expense - - 547,600 - 547,600
Net loss - - - (3,061,900) (3,061,900)
----------- -------- ------------- ------------- ------------
Balance March 31, 2020 57,403,583 574,000 96,981,300 (86,467,800) 11,087,500
=========== ======== ============= ============= ============
Issuance of common stock 19,181,423 191,900 28,375,300 - 28,567,200
Stock-based compensation
expense - - 559,000 - 559,000
Net loss - - - (3,004,100) (3,004,100)
----------- -------- ------------- ------------- ------------
Balance June 30, 2020 76,585,006 $ 765,900 $ 125,915,600 $ (89,471,900) $ 37,209,600
=========== ======== ============= ============= ============
Total
Common Stock Additional Accumulated Stockholders'
----------------------
Shares Amount Paid-in Capital Deficit Equity
----------- --------- ----------------- --------------- -------------
Balance January 1, 2021 77,382,473 $ 773,800 $ 127,673,900 $ (95,222,300) $ 33,225,400
Issuance of common stock 5,740,000 57,400 51,751,500 - 51,808,900
Stock-based compensation
expense - - 1,319,800 - 1,319,800
Exercise of stock options 1,567,086 15,700 2,021,400 - 2,037,100
Net loss - - - (7,105,600) (7,105,600)
----------- -------- ------------- -------------- ------------
Balance at March 31, 2021 84,689,559 846,900 182,766,600 (102,327,900) 81,285,600
=========== ======== ============= ============== ============
Stock-based compensation
expense - - 1,905,200 - 1,905,200
Exercise of stock options 29,786 300 51,900 - 52,200
Net loss - - - (4,421,800) (4,421,800)
----------- -------- ------------- -------------- ------------
Balance at June 30, 2021 84,719,345 $ 847,200 $ 184,723,700 $ (106,749,700) $ 78,821,200
=========== ======== ============= ============== ============
See accompanying notes to unaudited condensed consolidated
financial statements.
MaxCyte, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30,
-----------------------------
2021 2020
-------------- -------------
Cash flows from operating activities:
Net loss $ (11,527,400) $ (6,066,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization on property and equipment, net 641,400 478,200
Net book value of consigned equipment sold 13,900 12,000
Loss on disposal of fixed assets 19,800 51,300
Fair value adjustment of liability classified warrant 358,200 -
Stock-based compensation 3,225,000 1,106,600
Bad debt (recovery) expense - (117,200)
Amortization of discounts on short-term investments 1,900 (1,100)
Noncash interest expense 5,400 10,800
Changes in operating assets and liabilities:
Accounts receivable (547,300) (385,600)
Inventory (182,300) (608,900)
Other current assets (342,700) 9,700
Right of use asset - operating leases 554,400 258,200
Right of use asset - finance lease 47,600 35,700
Other assets (1,670,200) (100,000)
Accounts payable, accrued expenses and other (992,400) (2,339,200)
Operating lease liability (584,000) (248,800)
Deferred revenue 1,911,800 1,879,000
Other liabilities 38,000 (14,300)
------------- ------------
Net cash used in operating activities (9,028,900) (6,039,600)
------------- ------------
Cash flows from investing activities:
Purchases of short-term investments (35,963,100) (1,001,100)
Maturities of short-term investments 16,000,000 2,500,000
Purchases of property and equipment (1,271,100) (1,049,900)
Proceeds from sale of equipment 4,600 -
------------- ------------
Net cash (used in) provided by investing activities (21,229,600) 449,000
------------- ------------
Cash flows from financing activities:
Net proceeds from issuance of common stock 51,808,900 28,567,200
Borrowings under notes payable - 1,440,000
Principal payments on notes payable (4,922,400) (1,440,000)
Proceeds from exercise of stock options 2,089,300 -
Principal payments on finance leases (49,300) (15,700)
------------- ------------
Net cash provided by financing activities 48,926,500 28,551,500
------------- ------------
Net increase in cash and cash equivalents 18,668,000 22,960,900
Cash and cash equivalents, beginning of period 18,755,200 15,210,800
------------- ------------
Cash and cash equivalents, end of period $ 37,423,200 $ 38,171,700
============= ============
Supplemental cash flow information:
Cash paid for interest $ 419,200 $ 210,700
Supplemental disclosure of non-cash investing and financing activities:
Property and equipment purchases included in accounts payable $ 6,000 $ 159,000
Lease liability reduction due to operating lease modification $ 304,600 $ -
See accompanying notes to unaudited condensed consolidated
financial statements.
1. Organization and Description of Business
MaxCyte, Inc. (the "Company") is a global life sciences company
focused on advancing the discovery, development and
commercialization of next-generation cell therapies. The Company
leverages its proprietary cell engineering technology platform to
enable the programs of its biotechnology and pharmaceutical company
customers who are engaged in cell therapy, including gene editing
and immuno-oncology, as well as in drug discovery and development
and biomanufacturing. The Company licenses and sells its
instruments and technology and sells its consumables to developers
of cell therapies and to pharmaceutical and biotechnology companies
for use in drug discovery and development and biomanufacturing. In
early 2020, the Company established a wholly owned subsidiary,
CARMA Cell Therapies, Inc., as part of its development of CARMA,
the Company's proprietary, mRNA-based, clinical-stage,
immuno-oncology cell therapy platform. In the first quarter of
2021, the Company concluded all pre-clinical and clinical
activities related to the CARMA platform. During the six months
ended June 30, 2021, the Company incurred CARMA-related operating
expenses of $4.3 million, which consisted of $2.5 million of
ongoing CARMA expenses primarily for preclinical research and
clinical activities as well as $1.8 million of severance, legal and
other costs associated with the cessation of CARMA activities.
The COVID--19 pandemic has disrupted economic markets and the
economic impact, duration and spread of related effects is
uncertain at this time and difficult to predict. As a result, it is
not possible to ascertain the overall future impact of COVID--19 on
the Company's business and, depending upon the extent and severity
of such effects, including, but not limited to potential slowdowns
in customer operations, extension of sales cycles, shrinkage in
customer capital budgets or delays in customers' clinical trials,
the pandemic could have a material adverse effect on the Company's
business, results of operations, financial condition and cash
flows. In 2020, the Company made adjustments to its operating,
sales and marketing practices to mitigate the effects of COVID--19
restrictions which reduced planned spending, particularly on travel
and marketing expenditures. In addition, COVID--19 restrictions may
have delayed or slowed the research activities of some existing and
prospective customers. It is not possible to quantify the impact of
COVID--19 on the Company's revenues and expenses in the first half
of 2021or its expected impact on future periods.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated interim
financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of
America ("U.S. GAAP") for interim financial information and
pursuant to the instructions to Form 10--Q and Article 10 of
Regulation S-X of the United States Securities and Exchange
Commission (the "SEC"). In the Company's opinion, the accompanying
unaudited condensed consolidated financial statements include all
adjustments, consisting of normal recurring adjustments, which are
necessary to present fairly the financial position, results of
operations, and cash flow as of and for the periods presented. The
condensed consolidated balance sheet at December 31, 2020 has been
derived from audited consolidated financial statements as of that
date. The unaudited condensed consolidated results of operations
are not necessarily indicative of the results that may occur for
the full fiscal year or any other future year or period. Certain
information and footnotes disclosure normally included in financial
statements prepared in accordance with U.S. GAAP have been omitted
pursuant to instructions, rules, and regulations prescribed by the
SEC. The Company believes that the disclosures provided herein are
adequate to make the information presented not misleading when
these unaudited interim condensed consolidated financial statements
are read in conjunction with the audited consolidated financial
statements and notes included in the Company's final prospectus
filed with the SEC pursuant to Rule 424(b)(4) on July 30, 2021 (the
"Final Prospectus").
Significant Accounting Policies
The Company's significant accounting policies are disclosed in
the footnotes to its audited consolidated financial statements for
the year ended December 31, 2020 included in the Final Prospectus
and have not materially changed during the six months ended June
30, 2021, except as noted below.
Concentration of Significant Customers
Significant customers are those that accounted for 10% or more
of the Company's total revenue for the period or accounts
receivable as the end of a reporting period. During the three and
six months ended June 30, 2021, one customer represented 17% and
18% of revenue, respectively. During the three months ended June
30, 2020, one customer represented 23% of revenue, and during the
six months ended June 30, 2020, two customers represented 15% and
12% of revenue, respectively. As of June 30, 2021, one customer
accounted for 22% of accounts receivable. No customer accounted for
over 10% of accounts receivable at December 31, 2020.
Certain components included in the Company's products are
obtained from a single source or a limited group of suppliers.
During the three and six months ended June 30, 2021, the Company
purchased approximately 56% and 48% of its inventory from three and
two suppliers, respectively. During the three and six months ended
June 30, 2020, the Company purchased approximately 60% and 57% of
its inventory from three suppliers and one supplier, respectively.
As of June 30, 2021 and December 31, 2020, amounts payable to these
suppliers totaled 11% and 31% of total accounts payable,
respectively.
Foreign Currency
The Company's functional currency is the US dollar; transactions
denominated in foreign currencies are subject to currency risk. The
Company recognized $3,600 in foreign currency transaction gains and
$7,600 in foreign currency transaction losses for the three months
ended June 30, 2021 and 2020, respectively. The Company recognized
$23,400 and $16,700 in foreign currency transaction gains for the
six months ended June 30, 2021 and 2020, respectively.
