Right here, right now: catching the CAR-T wave

Initiation | 12 July 2016

Share this note

MaxCyte is already delivering strong revenue growth, due to demand for its flow electroporation devices in drug discovery and cell therapy. This should at the very least be maintained and could accelerate if cell therapies reach the market. But the biggest potential value driver is its CARMA platform for CAR-T therapies, excitement around this new therapeutic modality has already made Kite and Juno billion dollar companies, and MaxCyte’s CARMA technology could become the bedrock for next-generation CAR-T therapies. We initiate coverage of MaxCyte with a valuation of £80m, equivalent to 184p per share.

Year-end: December201420152016E2017E
Sales ($m)7.29.311.614.3
Adj. PBT ($m)(1.8)(1.4)(4.7)(6.1)
Net Income ($m)(3.8)(3.5)(4.7)(6.1)
Adj. EPS (c)(15.2)(1.9)(15.1)(14.0)
Cash ($m)
EBITDA ($m)(1.2)(0.7)(4.1)(5.5)
Source: Trinity Delta Note: Adjusted numbers exclude share-based payments and exceptionals.
  • Being in the right place, at the right time The advent of cell transfection is facilitating drug discovery, the manufacturing of biologic products, as well as enabling the development of cell therapies, notably those harnessing the body’s immune system. A common need underpinning these approaches is a transfection process that is efficient, versatile and provides a consistently high performance. MaxCyte’s instruments meet all of these requirements, and promise to transfect any cell, with any molecule at any scale.
  • Instruments drive the near-term growth MaxCyte’s range of flow electroporation instruments are already being used by over 50 biotech and pharmaceutical companies, including nine of the top ten big pharma. This has led to revenues growing at a CAGR of 22.5% since 2012, we forecast that this level of growth will be maintained. Our estimates exclude potential licensing deals for commercial use of MaxCyte’s technology with upfront, milestone and royalty payments, which could generate significant revenues.
  • CARMA platform is further upside MaxCyte also has a proprietary CAR-T therapy, CARMA, which could simplify the current lentiviral production process and allow solid tumours to be targeted (so far, only anti-CD19 CAR-T therapies for B-cell leukaemias have proven to be effective). MaxCyte is due to start a Phase I/II study in ovarian cancer in H117 to confirm the potential of the CARMA platform, data from which could led to various licensing deals.
  • The share price fails to reflect the potential We value MaxCyte, using a SOTP model, at £80m (184p per share) with conservative assumptions. This represents an upside of c 125% to the current market cap. Excluding the CARMA platform from the valuation, we value MaxCyte at £45m (104p per share), which still suggests there is a c 30% upside to the current share price


12 July 2016

Price (Sterling)81.5p
Market Cap£35.5m
Enterprise ValueN/A
Shares in issue43.5m
12 month range72.5p-82.0p
Free float67%
Primary exchangeAIM London
Other exchangesNA
Company CodeMXCT.L
Corporate clientYes

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.


Mick Cooper PhD
+44 (0) 20 3637 5042

Franc Gregori
+44 20 3637 5041

Investment case

MaxCyte is a leader in the field of flow electroporation, with over 50 companies using its instruments. The company was founded in 1998, as a subsidiary of the NASDAQ-listed life sciences company, EntreMed, with Doug Doerfler as its founding-CEO. Its core flow electroporation technology was developed in collaboration with CBR Laboratories, affiliated with Harvard University, and it launched its GT instrument in 2000. The two line extensions, the VLX and STX instruments, were released in 2005 and 2009 respectively. The instruments are used to transfect cells to assist drug discovery; manufacture products such as antibodies, vaccines and viral vectors; and develop cell therapies. Instrument sales also provided financing for the development of its proprietary CAR-T platform, CARMA. MaxCyte is using the £10m in funding from its IPO in March 2016 to invest in marketing and R&D, including conducting the first clinical trials with the CARMA therapy, which could lead to sizeable licensing agreements.


We value MaxCyte using a sum-of-the-parts DCF methodology at £80m or 184p per share, including £35m (80p per share) for its CARMA technology platform. We have used conservative assumptions, for example, we do not include potential commercial licensing deals (likely to be worth c $10m each) for the use of MaxCyte’s instruments for the commercialisation of cell therapies, which should arise from the many existing and future research collaborations. Despite this, our valuation suggests that there is a c 30% upside to the current market cap excluding any value for CARMA, and a c 125% upside including CARMA.


