Maxcyte Share Discussion Threads

[adamb1978] 24/3/2023 17:00

The good that its done MXCT is being able to raise a huge pile of cash at the top of the market which is probably 2x-3x the cash which they'd need to get through to breakeven. They really wouldnt have had any hope of raising that in the UK

Granted markets are different now, and raising that $ amount would today be harder.

Long-term though the future investor base for this sort of business is in the US so, as well as being the right place to raise that $200m-$300m 12-24 months ago, its the right place for the future

[thetrotsky] 24/3/2023 15:40

Don't know about the rest of you but these days I just chuckle when companies say that they're looking at a US listing because US investors afford a higher valuation to biotechnology companies. I see Oxford Nanopore is just the latest to look across the Pond.

Total baloney IMHO. The US market has moved on and biotechnology is no longer flavour of the month; it seems US investors are now just as capable of undervaluing companies as much as they were capable of overvaluing them in the past. Personally, I wouldn't complain if MXCT cancelled its US listing for all the "good" that it has done us.

[adamb1978] 22/3/2023 11:10

Option awards look fine given the vesting price = the market price

If the share price doubles, DD would make $1.6m from the options. I certainly wouldnt begrudge him that if he achieves that doubling!

[davemac3] 22/3/2023 07:44

They’ve just dished out loads of options, perhaps we are near the bottom.

[adamb1978] 21/3/2023 22:18

Personally I ignore the cash on the balance sheet. Simple reason is that it's plenty ( probably 3x too much) to see them to break even and they won't get any value upside for surplus cash. Past break even, cash becomes irrelevant to how this will be valued The value comes from the royalties and multiple milestones payments in the same year once all the customers are ramped.What they call the 'core' revenue today will at that point be table stakes

[trident5] 21/3/2023 19:14

The maths in your first sentence only makes sense if the business is at break-even.

It's not, so that cash or a large proportion of it will be spent pre-break-even (assuming such day arrives).

[nanopayments] 21/3/2023 18:31

Total cash on the balance sheet was $227m at the end of Q4 22. Net of the $5.6m of debt leaves $221m. The market cap is currently $448m, so net of cash the market believes MaxCyte is worth $227m.

In their September 22 research note, Trinity Delta does a sum-of-the-parts valuation analysis, breaking net present value down into 3 buckets: Core Life Sciences, SPL pre-commercialisation milestones and SPL sales revenue post commercialisation. Let's ignore the SPL payments, and assume no SPL sales revenue, so we are just looking at the core business. Trinity Delta assumes a 26% CAGR from FY21 to FY26 (not dissimilar from management's 2023 growth estimates), then trending towards 3% growth, with a terminal growth rate of 2%. These don't seem like aggressive assumptions to me. According to their model, the NPV would be $242 under these assumptions for just the Core Business, so slightly above where the stock is trading net of cash on the balance sheet. This assumes none of MaxCyte's partner drugs reach commercialisation, which is what would be the biggest value driver - Trinity Delta assumes this part to have a NPV of $623m.

[adamb1978] 17/3/2023 11:22

Cash is around 50% of market cap now so they have plenty of firepower to get them to break-even. Very different situation to companies which didnt raise capital when the sun was shining

Looking forward to when they start to have customers at the point of commercialisation. Its a real value inflection point and also takes the risk out of the business - any goliath in the industry could acquire and kill most of the S&M/G&A spend and have them instantly profitable.

[supernumerary] 17/3/2023 09:46

TT - thanks. I'm not an accountant so you may well be right about the tia ar - I googled it but didn't find the answer very enlightening, so just left it as something that I felt uneasy about. I expect there'll be a note in the full accounts, but it's also possible there's something in the US filings - they're usually more informative than the UK RNSs - I'll have a look over the weekend.

mxct is exceptionally well insulated from the wider market turmoil by its large cash pile, but biotech has been very badly hit - I note for instance that Arix is trading at a substantial discount to its nav - and one looks for any sign of weakness. The cash can also be a danger as management can easily get careless - am I the only one who feels a shiver down the spine when they read the words 'new headquarters'?

