TIDMMXCT TIDMTTM
RNS Number : 5084Z
MaxCyte, Inc.
21 September 2020
MaxCyte, Inc.
("MaxCyte" or the "Company")
Results for the Six Months ended 30 June 2020
-- Strong revenue growth of 30%, generating positive EBITDA (before CARMA investment)
-- Significant momentum in transformative therapies: three new
commercial partnerships, growing the potential
pre-commercial milestones to over $800m
-- $30.5m fundraise backed by specialist life science investors
supports further development of MaxCyte
Gaithersburg, Maryland - 21 September 2020: MaxCyte (LSE: MXCT,
MXCL), a global cell-based therapies and life sciences company,
today announces its financial results, along with its key
commercial and clinical highlights, for the six months ended 30
June 2020.
HIGHLIGHTS (including post-period-end highlights)
Operational
-- Significant commercial momentum in transformative therapies:
-- Three new clinical/commercial licences signed in 2020 with
leading cell therapy developers Allogene Therapeutics and Caribou
Biosciences, and with novel immunotherapy company APEIRON
Biologics
-- Aggregate potential pre-commercial milestone payments from
these relationships along with MaxCyte's previously signed
commercial agreements are in excess of $800m
-- Licensed partnered programs now exceed 120+ with more than 90 licensed for clinical use.
-- MaxCyte wholly-owned subsidiary CARMA Cell Therapies(TM)
expanded its Phase I trial of anti-mesothelin mRNA CAR-PBMC cell
therapy MCY-M11
-- New parallel trial cohort will broaden evaluation of MCY-M11
in patients through inclusion of a preconditioning regimen and
multiple dosing cycles
-- Clinicians at Massachusetts General Hospital and Hackensack
University Medical Center will join those at National Cancer
Institute and Washington University at St. Louis to evaluate
MCY-M11 in the ongoing Phase I clinical trial
-- To date, ongoing first-in-human study has demonstrated
promising tolerability of MCY-M11 and feasibility of rapid, one-day
autologous manufacturing
-- Completion of enrolment and dosing of the existing
no-preconditioning MCY-M11 trial is anticipated in H2 2020
following which additional preliminary clinical data is expected to
be announced
-- Company retained Locust Walk, a global life science strategic
advisory and transaction firm, to assist with the capital
acquisition process for the CARMA Cell Therapies subsidiary, which
is expected to be self-funded by end of 2020
Financial
Key metrics ([1]) H1 2020 H1 2019 % change
Revenue $10.9m $8.4m 30.1%
--------- --------- ---------
Gross margin 89.7% 87.5% 2.4%
--------- --------- ---------
CARMA investment ([2]) ($5.2m) ($6.6m) (21.7%)
--------- --------- ---------
Total operating expenses ($15.6m) ($16.3m) (4.2%)
--------- --------- ---------
EBITDA before CARMA (3) $0.6m ($1.4m) N/A
--------- --------- ---------
Net (loss) before CARMA
investment ($0.9m) ($2.9m) (69.2%)
--------- --------- ---------
Total assets $53.4m $24.8m 115.5%
--------- --------- ---------
Cash and cash equivalents,
including short-term investments $38.2m $14.9m 156.0%
--------- --------- ---------
-- Revenue grew substantially in the first half of 2020,
increasing 30.1% to $10.9m compared to $8.4m in H1 2019, an
acceleration of the year-on-year growth rate seen in H1 2019
-- Revenues currently driven by high-margin recurring annual
fees from cell therapeutics business, instrument sales and strong
growth in clinical milestones
-- Increase in clinical milestone revenues drove significant
(2.4%) improvement in gross margin to 89.7%
-- Total operating expenses decreased from the prior year due to
in part to the impact of the COVID-19 pandemic on marketing and
travel expenditures, leading to EBITDA before CARMA of $0.6m ($1.4m
loss in H1 2019)
-- The Company closed a successful $30.5m financing in May 2020,
led by premier life science specialist, Nasdaq crossover investors,
Casdin Capital, LLC and Sofinnova Partners
-- FY 2020 revenues on track to be at least modestly ahead of prior market expectations
Commenting on the half-year results, Doug Doerfler, CEO of
MaxCyte, said: "MaxCyte has delivered strong positive momentum
during the first half of 2020, building on the growth reported in
2019, reflecting its position as a leader in the field of advanced
therapies and a trusted partner-of-choice for cell therapy
developers. We remain mindful of the impact of the COVID-19 global
pandemic and will continue to work diligently to protect our team,
their families, our customers and patients and mitigate any
potential restrictions and delays in our operations. Our full-year
2020 revenue outlook has improved from the initial uncertainty
outlined in April, although the ongoing COVID pandemic still limits
visibility. As a result, we now expect to report revenues for the
full-year 2020 at least modestly ahead of prior market
expectations. In addition, the outlook for 2021 continues to
strengthen significantly, due to our current progress and our
partners' on-going advancement towards milestone events in the
coming year. We remain highly confident in the strength and
resilience of our business model, and in the prospects for
continued growth, particularly as our growing number of partners
advance their clinical programs. "
Conference call and webcast for analysts
A conference call for analysts and investors with Q&A will
be held at 13:00 p.m. BST on Monday, 21 September 2020. The
presentation will be available on the Investors section of
MaxCyte's website at https://www.maxcyte.com/investors/.