Cash, Cash Equivalents and Short-term Investments
The following table summarizes the Company's cash equivalents
and short-term investments at June 30, 2021:
Gross Gross
Amortized unrecognized unrecognized Aggregate
Description Classification cost holding gains holding losses fair value
------------------- ------------------ ------------ --------------- ---------------- ------------
Money market funds Cash equivalents $ 5,270,300 $ - $ - $ 5,270,300
Corporate Debt Cash equivalents 1,001,500 - (100) 1,001,400
Commercial Paper Cash equivalent 27,996,800 1,400 - 27,998,200
Short-term
Corporate Debt investments 35,968,700 21,600 - 35,990,300
----------- ----------- ------------ -----------
Total Investments $ 70,237,300 $ 23,000 $ (100) $ 70,260,200
=========== =========== ============ ===========
The following table summarizes the Company's cash equivalents
and short-term investments at December 31, 2020:
Gross Gross
Amortized unrecognized unrecognized Aggregate
Description Classification cost holding gains holding losses fair value
------------------- ------------------ ------------ --------------- ---------------- ------------
Money market funds Cash equivalents $ 8,702,200 $ - $ - $ 8,702,200
Commercial Paper Cash equivalents 6,523,500 - - 6,523,500
Short--term
Commercial Paper investments 13,996,800 1,800 - 13,998,600
Short--term
Corporate Debt investments 2,010,700 - (100) 2,010,600
----------- ----------- ------------ -----------
Total Investments $ 31,233,200 $ 1,800 $ (100) $ 31,234,900
=========== =========== ============ ===========
At times the Company's cash balances may exceed federally
insured limits and cash may also be deposited in foreign bank
accounts that are not covered by federal deposit insurance. The
Company does not believe that this results in any significant
credit risk.
Inventory
Inventory is carried at the lower of cost or net realizable
value. Inventory consisted of the following at:
June 30, December 31,
2021 2020
----------- --------------
Raw materials inventory $ 1,859,600 $ 1,771,300
Finished goods inventory 2,309,900 2,544,500
---------- ----------
Total inventory $ 4,169,500 $ 4,315,800
========== ==========
The Company determined no allowance for obsolescence was
necessary at June 30, 2021 or December 31, 2020.
Accounts Receivable
Accounts receivables are reduced by an allowance for doubtful
accounts, if needed. The Company determined no allowance was
necessary at June 30, 2021 or December 31, 2020.
Property and Equipment
Property and equipment are stated at cost. Depreciation is
computed using the straight-line method. Leasehold improvements are
amortized over the shorter of the estimated lease term or useful
life.
Property and equipment consisted of the following:
June 30, December 31,
2021 2020
------------- -------------
Furniture and equipment $ 3,696,400 $ 3,492,900
Instruments 1,755,600 1,424,600
Leasehold improvements 641,400 641,400
Internal-use software under development 980,200 -
Internal-use software 1,999,300 1,963,000
Accumulated depreciation and amortization (3,600,700) (2,975,700)
------------ ------------
Property and equipment, net $ 5,472,200 $ 4,546,200
============ ============
For the six months ended June 30, 2021, the Company transferred
$328,600 of instruments previously classified as inventory to
property and equipment leased to customers. For the six months
ended June 30, 2020, the Company transferred $154,000 of
instruments previously classified as inventory to property and
equipment leased to customers.
For the three and six months ended June 30, 2021, the Company
incurred depreciation and amortization expense of $325,000 and
$641,400, respectively. For the three and six months ended June 30,
2020, the Company incurred depreciation and amortization expense of
$256,500 and $478,200, respectively.
In the three and six months ended June 30, 2020, the Company
capitalized $5,700 and $8,200, respectively, of interest expense
related to capitalized software development projects. No interest
expense was capitalized in the three and six months ended June 30,
2021.
Deferred Offering Costs
The Company capitalizes certain legal, accounting and other
third-party fees that are directly associated with in-process
equity financings as deferred offering costs (non-current) until
such financings are consummated or determined not to be probable of
consummation. After consummation of the equity financing, these
costs are recorded in stockholders' equity as a reduction of
proceeds received as a result of the offering. If the equity
financing is no longer considered probable of being consummated,
all deferred offering costs will be charged to operating expenses
in the consolidated statement of operations at such time.
As of June 30, 2021 and December 31, 2020, $1,384,500 and $0,
respectively, of deferred offering costs were reported as other
assets in the condensed consolidated balance sheets.
Leases
In transactions where the Company is the lessee, at the
inception of a contract, the Company determines if the arrangement
is, or contains, a lease. See Note 7 for additional details over
leases where the Company is the lessee.
All transactions in which the Company is the lessor are
short-term (one year or less) and have been classified as operating
leases. All leases require upfront payments covering the full
period of the lease and thus, there are no future payments expected
to be received from existing leases. See Note 3 for details over
revenue recognition related to lease agreements.
Loss Per Share
Basic loss per share is computed by dividing net loss available
to common stockholders by the weighted average number of shares of
common stock outstanding during the period.
For periods of net income, and when the effects are not
anti-dilutive, diluted earnings per share is computed by dividing
net income available to common stockholders by the weighted-average
number of shares outstanding plus the impact of all potential
dilutive common shares, consisting primarily of common stock
options and stock purchase warrants using the treasury stock
method.
For periods of net loss, diluted loss per share is calculated
similarly to basic loss per share because the impact of all
dilutive potential common shares is anti-dilutive. The number of
anti-dilutive shares excluded from the computation of diluted loss
per share, consisting of shares underlying stock options and stock
purchase warrants, was 12.2 million and 12.4 million for the three
and six months ended June 30, 2021 and 2020, respectively.
Recent Accounting Pronouncements
Recently Adopted
On January 1, 2021, the Company adopted new guidance addressing
income taxes, which is intended to simplify various aspects related
to the accounting for income taxes. The guidance removes certain
exceptions to the general principles in Accounting Standards
Codification ("ASC") 740, Income Taxes , and also clarifies and
amends existing guidance to improve consistent application. The
adoption did not have a material effect on the Company's condensed
consolidated interim financial statements.
New Accounting Pronouncements Not Yet Adopted
In June 2016, the Financial Accounting Standards Board ("FASB")
issued guidance with respect to measuring credit losses on
financial instruments, including trade receivables. The guidance
eliminates the probable initial recognition threshold that was
previously required prior to recognizing a credit loss on financial
instruments. The credit loss estimate can now reflect an entity's
current estimate of all future expected credit losses. Under the
previous guidance, an entity only considered past events and
current conditions. The guidance is effective for fiscal years
beginning after December 15, 2022, including interim periods within
those fiscal years, with early adoption permitted. The adoption of
certain amendments of this guidance must be applied on a modified
retrospective basis and the adoption of the remaining amendments
must be applied on a prospective basis. The Company is currently
evaluating the impact, if any, that this new accounting
pronouncement will have on its consolidated financial
statements.
The Company has evaluated all other issued and unadopted
Accounting Standards Updates and believes the adoption of these
standards will not have a material impact on its results of
operations, financial position, or cash flows.
3. Revenue
Revenue is principally from the sale of instruments and
processing assemblies, and extended warranties and the lease of
instruments, which leases also include customer-specific milestone
payments. In some arrangements, products and services have been
sold together representing distinct performance obligations. In
these arrangements the Company allocates the sale price to the
various performance obligations in the arrangement on a relative
selling price basis. Under this basis, the Company determines the
estimated selling price of each performance obligation in a manner
that is consistent with that used to determine the price to sell
the deliverable on a standalone basis.
Revenue is recognized at the time control is transferred to the
customer and the performance obligation is satisfied. Revenue from
the sale of instruments and processing assemblies is generally
recognized at the time of shipment to the customer, provided that
no significant vendor obligations remain and collectability is
reasonably assured. Revenue from equipment leases is recognized
ratably over the contractual term of the lease agreement and when
specific milestones are achieved by a customer. Licensing fee
revenue is recognized ratably over the license period. Revenue from
fees for research services is recognized when services have been
provided.
Disaggregation of Revenue
The following table depicts the disaggregation of revenue by
type of contract:
Three months ended June 30, 2021 Six months ended June 30, 2021
---------------------------------------- -----------------------------------------
Revenue from Revenue Revenue from Revenue
Contracts from Contracts from
with Lease Total with Lease Total
Customers Elements Revenue Customers Elements Revenue
-------------- ----------- ----------- -------------- ----------- ------------
Product
Sales $ 4,041,600 $ - $ 4,041,600 $ 8,117,400 $ - $ 8,117,400
Lease
Elements - 2,889,700 2,889,700 - 5,145,600 5,145,600
Other 176,800 - 176,800 339,900 - 339,900
---------- ---------- ---------- ---------- ---------- -----------
Total $ 4,218,400 $ 2,889,700 $ 7,108,100 $ 8,457,300 $ 5,145,600 $ 13,602,900
========== ========== ========== ========== ========== ===========
Three months ended June 30, 2020 Six months ended June 30, 2020
---------------------------------------- -----------------------------------------
Revenue from Revenue Revenue from Revenue
Contracts from Contracts from
with Lease Total with Lease Total
Customers Elements Revenue Customers Elements Revenue
-------------- ----------- ----------- -------------- ----------- ------------
Product
Sales $ 2,244,300 $ - $ 2,244,300 $ 5,439,500 $ - $ 5,439,500
Lease
Elements - 2,824,100 2,824,100 - 5,252,100 5,252,100
Other 82,000 - 82,000 200,800 - 200,800
---------- ---------- ---------- ---------- ---------- -----------
Total $ 2,326,300 $ 2,824,100 $ 5,150,400 $ 5,640,300 $ 5,252,100 $ 10,892,400
========== ========== ========== ========== ========== ===========
Additional Disclosures Relating to Revenue from Contracts with
Customers
Deferred revenue represents payments received for performance
obligations not yet satisfied and is presented as current or
long-term in the accompanying condensed consolidated balance sheets
based on the expected timing and satisfaction of the underlying
goods or services. Deferred revenue was $7.1 million and $5.0
million as of June 30, 2021 and December 31, 2020, respectively.