MaxCyte raised £10m (gross) as part of its IPO on 29 March 2016, with 14.3m new shares issued at 70p. The capital raised will be used to strengthen its position in flow electroporation, increase its marketing efforts, and invest c $8m in the Phase I/II trial with its CARMA therapy. We forecast that MaxCyte’s revenues will increase at a CAGR of 23.4% over the next three years, having grown at a CAGR of 22.5% since FY12. Our forecasts also indicate that MaxCyte should become cash generative from H218 without requiring additional capital.


MaxCyte has fast growing revenues with a gross margin of c 88%, so its risk profile is much lower than that of most biotech companies. But its prospects are still heavily linked to the results of the Phase I/II trial with its CARMA therapy, which are expected in FY18. The quality of the data from the Phase I/II study, combined with advances with other competing CAR-T technologies, will determine the likelihood and size of any potential licensing deals for the CARMA technology. The other key issue determining MaxCyte’s prospects is its ability to sustain its leading position in flow electroporation, with significant competition likely to come from companies such as Thermo Fisher Scientific and Lonza.

MaxCyte: gaining momentum

MaxCyte is ideally placed to benefit from the surging interest in developing cell-based therapies to address intractable diseases, notably in immune-oncology indications. It is a leading player in flow electroporation, where its platform offers clear and valuable advantages over other tranfection methods. The revenue streams, 22% CAGR over 2012-15, have helped fund a proprietary CAR technology known as CARMA. This offers the potential of reduced toxicity, broader utility (including in solid tumours), and materially lower manufacturing costs. Our DCF-based valuation, based on conservative assumptions, of £80m  (184p per share) suggests the shares are currently undervalued by c 125%.

MaxCyte’s technology platform centres on flow electroporation, its proprietary devices can transfect almost any living cell with a wide variety of molecules, ranging from antibodies through DNA to mRNA and siRNA. The patented technology is both highly efficient, with 90% to 95% effective cell loading commonplace, and very scalable, up to 2×1011 cells can be processed in less than 30 minutes under sterile and clinical conditions. The versatility and consistently high performance of MaxCyte’s instruments has led to their widespread use with over 50 companies, including nine of the top ten global players, using them.

The devices’ flexibility has led to their use in a broad range of applications, from making cell lines for protein production and cell-based drug discovery tools to the manufacture of ex-vivo cell therapies. Product sales and leases generated revenues of $9.3m in 2015, an increase of 30% over 2014, with a gross margin of over 85%. It is their use in developing cell therapies, where the instruments can be used to solve engineering and production difficulties, which is expected to provide the most future growth.

There are over 35 partnered cell therapy programmes with pharmaceutical and biotech companies (such as Roche, AstraZeneca, Sangamo, Juno, Editas and Evotec), as well as leading academic institutions, which rely on MaxCyte’s devices. The indications range from cancers and cardiovascular diseases to niche areas such as sickle cell anaemia and β thalasemia, and ten of programmes are already in FDA-approved clinical trials. As these programmes progress through development, MaxCyte is likely to benefit from further licence fees, milestones and royalties as well as income from manufacturing and supply.

Additionally, MaxCyte has used its flow electroporation expertise to develop a proprietary cell therapy platform known as CARMA. This is being explored, both in-house and through academic collaborations (especially the Kimmel Cancer Center at The John Hopkins University), using mRNA to produce CAR cells for study in multiple oncology indications (including solid tumours). The clinical appeal is the potential to reduce toxicities (notably on-target, off-tumour effects) as well as addressing new indications (beyond the CART-19 pathways), including solid tumours. From a production perspective, the principal attraction is the significantly faster and much less costly commercial manufacturing process (which could be orders of magnitude less expensive).

A leader in a highly specialised field

MaxCyte is well placed to benefit from the surge in interest in engineered cell therapies. Recent advances have demonstrated that such treatments can be extremely potent and able to address previously intractable diseases. Whilst the principles employed can vary widely, a common feature to most is the need to modify the cell by introducing an agent (from a simple molecule to a complex protein) through the cell membrane by a process known as transfection[1]. It is this key step that underpins these novel approaches and it can be viewed as the enabling technology for commercialising these promising new generations of therapies. There are three main methods to transfect a cell:

  • Biochemical – using reagents such as calcium phosphate, lipofection, DEAE-dextran, and dendrimers;
  • Physical – electroporation, nucleofection, and other (including gene gun, sonoporation, magnetofection and optoinjection); and
  • Viral – principally either lentiviruses or AAV (adeno-associated virus).