Dial-in details:
UK Participant dial-in: +44 (0) 203 107 0289
International dial-in: 0800 028 8438
Participant code: 6413899
Webcast :
https://www.lsegissuerservices.com/spark/MaxCyteInc/events/a33e5171-8933-4cc8-b31d-b980169049c5
A replay file will be made available shortly afterwards via the
Company website.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S REVIEW
We are pleased to report on another strong half-year period for
MaxCyte, both financially and operationally. During these
unprecedented times, our priority has naturally been to ensure the
health and safety of our employees and customers in light of the
COVID-19 pandemic. The business continuity plans and adaptive
working protocols we have successfully implemented at our
facilities since February have enabled us to do this while
delivering uniquely enabling technology to support the programs of
our customers and partners, many of whom are at the forefront of
the effort to address COVID-19.
As a Company, we remain uniquely positioned to capitalise on the
rapidly growing cell therapy market, into which a total of $5.1
billion was invested over the course of 2019, according to the
Alliance of Regenerative Medicine. Our flow electroporation
technology offers our customers the effective and broadly
applicable cell engineering capability that is critical to clinical
success in cell therapy. We see our platform as more than just a
technology, but rather as a unique means of enabling our partners
to achieve their therapeutic development goals.
Our broad global customer base includes all ten of the top ten
pharma companies by revenue, and 20 of the top 25. MaxCyte has
become the partner of choice for leading cellular therapy and
gene-editing companies and is the industry standard non-viral
approach to cell and gene therapy. Our technology, with the
ExPERT(TM) brand series of commercially oriented instruments and
consumables at its core, continues to enable new therapies, which
have the potential to transform the treatment of many challenging
diseases.
Successful financing during the period
The Company's cash position was bolstered by the successful
completion of a $30.5m financing in May 2020, led by Casdin
Capital, LLC with Sofinnova Partners, two premier life science
specialist Nasdaq crossover investors, and our UK investor base.
This additional financing provides the Company with the capital to
accelerate and strengthen its market position as an enabler of
next-generation cell-based therapies and supports its intended plan
to pursue a dual-listing on Nasdaq. This process remains on track
and we anticipate filing for registration to take place during 2021
as previously announced.
Robust growth in cell therapy business
With proven ability to scale from early research to the clinic,
MaxCyte continues to cement its position as a partner of choice for
companies undertaking complex cellular engineering. During the
first half of the year and into the post-reporting period, we
continued the expansion of our cell therapy partnerships with
leading industry innovators as evidenced by new agreements with
Allogene Therapeutics, Caribou Biosciences, and novel immunotherapy
company APEIRON Biologics. These relationships bring the total
number of commercial agreements up to eleven. The aggregate
potential pre-commercial milestone payments from these
relationships along with MaxCyte's previously signed commercial
agreements are in excess of $800m. With the addition of these
commercial licenses, the Company now has in excess of 120 partnered
program licenses with more than 90 licensed for clinical use. Under
the terms of our enabling-technology license agreements, the
cellular therapies our partners are developing deliver a series of
milestone payments as those programmes enter the clinic and
continue through clinical development and into the
commercialisation of the
therapy. MaxCyte is set to receive significant milestone
payments as anticipated clinical progress is made by the programmes
of MaxCyte partners. These milestone payments are our
fastest-growing revenue stream. We are extremely proud of our
partnerships that are advancing new therapeutic drugs, including
cell-based and gene-edited therapies for patients with significant
unmet medical needs.
Operational and technology progress
MaxCyte is focused on continually improving and expanding our
product offerings to provide scalable, high performance solutions
reflecting the breadth and variety of our customer base and the
applications for which our technology is utilised. That focus
includes current and planned investment in the advancement of our
instruments and the range of available disposables. In June, we
launched the first product in the new and expanded range of ExPERT
disposables. The new R-1000 cuvette expands the range covered by
the Company's disposables with a processing volume of up to 1 mL,
or up to 200 million cells, and provides increased versatility for
companies developing cell therapy drugs as well as those advancing
early drug discovery. This expansion in the range of disposables
provides additional growth opportunities by addressing a processing
volume frequently requested by customers.
Update on CARMA Cell Therapies
CARMA Cell Therapies has now been established as a wholly-owned
subsidiary of MaxCyte with a view to facilitating independent
investment that will position CARMA Cell Therapies as an
independent therapeutics company. This will allow MaxCyte to retain
its focus on its core cell-engineering business. MaxCyte is working
closely with Locust Walk, a global life science strategic advisory
and transaction firm that is assisting with the capital acquisition
process of CARMA Cell Therapies. MaxCyte expects CARMA Cell
Therapies to be self-funded by the end of 2020.
During the period, the Company has continued to progress its
Phase I dose-escalation trial with MCY-M11, CARMA Cell Therapies'
non-viral, mRNA-based cell therapy candidate manufactured using
un-manipulated peripheral blood mononuclear cells, which is being
investigated for the initial treatment of relapsed/refractory
ovarian cancer and malignant peritoneal mesothelioma. There have
been no dose-limiting toxicities or related serious adverse events
observed in the three completed cohorts. A fourth dosing cohort
commenced in March 2020 as planned.