During the three and six months ended June 30, 2021, the Company
recognized $1.5 million and $3.5 million, respectively, and during
the three and six months ended June 30, 2020, $1.0 million and $2.5
million, respectively, of revenue that was included in deferred
revenue at the beginning of such periods.
Remaining contract consideration for which revenue has not been
recognized due to unsatisfied performance obligations with a
duration greater than one year at June 30, 2021 was $366,800, of
which the Company expects to recognize $71,200 in one year or less,
$72,000 in one to two years, $67,000 in two to three years, and
$156,600 thereafter.
For the three and six months ended June 30, 2021 and 2020, the
Company did not incur, and therefore did not defer, any material
incremental costs to obtain contracts or costs to fulfill
contracts.
4. Debt
In November 2019, the Company entered into a new credit facility
with MidCap Financial SBIC, LP ("MidCap"). The credit facility
provided for a $5 million term loan maturing on November 1, 2024.
The term loan provided for (i) an interest rate of one-month Libor
plus 6.5% with a 1.5% Libor floor, (ii) monthly interest payments,
(iii) 30 monthly principal payments of $166,700 beginning in June
2022 and (iv) a 3% final payment fee. The Company used the proceeds
from the credit facility for general operating purposes. The debt
was collateralized by substantially all assets of the Company. At
December 31, 2020, the term loan had an outstanding principal
balance of $5.0 million and $83,000 of unamortized debt discount.
In March 2021, the Company repaid the MidCap loan in full. The
Company incurred fees of $260,000 associated with early repayment
of the loan. The unamortized debt discounts and fees were expensed
and recorded as interest expense.
In April 2020, the Company received a loan from Silicon Valley
Bank in the amount of $1,440,000 under the US Small Business
Administration's Paycheck Protection Program ("PPP"). The PPP was
established as part of the US Coronavirus Aid, Relief, and Economic
Security ("CARES") Act. The loan provided for interest at 1% and a
maturity date of April 2022. In May 2020, the Company repaid the
loan in full.
5. Stockholders' Equity
Common Stock
During the first quarter of 2021, the Company completed an
equity capital raise issuing 5,740,000 shares of its common stock
at a price of LIR7.00 (or approximately $9.64) per share. The
transaction generated gross proceeds of LIR40.2 million (or $55.3
million). In conjunction with the transaction, the Company incurred
costs of $3.5 million which resulted in the Company receiving net
proceeds of $51.8 million.
Warrant
In connection with the November 2019 credit facility (see Note
4), the Company issued the lender a warrant to purchase 71,168
shares of common stock at an exercise price of GBP1.09081 per
share. Through June 30, 2021, the warrant is exercisable at any
time through the tenth anniversary of issuance. The warrant was
classified as a liability, as its strike price was in a currency
other than the Company's functional currency. The warrant was
recorded at fair value at the end of each reporting period with
changes from the prior balance sheet date recorded on the condensed
consolidated statements of operations (see Note 6). In August 2021,
MidCap exercised the warrant in full (see Note 8).
Stock Options
The Company adopted the MaxCyte, Inc. Long-Term Incentive Plan
(the "Plan") in January 2016 to amend and restate the MaxCyte 2000
Long-Term Incentive Plan to provide for the awarding of (i) stock
options, (ii) restricted stock, (iii) incentive shares, and (iv)
performance awards to employees, officers, and Directors of the
Company and to other individuals as determined by the Board of
Directors. Under the Plan, as amended, the maximum number of shares
of Common Stock of the Company that the Company may issue is
increased by ten percent (10%) of the shares that are issued and
outstanding at the time awards are made under the Plan. On December
10, 2019 and October 27, 2020, the Company's Board resolved to
increase the number of shares available for grant under the Plan by
3,000,000 and 1,500,000, respectively.
At December 31, 2020 and June 30, 2021, there were 4,175,737 and
4,090,810 shares available to be issued under the Plan,
respectively.
The weighted-average fair value of the options granted during
the three months ended June 30, 2021 and 2020 was estimated to be
$7.22 and $1.09, respectively. The weighted-average fair value of
the options granted during the six months ended June 30, 2021 and
2020 was estimated to be $7.32 and $0.87, respectively.
The value of an option award is recognized as expense on a
straight-line basis over the requisite service period. At June 30,
2021, total unrecognized compensation expense was $20,211,400,
which will be recognized over the next 3.2 years.
The Company recorded stock-based compensation expense in the
following expense categories of its condensed consolidated
statements of operations:
Three months ended June 30, Six months ended June 30,
------------------------------- -----------------------------
2021 2020 2021 2020
------------------ ----------- --------------- ------------
General and administrative $ 1,169,600 $ 265,900 $ 1,911,300 $ 519,900
Sales and marketing 352,400 112,000 621,600 218,000
Research and development 383,200 181,100 692,100 368,700
-------------- ---------- ----------- -----------
Total $ 1,905,200 $ 559,000 $ 3,225,000 $ 1,106,600
============== ========== =========== ===========
6. Fair Value
The Company's condensed consolidated balance sheets include
various financial instruments (primarily cash and cash equivalents,
accounts receivable and accounts payable) that are carried at cost,
which approximates fair value due to the short-term nature of the
instruments. The Company's short-term investments are carried at
amortized cost (see Note 2 for fair values of short-term
investments). Notes payable are reflective of fair value based on
market comparable instruments with similar terms.
Financial Assets and Liabilities Measured at Fair Value on a
Recurring Basis
The Company had an outstanding warrant accounted for as a
liability and measured at fair value on a recurring basis, using
Level 3 inputs. The following table identifies the carrying amount
of this warrant at June 30, 2021:
Level 1 Level 2 Level 3 Total
----------- ----------- --------- ---------
Liabilities
Liability classified warrant $ - $ - $ 799,400 $ 799,400
---- ------ ---- ---- -------- --------
Total at June 30, 2021 $ - $ - $ 799,400 $ 799,400
==== ====== ==== ==== ======== ========
The following table identifies the carrying amount of this
warrant at December 31, 2020:
Level 1 Level 2 Level 3 Total
----------- ----------- --------- ---------
Liabilities
Liability classified warrant $ - $ - $ 441,200 $ 441,200
---- ------ ---- ---- -------- --------
Total at December 31, 2020 $ - $ - $ 441,200 $ 441,200
==== ====== ==== ==== ======== ========
The following table presents the activity for those items
measured at fair value on a recurring basis using Level 3 inputs
for the three and six months ended June 30, 2021 and 2020:
Mark-to-market liabilities - warrant
------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2021 2020 2021 2020
--------- --------- --------- ---------
Balance, beginning of period $ 789,100 $ 74,500 $ 441,200 $ 74,700
Change in fair value 10,300 51,500 358,200 51,300
-------- -------- -------- --------
Balance, end of period $ 799,400 $ 126,000 $ 799,400 $ 126,000
======== ======== ======== ========
The gains and losses resulting from the changes in the fair
value of the warrant liability are classified as other income or
expense in the accompanying condensed consolidated statements of
operations. The fair value of the Common Stock purchase warrants is
determined based on the Black-Scholes option pricing model or other
option pricing models as appropriate and included the use of
unobservable inputs such as the expected term, anticipated
volatility and expected dividends. Changes in any of the
assumptions related to such unobservable inputs may change the fair
value; increases in expected term, anticipated volatility and
expected dividends generally result in increases in fair value,
while decreases in these unobservable inputs generally result in
decreases in fair value.
The Company has no other financial assets or liabilities
measured at fair value on a recurring basis.
Financial Assets and Liabilities Measured at Fair Value on a
Non-Recurring Basis
Short-term investments carried at amortized cost are measured at
fair value on a non-recurring basis when they are deemed to be
impaired on an other-than-temporary basis. No fair value impairment
was recognized during the three and six months ended June 30, 2021
and 2020.
Non-Financial Assets and Liabilities Measured at Fair Value on a
Recurring Basis
The Company has no non-financial assets and liabilities that are
measured at fair value on a recurring basis.
Non-Financial Assets and Liabilities Measured at Fair Value on a
Non-Recurring Basis
The Company measures its long-lived assets, including property
and equipment, at fair value on a non-recurring basis. These assets
are recognized at fair value when they are deemed to be impaired.
No fair value impairment was recognized during the three and six
months ended June 30, 2021 and 2020.
7. Commitments and Contingencies
Operating Leases
The Company is a party to various leases for office and
laboratory space. A member of the Company's Board of Directors is
the CEO and Board member of the lessor of certain of these leases
for which the rent payments totaled $159,600 and $155,800 in the
three months ended June 30, 2021 and 2020, respectively, and
$318,300 and $310,500 in the six months ended June 30, 2021 and
2020, respectively.
At June 30, 2021, the Company had a $1,173,900 right of use
(ROU) lease asset, a $616,500 short-term lease liability and a
$606,700 long-term lease liability related to its operating leases.
At December 31, 2020, the Company had a $1,728,300 ROU asset, a
$572,600 short-term lease liability and a $1,234,600 long-term
lease liability related to its operating leases.
At June 30, 2021 and December 31, 2020, the weighted average
remaining lease term for the Company's operating leases was 2.1
years and 2.8 years, respectively.
On May 27, 2021, the Company entered into an operating lease for
new office and manufacturing space. The lease for the new space
consists of three phases, with Phase 1 estimated to commence in
October 2021 which is subject to revision, and the lease of all
phases is estimated to expire on June 30, 2035. Both the Company
and the landlord have a one-time right to terminate a portion of
Phase 3 of the lease during a defined time window. The Company will
design and construct the leasehold improvements with the approval
of the landlord. The landlord will reimburse the Company for the
costs of property improvements up to amounts specified in the
lease. The total incremental non-cancellable lease payments under
the new lease agreements are approximately $24.5 million over the
lease term.