Viral methods were among the earliest used and are widely employed in clinical research. Chemical methods are often used in academic research, where the low relative cost and flexibility are key factors that often overcome other limitations. Physical methods have come to the fore more recently, with electroporation[2] now the most widely used. Whatever the application, the ideal method should have high transfection efficiency, low cell toxicity, minimal effects on normal cell physiology, be easy to use, and be reproducible.

Over the past 18 years MaxCyte has established itself as the sole supplier of flow electroporation instruments to the pharmaceutical and biotechnology industries. The commercial strategy has been to exploit the platform’s ability to effectively transfect almost any living cell with a wide variety of molecules and genetic material in a consistent and efficient way. The experiences gained have resulted in a system that is robust, reliable, and scalable; importantly for commercial applications, it is also very reproducible.

The main revenues initially came from the discovery and development segments of both the academic sector and the drug industry but, as interest in the potential of cell-based therapies soared, the revenue base has broadened.

MaxCyte’s instrument range consists of three models: the STX addresses the core research market segment for cost-effective assay development, high throughput screening (HTS), high content screening (HCS), gram scale protein production, and other applications; the VLX offers similar versatility and ease of use but the capacity increases from 1×1010 cells per cycle to 2×1011 cells and is particularly suited to higher production needs (eg vaccines and viral vectors); the GT is of similar capacity to the STX but is cGMP compliant and targets the specific needs of those working on the pre-clinical, clinical development and potential commercial needs of cell-based therapies.

These market segments can be broadly classed as:

  • Drug discovery and development;
  • High volume bio-manufacturing; and
  • Cell therapy development and commercialisation.

Drug discovery and bio-manufacturing

The drug discovery applications are wide ranging, with the STX offering an ideal blend of flexibility and performance in a cost-effective package. For instance, cells can be transfected to produce a variety of assays (including ion channel, GPCRs, reporter genes, and siRNA based) that are comparable to stable cell lines in terms of quality and performance but in a fraction of the time and in physiologically-relevant cell. The STX can be used to manufacture small volumes (gram scale for preclinical studies) of difficult to produce compounds, such as multi-valent antibodies, which is usually all that is required for research purposes.

Exhibit 1: A diagram showing the instrument mode of action
Source: MaxCyte

The VLX is sold specifically for its capability to transiently transfect extremely large volumes of cells (up to 2×1011 cells in around 30 minutes), which can result in significant savings (at least an order of magnitude) compared to other transfection methods. Despite this, it is still a compact unit and simple to operate. The VLX can be used to produce multi-gram quantities of proteins, antibodies, viral vectors and recombinant vaccines to cGMP standards.

Both the STX and VLX, and their respective disposable processing assemblies, are sold primarily to biotechnology and pharmaceutical companies by a small sales team directly in North America and Europe and through distributors in other markets. Historically little resource was available to support the marketing effort but since the IPO the sales team has been expanded (from 5 to 7), with the benefit expected to begin to show through in late-16 and early-17. The selling cycle for the STX tends to be quite short (around 3-9 months from lead identification to sale), with the VLX being understandably longer.

The average price of the STX was around $110,000 in 2015, with an average of around $34,000 per annum in consumables sold per instrument over the past three years. The installed base is now more than 100 instruments, of which about 20 were sold in 2015. The VLX is priced at around $450,000 and, as yet, only a few have been sold. Currently the top five customers account for around 22% of drug discovery and bio-manufacturing revenues but this is expected to decrease as the installed base develops further.

The consistent high performance of MaxCyte’s instruments has led to over 50 leading biotech and pharmaceutical companies using the products, including nine of the top-10 pharmaceutical companies (eg. AstraZeneca, Pfizer and Roche).

Partnered programmes in cell therapy

The GT instruments target the growing cell therapy markets, where demand for effective transfection technologies is mirroring the interest seen not only in immune-oncology indications but also for applications in regenerative medicine (including stem cells), gene editing, and dendritic cell vaccines. A major attraction of flow electroporation in these settings is the ability to load cells consistently, even when using large loads (up to 500kDa), and still maintaining cell viability (c 95%).