In August 2020, MaxCyte announced the expansion of the ongoing
Phase I dose-escalation trial to include a new parallel cohort of
patients and the initiation of two additional clinical sites. The
new parallel Phase I cohort will evaluate intraperitoneal delivery
of MCY-M11 at escalating doses in additional patients with
relapsed/refractory ovarian cancer and malignant peritoneal
mesothelioma, with the addition of a preconditioning regimen of
cyclophosphamide prior to MCY-M11 infusion. This parallel Phase I
cohort with preconditioning will progress independently from the
ongoing evaluation of MCY-M11 in the existing no-preconditioning
Phase I cohort. The MCY-M11 Phase I trial will also allow for
multiple treatment cycles where indicated for both future
preconditioning and no-preconditioning patients. New clinical sites
for the study at Massachusetts General Hospital/Harvard Medical
School and Hackensack University Medical Center are joining
existing sites at the National Cancer Institute at the National
Institutes of Health and Washington University in St. Louis.
Completion of enrolment and dosing of the existing
no-preconditioning MCY-M11 trial is anticipated in H2 2020
following which additional preliminary clinical data is expected to
be announced .
In May 2020, encouraging preliminary results for MCY-M11, which
had supported this study expansion and the pursuit of new
strategies with the therapy (such as the addition of a
preconditioning regimen and delivering multiple cycles of treatment
to further enhance efficacy), were presented in a poster discussion
at the virtual American Society of Clinical Oncology (ASCO) annual
meeting. Results to-date support the continued validation of
MaxCyte's proprietary CARMA's proprietary mRNA cell therapy
platform.
Outlook
Our Board anticipates continued progress for the remainder of
the 2020 fiscal year and expects trading for the full-year 2020 at
least modestly ahead of prior market expectations, notwithstanding
the general uncertainty created by the ongoing COVID-19
pandemic.
We will continue to pursue opportunities to grow the number of
high-value clinical and commercial partnerships as we strive to
maintain our position as the non-viral transfection delivery
platform of choice for the world's leading cell therapy companies
in their development and commercialisation of drug treatments.
We will also remain focused on delivering the potential of our
CARMA programme as we continue advancing our next-generation
CAR-based cancer treatment through the clinic. We anticipate that
independent funding for the CARMA platform will be secured during
FY2020.
We remain optimistic for the remainder of 2020 and beyond,
including as the number of milestone events expected in the
mid-term accelerates, and confident in our prospects for long-term
growth.
Doug Doerfler
President and Chief Executive Officer
J. Stark Thompson, PhD
Non-Executive Chairman
21 September 2020
FINANCIAL REVIEW
Financial performance in the first half of the year remained
strong, with first-half revenues increasing significantly,
approximately 30% year-on-year, to $10.9m (2019: $8.4m). This
performance, demonstrating the resilience of our business model in
times of economic stress, has been driven by high-margin recurring
annual fees from the cell therapeutics business, instrument sales
and strong growth in clinical milestones, which continued to be the
fastest growing component of revenues.
Operating expenses fell by 4.2% during the period as a result of
the COVID-19 pandemic restricting life sciences spending to $15.6m
compared to $16.4m in 2019. Combined with the increase in revenue,
this resulted in EBITDA before CARMA of $0.6m, continuing the
momentum from the second half of 2019. CARMA expenses during the
period were $5.2m and EBITDA after CARMA expenses was ($4.3m).
Total assets of the Company at the end of the period were
$53.4m, compared to $24.8m in 2019 . This substantial increase in
total assets was principally associated with a) proceeds from the
capital raise in May 2020, b) the adoption of accounting guidance
that requires the fair value of leases be presented on the balance
sheet as offsetting Right-of-Use Asset and Lease Liability
accounts, c) capital investments including those related to
development of the ExPERT branded instruments and consumables, and
d) the associated increase in inventory for those new
offerings.
Cash and cash equivalents, including short-term investments,
totalled $38.2m, compared to $14.9m in 2019. In May 2020 the
Company's cash position was bolstered by the successful completion
of a $30.5m financing, led by premier life science specialist
Nasdaq crossover investors, Casdin Capital, LLC and Sofinnova
Partners, and supported by our existing investors.
Amanda Murphy
Chief Financial Officer
Ron Holtz
Chief Accounting Officer
21 September 2020
About MaxCyte
MaxCyte is a clinical-stage global cell-based therapies and life
sciences company. As the inventors of the premier cell-engineering
enabling technology, the Company helps bring the promise of
next-generation cell and gene-editing therapies to life. The
Company's technology is currently being deployed by leading drug
developers worldwide, including all of the top ten global
biopharmaceutical companies. MaxCyte licences have been granted for
more than 120 cell therapy programmes, with more than 90 licensed
for clinical use, and the Company has now entered into eleven
clinical/commercial license partnerships with leading cell therapy
and gene editing developers. MaxCyte was founded in 1998, is listed
on the London Stock Exchange (LSE: MXCT, MXCL) and is headquartered
in Gaithersburg, Maryland, US. For more information, visit
www.maxcyte.com .
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014 (MAR).
Contacts:
MaxCyte Inc.
