FDA clearance of the IND for MCY-M11 is a watershed moment. It is MaxCyte’s first next-generation CAR (chimeric antigen receptor) candidate to approach the clinic, and significantly will be studied in solid tumours. Regulatory clearance of the Phase I trial means first patient dosing – and detail on trial design – is on track for H218. Clearance, while expected, provides important validation of the proprietary mRNA-based CARMA platform, and MaxCyte’s scientific and regulatory expertise in the fast-evolving cell therapy field. The H118 trading statement confirms solid progress in both growing and advancing the number of cell therapy licenses, underpinning Board confidence that FY18 revenue will meet market expectations. We maintain our £166m or 327p/share valuation, pending interims and updated financial guidance.
| Year-end: December 31 | 2016 | 2017 | 2018E | 2019E |
| Sales (US$m) | 12.3 | 14.0 | 17.0 | 20.3 |
| Adj. PBT (US$m) | (3.3) | (9.9) | (13.9) | (13.8) |
| Net Income (US$m) | (3.9) | (9.9) | (13.9) | (13.8) |
| EPS (US$) | (10.0) | (20.4) | (27.3) | (27.2) |
| Cash (US$m) | 11.7 | 25.3 | 12.1 | 0.1 |
| EBITDA (US$m) | (2.6) | (9.1) | (13.0) | (12.7) |
Update
16 July 2018
| Price | 239p |
| Market Cap | £122.1m |
| Enterprise Value | £101.8m |
| Shares in issue | 50.8m |
| 12 month range | 235-284p |
| Free float | 70% |
| Primary exchange | AIM London |
| Other exchanges | NA |
| Sector | Healthcare |
| Company Code | MXCT.L / MXCR.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
MaxCyte has achieved a major milestone with receipt of its first FDA IND approval for MCY-M11, clearing the path for the H218 initiation of a Phase I trial in solid tumours. MCY-M11 (anti-mesothelin, CARMA-hMeso) is the lead programme generated by MaxCyte’s proprietary CARMA platform and is wholly-owned. This is a novel mRNA mediated CAR technology that could provide fewer off-tumour effects and has a simpler, and less costly, production system than current viral mediated CAR-T (Chimeric Antigen Receptor T-cell) approaches.
The MCY-M11 IND was filed with the FDA in November 2017, and its approval has been widely anticipated during 2018. However, as with all novel cell and gene therapies (such as CARMA), the agency adopted a cautious approach before allowing clinical development to start. Nevertheless, MaxCyte’s ongoing constructive dialogue with the FDA, supported by key new hires (Chief Medical Officer, Dr Claudio Dansky Ullmann, and VP, Regulatory, Kathryn Wekselman) has resulted in a green light to start its first clinical trial later this year.
The US-based MCY-M11 trial will study the safety and potential efficacy of ascending doses of MCY-M11 in patients with relapsed/refractory ovarian cancer and peritoneal mesothelioma. No other details about trial design or clinical sites have so far been disclosed, but we expect further information to be forthcoming.
CARMA is an autologous cell therapy platform, which utilises mRNA to develop differentiated targeted cell-based immune therapies; MCY-M11 is MaxCyte’s lead CARMA programme. The use of mRNA is an important differentiating factor: it allows for the transient expression of the selected antigen complex, with the ability to control the timing and clinical effect with a degree of flexibility. This means that CARMA-based therapies can be applied to the treatment of the full range of haematological malignancies and also to solid tumours.
Approved CAR-T therapies such as Novartis’ Kymriah and Gilead/Kite’s Yescarta have shown impressive efficacy in B-cell malignancies; however, their use and that of other clinical stage CAR-T programmes has been limited in other cancer types. Part of the reason for this is the incidence of treatment-related adverse event such as antigen-specific toxicities and life-threatening CRS (cytokine release syndromes). Globally, researchers are focusing significant attention on evaluating a diverse array of potential methods to overcome these, including novel antigen cocktails that only activate for a specific tumour site, introducing “suicide switches”, co-administration with other agents (eg IL6R blockers), and tailoring the T-cells’ CAR expression to suit the specific tumour type.
CARMA has the potential to overcome these limiting safety issues, including on-target/off-tumour toxicities frequently seen in solid tumours, where target antigens are overexpressed by tumours rather being tumour-specific. This can be achieved by varying the dosing (number of cells per dose and frequency of dosing) to deliver the optimal balance of targeted anti-tumour activity with tolerable toxicity. The MCY-M11 Phase I trial will provide important insights into, and clinical validation of this approach.
The field of cell and gene therapies has shown considerable growth in the last few years. As the knowledge base and understanding develops, there has been a concomitant explosion of interest attracting more investment into the sector, catalysing more companies to develop more products, and seek to advance them more rapidly. New regulatory frameworks have been developed to support this, including the FDA Regenerative Medicine Advanced Therapy (RMAT) designation in 2017, and the more recent publication by the FDA of six cell and gene therapy guidelines for industry.
According to the Alliance for Regenerative Medicine (ARM 2018 Cell & Gene Therapy State of the Industry), a total of $7.5bn was raised globally, up from $4.2bn in 2016, with the bulk of this funding allocated to gene and gene-modified cell therapy, the sector which also saw the highest rate of year-on-year growth. In the same briefing report, ARM highlighted that at end-2017, 946 clinical trials were ongoing worldwide (end-2016: 802), of which 53% of were in oncology. Growth in number of ongoing trials was seen at all stages of development (Phase I: 314 vs 271; Phase II: 550 vs 465; and Phase III: 82 vs 66).
MaxCyte has benefited from these market trends, as demonstrated by the growth in the number of cell therapies licensing its technology (now more than 55, up from 50+ at end-2017), as well as the acceleration in the number of partner programmes advancing to the more lucrative commercialisation stage. MaxCyte’s licensing arrangements are structured to meet its partner’s needs, but typically follows the approach below:
The growing and maturing license base will underpin robust future revenue growth; and is testament to MaxCyte’s leading market position and its in-depth scientific and regulatory understanding of cell therapies across the value chain.
FDA approval of the MCY-M11 IND is a significant milestone. Not only does it provide more clarity on timelines for progressing the wholly-owned CARMA pipeline, but increases confidence in the investment case, as MaxCyte now transitions to a product development company, as well as being a partner of choice for its enabling technologies and know-how.
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