Finance Leases
At June 30, 2021, the Company had a $170,700 ROU asset, a
$102,800 short-term lease liability included in "Accrued expenses
and other" and a $90,100 long-term lease liability included in
"Other liabilities" related to its finance lease.
At December 31, 2020, the Company had a $218,300 ROU asset, a
$100,000 short-term lease liability included in "Accrued expenses
and other" and a $142,200 long-term lease liability included in
"Other liabilities" related to its finance lease.
All Leases
Lease costs for the three and six months ended June 30, 2021 and
2020 were as follows:
Three months ended Six months ended
June 30, June 30,
-------------------- --------------------
2021 2020 2021 2020
--------- --------- --------- ---------
Finance lease cost
Amortization of ROU asset $ 23,800 $ 23,800 $ 47,600 $ 35,700
Interest on expense 2,900 4,200 6,100 6,900
Operating lease cost 174,200 170,100 346,900 337,200
Short-term lease cost 10,000 - 18,900 -
Variable lease cost 75,600 65,700 151,200 141,500
-------- -------- -------- --------
Total lease cost $ 286,500 $ 263,800 $ 570,700 $ 521,300
======== ======== ======== ========
As of June 30, 2021, maturities of lease liabilities that have
commenced prior to June 30, 2021 were as follows:
Operating Leases Finance Leases
------------------ ----------------
Remainder of 2021 $ 360,300 $ 55,400
2022 579,200 110,800
2023 405,000 36,900
-------------- ------------
Total lease payments 1,344,500 203,100
Discount factor (121,300) (10,300)
-------------- ------------
Present value of lease liabilities $ 1,223,200 $ 192,800
============== ============
8. Subsequent Events
Initial Public Offering
The Company's registration statement on Form S--1 related to its
initial public offering of common stock in the United States (the
"IPO") was declared effective on July 29, 2021, and the Company's
common stock began trading on the Nasdaq Global Select Market on
July 30, 2021. On August 3, 2021, the Company issued and sold
15,525,000 shares of common stock in the IPO at a price to the
public of $13.00 per share, inclusive of 2,025,000 shares issued
pursuant to the full exercise of the underwriters' option to
purchase additional shares. The IPO generated gross proceeds to the
Company of $201.8 million. The Company received aggregate net
proceeds of approximately $184 million after deducting aggregate
underwriting commissions and offering costs of approximately $18
million.
Warrant Exercise
In a cashless settlement on August 11, 2021, MidCap exercised
its warrant (see Note 5), in whole, for 64,603 shares of common
stock.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
You should read the following discussion and analysis of our
financial condition and results of operations in conjunction with
our unaudited condensed consolidated financial statements and
related notes thereto included in Part I, Item 1 of this Quarterly
Report on Form 10--Q, our audited consolidated financial statements
and related notes for the year ended December 31, 2020, included in
our final prospectus dated July 29, 2021 (the "Final Prospectus"),
as filed with the Securities and Exchange Commission (the "SEC")
pursuant to Rule 424(b)(4) on July 30, 2021, as well as the
information contained under Management's Discussion and Analysis of
Financial Condition and Results of Operations and "Risk Factors"
contained in the Final Prospectus, and "Risk Factors Summary" and
Part II, Item 1A "Risk Factors" of this Quarterly Report on Form
10--Q , and other information provided from time to time in our
other filings with the SEC.
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10--Q contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements about us and our industry that
involve substantial risks, uncertainties, and assumptions,
including those described in "Risk Factors Summary" and elsewhere
in this report. All statements other than statements of historical
facts contained in this report, 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. In some cases, you can
identify forward-looking statements because they contain words such
as "anticipate," "believe," "contemplate," "continue, " "could,"
"estimate," "expect," "intend," "may," "plan," "potential,"
"predict," "project," "should," "target," "will" or "would" or the
negative of these words or other similar terms or expressions.
These forward-looking statements include, but are not limited to,
statements concerning the following:
-- our expected future growth and the success of our business model;
-- the potential payments we may receive pursuant to our Strategic Platform Licenses ("SPLs");
-- the size and growth potential of the markets for our
products, and our ability to serve those markets, increase our
market share and achieve and maintain industry leadership;
-- the rate and degree of market acceptance of our products
within the cell engineering market;
-- the expected future growth of our manufacturing capabilities
and sales, support and marketing capabilities;
-- our ability to expand our customer base and enter into additional SPLs;
-- our ability to accurately forecast and manufacture
appropriate quantities of our products to meet commercial
demand;
-- our expectations regarding development of the cell therapy
market, including projected growth in adoption of non-viral
delivery approaches and gene editing manipulation technologies;
-- our ability to maintain our FDA Master File and Technical Files;
-- our research and development for any future products,
including our intention to introduce new instruments and processing
assemblies and move into new applications;
-- the development, regulatory approval, and commercialization
of competing products and our ability to compete with the companies
that develop and sell such products;
-- our ability to retain and hire senior management and key personnel;
-- regulatory developments in the United States and foreign countries;
-- our expectations regarding the period during which we qualify
as an emerging growth company under the JOBS Act;
-- our ability to develop and maintain our corporate
infrastructure, including our internal controls;
-- our financial performance and capital requirements;
-- our expectations regarding our ability to obtain and maintain
intellectual property protection for our products, as well as our
ability to operate our business without infringing the intellectual
property rights of others; and
-- our use of available capital resources.
You should not rely on forward-looking statements as predictions
of future events. We have based the forward-looking statements
contained in this Quarterly Report primarily on our current
expectations and projections about future events and trends that we
believe may affect our business, financial condition and operating
results. The outcome of the events described in these
forward-looking statements is subject to risks, uncertainties and
other factors described in the section titled "Risk Factors
Summary" in this report and under the caption "Risk Factors" and
elsewhere in the Final Prospectus. Moreover, we operate in a very
competitive and rapidly changing environment. New risks and
uncertainties emerge from time to time, and it is not possible for
us to predict all risks and uncertainties that could have an impact
on the forward-looking statements contained in this report. The
results, events and circumstances reflected in the forward-looking
statements may not be achieved or occur, and actual results, events
or circumstances could differ materially from those described in
the forward-looking statements.
In addition, statements that "we believe" and similar statements
reflect our beliefs and opinions on the relevant subject. These
statements are based on information available to us as of the date
of this Quarterly Report on Form 10--Q. And while we believe that
information provides a reasonable basis for these statements, that
information may be limited or incomplete. Our statements should not
be read to indicate that we have conducted an exhaustive inquiry
into, or review of, all relevant information. These statements are
inherently uncertain, and investors are cautioned not to unduly
rely on these statements.
The forward-looking statements made in this Quarterly Report on
Form 10--Q relate only to events as of the date on which the
statements are made. We undertake no obligation to update any
forward-looking statements made in this Quarterly Report to reflect
events or circumstances after the date of this Quarterly Report or
to reflect new information or the occurrence of unanticipated
events, except as required by law. We may not actually achieve the
plans, intentions or expectations disclosed in our forward-looking
statements, and you should not place undue reliance on our
forward-looking statements. Our forward-looking statements do not
reflect the potential impact of any future acquisitions, mergers,
dispositions, joint ventures or investments.
You should read this Quarterly Report and the documents that we
file with the SEC with the understanding that our actual future
results , levels of activity, performance and events and
circumstances may be materially different from what we expect.
Overview
We are a leading commercial cell engineering company focused on
providing enabling platform technologies to advance innovative
cell-based research as well as next-generation cell therapeutic
discovery, development and commercialization. Over the past twenty
years, we have developed and commercialized our proprietary Flow
Electroporation platform, which facilitates complex engineering
through the delivery of molecules into a wide variety of cells.
Electroporation is a method of transfection, or the process of
deliberately introducing molecules into cells, that involves
applying an electric field to temporarily increase the permeability
of the cell membrane. This precisely controlled increase in
permeability allows the intracellular delivery of molecules, such
as genetic material and proteins, that would not normally be able
to cross the cell membrane as easily.
Our ExPERT platform, which is based on our Flow Electroporation
technology, has been designed to address this rapidly expanding
cell therapy market and can be utilized across the continuum of the
high-growth cell therapy sector, from discovery and development
through commercialization of next-generation, cell-based medicines.
The ExPERT family of products includes: three instruments, the ATx,
STx and GTx; our portfolio of proprietary single-use processing
assemblies, or disposables; and software protocols. We have
garnered meaningful expertise in cell engineering via our internal
research and development efforts as well as our customer-focused
commercial approach, which includes a growing application scientist
team. The platform is also supported by a robust intellectual
property portfolio with 50 granted U.S. and foreign patents and 76
pending patent applications worldwide.
From leading commercial cell therapy drug developers and top
biopharmaceutical companies to top academic and government research
institutions, including the U.S. National Institutes of Health, or
NIH, our customers have extensively validated our technology. We
believe the features and performance of our platform have led to
sustained customer engagement. Our existing customer base ranges
from large biopharmaceutical companies, including all of the top
10, and 20 of the top 25, pharmaceutical companies based on 2020
global revenue, to hundreds of biotechnology companies and academic
centers focused on translational research.
Since our inception, we have incurred significant operating
losses. Our ability to generate revenue sufficient to achieve
profitability will depend on the successful further development and
commercialization of our products. We generated revenue of $13.6
million and incurred a net loss of $11.5 million for the six months
ended June 30, 2021. As of June 30, 2021, we had an accumulated
deficit of $106.7 million. We expect to continue to incur net
losses as we focus on growing commercial sales of our products in
both the United States and international markets, including growing
our sales and field application scientist teams, scaling our
manufacturing operations, and research and development efforts to
develop new products and further enhance our existing products.
