Picking up the pace
Update | 15 January 2019
MaxCyte saw strong progress on all fronts in H218. There was a marked acceleration in revenues and in new cell therapy licenses, and the first patient was treated with MaxCyte’s wholly-owned CARMA therapy. Sales growth in FY18 was c19% compared to 14% in FY17 following an increase in revenues of c25% in H218. The number of licensed cell therapy programmes has risen by c15 to >70 over the last six months; and commercial licensing agreements were signed with two companies. On top of this, MaxCyte advanced its first CARMA therapy into the clinic; promising results from this trial could lead to the CARMA platform becoming the main value driver for MaxCyte. We have increased our valuation by 11p/share to 358p/share.
|Year-end: December 31||2016||2017||2018E||2019E|
|Adj. PBT (US$m)||(3.3)||(9.9)||(10.7)||(14.5)|
|Net Income (US$m)||(3.9)||(9.9)||(10.7)||(14.5)|
15 January 2019
|Shares in issue||51.3m|
|12 month range||186.5-280p|
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.
Mick Cooper PhD
+44 (0) 20 3637 5042
+44 20 3637 5041
It is clear that MaxCyte’s evolving marketing strategy, which has given the company a stronger presence in key markets and territories, is delivering results. There was the significant acceleration in revenue growth to c25% in H218. As importantly, the number of licensed cell therapy programmes increased by c15 to >70, about ten more programmes now have clinical licenses (>35 in total), and commercial licenses were also signed with CRISPR Therapeutics and Precision BioSciences during the period.
We believe that the broader and deeper base of cell therapy licences will now enable MaxCyte to sustain the 25% growth, seen in H218, into FY19 and maintain growth of over 20% in FY20. This has resulted in our revenue forecasts being updated as shown in Exhibit 1. We have also amended our FY18 estimates to bring them into line with the company’s guidance in its trading update.
As a result of these changes to our estimates, and the improved growth prospects for MaxCyte, we raise our valuation of the company from 347p/share or £177m to 358p/share or £184m. This is made up of 201p/share (£103m) for the core sales-generating business and 157p/share (£81m) for the CARMA platform.
This suggests that current market cap of £97m is more than supported by the sales-generating operations, with the market attributing no value to the CARMA platform. This situation could change quickly if the current Phase I trial with MCY-M11 delivers promising results. The EV of other comparable CAR companies is over $200m, and it is reasonable to believe that the CARMA platform could soon become the main value driver for MaxCyte.
Trinity Delta Research Limited (“TDRL”; firm reference number: 725161), which trades as Trinity Delta, is an appointed representative of Equity Development Limited (“ED”). The contents of this report, which has been prepared by and is the sole responsibility of TDRL, have been reviewed, but not independently verified, by ED which is authorised and regulated by the FCA, and whose reference number is 185325.
ED is acting for TDRL and not for any other person and will not be responsible for providing the protections provided to clients of TDRL nor for advising any other person in connection with the contents of this report and, except to the extent required by applicable law, including the rules of the FCA, owes no duty of care to any other such person. No reliance may be placed on ED for advice or recommendations with respect to the contents of this report and, to the extent it may do so under applicable law, ED makes no representation or warranty to the persons reading this report with regards to the information contained in it.
In the preparation of this report TDRL has used publically available sources and taken reasonable efforts to ensure that the facts stated herein are clear, fair and not misleading, but make no guarantee or warranty as to the accuracy or completeness of the information or opinions contained herein, nor to provide updates should fresh information become available or opinions change.
Any person who is not a relevant person under section of Section 21(2) of the Financial Services & Markets Act 2000 of the United Kingdom should not act or rely on this document or any of its contents. Research on its client companies produced by TDRL is normally commissioned and paid for by those companies themselves (‘issuer financed research’) and as such is not deemed to be independent, as defined by the FCA, but is ‘objective’ in that the authors are stating their own opinions. The report should be considered a marketing communication for purposes of the FCA rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. TDRL does not hold any positions in any of the companies mentioned in the report, although directors, employees or consultants of TDRL may hold positions in the companies mentioned. TDRL does impose restrictions on personal dealings. TDRL might also provide services to companies mentioned or solicit business from them.
This report is being provided to relevant persons to provide background information about the subject matter of the note. This document does not constitute, nor form part of, and should not be construed as, any offer for sale or purchase of (or solicitation of, or invitation to make any offer to buy or sell) any Securities (which may rise and fall in value). Nor shall it, or any part of it, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The information that we provide is not intended to be, and should not in any manner whatsoever be, construed as personalised advice. Self-certification by investors can be completed free of charge at www.fisma.org. TDRL, its affiliates, officers, directors and employees, and ED will not be liable for any loss or damage arising from any use of this document, to the maximum extent that the law permits.
Copyright 2019 Trinity Delta Research Limited. All rights reserved.