Doug Doerfler, Chief Executive Officer
Ron Holtz, Chief Financial Officer +1 301-944-1660
Nominated Adviser and Joint Corporate
Broker
Panmure Gordon
Emma Earl
Freddy Crossley
Corporate Broking
Rupert Dearden +44 (0)20 7886 2500
Joint Corporate Broker
Numis Securities Limited
James Black
Duncan Monteith +44 (0)20 7260 1000
Financial PR Adviser +44 (0)203 709 5700
Consilium Strategic Communications maxcyte@consilium-com
Mary-Jane Elliott
Ashley Tapp
Chris Welsh
--------------------------------------------------------------
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed
to be, forward looking statements. Forward looking statements are
identi ed by their use of terms and phrases such as "believe",
"could", "should", "expect", "envisage", "estimate", "intend",
"may", "plan", "potentially", "will" or the negative of those,
variations or comparable expressions, including references to
assumptions. These forward-looking statements are not based on
historical facts but rather on the Directors' current expectations
and assumptions regarding the Company's future growth, results of
operations, performance, future capital and other expenditures
(including the amount, nature and sources of funding thereof),
competitive advantages, business prospects and opportunities. Such
forward looking statements re ect the Directors' current beliefs
and assumptions and are based on information currently available to
the Directors.
A number of factors could cause actual results to differ
materially from the results and expectations discussed in the
forward-looking statements, many of which are beyond the control of
the Company. In particular, the outcome of clinical trials
(including, but not limited to the Company's CARMA trial) may not
be favourable, potential milestone payments associated with the
Company's licensed programmes may not be received or the ability to
enter into future partnered programmes may be limited. In addition,
other factors which could cause actual results to differ materially
include risks associated with vulnerability to general economic and
business conditions, competition, regulatory changes, actions by
governmental authorities, the availability of capital markets,
reliance on key personnel, ability to attract new talent, uninsured
and underinsured losses, any future litigation and other factors.
Although any forward-looking statements contained in this
announcement are based upon what the Directors believe to be
reasonable assumptions, the Company cannot assure investors that
actual results will be consistent with such forward looking
statements. Accordingly, readers are cautioned not to place undue
reliance on forward looking statements. Subject to any continuing
obligations under applicable law or any relevant AIM Rule
requirements, in providing this information the Company does not
undertake any obligation to publicly update or revise any of the
forward-looking statements or to advise of any change in events,
conditions or circumstances on which any such statement is
based.
MaxCyte, Incorporated
Unaudited Consolidated Condensed Financial Statements
as of 30 June 2020 and 31 December 2019
and for the six months ended
30 June 2020 and 2019
MaxCyte, Inc.
Unaudited Condensed Consolidated Balance Sheets
(amounts in U.S. dollars)
31 December
30 June 2020 2019
------------------------- ---------------------------
Assets
Current assets:
Cash and cash equivalents $ 38,171,700 $ 15,210,800
Short-term investments, at
amortised cost - 1,497,800
Accounts receivable, net 3,747,300 3,244,500
Inventory 4,156,700 3,701,800
Other current assets 787,400 797,100
------------------------- ---------------------------
Total current assets 46,863,100 24,452,000
Property and equipment, net 4,152,800 3,280,100
Right of use asset - operating
leases 1,995,100 2,253,300
Right of use asset - finance
leases 266,000 -
Other assets 100,000 -
Total assets $ 53,377,000 $ 29,985,400
========================= ===========================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 704,100 $ 2,089,400
Accrued expenses and other 2,849,900 3,551,600
Operating lease liability,
current 539,300 508,900
Deferred revenue 5,072,200 3,193,200
------------------------- ---------------------------
Total current liabilities 9,165,500 9,343,100
Note payable, net of discount and deferred fees 4,906,100 4,895,300
Operating lease liability,
net of current portion 1,527,900 1,807,100
Other liabilities 567,900 338,100
------------------------- ---------------------------
Total liabilities 16,167,400 16,383,600
------------------------- ---------------------------
Commitments and contingencies (Note 8)
Stockholders' equity
Common stock, $0.01 par; 200,000,000 shares
authorised,
76,585,006 and 57,403,583 shares issued and
outstanding
at 30 June 2020 and 31 December 2019,
respectively. 765,900 574,000
Additional paid-in capital 125,915,600 96,433,700
Accumulated deficit (89,471,900) (83,405,900)
------------------------- ---------------------------
Total stockholders' equity 37,209,600 13,601,800
------------------------- ---------------------------
Liabilities and stockholders' equity $ 53,377,000 $ 29,985,400
========================= ===========================
See accompanying notes to the consolidated financial
statements.
MaxCyte, Inc.
Unaudited Condensed Consolidated Statements of Operations
For the Six Months Ended 30 June,
(amounts in U.S. dollars)
2020 2019
------------------------------------ -------------------
Revenue $ 10,892,400 $ 8,373,300
Costs of goods sold 1,125,300 1,043,200
------------------------------------ -------------------
Gross profit 9,767,100 7,330,100
------------------------------------ -------------------
Operating expenses:
Research and development 8,335,100 9,695,000
Sales and marketing 3,894,000 3,824,200
General and administrative 3,370,900 2,769,600
------------------------------------ -------------------
Total operating expenses 15,600,000 16,288,800
Operating loss (5,832,900) (8,958,700)
------------------------------------ -------------------
Other income (expense):
Interest and other
expense (281,800) (609,800)
Interest and other
income 48,700 94,300
------------------------------------ -------------------
Total other income (expense) (233,100) (515,500)
------------------------------------ -------------------
Net loss $ (6,066,000) $ (9,474,200)
==================================== ===================
Basic and diluted net loss per common share $ (0.10) $ (0.17)
==================================== ===================
Weighted average common shares outstanding, basic
and diluted 61,619,280 55,376,683
==================================== ===================
See accompanying notes to the consolidated financial
statements.