Further, we expect to incur additional costs associated with
operating as a public company in the United States.
Impact of COVID--19 on Our Business
We continue to closely monitor the impact of the novel
coronavirus ("COVID--19") pandemic on our business and the
geographic regions where we operate. The impact of this pandemic
has been and will likely continue to be extensive in many aspects
of society, which has resulted in and will likely continue to
result in significant disruptions to the global economy, as well as
businesses and capital markets around the world.
Impacts to our business as a result of COVID--19 have included
disruptions to our manufacturing operations and supply chain caused
by facility closures, reductions in operating hours, staggered
shifts and other social distancing efforts, decreased productivity
and delayed availability of materials or components, limitations on
our employees' and customers' ability to travel, and delays in
product installations, demonstrations, trainings or shipments to
and from affected countries and within the United States.
Disruptions in our customers' operations have impacted and may
continue to impact our business. In light of the uncertain and
rapidly evolving situation relating to the spread of COVID--19, we
have taken precautionary measures intended to minimize the risk of
the virus to our employees, our customers and the communities in
which we operate, including temporarily closing our offices to
visitors and limiting the number of employees in our offices to
those that are deemed essential for manufacturing and research
purposes, as well as virtualizing, postponing or canceling
customer, employee and industry events.
We do not yet know the full impact that the COVID--19 pandemic
may have on our business and cannot guarantee that it will not be
materially negative. Although we continue to monitor the situation
and may adjust our policies as more information and public health
guidance become available, the ongoing effects of the COVID--19
pandemic and/or the precautionary measures that we or our customers
have implemented or may adopt may create operational and other
challenges, any of which could harm our business and results of
operations.
Recent Developments
Our registration statement on Form S--1 related to our initial
public offering of common stock in the United States (the "IPO")
was declared effective on July 29, 2021, and our common stock began
trading on the Nasdaq Global Select Market on July 30, 2021. On
August 3, 2021, we issued and sold 15,525,000 shares of common
stock in the IPO at a price to the public of $13.00 per share,
inclusive of 2,025,000 shares issued pursuant to the full exercise
of the underwriters' option to purchase additional shares. The IPO
generated gross proceeds to us of $201.8 million. We received
aggregate net proceeds of approximately $184 million after
deducting aggregate underwriting commissions and offering costs of
approximately $18 million. We believe that the net proceeds from
the IPO, together with our existing cash, will enable us to fund
our operating expenses and capital expenditure requirements for the
foreseeable future. We have based this estimate on assumptions that
may prove to be wrong, however, and we could exhaust our available
capital resources sooner than we expect. See "Liquidity and Capital
Resources" for more information about our current capital
resources.
We have also continued to enter into Strategic Platform License
("SPL") agreements with our cell therapy customers. These
agreements are discussed in more detail in "Results of Operations"
below and provide us with revenue from instrument technology access
fees and disposables as well as downstream economics on our
partners' programs (both pre- and post-commercial). In the first
six months of 2021, we signed SPL agreements with Myeloid
Therapeutics and Celularity, Inc., and signed a third agreement
with Sana Biotechnology in the third quarter of this year. We
continue to grow our SPL pipeline and, while the specific timing of
any agreement is uncertain, we believe we have several potential
opportunities to sign SPL agreements in the coming months.
We recognized $0.5 million and $1.8 million in milestone revenue
in the first six months of 2021 and 2020, respectively. Although
there is uncertainty around the timing and realization of
milestones, as they are dependent on the regulatory activities and
clinical success of our partners, we are encouraged by the
potential for meaningful milestone revenue over the next 12 to 18
months as our partners progress through the clinic towards pivotal
trials.
Results of Operations
Comparison of the Three Months Ended June 30, 2021 and 2020
The following table sets forth our results of operations for the
periods presented:
Three Months Ended
June 30,
--------------------
2021 2020
--------- --------
(in thousands)
Total revenue $ 7,108 $ 5,150
--------- --------
Cost of goods sold 785 466
--------- --------
Gross profit 6,323 4,684
--------- --------
Operating expense
Research and development 3,206 4,090
Sales and marketing 2,913 1,844
General and administrative 4,622 1,594
--------- --------
Total operating expense 10,741 7,528
--------- --------
Operating loss (4,418) (2,844)
--------- --------
Other income (expense)
Interest and other expense (13) (165)
Interest and other income 9 5
--------- --------
Total other income (expense) (4) (160)
--------- --------
Net loss $ (4,422) $ (3,004)
========= ========
Revenue
We generate revenue principally from the sale of instruments and
single-use processing assemblies ("PAs") and buffer, and from the
lease of instruments to our customers. In addition, our SPLs
include clinical progress milestones and sales-based payments to us
which may also provide material revenues.
In order to evaluate how our sales are trending across key
markets, as well as the contribution of program economics from our
SPLs, we separately analyze revenue derived from our cell therapy
customers and drug discovery customers, as well as the
performance-based milestone revenues we recognize under our SPLs.
Cell therapy revenues include primarily revenue from instruments
sold, annual license fees for instruments under lease, and sales of
our proprietary disposables. Drug discovery revenue includes
primarily revenue from instruments sold, sales of our proprietary
disposables and, occasionally, instruments leased. Program related
revenues includes clinical progress milestone and sales-based
revenues derived from SPL agreements. To date, all Program-related
revenue has consisted entirely of pre-commercial milestone
revenue.
The following table provides details regarding the sources of
our revenue for the periods presented:
Three Months Ended
June 30, Change
---------------------- --------------
2021 2020 Amount %
------------ -------- ------- -----
(in thousands, except percentages)
Cell therapy $ 4,766 $ 2,999 $ 1,767 59%
Drug discovery 1,838 1,150 689 60%
Program-related 504 1,002 (498) (50%)
-------- ------- ------
Total Revenue $ 7,108 $ 5,150 $ 1,958 38%
======== ======= ======
Total revenue for the three months ended June 30, 2021 was $7.1
million, an increase of $2.0 million, or 38%, compared to revenue
of $5.2 million during the three months ended June 30, 2020.
Our overall increase in revenue was primarily driven by growth
in sales and licenses of instruments and sales of disposables,
partially offset by a decrease in program-related revenue. In the
cell therapy market, instrument sales and licenses of instruments
increased by $0.8 million which was primarily due to continued high
levels of capital invested in companies operating in our target
markets, while disposable sales increased by $0.9 million, as a
result of the continued progression of our cell therapy partners'
clinical development programs. In the drug discovery market, the
$0.7 million increase was primarily driven by a growth resurgence
lead by the sales of newly introduced multi-well processing
assemblies. The $0.5 million decrease in program-related revenues
resulted from expected variability given the small number of
individual triggering events which currently generate this portion
of revenue. We expect program-related revenue to experience
variability for some time, although we anticipate that it may
moderate as the volume of SPLs and associated milestones grows.
We expect total revenue to increase over time as our markets
grow and we are able to secure additional instrument and disposable
sales and as the percentage of our installed base that are under
cell therapy license agreements increases. We expect revenue from
instruments licensed to cell therapy customers to continue to grow
as those customers move their existing drug development programs
into later-stage clinical trials and advance their preclinical
pipeline programs into clinical development. In addition, we expect
new customers to emerge and contribute to these revenues,
particularly given the underlying growth in the cell therapy
pipeline among companies in this market, continued availability of
capital to support such companies, and in particular the switch by
some of these cell therapy companies away from viral to non-viral
approaches. We expect, however, that our revenue will fluctuate
from period to period due to the timing of securing product sales
and licenses, the inherently uncertain nature of the timing of our
partner's milestone achievements and our dependence on the program
decisions of our partners.
Costs of Goods Sold and Gross Profit
Costs of goods sold primarily consists of costs for instrument
and processing assembly components, contract manufacturer costs,
salaries, overhead and other direct costs related to sales
recognized as revenue in the period. Costs of goods sold associated
with instrument lease revenue consists of leased equipment
depreciation. Gross profit is calculated as revenue less costs of
goods sold. Gross profit margin is gross profit expressed as a
percentage of revenue.
Our gross profit in future periods will depend on a variety of
factors, including sales mix among instruments, disposables and
milestones, the specific mix among types of instruments or
disposables, the proportion of revenues associated with instrument
leases as opposed to sales, changes in the costs to produce our
various products, the launch of new products or changes in existing
products, our cost structure for manufacturing including changes in
production volumes, and the pricing of our products which may be
impacted by market conditions.
We have generated overall gross margins of approximately 89%
over the past several years, including during the three and six
months ended June 30, 2021 and 2020. Our margins depend on the
revenue mix from instruments, PAs and potential milestones under
SPLs. We price our instruments at a premium given what we believe
to be the broad benefits of our platform, and the limited
availability of alternative, clinically validated non-viral
delivery approaches. However, the market for non-viral delivery is
highly competitive, and introduction of a GMP-grade platform by a
competitor that delivers similar performance across a similar
diversity of cell types could negatively impact our business and
lead to increased price pressure that negatively impacts our gross
margins.
In addition, part of our growth strategy is to expand into new
regional markets, which could require the use of distributors
and/or our participation in more competitive environments, which
could impact our ability to price our instruments at a premium and
could negatively impact our ability to enter into SPLs on terms
similar to those currently in effect.
Three Months Ended June 30, Change
--------------------------------- ------------
2021 2020 Amount %
---------------- --------------- ------- ---
(in thousands, except percentages)
Cost of goods sold $ 785 $ 466 $ 319 68%
Gross profit $ 6,324 $ 4,684 $ 1,640 35%
Gross margin 89% 90%
Costs of goods sold increased by $0.3 million, or 68%, for the
three months ended June 30, 2021 compared to the three months ended
June 30, 2020. The increase was primarily driven by higher sales of
instruments and disposables.