Good for the moment, but no harm in caution...

[trident5] 16/3/2023 22:21

They're holding an awful lot of inventory too $8.6m - that's almost enough 2 years' worth at current rates.

[thetrotsky] 16/3/2023 19:59

Hi Supernumerary,

Accounts receivable have actually gone up by about $4.8m. I suspect that this is in part due to the timing of the $1.85m program-related income milestone in Q4 and the general income increase in FY22 compared to FY21. Nevertheless, assuming that the Q4 program-related income was outstanding at the end of FY22, debtor days appear to have increased from c61 days to c83 days (based on Q4 income). Not a total disaster but, as you imply, suggestive that customers are stretching their credit as their ability to raise new funds becomes more difficult. Ultimately they are going to have to pay or MXCT can (literally) shut them down by stopping supply of the bespoke reagents they need to undertake their research. There is undoubtedly a heightend risk that some customers might fail but nothing abnormal IMHO for this stage in the economic cycle.

I think the accounts receivable increase that you have alighted upon are the TIA accounts receivable. I believe, but stand to be corrected, that these may relate amounts receivable from MXCT's landlord(s) for property improvements incurred by MXCT which would, in the normal course of business, be offsetable against future rental payments over the period of their initial lease.

TT

[adamb1978] 16/3/2023 14:59

Hi nano

Yep, just listened to the results call myself. Some other brief notes which I took:

- they stated that guidance includes some conservatism given macro environment.

- The $6m milestone guidance is a probability weighted view based on all posssibilities

- H1 2022 was an anomaly in terms of seasonality given where customers were in commercialisation cycles - expect something closer to 40/60 in 2023 as is typical in previous years (I've looked at the average over a few years and 42/58 seems normal)

- Said that there was some lumpiness in Q4 2022 with fewer Process Assmeblies (consumables) driven by where customers were with their commercialisation processes (opposite was true in 2021). Instrument sales were good but this was offset by PA sales below target

- Continue to expect SPL list to increase at historic rates

More broadly, I thought the new CFO a lot more impressive than previous CFO. Seems a lot more like a true business partner to the CEO, rather than the previous incumbent who seemed to just report the facts but with less insight into the business.

Agree that the tone was somewhat subdued - it didnt seem to relate to their business or the potential for what they've developed, but more than their customers had some uncertainty in their broader businesses and obviously the macro environment.

Adam

[nanopayments] 16/3/2023 14:39

Thanks for the interesting analysis on opex Adam. Good to see this happening, and hopefully continue as the heavily lifting in terms on building the new manufacturing facility and field scientist hires are largely done. That said, I'd like to see a re-acceleration in core revenues, especially in gene therapy, that has pretty much stalled since the end of 2021 . They said on the call that weakness in Q4 was due to lumpiness in disposables purchases at a big client. The tone was also a bit subdued. They expect a consolidation of partner assets, though not in the prime and secondary programmes. Good to see they are still expecting 21%-26% revenue growth this year, despite this. H2 is expected to be better than H1, as has been the trend until recently.

Here are the numbers for cell therapy:
Q4 21 $7.3m
Q1 22 $7.4m
Q2 22 $7.7m
Q3 22 $7.9m
Q4 22 $7.5m

[supernumerary] 16/3/2023 10:59

Any thoughts on accounts receivable up by a couple of million? While they have plenty of cash, their customers may not...

[trident5] 16/3/2023 10:58

Yeah - if it doesn't become profitable the share price will head to zero.

[adamb1978] 16/3/2023 10:06

I need to listen to last night's results call but one thing jumped out from going through the figures this morning: they're starting to get some operating leverage from the continued growth as the cost lines are getting to the size to support the business.