MaxCyte, Inc.
Unaudited Condensed Consolidated Statements of Changes in Stockholders'
Equity
For the Six Months Ended 30 June,
(amounts in U.S. dollars)
Additional
Paid-in Accumulated Total Stockholders'
Common Stock Capital Deficit Equity
-------------------------------------------- --------------------- ------------------------ --------------------
Shares Amount
Balance 1
January
2019 51,332,764 $ 513,300 $82,729,300 $ (70,510,900) $ 12,281,700
Issuance of
stock
in public
offering 5,908,319 59,100 12,271,200 - 12,330,300
Stock-based
compensation
expense - - 823,900 - 823,900
Exercise of
stock
options 147,500 1,500 116,100 - 117,600
Net loss - - - (9,474,200) (9,474,200)
--------------------- --------------------- --------------------- ------------------------ --------------------
Balance 30
June
2019 57,388,583 $ 573,900 $ 95,490,500 $ (79,985,100) $ 16,079,300
===================== ===================== ===================== ======================== ====================
Additional
Paid-in Accumulated Total Stockholders'
Common Stock Capital Deficit Equity
---------------------------------------------- ---------------------- ------------------------ --------------------
Shares Amount
Balance 1
January
2020 57,403,583 $ 574,000 $ 96,433,700 $ (83,405,900) $ 13,601,800
Issuance of
stock
in public
offering 19,181,423 191,900 28,375,300 - 28,567,200
Stock-based
compensation
expense - - 1,106,600 - 1,106,600
Net loss - - - (6,066,000) (6,066,000)
---------------------- ---------------------- ---------------------- ------------------------ --------------------
Balance 30
June
2020 76,585,006 $ 765,900 $125,915,600 $ (89,471,900) $ 37,209,600
====================== ====================== ====================== ======================== ====================
See accompanying notes to the consolidated financial
statements.
MaxCyte, Inc.
Unaudited Condensed Consolidated Statements of Cash Flow
For the Six Months Ended 30 June,
(amounts in U.S. dollars)
2020 2019
----------------------- ------------------------
Cash flows from operating activities:
Net loss $ (6,066,000) $ (9,474,200)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortisation on property
and equipment, net 478,200 256,600
Net book value of consigned equipment
sold 12,000 -
Loss on disposal of fixed assets - 2,300
Fair value adjustment of liability classified
warrant 51,300 -
Stock-based compensation 1,106,600 823,900
Bad debt (recovery) expense (117,200) 5,000
Amortisation of discounts on short-term
investments (1,100) (12,500)
Non-cash interest expense 10,800 49,200
Changes in operating assets and liabilities:
Accounts receivable (385,600) 1,957,600
Inventory (608,900) (1,521,800)
Other current assets 9,700 (52,000)
Right of use asset - operating leases 258,200 227,100
Right of use asset - finance lease 35,700 -
Other assets (100,000) -
Accounts payable, accrued expenses and
other (2,339,200) 201,600
Operating lease liability (248,800) -
Deferred revenue 1,879,000 1,468,800
Other liabilities (14,300) (284,400)
----------------------- ------------------------
Net cash used in operating activities (6,039,600) (6,352,800)
----------------------- ------------------------
Cash flows from investing activities:
Purchases of short-term investments (1,001,100) (3,436,400)
Maturities of short-term investments 2,500,000 3,200,000
Purchases of property and equipment (1,049,900) (532,700)
----------------------- ------------------------
Net cash provided by (used in) investing
activities 449,000 (769,100)
----------------------- ------------------------
Cash flows from financing activities:
Net proceeds from sale of common stock 28,567,200 12,330,300
Borrowings under notes payable 1,440,000 -
Principal payments on notes payable (1,440,000) (5,105,500)
Procced from exercise of stock options - 117,600
Principal payments on finance leases (15,700) -
Net cash provided by financing activities 28,551,500 7,342,400
----------------------- ------------------------
Net increase in cash and cash equivalents 22,960,900 220,500
Cash and cash equivalents, beginning of
period 15,210,800 11,248,000
Cash and cash equivalents, end of period $ 38,171,700 $ 11,468,500
======================= ========================
Supplemental cash flow information:
Cash paid for interest $ 210,700 $ 650,100
Supplemental non-cash information:
Property and equipment purchases included
in accounts payable $ 159,000 $ 9,000
See accompanying notes to the consolidated financial
statements.
1. Organization and Description of Business
MaxCyte, Inc. (the "Company" or "MaxCyte") was incorporated as a
majority owned subsidiary of EntreMed, Inc. ("EntreMed") on 31 July
1998, under the laws and provisions of the state of Delaware and
commenced operations on 01 July 1999. In November 2002, MaxCyte was
recapitalised and EntreMed was no longer deemed to control the
Company.
MaxCyte is a global life sciences company utilizing its
proprietary cell engineering technology to enable the programmes of
its biotechnology and pharmaceutical company customers who are
engaged in cell therapy, including gene editing and
immuno-oncology, and in drug discovery and development and
biomanufacturing. The Company licenses and sells its instruments
and technology and sells its consumables to developers of cell
therapies and to pharmaceutical and biotechnology companies for use
in drug discovery and development and biomanufacturing. In early
2020, the Company established a wholly owned subsidiary , CARMA
Cell Therapies, Inc. ("CCTI"), as part of its continued development
of CARMA, MaxCyte's proprietary, mRNA-based, clinical-stage,
immuno-oncology cell therapy .