Gross profit increased by $1.6 million, or 35%, for the three
months ended June 30, 2021 compared to the three months ended June
30, 2020. The increase was primarily driven by increased revenue
from instrument and disposable sales and licensed instruments.
We expect that our costs of goods sold will generally increase
or decrease as our instrument and disposables revenue increases or
decreases. We expect our gross margin to benefit from realization
of the economics from our SPL agreements, to the extent that such
milestones grow to be a significant proportion of overall revenues,
as there are no costs of goods sold associated with such revenue.
However, realization and timing of these potential milestone
revenues is uncertain.
Operating Expenses
Research and Development
Three Months Ended June 30, Change
--------------------------------- --------------
2021 2020 Amount %
---------------- --------------- ------- -----
(in thousands, except percentages)
Research and development $ 3,206 $ 4,090 ($ 885) (22%)
Research and development expenses consist primarily of costs
incurred for our research activities related to advancing our
technology and development of applications for our technology,
including research into specific applications and associated data
development, process development, product development (e.g.
development of instruments and disposables, including hardware and
software engineering) and design and other costs not directly
charged to inventory or costs of goods sold.
These expenses principally include employee-related costs, such
as salaries, benefits, incentive compensation, stock-based
compensation, and travel, as well as consultant services,
facilities, and laboratory supplies and materials. We expense
research and development costs as incurred in the period in which
the underlying activity is undertaken.
For periods through the first half of 2021, our research and
development expenses include costs associated with developing the
CARMA platform principally for a clinical trial that has concluded.
As a result of our strategic decision to focus on out-licensing
this platform, we will no longer incur any material CARMA-related
expenses in future periods.
Research and development expenses decreased by $0.8 million, or
22%, for the three months ended June 30, 2021 compared to the three
months ended June 30, 2020. The decrease was primarily driven by a
$1.9 million decrease in CARMA expenses as a result of the
wind-down of CARMA operations, partially offset by a $0.7 million
increase in compensation expenses associated with headcount
increases and stock-based compensation and a $0.2 million increase
in lab supplies.
We believe that our continued investment in research and
development is essential to our long-term competitive position. We
expect to continue to incur substantial research and development
expenses as we invest in research and development to support our
customers, develop new uses for our existing technology and develop
improved and/or new offerings for our customers and partners. As a
result, we expect that our research and development expenses,
excluding CARMA-related expenses, will continue to increase in
absolute dollars in future periods and vary from period to period
as a percentage of revenue.
Sales and Marketing
Three Months Ended June 30, Change
--------------------------------- ------------
2021 2020 Amount %
---------------- --------------- ------- ---
(in thousands, except percentages)
Sales and Marketing $ 2,913 $ 1,844 $ 1,069 58%
Our sales and marketing expenses consist primarily of salaries,
commissions and other variable compensation, benefits, stock-based
compensation and travel costs for employees within our commercial
sales and marketing functions, as well as third-party costs
associated with our marketing activities.
Sales and marketing expenses increased by $1.1 million, or 58%,
for the three months ended June 30, 2021 compared to the three
months ended June 30, 2020. The increase was primarily driven by a
$0.8 million increase in compensation expenses as a result of
increases in headcount, commissions on sales and stock-based
compensation primarily due to stock price appreciation and a $0.2
million increase in marketing expenses.
We expect our sales and marketing expenses to increase in future
periods as we expand our commercial sales, marketing and business
development teams, product offerings, expand our collaboration
efforts, increase our presence globally, and increase marketing
activities to drive awareness and adoption of our products.
General and Administrative
Three Months Ended June 30, Change
--------------------------------- -------------
2021 2020 Amount %
---------------- --------------- ------- ----
(in thousands, except percentages)
General and administrative $ 4,622 $ 1,594 $ 3,028 190%
General and administrative expenses primarily consist of
salaries, benefits, stock-based compensation and travel costs for
employees in our executive, accounting and finance, legal,
corporate development, human resources, and office administration
functions as well as professional services fees, such as
consulting, audit, tax and legal fees, general corporate costs,
facilities and allocated overhead expenses and costs associated
with being an AIM listed public company such as director fees, U.K.
NOMAD and broker fees, investor relations consultants and insurance
costs. In future periods these expenses will also include costs
associated with being a public company in the United States.
General and administrative expense increased by $3.0 million, or
190%, for the three months ended June 30, 2021 compared to the
three months ended June 30, 2020. The increase was primarily driven
by a $1.8 million increase in compensation expense associated with
headcount increases, salary increases and stock-based compensation
primarily due to stock price appreciation, and a $1.0 million
increase in expenses associated with legal and other professional
services.
We expect that our general and administrative expenses will
continue to increase in absolute dollars in future periods,
primarily due to increased headcount to support anticipated growth
in the business and due to incremental costs associated with
operating as a public company listed on a U.S. exchange, including
insurance (particularly directors and officers insurance), costs to
comply with the rules and regulations applicable to companies
listed on a U.S. securities exchange and costs related to
compliance and reporting obligations pursuant to the rules and
regulations of the SEC and stock exchange listing standards,
investor relations and professional services. We expect these
expenses to vary from period to period as a percentage of
revenue.
Interest and Other Income (Expense)
Three Months Ended June 30, Change
--------------------------------- --------------
2021 2020 Amount %
-------------- ----------------- ------- -----
(in thousands, except percentages)
Interest and other expense $ 13 $ 165 ($ 152) (92%)
Interest and other income $ 9 $ 5 $ 3 65%
Interest and other income were immaterial in the three months
ended June 30, 2021 and 2020. Interest and other expense decreased
by $0.2 million, or 92%, for the three months ended June 30, 2021
compared to the three months ended June 30, 2020. The decrease was
primarily driven by the repayment of the MidCap loan in March 2021,
which resulted in our no longer incurring interest expense on
indebtedness. We currently maintain no outstanding debt
facility.
Comparison of the Six Months Ended June 30, 2021 and 2020
The following table sets forth our results of operations for the
periods presented:
Six Months Ended
June 30
---------------------
2021 2020
---------- ---------
(in thousands)
Total revenue $ 13,603 $ 10,892
--------- --------
Cost of goods sold 1,478 1,125
--------- --------
Gross profit 12,125 9,767
--------- --------
Operating expense
Research and development 9,283 8,335
Sales and marketing 5,702 3,894
General and administrative 7,930 3,371
--------- --------
Total operating expense 22,915 15,600
--------- --------
Operating loss (10,790) (5,833)
--------- --------
Other income (expense)
Interest and other expense (756) (282)
Interest and other income 18 49
--------- --------
Total other income (expense) (737) (233)
--------- --------
Net loss $ (11,527) $ (6,066)
========= ========
Revenue
The following table provides details regarding the sources of
our revenue for the periods presented:
Six Months Ended,
June 30 Change
--------------------- ----------------
2021 2020 Amount %
----------- -------- --------- -----
(in thousands, except percentages)
Cell therapy $ 9,494 $ 6,188 $ 3,306 53%
Drug discovery 3,601 2,950 650 22%
Program-related 508 1,754 (1,246) (71%)
------- ------- --------
Total revenue $ 13,603 $ 10,892 $ 2,711 25%
======= ======= ========
Total revenue for the six months ended June 30, 2021 was $13.6
million, an increase of $2.7 million, or 25%, compared to revenue
of $10.9 million during the six months ended June 30, 2020.
Our overall increase in revenue was primarily driven by growth
in sales and licenses of instruments and sales of disposables to
cell therapy customers, partially offset by a decrease in
program-related revenue. In the cell therapy market, the instrument
sales and licenses of instruments increased by $2.3 million which
was primarily due to continued high levels of capital invested in
companies operating in our target markets, while disposable sales
increased by $1.0 million as a result of the continued progression
of our cell therapy partners' clinical development programs. In the
drug discovery market, the $0.7 million increase was primarily
driven by a growth resurgence led by the sales of newly introduced
multi-well processing assemblies. The $1.2 million decrease in
program-related revenues resulted from expected variability from
period to period in the level of program-related revenue given the
small number of individual triggering events which currently
generate this portion of revenue. We expect program-related revenue
to experience variability for some time, although we anticipate
that it may moderate as the volume of SPLs and associated
milestones grows.
Costs of Goods Sold and Gross Profit
Six Months Ended June 30, Change
----------------------------- ------------
2021 2020 Amount %
---------------- ----------- ------- ---
(in thousands, except percentages)
Cost of goods sold $ 1,478 $ 1,125 $ 352 31%
Gross profit $ 12,125 $ 9,767 $ 2,358 24%
Gross margin 89% 90%
Costs of goods sold increased by $0.4 million, or 31%, for the
six months ended June 30, 2021 compared to the six months ended
June 30, 2020. The increase was primarily driven by higher sales of
instruments and disposables.
Gross profit increased by $2.4 million, or 24%, for the six
months ended June 30, 2021 compared to the six months ended June
30, 2020. The increase was primarily driven by increased revenue
from instrument and disposable sales and licensed instruments.
Operating Expenses
Research and Development
Six Months Ended June 30, Change
------------------------------- -------------
2021 2020 Amount %
--------------- -------------- -------- ---
(in thousands, except percentages)
Research and development $ 9,283 $ 8,335 $ 948 11%
Research and development expenses increased by $0.9 million, or
11%, for the six months ended June 30, 2021 compared to the six
months ended June 30, 2020. The increase was primarily driven by a
$1.2 million increase in compensation expenses associated with
headcount increases and stock-based compensation primarily due to
stock price appreciation, a $0.2 million increase in lab supplies
and a $0.3 million increase in product development costs and
occupancy costs, partially offset by a $0.8 million decrease in
CARMA expenses as a result of the wind-down of CARMA
operations.