The GT is also a closed sterile system that is cGMP compliant and CE marked, with, importantly, a Master File[3] lodged with the FDA. The Master File is a confidential dossier that effectively details, and validates, all the key parameters and processes employed. Unlike the STX and VLX instruments, the GT is leased to customers with an appropriate licence for use in narrowly defined fields. These are typically for non-exclusive and non-commercial use and describe the distinct cell types, the target indications, and the class of molecules employed.

The fees charged can vary widely; reflecting factors such as the nature of the customer (academic vs commercial), the breadth of the indications studied, and the stage of the programme (research vs clinical). The license allows a customer to reference the FDA Master File, hence simplifying and expediting their clinical planning.

The fees for later programmes tend to be around $250,000 pa, with further revenues also arising from the disposable processing assemblies (estimated at around $20,000 per instrument in 2015). As these programmes progress through clinical development, and approach commercialisation, the licensing deals are expected to broaden to include additional fees, milestone payments and/or royalties on eventual product sales. Although the amounts will likely reflect commercial factors (eg indication market size, manufacturing complexity, treatment pricing, etc), the deal values are expected to be circa $10m each.

Exhibit 2: Number of deals currently in place
Source: MaxCyte

There are currently circa 35 such lease partnerships in place with a variety of pharmaceutical, biotechnology and academic institutions (Exhibit 2); of which around a third are believed to now be in the clinical stages of development.

Each lease is structured to the partner’s needs but will share a common approach:

  • an initial research lease that allows sufficient support to explore a potential application; which
  • if the programme shows sufficient promise to enter development then a clinical lease is required (which allows access to the Master File to support the IND); and,
  • assuming a successful proof of concept (usually at Phase IIa), then a broader commercial lease will be negotiated.

Timings for the transitions clearly vary according to the programmes but, using industry averages, we would expect 6 to 18 months for a research lease and 2 to 5 years for a clinical lease.

MaxCyte has only disclosed the names of a few of its cell therapy partners and limited details:

  • Sangamo
  • United Therapeutics
  • Juno (CAR-T company)
  • CRISPR Therapeutics
  • Editas

Sangamo has a broad pipeline of gene therapies in development based on its zinc-finger technology platform, including four clinical assets (Exhibit 3). It has been disclosed that the two HIV products (in Phase II and Phase I) and the two preclinical assets for sickle-cell anaemia and beta-thalassemia partnered with Biogen rely on MaxCyte’s technology to transfect cells with plasmids encoding the specific zinc-finger proteins (Sangamo uses AAV vectors for its In Vivo Protein Replacement Platform [IVPRP]). Thus, MaxCyte revenues should grow as these products in Sangamo’s pipeline advance.

Exhibit 3: Sangamo’s pipeline of zinc-finger therapies
Source: Sangamo

Proprietary CARMA platform being developed

MaxCyte has capitalised on its extensive transfection expertise by developing its proprietary CARMA platform. This is a novel mRNA mediated CAR technology that could provide fewer off-tumour effects and a simpler, and less costly, production system than current CAR-T (Chimeric Antigen Receptor T-cell) approaches.

A number of CAR-T[4] therapies have shown remarkable efficacy in the clinic, although there are significant adverse events, including cytokine release syndrome and neurotoxicity (A clinical hold with Juno Therapeutics Phase II study with JCAR015 has recently been put in place). This has elicited widespread excitement among the medical and investment communities as their potential could herald a new era in cancer treatment; yet their current applicability beyond a relatively small subset of blood cancers remains a major frustration[5]. A variety of approaches have been tried in solid tumours but with limited success to date. This reflects the challenges that remain in target selection (a lack of truly unique tumour-associated antigens), accessibility (inefficient homing of T-cells into the tumour site), and finding avenues to overcome the active immune suppression that occurs within a tumour’s microenvironment.

The clinical success seen in B cell haematological malignancies reflects the exquisite nature of the CD19 antigen. Most B cell malignancies, as well as normal B cells, express the CD19 antigen but this is absent from other cell types, making it an attractive therapeutic target. Clearly accessibility and the tumour micro-environment are less of an issue in such blood cancers, but the long persistence of the effect also causes B-cell aplasia (which increases infection risks and requires costly long-term plasma infusions). The B cell aplasia is a consequence of the effective targeting of the CD19 antigen and is known as an on-target/off-tumour side-effect.