The COVID-19 pandemic has disrupted economic markets and the
economic impact, duration and spread of related effects is
uncertain at this time and difficult to predict. As a result, it is
not possible to ascertain the overall future impact of COVID-19 on
the Company's business and, depending upon the extent and severity
of such effects, including, but not limited to potential slowdowns
in customer operations, extension of sales cycles, shrinkage in
customer capital budgets or delays in customers' clinical trials,
the pandemic could have a material adverse effect on the Company's
business, results of operations, financial condition and cash
flows.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared in
accordance with accounting principles generally accepted in the
United States of America ("U.S. GAAP"). These unaudited interim
condensed financial statements do not include all the information
and footnotes required by U.S. GAAP for complete audited financial
statements. These unaudited interim condensed financial statements
should be read in conjunction with the audited financial statements
and accompanying notes for the year ended 31 December 2019. In the
opinion of management, the unaudited interim condensed financial
statements reflect all the adjustments (consisting of normal
recurring adjustments) necessary to state fairly the Company's
financial position as of 30 June 2020 and the results of operations
for the six months ended 30 June 2020 and 2019. The interim
condensed results of operations are not necessarily indicative of
the results that may occur for the full fiscal year. The 31
December 2019 balance sheet included herein was derived from the
audited financial statements, but do not include all disclosures
including notes required by U.S. GAAP for complete audited
financial statements.
Use of Estimates
The preparation of financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of revenues and
expenses during the reporting period. In the accompanying financial
statements, estimates are used for, but not limited to, revenue
recognition, stock-based compensation, allowance for doubtful
accounts, allowance for inventory obsolescence, accruals for
contingent liabilities, accruals for clinical trials, deferred
taxes and valuation allowance, and the depreciable lives of fixed
assets. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of
the Company and its wholly owned subsidiary, CCTI. All significant
intercompany balances have been eliminated in consolidation.
Concentration
During the six months ended 30 June 2020, two customers
represented 28% of revenue, in part due to certain one-time
milestone events. During the six months ended 30 June 2019, no
single customer represented more than 10% of net revenues. No
customer represented over 10% of net accounts receivable at 30 June
2020 or 2019.
During the six months ended 30 June 2020, the Company purchased
approximately 57% of its inventory from two suppliers. During the
six months ended 30 June 2019, the Company purchased approximately
57% of its inventory from a single supplier. For the six months
ended 30 June 2020 and 2019, amounts payable to these suppliers
totalled 10% and 22% of total accounts payable, respectively.
Foreign Currency
The Company's functional currency is the U.S. dollar;
transactions denominated in foreign currencies are transacted at
the exchange rate in effect at the date of each transaction.
Differences in exchange rates during the period between the date a
transaction denominated in foreign currency is consummated and the
date on which it is either settled or at the reporting date are
recognised in the Consolidated Statements of Operations as general
and administrative expense. The Company recognised $16,700 and
$21,100 of foreign currency transaction losses for the six months
ended 30 June 2020 and 2019, respectively.
Fair Value
Fair value is the price that would be received from the sale of
an asset or paid to transfer a liability assuming an orderly
transaction in the most advantageous market at the measurement
date. U.S. GAAP establishes a hierarchical disclosure framework
which prioritises and ranks the level of observability of inputs
used in measuring fair value. These tiers include:
-- Level 1-Quoted prices (unadjusted) in active markets that are
accessible at the measurement date for identical assets or
liabilities. The fair value hierarchy gives the highest priority to
Level 1 inputs.
-- Level 2-Observable market-based inputs other than quoted
prices in active markets for identical assets or liabilities.
-- Level 3-Unobservable inputs are used when little or no market
data is available. The fair value hierarchy gives the lowest
priority to Level 3 inputs.
See Note 6 for additional information regarding fair value.
Cash, Cash Equivalents and Short-term Investments
Cash and cash equivalents consist of financial instruments
including money market funds and commercial paper with original
maturities of less than 90 days. Short-term investments consist of
commercial paper with original maturities greater than 90 days and
less than 1 year. All money market funds, and commercial paper are
recorded at amortised cost unless they are deemed to be impaired on
an other-than-temporary basis, at which time they are recorded at
fair value using Level 2 inputs.
At 30 June 2020, the Company's investments consisted solely of
$7,241,500 of money market funds classified as cash
equivalents.
The following table summarizes the Company's investments at 31
December 2019:
Gross unrecognised Gross unrecognised
Amortised holding holding Aggregate
Description Classification cost gains losses fair value
Money market Cash
funds equivalents $ 10,037,000 $ - $ - $ 10,037,000
Commercial Cash
Paper equivalents 1,399,700 - - 1,399,700
Commercial Short-term
Paper investments 1,497,800 400 - 1,498,200
------------------- ------------------------- ----------------------- -----------------
Total Investments $ 12,934,500 $ 400 $ - $ 12,934,900
=================== ========================= ======================= =================
At times the Company's cash balances may exceed federally
insured limits and cash may also be deposited in foreign bank
accounts that are not covered by federal deposit insurance. The
Company does not believe that this results in any significant
credit risk.