Looking at growth rates of some cost lines over the last 4 halves:
S&M has gone 29%, 28%, 29%, 13%
G&A has gone 46%, 56%, 21%, -12%
R&D still growing around 30%, which feels fine given the investment in new products

So as they continue to deliver on the 25%-30% typical growth (even before royalties come through) the bottom line should start to benefit.

They have bucket loads of cash so they don't need to get to profitability however when they do it'll be another value inflection point to add to the royalty one. The value inflection points I see are (looking only at know items):

H2 2023: Regulatory approval for Vertex/exa-cel
2024: guidance on production of the above
2025: profitability
...then there's obviously other parties following on from Vertex

[nanopayments] 15/3/2023 10:56

On shareholder dumping, 3X sales of 2000 shares on the LSE this morning. All other amounts are for sizes in double or triple digits. Tiny.

On in vivo vs ex vivo, Doug Doerfler addressed this on the recent Cowen call. He said MaxCyte is a cell engineering company, not a Flow Electroporation company. Their field scientists work closely with partners and they want to be the first to know about competing delivery technology, so they can adopt it if appropriate. Beam Therapeutics is an important case study. They bought Guide for its LNP technology, so have every reason to push in vivo delivery, but continue to work with ex vivo (and MaxCyte) and continue to say it will remain an important technology for them.

More generally, the markets have been extremely skittish recently. In the US, 2-year Treasury Bill yields dropped 100bps in 3 days starting the end of last week. The last time that happened was after the 1987 crash. Investors are redically reducing their duration. They want assets where cash flows are as close to the present as possible, not several years out. Who knows, maybe some of MaxCyte's partners were relying on funding from Silicon Valley Bank, but personally I suspect it more a case of risk-off trades taking centre stage that explain the drop in the stock price. Is there any reason to think the long-term drivers of growth have been permanently impaired? We are not even seeing management lower guidance for 2023.

[adamb1978] 15/3/2023 09:33

Results are this evening, though we already know the 2022 top line figure and their initial guidance for 2023.

MXCT share price has been weak recently however if you look at various other healthcare companies, most of them have come off too.

[adamb1978] 15/3/2023 09:28

2theduke

"being dumped by the main share holder though" - which shareholder is that? Can you point me in the direction of the filing?

Appreciate it if you could also let me know what you've read re in vivo vs ex vivo

Thanks

Adam

[2theduke] 15/3/2023 08:13

This is being dumped by the main share holder though, constant selling. Management have a lot of questions to answer on the partnership time scales, margins inclusive of inflation , the present value rate used in their last valuation, the preference apparently occurring in in vivo vs ex vivo and the list goes on.

[adamb1978] 08/3/2023 20:05

Hi Nano

Yep, all that makes sense but the Exec team only own 5% of the company so the future of the company will be dictated by the instis. Fingers cross they dont sell out early!

Adam

[nanopayments] 08/3/2023 15:33

I'm sure there are and have been potential acquirers, but I doubt they have spent so much time building the company to the point where the real value, both financial and medical, is about to be unlocked as partner drugs reach the commercial stage, just to sell out in the period immediately following. This may sound cliched, but from all the interviews I've heard with Doug Doerfler, he just doesn't seem the type to grab the cash and cut and run. I think he wants to build something important. I also remember reading a long time ago, that a poison pill was included in their articles of incorporation.

[adamb1978] 08/3/2023 15:08

Yes, clearly trying to put in the building blocks for the next stage and being a proper company. Great to see. My biggest fear with MXCT is that they sell out too soon

[nanopayments] 08/3/2023 14:54

The new website and refresh of the brand looks to me like they are preparing for a new phase in the company. "With the launch of our brand refresh, MaxCyte is entering an exciting era! Our new brand identity is grounded in collaboration, with the hope that we can build better cells together to ultimately help more patients. Get to know the new MaxCyte"

[nanopayments] 08/3/2023 14:41

Establishing a new scientific advisory board is a good initiative. These 4 new members look like good additions: investors.maxcyte.com/news-releases/news-release-details/maxcyte-establishes-new-scientific-advisory-board-comprised