Although solid tumour antigens have the potential to be immunogenic, because tumours arise from the individual’s own cells only mutated proteins or proteins with altered translational processing will be seen as foreign by the immune system. Antigens that are simply up-regulated or over-expressed (so called self-antigens) will not necessarily induce a functional immune response against the tumour. The end-result is that addressing solid tumours will likely require a cocktail of targeted antigens, with the consequent downside that on-target/off-tumour effects will be more troublesome.

The CARMA platform 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. Whilst this would be a worthwhile advantage in treating B cell malignancies, the true value would be in solid tumours where the limiting of on-target/off-tumour toxicities could be a critical determinant of success.

Another key issue affecting the wider adoption of CAR T-cell therapy will be how to roll it out at scale, with new production techniques and tailored supply chains required. Currently the system (both for autologous and allogeneic cells[6]) is complex, time consuming, and very costly (see Exhibit 4). The problems of industrialising the processes are many; producing material at a commercially viable scale is complex and few systems reliably and consistently provide adequate yield, scalability and potency.

Exhibit 4: The key steps in producing an autologous CAR-T therapy

The raw material is blood cells, which are transformed in a 5-step process:

  • Step 1: Apheresis consists of extracting the T-cells from among the Peripheral Blood Mononuclear Cells (PBMC) of the blood and isolating with a cGMP compliant process. Then transportation to the cell processing site.
  • Step 2: Selection and activation of T-cells through stimulation of TCR (T-Cell Receptor) and Co-stimulation receptor (eg CD3 and CD28) to transform them into a Cytotoxic T-Cell (CD8+).
  • Step 3: Transfection. Once a T-cell is activated, the CAR needs to be expressed by the cell to recognize the tumours. This requires the insertion of a gene or other component via a vector (currently this is typically via a Lentivirus). In the case of allogeneic cells, the immunogenicity is reduced at this step (eg through TCR knock-out).
  • Step 4: T-Cell expansion. Needs to strike the right time balance for proliferating the culture. The period has to be long enough for good CAR insertion, but not too long as over time cells begin to lose their function.
  • Step 5: Conservation and Cells are purified, processed and cryo-preserved before being transported back for infusion into the patient.

The process takes between 7 and 15 days and is currently very labour intensive.

Source: Trinity Delta and MaxCyte

The existing manufacturing process takes between 7 and 15 days and is estimated to cost $200K-$450K per patient. Substantial efforts are being made to automate as many of the procedures as possible in order to reduce variability, increase reproducibility and lower costs. Nonetheless, the challenges to successfully producing commercial grade material for use in a variety of clinical settings are manifold and remain daunting.

MaxCyte originally got involved in the CAR-T field through two notable collaborations with world leaders in the CAR field. These are with Dr Carl June of the University of Pennsylvania and Dr Dario Campana originally of St. Jude’s Chidren’s Research Hospital and now with the National University of Singapore. The goal of these alliances was to develop a non-viral, commercial, and safer approach to produce CAR-T therapies capable of addressing more tumour types.

To date over 30 patients have been treated in seven clinical trials (five at University of Pennsylvania and two at National University of Singapore [NUS]) using mRNA to express CAR in expanded T-cells and have confirmed the potential of the approach. In a small clinical trial with 14 patients conducted by the University of Pennsylvania with anti-mesothelin CAR-T therapy in mesothelioma and pancreatic, the treatment was well tolerated without dose-limiting toxicity and one patient achieved a partial response and six patients experienced stable disease (Source: J. Clin. Oncol. 33, 2015). Other antigen targets of mRNA CAR-T therapies that have been studied include GD-2, and C-met in solid tumours and CD-19 and CD123 in haematological cancers.

The initial results from these admittedly early trials also suggest that both on-target/off-tumour toxicities and CRS (cytokine release syndromes) can be contained. However, Janos Tanyi from the University of Pennsylvania has said that his group at the University would be concentrating its efforts the lentiviral approach as “the antitumor effect was very limited” with the mRNA CAR-T cell only detectable for one to two days with a dose of 108 cells. MaxCyte disagrees with this view, and cites the findings of Carl June’s group who found that they detected mRNA CAR-T cells up to seven days after administration with 109 cells. There is also preclinical data suggesting that mRNA CAR-T cells can be as potent as lentiviral CAR-T cells (Exhibit 5)