Inventory
The Company sells or licenses products to customers. The Company
uses the average cost method of accounting for its inventory and
adjustments resulting from periodic physical inventory counts are
reflected in costs of goods sold in the period of the adjustment.
Inventory is carried at the lower of cost or net realisable value.
Inventory consisted of the following at:
30 June 31 December
2020 2019
-------------- ------------------
Raw materials inventory $ 2,029,900 $ 1,318,600
Finished goods inventory 2,126,800 2,383,200
Total Inventory $ 4,156,700 $ 3,701,800
============== ==================
The Company determined no allowance for obsolescence was
necessary at 30 June 2020 or December 2019.
Accounts Receivable
Accounts receivable are reduced by an allowance for doubtful
accounts, if needed. The allowance for doubtful accounts reflects
the best estimate of probable losses determined principally on the
basis of historical experience and specific allowances for known
troubled accounts. All accounts or portions thereof that are deemed
to be uncollectible or to require an excessive collection cost are
written off to the allowance for doubtful accounts. The Company
recorded an allowance of $117,200 at 31 December 2019. This amount
was subsequently collected and the allowance was reversed in the
six months ended 30 June 2020. The Company determined no allowance
was necessary at 30 June 2020.
Property and Equipment
Property and equipment are stated at cost. Depreciation is
computed using the straight-line method. Office equipment
(principally computers) is depreciated over an estimated useful
life of three years. Laboratory equipment is depreciated over an
estimated useful life of five years. Furniture is depreciated over
a useful life of seven years. Leasehold improvements are amortised
over the shorter of the estimated lease term or useful life.
Instruments represent equipment held at a customer's site that is
typically leased to customers on a short-term basis and is
depreciated over an estimated useful life of five years.
Property and equipment include capitalised costs to develop
internal-use software. Applicable costs are capitalised during the
development stage of the project and include direct internal costs,
third-party costs and allocated interest expenses as
appropriate.
Property and equipment consist of the following:
30 June 31 December
2020 2019
-------------- ---------------
Furniture and equipment $ 2,923,300 $ 2,311,800
Instruments 1,364,400 1,223,700
Leasehold improvements 640,100 635,100
Internal-use software under
development 63,200 30,300
Internal-use software 1,628,600 1,277,300
Accumulated depreciation
and amortisation (2,466,800) (2,198,100)
Property and equipment,
net $ 4,152,800 $ 3,280,100
============== ===============
For the six months ended 30 June 2020 and 2019, the Company
transferred $154,000 and $270,100, respectively of instruments
previously classified as inventory to property and equipment leased
to customers.
For the six months ended 30 June 2020 and 2019, the Company
incurred depreciation and amortisation expense of $478,200 and
$256,600 respectively. Maintenance and repairs are charged to
expense as incurred.
In the six months ended 30 June 2020 and 2019, the Company
capitalised approximately $8,200 and $9,800 of interest expense
related to capitalised software development projects.
Management reviews property and equipment for impairment
whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability
of the long-lived asset is measured by a comparison of the carrying
amount of the asset to future undiscounted net cash flows expected
to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognised is measured by the amount
by which the carrying amount of the assets exceeds the estimated
fair value of the assets. The Company recognised no impairment in
either of the six months ended 30 June 2020 or 2019.
Revenue Recognition
The Company analyzes contracts to determine the appropriate
revenue recognition using the following steps: (i) identification
of contracts with customers, (ii) identification of distinct
performance obligations in the contract, (iii) determination of
contract transaction price, (iv) allocation of contract transaction
price to the performance obligations and (v) determination of
revenue recognition based on timing of satisfaction of the
performance obligations.
In some arrangements, product and services have been sold
together representing distinct performance obligations. In such
arrangements the Company allocates the sale price to the various
performance obligations in the arrangement on a relative selling
price basis. Under this basis, the Company determines the estimated
selling price of each performance obligation in a manner that is
consistent with that used to determine the price to sell the
deliverable on a standalone basis.
The Company recognises revenue upon the satisfaction of its
performance obligation (generally upon transfer of control of
promised goods or services to its customers) in an amount that
reflects the consideration to which it expects to be entitled in
exchange for those goods or services.
The Company defers incremental costs of obtaining a customer
contract and amortises the deferred costs over the period that the
goods and services are transferred to the customer. The Company had
no material incremental costs to obtain customer contracts in any
period presented.
Deferred revenue results from amounts billed in advance to
customers or cash received from customers in advance of services
being provided.
Research and Development Costs
Research and development costs consist of independent
proprietary research and development costs and the costs associated
with work performed for fees from third parties. Research and
development costs are expensed as incurred. Research costs
performed for fees paid by customers are included in cost of goods
sold.
Stock-Based Compensation
The Company grants stock-based awards in exchange for employee,
consultant and non-employee director services. The value of the
award is recognised as expense on a straight-line basis over the
requisite service period.