Sales and Marketing
Six Months Ended June 30, Change
------------------------------- ------------
2021 2020 Amount %
--------------- -------------- ------- ---
(in thousands, except percentages)
Sales and Marketing $ 5,702 $ 3,894 $ 1,808 46%
Sales and marketing expenses increased by $1.8 million, or 46%,
for the six months ended June 30, 2021 compared to the six months
ended June 30, 2020. The increase was primarily driven by a $1.8
million increase in compensation expenses as a result of increases
in headcount, commissions on sales and stock-based compensation
primarily due to stock price appreciation.
General and Administrative
Six Months Ended June 30, Change
------------------------------- -------------
2021 2020 Amount %
--------------- -------------- ------- ----
(in thousands, except percentages)
General and administrative $ 7,931 $ 3,371 $ 4,560 135%
General and administrative expense increased by $4.6 million, or
135%, for the six months ended June 30, 2021 compared to the six
months ended June 30, 2020. The increase was primarily driven by a
$2.8 million increase in compensation expense associated with
headcount increases, salary increases and stock-based compensation
primarily due to stock price appreciation and a $1.4 million
increase in expenses including legal and professional services.
Interest and Other Income (Expense)
Six Months Ended June 30, Six Month Change
------------------------------- --------------------
2021 2020 Amount %
--------------- -------------- ------------ ------
(in thousands, except percentages)
Interest and other expense $ 756 $ 282 $ 474 168%
Interest and other income $ 18 $ 49 ($ 30) (62%)
Interest and other income were immaterial in the six months
ended June 30, 2021 and 2020. Interest and other expense increased
by $0.5 million, or 168%, for the six months ended June 30, 2021
compared to the six months ended June 30, 2020. The increase was
primarily driven by the termination fees associated with repayment
before maturity of the MidCap loan and the fair value change of
common stock warrants.
Liquidity and Capital Resources
Since our inception, we have experienced losses and negative
cash flows from operations. For the three and six months ended June
30, 2021, we incurred net losses of $4.4 million and $11.5 million,
respectively. As of June 30, 2021, we had an accumulated deficit of
$106.7 million. To date, we have funded our operations primarily
with proceeds from sales of common stock, borrowings under loan
agreements and from revenues associated with sales and licenses of
our products to customers. As of June 30, 2021, we had cash and
cash equivalents and short-term investments of $73.4 million. On
August 3, 2021, we completed our IPO, generating gross proceeds of
$201.8 million. We received net proceeds of approximately $184
million after deducting aggregate underwriting commissions and
offering expenses of approximately $18 million.
We expect to incur additional operating losses in the future as
we continue to invest in expanding our business through growing our
sales and marketing efforts, continued research and development,
product development and expanding our product offerings. Based on
our current business plan, we believe the net proceeds from the
IPO, together with our existing cash and cash equivalents, will
enable us to fund our operating expenses and capital expenditure
requirements for the foreseeable future.
We have based this estimate on assumptions that may prove to be
wrong, and we could utilize our available capital resources sooner
than we expect. Our future funding requirements will depend on many
factors, including:
-- market acceptance of our products;
-- the cost and timing of establishing additional sales,
marketing and distribution capabilities;
-- the cost of our research and development activities and
successful development of data supporting use of our products for
new applications, and timely launch of new features and
products;
-- our ability to enter into additional SPLs and licenses for
clinical use of our platform in the future;
-- changes in the amount of capital available to existing and
emerging customers in our target markets;
-- the effect of competing technological and market developments; and
-- the level of our selling, general and administrative expenses.
If we are unable to execute on our business plan and adequately
fund operations, or if the business plan requires a level of
spending in excess of cash resources, we will have to seek
additional equity or debt financing. If additional financings are
required from outside sources, we may not be able to raise such
capital on terms acceptable to us or at all.
To the extent that we raise additional capital through the sale
of equity or debt securities, the ownership interest of our
stockholders will be diluted, and the terms of these securities may
include liquidation or other preferences that adversely affect the
rights of our common stockholders. Debt financing, if available,
may involve agreements that include covenants restricting our
ability to take specific actions, such as incurring additional
debt, selling or licensing our assets, making product acquisitions,
making capital expenditures or declaring dividends. If we raise
additional funds through collaboration and licensing arrangements
with third parties, it may be necessary to relinquish some rights
to our technologies or our products, or grant licenses on terms
that are not favorable to us. If we are unable to raise additional
capital when desired, we may have to delay development or
commercialization of future products. We also may have to reduce
marketing, customer support or other resources devoted to our
existing products.
Cash Flows
The following table summarizes our uses and sources of cash for
the periods presented:
Six Months Ended
June 30,
---------------------
(in thousands, except percentages) 2021 2020
---------- ---------
Net cash provided by (used in):
Operating activities $ (9,029) $ (6,040)
Investing activities (21,230) 449
Financing activities 48,927 28,552
--------- --------
Net increase (decrease) in cash and cash equivalents, and restricted cash $ 18,668 $ 22,961
========= ========
Operating Activities
Net cash used in operating activities for the six months ended
June 30, 2021 was $9.0 million, and consisted primarily of our net
loss of $11.5 million, offset in part by net non-cash expenses of
$4.3 million, including stock-based compensation of $3.2 million,
warrant liability fair value adjustments of $0.4 million, and
depreciation and amortization expenses of $0.6 million. We also had
net cash outflows of $1.7 million due to net changes in our
operating assets and liabilities. Net changes in our operating
assets and liabilities consisted primarily of an increase in
deferred revenue (deferred revenue consists primarily of
unrecognized instrument license revenue) of $1.9 million and an
decrease in the net effect of our right-of-use assets and lease
liabilities of $0.1 million, partially offset by a $1.7 million
increase in long-term prepaid expense (other non-current assets), a
$1.0 million decrease in accounts payable and accrued expenses, a
$0.5 million increase in accounts receivable, a $0.2 million
increase in inventory and a $0.3 million increase in other current
assets.
Net cash used in operating activities for the six months ended
June 30, 2020 was $6.0 million, and consisted primarily of our net
loss of $6.1 million, offset in part by non-cash expenses of $1.5
million, including stock-based compensation of $1.1 million and
depreciation and amortization expenses of $0.5 million. We also had
net cash outflows of $1.5 million due to changes in our operating
assets and liabilities. Net changes in our operating assets and
liabilities consisted primarily of an increase in deferred revenue
of $1.9 million, partially offset by a $2.3 million decrease in
accounts payable and accrued expenses, a $0.6 million increase in
inventory, a $0.4 million increase in accounts receivable, a $0.1
million increase in other current and non-current assets and a $0.1
million increase in the net effect of our right-of-use assets and
lease liabilities.
Investing Activities
Net cash used in investing activities during the six months
ended June 30, 2021 was $21.2 million, which was primarily
attributable to net purchases of short-term marketable securities
of $20.0 million and purchases of property and equipment of $1.2
million.
Net cash provided by investing activities during the six months
ended June 30, 2020 was $0.4 million, which was primarily
attributable to net maturities of short-term marketable securities
of $1.5 million, partially offset by purchases of property and
equipment of $1.0 million.
Financing activities
Net cash provided by financing activities during the six months
ended June 30, 2021 was $48.9 million, which was primarily
attributable to net proceeds of $51.8 million from the issuance of
common stock and proceeds of $2.1 million from the exercise of
stock options, partially offset by the repayment of the Midcap loan
of $4.9 million.
Net cash provided by financing activities during the six months
ended June 30, 2020 was $28.6 million, which was primarily
attributable to net proceeds of $28.6 million from the issuance of
common stock.
Contractual Obligations and Commitments
Our contractual obligations and commitments as of June 30, 2021
consisted of operating lease and finance lease obligations. On May
27, 2021, we entered into an operating lease for new office, lab
and warehouse/manufacturing space. The lease for the new facility
consists of three phases, with Phase 1 estimated to commence in
September 2021, and the lease of all phases is estimated to expire
on June 30, 2035. We and the landlord each have a one-time right to
terminate Phase 3 of the lease associated with 13,543 square feet
during a defined time window. We will design and construct the
leasehold improvements with the approval of the landlord. The
landlord will reimburse us for costs of property improvements up to
amounts specified in the lease. The total incremental
non-cancellable lease payments under the new lease agreements are
approximately $24.6 million through the lease term.
On June 8, 2021, we exercised our option to early terminate the
terms of one of our existing office space lease arrangements. The
amended office lease expires on June 7, 2022.
As of June 30, 2021, operating lease obligations included $1.2
million in payments due under our lease of office and laboratory
space under operating lease agreements that expire in October 2023.
As of June 30, 2021, our finance lease obligations consisted of
$0.2 million in payments due for our lease of laboratory equipment
under a finance lease that expires in April 2023.
Purchase orders or contracts for the purchase of supplies and
other goods and services are based on our current procurement or
development needs and are generally fulfilled by our vendors within
short time horizons.
Critical Accounting Policies and Significant Judgments and
Estimates
We have prepared our condensed consolidated financial statements
in accordance with U.S. GAAP. Our preparation of these condensed
consolidated financial statements requires us to make estimates,
assumptions and judgments that affect the reported amounts of
assets, liabilities, revenue, expenses and related disclosures. We
evaluate our estimates and judgments on an ongoing basis. We base
our estimates on historical experience and on various other factors
that we believe are reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying
value of assets and liabilities that are not readily apparent from
other sources. Actual results could therefore differ materially
from these estimates under different assumptions or conditions.