Exhibit 5: Anti-CD19 mRNA CAR-T have similar activity to anti-CD19 lentiviral CAR-T therapy in mice
Source: Barrett DM et al, Human Gene Therapy, 22, 1575-86, December 2011

When MaxCyte was studying mRNA CAR using expanded T-cells, it discovered that it could significantly simplify the process by transfecting freshly isolated PBMCs (Peripheral Blood Mononuclear Cells) while producing cells with the same level of anti-tumour activity. Consequently, MaxCyte decided to invest the profits from the sale of the flow electroporation instruments into its proprietary CARMA platform. MaxCyte has also reported that CARMA cells can improve survival in preclinical mouse models with solid tumours (data not published) and is now collaborating in the development of CARMA with the John Hopkins Medical Institute’s Kimmel Cancer Center.

The CARMA platform can potentially offer a number of supply chain benefits over the lentiviral vector systems and mRNA CAR. The current process using lentivirus transfection is complex and time-consuming, requiring the cells collected during apheresis to be transported to a central facility (Exhibit 6). The mRNA-CAR process used by the University of Pennsylvania and NUS with MaxCyte’s flow electroporation is much simpler and can be completely conducted in a hospital; however, it still requires the expansion of the T-cells and hence still takes one-to-two weeks.

In comparison, MaxCyte’s CARMA process is even simpler, with the PBMCs transfected rather than T-cells, thus avoiding the time-consuming expansion step. This means that the CARMA process can be carried out in a single day. This would suggest that the patient could be treated with a protocol that requires only an overnight stay.

Exhibit 6: A comparison lentiviral CAR-T, mRNA CAR and CARMA processes
Source: MaxCyte

To confirm the potential of CARMA, MaxCyte needs to conduct a small-scale study (most likely Phase I/IIa in ovarian cancer with c 30 patients and anti-mesothelin CAR-T therapy) in the John Hopkins Medical Institute. This trial should provide a good indication if CARMA therapies can have a significant anti-tumour effect, while not causing significant on-target/off-tumour toxicities (mesothelin is expressed at normal levels on mesothelial cells and at high levels on various tumours, including ovarian cancer). The trial should start in H117.

MaxCyte does not intend to become a drug development company and conduct more advanced clinical trials with CARMA. Instead it plans to use the data from the Phase I/II study, assuming the data are positive and confirm the potential of CARMA, to find a partner(s) to develop the platform further with Phase II/III studies and against other targets. The possible value of such deals is difficult to estimate, but the interest being shown in this area means that >$100m per programme/target appears realistic. Timings for these are, understandably, a clear uncertainty but we would view anything material before 2018 as unlikely.

Well protected in a sizeable and growing market

MaxCyte’s instruments address a well defined need in a large market segment. The Markets and Markets report (June 2015) on Transfection Reagents and Equipment estimates this to be worth $676.8m in 2015 and expects it to grow by 7.2% CAGR to $957.9m in 2020. By usage North America is the largest, closely followed by Europe, and then Asia-Pacific and rest of the world (RoW). Asia-Pacific (mainly due to China) is expected to grow at the highest CAGR during the forecast period. Whist the biochemical methods are currently the largest (both volume and value), these are set to be overtaken by viral (mainly lentiviral and AAV) and physical (principally electroporation) methods as use switches from biomedical research to therapeutic delivery (Exhibit 7).

Exhibit 7: Competitors in the transfection market
Source: Companies

To protect its commercial position, MaxCyte has patents covering the technology platform, the individual critical components and certain applications; additionally it possesses substantial know-how and trade secrets relating to the development and commercialization of cell-therapy products. As one of the pioneers in the field, MaxCyte has a broad patent estate, with a multi-layered portfolio covered by 38 issued or pending patents in key jurisdictions. The FDA Master File includes information not disclosed in patents, but this is a confidential document, which MaxCyte’s clients only need to reference when making regulatory applications, without having precise knowledge of the contents of the File. In fact, the presence of the FDA Master File for MaxCyte’s instruments provides the company with an additional competitive advantage as regulatory filings are simplified and will help to secure MaxCyte’s position as a preferred partner for companies developing cell therapies.



Although MaxCyte is exposed to many of the risks associated with investing in small- to mid-cap biotech companies, its risk profile is considerably lower than most such companies. This is because it has a fast-growing revenue stream and, due to the number of alliances it has, it generally has limited exposure to the clinical readout from any one programme. That said, the quality of the clinical data from the ongoing and planned clinical trials with CARMA will be crucial in determining the likelihood and value of any potential licensing deals for CARMA.

