Continued expansion of MaxCyte’s base of licenced cell therapy programmes provides an increasingly solid foundation to support future revenue growth. MaxCyte has delivered four-year revenue CAGR of 24%; H119 revenues were up 21%. With an industry increasingly transitioning towards non-viral transfection methods for cell and gene therapies, MaxCyte’s enabling technologies are well positioned. The company is benefitting from this trend with an increasing number of licenced cell therapy programmes (now 80+), as well as expansion in the number of clinical (45+) and commercial (5) licences. The latter represent $450m in aggregate pre-commercial milestones. Coupled to this, MaxCyte is advancing the development of its proprietary CARMA platform and is exploring independent sources of investment to fully exploit this opportunity. We value MaxCyte at £195m or 341p per share.
| Year-end: December 31 | 2017 | 2018 | 2019E | 2020E |
| Sales (US$m) | 14.0 | 16.7 | 20.9 | 25.2 |
| Adj. PBT (US$m) | (9.9) | (8.9) | (16.6) | (16.2) |
| Net Income (US$m) | (9.9) | (8.9) | (16.6) | (16.2) |
| EPS (USc) | (20.4) | (17.3) | (29.5) | (28.3) |
| Cash (US$m) | 25.3 | 14.4 | 13.3 | 4.0 |
| EBITDA (US$m) | (9.1) | (8.1) | (15.4) | (14.8) |
Update
19 September 2019
| Price | 124.0p |
| Market Cap | £71.1m |
| Enterprise Value | £59.6m |
| Shares in issue | 57.3m |
| 12 month range | 110.0-244.0p |
| Free float | 70% |
| Primary exchange | AIM |
| Other exchanges | NA |
| Sector | Healthcare |
| Company Code | MXCT.L MXCS.L |
| Corporate client | Yes |
Company description
MaxCyte uses its patented flow electroporation platform to transfect a wide array of cells. Revenues arise from sale and lease of equipment, disposables and licence fees; with an impressive client list. Additionally, a novel mRNA mediated CAR technology, known as CARMA, is being explored in various cancers, including solid tumours.
Analysts
Mick Cooper PhD
mcooper@trinitydelta.org
+44 (0) 20 3637 5042
Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5041
Table of Contents
MaxCyte has delivered another six-month period of strong sales growth, with H119 revenues up 21% to $8.4m, and with gross margin of 88% maintained at pharmaceutical company-like levels. Consistency is a key theme for MaxCyte, both financially and with respect to its proprietary flow electroporation technology which delivers highly efficient, reproducible, and scalable non-viral cell engineering. The consistency and broad applicability of this technology has given the company a leading position in non-viral cell modification, and with the rapid growth of the number of cell and gene therapies in development, MaxCyte is approaching a revenue inflection point. Ahead of this, we reiterate our 341p/share valuation.
Less than 10% of MaxCyte’s current revenues are derived from milestones, but we expect both the proportion and magnitude of this revenue stream to increase over the coming years as the company’s stable of cell therapy licences matures. At H119 results, management reported a further rise in the number of cell therapy programmes covered by licences (Exhibit 1), including potentially lucrative clinical (up from >35 to >45) and commercial (five, including two additions so far in 2019) licences. These latter licences represent over $450m in aggregate pre-commercial milestones which would be triggered as these programmes progress through development and the regulatory process. However, it should be noted that not all programmes covered by a commercial licence will enter clinical development.
Additionally, as is typical with most licensing agreements, the deals are backend-weighted with the most significant potential payments to MaxCyte dependent on the programme becoming an approved and marketable product. We note that the >$450m milestone potential does not include MaxCyte’s share of post approval product revenues (broad instrument roll-out, per patient consumable sales plus royalties and/or sales milestones).
MaxCyte estimates that the NPV of each programme with a commercial licence is on average c $10m at the start of clinical development, after considering development and commercial risks.
Four of the five commercial partners have been publicly disclosed: CRISPR Therapeutics, Casebia, Kite Pharmaceuticals (Gilead), and Precision Biosciences. Further detail on these deals can be found in our July 2019 Update; but we highlight here that they cover a range of genome editing approaches, as well as stem cell therapies, and allogeneic cell therapy programmes, demonstrating the versatility of MaxCyte’s technology.
MaxCyte announced that it is exploring independent sources of funding for CARMA, its proprietary autologous mRNA-based CAR therapy platform. This business line now operates as a standalone, with a different risk/reward profile to MaxCyte’s life sciences business. Investment is required to advance the development of the CARMA pipeline (Exhibit 2), and data from the lead programme MCY-M11 should support MaxCyte’s partnering efforts.
MCY-M11 entered the clinic in H218; it is being evaluated in an open-label Phase I ovarian cancer and mesothelioma study, which has a dose escalation 3+3 design with intraperitoneal dosing. The trial is expected to complete by mid-2020. Nevertheless, two key milestones for CARMA have already been achieved with the validation of the one-day manufacturing process for MCY-M11 one day (vs 1-2 weeks for current CAR-T approaches), and the fact that no dose-limiting toxicities or safety concerns were observed in first patient cohort.
The second dose cohort started enrolling in May, and preliminary safety (and possibly efficacy) data is expected to be announced at various upcoming conferences, potentially including ESMO and/or SITC.
We have updated our financial estimates following the report of H119 results. The key changes (Exhibit 3) relate to increased CARMA spend with progression of the MCY-M11 Phase I, and additional investment into R&D and sales.
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