There have been no material changes to our critical accounting
policies and estimates from those disclosed in our consolidated
financial statements and the related notes and other financial
information included in the Final Prospectus.
JOBS Act Accounting Election
We are an "emerging growth company," or EGC, under the Jumpstart
Our Business Startups Act of 2012, or the JOBS Act. Section 107 of
the JOBS Act provides that an EGC can take advantage of the
extended transition period provided in Section 7(a)(2)(B) of the
Securities Act for complying with new or revised accounting
standards. Thus, an EGC can delay the adoption of certain
accounting standards until those standards would otherwise apply to
private companies. We have elected to avail ourselves of the
delayed adoption of new and revised accounting standards and,
therefore, we will be subject to the same requirements to adopt new
or revised accounting standards as private entities. We also intend
to rely on other exemptions provided by the JOBS Act, including not
being required to comply with the auditor attestation requirements
of Section 404(b) of the Sarbanes-Oxley Act.
We will remain an EGC until the earliest of (i) December 31,
2026, (ii) the last day of the fiscal year in which we have total
annual gross revenues of $1.07 billion or more, (iii) the date on
which we have issued more than $1 billion in non-convertible debt
during the previous rolling three-year period, or (iv) the date on
which we are deemed to be a "large accelerated filer" under SEC
rules.
Recent Accounting Pronouncements
A description of recently issued accounting pronouncements that
may potentially impact our financial position, results of
operations or cash flows is disclosed in Note 2 to our condensed
consolidated financial statements included in this Quarterly Report
on Form 10--Q.
Item 3. Qualitative and Quantitative Disclosures About Market
Risk
Interest Rate Risk
We are exposed to market risk for changes in interest rates
related primarily to balances of our financial instruments
including cash and cash equivalents and short-term investments. As
of June 30, 2021, we had cash and cash equivalents and investments
of $73.4 million, which consisted primarily of money market funds
and commercial paper. The primary objective of our investment
approach is to preserve principal and provide liquidity. As of June
30, 2021, we held money market funds securities of $8.7 million,
short-term commercial paper of $20.5 million and corporate debt of
$2.0 million. Our primary exposure to market risk is interest
income sensitivity, which is affected by changes in the general
level of interest rates in the United States. A 10% change in the
level of market interest rates would not have a material effect on
our business, financial condition or results of operations.
Foreign Currency Risk
We are exposed to financial risks as a result of exchange rate
fluctuations between the U.S. dollar and certain foreign currencies
and the volatility of these rates. In the normal course of
business, we earn revenue primarily denominated in U.S. Dollars as
well as in Euros and British Pounds. We incur expenses primarily in
U.S. Dollars as well as in Euros, British Pounds and other
currencies. Our reporting currency is the U.S. Dollar. We hold our
cash primarily in U.S. Dollars as well as in Euros and British
Pounds. We do not expect that foreign currency gains or losses will
have a material effect on our financial position or results of
operations in the foreseeable future. We have not entered into any
hedging arrangements with respect to foreign currency risk. As our
international operations grow, we will continue to reassess our
approach to managing risks relating to fluctuations in currency
exchange rates.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the
participation of management, including our Chief Executive Officer,
Chief Financial Officer and Chief Accounting Officer, of the
effectiveness of our "disclosure controls and procedures" as
defined in Rules 13a--15(e) and 15d--15(e) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The term
"disclosure controls and procedures," as defined in Rules
13a--15(e) and 15d--15(e) under the Exchange Act, means controls
and other procedures of a company that are designed to ensure that
information required to be disclosed by a company in the reports
that it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods
specified in the SEC's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by a
company in the reports that it files or submits under the Exchange
Act is accumulated and communicated to the company's management,
including its principal executive and principal financial officers,
or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure.
Based on our evaluation, our Chief Executive Officer, Chief
Financial Officer and Chief Accounting Officer concluded that the
design and operation of these disclosure controls and procedures
were effective as of June 30, 2021 at the reasonable assurance
level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial
reporting during the three months ended June 30, 2021 that have
materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
Limitations on the Effectiveness of Controls
Control systems, no matter how well designed and operated, can
provide only reasonable, not absolute, assurance that the control
systems' objectives are being met. Further, the design of any
system of controls must reflect the fact that there are resource
constraints, and the benefits of all controls must be considered
relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any,
within our company have been detected. These inherent limitations
include the realities that judgments in decision-making can be
faulty and that breakdowns can occur because of error or mistake.
Control systems can also be circumvented by the individual acts of
some persons, by collusion of two or more people, or by management
override of the controls. The design of any system of controls is
also based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future
conditions. Over time, controls may become inadequate because of
changes in conditions or deterioration in the degree of compliance
with policies or procedures.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in legal proceedings
arising in the ordinary course of our business. We are not
currently a party to any material legal proceedings, and we are not
aware of any pending or threatened legal proceeding against us that
we believe could have an adverse effect on our business, operating
results or financial condition.
Item 1A. Risk Factors.
Our business is subject to numerous risks. You should carefully
consider the risks and uncertainties described in this report under
the caption "Risk Factors Summary," in addition to other
information contained in this report as well as our other public
filings with the SEC from time to time.
There have been no material changes to the risk factors set
forth in the Final Prospectus filed with the SEC on July 30, 2021,
which are incorporated herein by reference. However, the risk
factors described in this report and in the Final Prospectus are
not the only risks that we face. Additional risks and uncertainties
that we are unaware of, or that we currently believe are not
material, may also become important factors that adversely affect
our business. If any such risks materialize, it could have a
material adverse effect on our business, financial condition,
results of operations and growth prospects and cause the trading
price of our common stock to decline.
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds.
(a) Sale of Unregistered Securities
From January 1, 2021 through June 30, 2021, we granted options
to purchase an aggregate of 2,357,256 shares of our common stock,
pursuant to our Long-Term Incentive Plan, as amended, or our LTIP,
with a weighted average exercise price of $14.07 per share. From
January 1, 2021 through June 30, 2021, certain of our employees
exercised options to purchase an aggregate of 1,596,872 shares of
our common stock pursuant to options issued under our LTIP, with a
weighted average exercise price of $1.30 per share, for an
aggregate purchase price of $2,089,300. These issuances were exempt
from registration under the Securities Act pursuant to the
exemption provided in Rule 701 of the Securities Act.
(b) Use of Proceeds
On August 3, 2021, we closed our IPO, in which we issued and
sold 15,525,000 shares of common stock at a price to the public of
$13.00 per share, inclusive of 2,025,000 shares sold pursuant to
the full exercise of the underwriters' option to purchase
additional shares. The IPO generated gross proceeds to us of $201.8
million. We received net proceeds of approximately $184 million
after deducting aggregate underwriting commissions and offering
expenses of approximately $18 million. All of the shares of common
stock issued and sold in the offering were registered under the
Securities Act of 1933, as amended ("Securities Act") pursuant to a
registration statement on Form S--1 (File No. 333--257810), which
was declared effective by the SEC on July 29, 2021. The joint
book-running managers of the offering were Cowen and Company, LLC,
Stifel, Nicolaus & Company, Incorporated and William Blair
& Company, L.L.C.
In connection with our IPO, no payments were made by us to
directors, officers or persons owning ten percent or more of our
common stock or to their associates or to our affiliates. There has
been no material change in the planned use of proceeds from the IPO
from that described in the Final Prospectus.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
The following exhibits are filed with this Quarterly Report on
Form 10--Q:
Incorporated by Reference
--------------------------------------------------------
Exhibit File Filing
Number Description Form No. Exhibit Date
-------- ----------------------------------- -------- ------------------ ---------- -----------
Amended and Restated Bylaws August
3.1 of the Registrant. 8--K 001--40674 3.1 4, 2021
Fifteenth Amended and
Restated Certificate of July 26,
3.2 Incorporation. S--1 333--257810 3.1 2021
31.1 Certification of Principal
Executive Officer Pursuant
to Rules 13a--14(a) and
15d--14(a) under the Securities
Exchange Act of 1934, as
Adopted Pursuant to Section
302 of the Sarbanes-Oxley
Act of 2002.
31.2 Certification of Principal
Financial Officer Pursuant
to Rules 13a--14(a) and
15d--14(a) under the Securities
Exchange Act of 1934, as
Adopted Pursuant to Section
302 of the Sarbanes-Oxley
Act of 2002.
32.1* Certification of Principal
Executive Officer Pursuant
to 18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley
Act of 2002.
32.2* Certification of Principal
Financial Officer Pursuant
to 18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley
Act of 2002.
101.INS Inline XBRL Instance Document.
101.SCH XBRL Taxonomy Extension
Schema Document
101.CAL XBRL Taxonomy Extension
Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension
Definition Linkbase Document
101.LAB XBRL Taxonomy Extension
Label Linkbase Document
101.PRE XBRL Taxonomy Extension
Presentation Linkbase Document
104 Cover Page Interactive
Data File (formatted as
inline XBRL with applicable
taxonomy extension information
contained in Exhibits 101.SCH,
101.CAL, 101.DEF, 101.LAB
and 101.PRE).
* This exhibit shall not be deemed "filed" for purposes of
Section 18 of the Exchange Act or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933 or the
Exchange Act of 1934, whether made before or after the date hereof
and irrespective of any general incorporation language in such
filings.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
MaxCyte Inc.
Date: September 13, 2021 By: /s/ Douglas Doerfler
------------------------------------
Name: Douglas Doerfler
President and Chief Executive
Title: Officer and Director
(On Behalf of the Registrant
and as Principal Executive Officer)
Date: September 13, 2021 By: /s/ Amanda Murphy
------------------------------------
Name: Amanda Murphy
Chief Financial Officer (Principal
Title: Financial Officer)
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