The potential interest in CARMA from possible partners will also depend on advances from other companies developing CAR-T therapies; this area of science is very competitive. For instance, Bellicum Pharmaceuticals is developing CAR-T products with its CIDeCAR technology so that it can eliminate the infused CAR-T cells if desired. Groups at University of Pennsylvania and University of Texas MD Anderson Cancer Center are addressing the issue of on-target/off-tumour toxicities by developing low affinity CAR-T therapies. Ziopharma/Intrexon licensed Sleeping Beauty technology from MD Anderson, which allows the formation of viral-free CAR-T cells. Finally, Cellectis/Pfizer could be developing the biggest threat to the CARMA platform with its allogeneic CAR-T cells.

The drug discovery and cell therapy revenue lines are growing strongly because of the leading position MaxCyte enjoys in the field of flow electroporation. There are significant barriers to competitors, given its patent portfolio and trade secrets; however well-resourced companies such as BTX, Lonza and Thermo Fisher Scientific will be striving to break MaxCyte’s dominance.



MaxCyte is well positioned to benefit from the growing interest in altering cells to treat currently intractable diseases. The appeal of successful therapies should not be underestimated, both from a clinical and commercial perspective, with MaxCyte’s technology having the potential to be effectively embedded within a number of such treatments, not just CARMA-based therapies.

Cell-based therapies have been materially de-risked over the last few years, as the mounting body of clinical evidence supports the initial positive outcomes of the earlier studies, with valuations of numerous companies reflecting increasing investor optimism that such therapies will achieve commercial success.

We have valued MaxCyte at £80m using a DCF and sum-of-the-parts methodology or 184p per share, as summarised in Exhibit 8. We have adopted conservative assumptions in our modelling; for instance, we have not included any potential commercial licensing agreements for approved cell therapies, which could be worth c $10m each, nor do we consider potential royalty revenues from the CARMA platform. We feel this is currently appropriate but as progress is achieved, we would expect to revisit the model and anticipate the valuation would reflect this.

Our valuation suggests that there is c 125% upside to the current market cap of £38.3m, and even if the potential of the CARMA platform is excluded, there is still a c 30% upside.

Exhibit 8: Summary of the DCF valuation model of MaxCyte
Source: Trinity Delta; Note 1For the purposes of the valuation, we have assumed that 50% of R&D excluding CARMA and sales & marketing expenses are allocated to Drug discovery and the remaining 50% to Cell therapy.

There is a lock-in arrangement affecting 68.5% of the outstanding shares and options, which lapses on the first anniversary of the admission of the shares to AIM on 29 March 2017. In addition, all directors of the company and all original shareholders with over 0.5% shareholding have agreed to only dispose of shares in accordance with maintaining an orderly market.


MaxCyte’s revenues have increased at a CAGR of 22.5% over the last three years, and were at least $5.4m in H116 (<30% growth). We forecast that this growth rate will accelerate because of the increasing use of modified cell lines in drug discovery and progress of cell therapies, and the greater investment in sales and marketing following the capital raise. Our sales forecasts, shown in Exhibit 9, are based on 60% of revenues being derived from drug discovery & manufacturing sales and 40% from cell therapy, and company guidance.

These estimates do not include potential licensing agreements covering the commercial use of MaxCyte’s devices, such deals could result in upfront payments of circa $1m, with milestones and eventual royalties

Exhibit 9: Revenue forecasts between FY15 and FY20
Source: Trinity Delta; Note: 1Forecasts based on 60% of revenues in FY15 being derived from drug discovery and manufacturing sales.

The extra investment in R&D excluding CARMA and S&M following the IPO is expected to increase R&D by 15% and S&M by 39% in FY16. There will also be the additional R&D spending of c $8m over three years in the development of the CARMA platform (primarily the Phase I/II study in ovarian cancer); we estimate that CARMA R&D will be $2m in FY16, $4m in FY17 and $2m in FY18.

There are material costs associated with being a publicly-listed company, such as greater remuneration costs for the board and expenses for advisory services. To take this into account, we estimate that G&A costs will increase by 65% to £4.4m in FY16, before rising more modestly at 11% in FY17.

The gross amount raised during MaxCyte’s IPO in March was £10.0m (c $14.3m), which gave the company a cash position of $14.7m (net of expenses) at the time of listing. We estimate that net amount raised during the fundraising was $11.0m (NB. under US GAAP the costs associated with the IPO are not recognised on the income statement and the amount raised net of costs is shown in the balance sheet and cash flow statement). We estimate that the company will have $8.6m at the end of FY16, which should enable the MaxCyte to execute its current plans and achieve profitability.

Exhibit 10: Summary of financials
Source: MaxCyte, Trinity Delta  Note: Adjusted numbers exclude share-based payments and exceptionals.


[1] Transfection refers to the modification of biological cells through the introduction or transfer of selected material, such as DNA or RNA, into the cell. The technological advances of the past decade have resulted in a seismic shift in cell-based research activities, leading to the developments seen in immune-based cancer treatments.

[2] Electroporation is the application of an electric field to cells to temporarily increase the permeability of the membrane, allowing the passage of larger molecules than would normally be allowed to enter the cell.

[3] An FDA Master File for biologic project is a confidential dossier that contains full information about the facilities, processes, or articles used in the manufacturing, processing, packaging, and storing of one or more human drug products. It is used to help prove the quality, safety and efficacy of a medicinal product ahead obtaining an Investigational New Drug Application (IND) and a Biologic License Application (BLA).

[4] CAR-T refers to techniques that genetically engineer a patient’s own T-cells (also known as T-lymphocytes), a type of white blood cell that orchestrates the body’s immune response, so it can produce specific proteins called Chimeric Antigen Receptors (CARs) that enable the T-cells to identify and help destroy cancerous cells. The T-cells are harvested and modified ex-vivo then returned to the patient. This model of delivery is very expensive and completely different from existing pharmaceutical approaches since it requires the creation of a highly personalised product for each patient.

[5] Whilst CAR-Ts have shown amazing efficacy in B cell malignancies, their use in other cancers has been limited, in part, by antigen-specific toxicities and life-threatening CRS (cytokine release syndromes). Researchers globally are evaluating a variety of 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 IL-6R blockers), and tailoring the T-cells’ CAR expression to suit the particular tumour type.

[6] Autologous cells are taken from the patient, modified and then re-introduced. Allogeneic cells are taken from a donor, modified and then infused into the patient.



Company information

Contact details

MaxCyte Inc.,
22 Firstfield Road, Suite 110,
Gaithersburg, MD 20878,
Tel: +(1) 301 944 1700

Key personnel

Dr Stark ThompsonNon-Executive ChairmanFormer President & CEO of Life Technologies Inc (now Thermo Fisher).Also currently Director of Luminex (Nasdaq LMNX), Chairman of GeneLogic (Nasdaq GLGC), and active with several educational and non-profit organisations. Holds a Bachelor degree in Chemistry from Muskingum College and a PhD in Physiological Chemistry from Ohio State University.
Douglas A DoerflerPresident and CEOFounded MaxCyte in July 1998. Previously President, CEO and a Director of Immunicon Corporation, a private cell-based therapy and diagnostics company. Prior to this, had a number of executive positions with Life Technologies Inc. Holds a Bachelor degree in Finance from the University of Baltimore School of Business and a Certificate in Industrial Relations.
Ronald HoltzCFOCFO since 2005. Previously CFO at B2eMarkets, a private software company, and RWD Technologies Inc, a public information technology and consulting firm. Prior to this experience with Ernst & Young. Has a Bachelors degree in mathematics from the University of Wisconsin, an MBA from the University of Maryland and is a CPA.
Dr Madhusudan PeshwaCSO and EVP Cellular TherapiesPreviously EVO for R&D at New Neural LLC, a start up stem cell therapy company. Prior to this VP of Manufacturing and VP of Process Sciences at Dendreon Corporation (Nasdaq DNDN). Holds a B.Tech from the Indian Institute of Technology, Kanpur, India and a Ph.D from the University of Minnesota.

Top institutional shareholdings

No. of shares (m)% holding
Intersouth Partners VI8.2418.95
River and Mercantile Asset Management 5.7811.37
Bost-Jackson4.65 9.15
Legal & General Investment Management3.95 7.99
Harbert Venture Partners3.69 7.26
Unicorn AIM VCT2.74 5.40
Blackrock Investment Management (UK)2.14 4.22
MASA Life Science Ventures1.85 3.64
Source: Bloomberg


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 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 2016 Trinity Delta Research Limited. All rights reserved.