The Company utilises the Black-Scholes option pricing model for
estimating fair value of its stock options granted. Option
valuation models, including the Black-Scholes model, require the
input of highly subjective assumptions, and changes in the
assumptions used can materially affect the grant-date fair value of
an award. These assumptions include the expected volatility,
expected dividend yield, risk-free rate of interest and the
expected life of the award. A discussion of management's
methodology for developing each of the assumptions used in the
Black-Scholes model is as follows:
Expected volatility
Volatility is a measure of the amount by which a financial
variable such as a share price has fluctuated (historical
volatility) or is expected to fluctuate (expected volatility)
during a period. The Company does not currently have sufficient
history with its common stock subsequent to its 2016 initial public
offering to determine its actual volatility. The Company has been
able to identify several public entities of similar size,
complexity and stage of development; accordingly, historical
volatility has been calculated at between 49% and 52% for the six
months ended 30 June 2020 and at 49% for the six months ended 30
June 2019 using the volatility of these companies.
Expected dividend yield
The Company has never declared or paid common stock dividends
and has no plans to do so in the foreseeable future. Additionally,
the Company's long-term debt agreement restricts the payment of
cash dividends.
Risk-free interest rate
This approximates the U.S. Treasury rate for the day of each
option grant during the year, having a term that closely resembles
the expected term of the option. The risk-free interest rate was
between 0.4% and 1.7% for the six months ended 30 June 2020 and
2.3% and 2.6% for the six months ended 30 June 2019.
Expected term
This is the period that the options granted are expected to
remain unexercised. Options granted have a maximum term of ten
years. The Company estimates the expected term of the options to be
approximately 6 years for options with a standard four-year vesting
period, using the simplified method. Over time, management intends
to track estimates of the expected term of the option term so that
estimates will approximate actual behaviour for similar
options.
Expected forfeiture rate
The Company records forfeitures as they occur.
Income Taxes
The Company uses the asset and liability method of accounting
for income taxes. Deferred tax assets and liabilities are
determined based on differences between the financial reporting and
tax basis of assets and liabilities and are measured using the
enacted tax rates and laws that are expected to be in effect when
the differences are expected to reverse. The effect on deferred tax
assets and liabilities of a change in tax rates is recognised in
the period that such tax rate changes are enacted. The measurement
of a deferred tax asset is reduced, if necessary, by a valuation
allowance if it is more-likely-than-not that all or a portion of
the deferred tax asset will not be realised.
Management uses a recognition threshold and a measurement
attribute for the financial statement recognition and measurement
of tax positions taken or expected to be taken in a tax return, as
well as guidance on derecognition, classification, interest and
penalties and financial statement reporting disclosures. For those
benefits to be recognised, a tax position must be
more-likely-than-not to be sustained upon examination by taxing
authorities. The Company recognises interest and penalties accrued
on any unrecognised tax exposures as a component of income tax
expense. The Company has not identified any uncertain income tax
positions that could have a material impact to the consolidated
financial statements.
The Company is subject to taxation in various jurisdictions in
the United States and abroad and remains subject to examination by
taxing jurisdictions for 2015 and all subsequent periods. The
Company had a Federal Net Operating Loss ("NOL") carry forward of
$48.9 million as of 31 December 2019, which was generally available
as a deduction against future income for US federal corporate
income tax purposes, subject to applicable carryforward
limitations. As a result of the March 2016 initial public offering,
the Company's NOLs are limited on an annual basis, subject to
certain carryforward provisions, pursuant to Section 382 of the
Internal Revenue Code of 1986, as amended, as a result of a greater
than 50% change in ownership that occurred in the three-year period
ending at the time of the March AIM IPO. The Company has calculated
that for the period ending 31 December 2022, the cumulative
limitation amount exceeds the NOLs subject to the limitation.
Leases
Right-of-use ("ROU") assets represent the Company's right to use
an underlying asset for the lease term and lease liabilities
represent its obligation to make lease payments arising from the
lease. In transactions where the Company is the lessee, at the
inception of a contract, the Company determines if the arrangement
is, or contains, a lease. Operating lease ROU assets and
liabilities are recognised at commencement date based on the
present value of lease payments over the lease term. Lease expense
is recognised on a straight-line basis over the lease term.
The Company has made certain accounting policy elections for
leases where it is the lessee whereby the Company (i) does not
recognise ROU assets or lease liabilities for short-term leases
(those with original terms of 12-months or less) and (ii) combines
lease and non-lease elements of its operating leases. See Note 9
for additional details over leases where the Company is the
lessee.
All transactions where the Company is the lessor are short-term
(one year or less) and have been classified as operating leases.
All leases require upfront payments covering the full period of the
lease and thus, there are no future payments expected to be
received from existing leases. See Note 3 for details over revenue
recognition related to lease agreements.
Loss Per Share
Basic loss per share is computed by dividing net loss available
to common shareholders by the weighted average number of shares of
Common Stock outstanding during the period.
For periods of net income, and when the effects are not
anti-dilutive, diluted earnings per share is computed by dividing
net income available to common shareholders by the weighted-average
number of shares outstanding plus the impact of all potential
dilutive common shares, consisting primarily of common stock
options and stock purchase warrants using the treasury stock
method.
For periods of net loss, diluted loss per share is calculated
similarly to basic loss per share because the impact of all
dilutive potential common shares is anti-dilutive. The number of
anti-dilutive shares, consisting of stock options and stock
purchase warrants, which has been excluded from the computation of
diluted loss per share, was 12.4 million and 9.9 million for the
six months ended 30 June 2020 and 2019, respectively.
Recent Accounting Pronouncements
Recently Adopted
On January 1, 2020, the Company adopted new guidance addressing
the accounting for implementation, setup and other upfront costs
paid by a customer in a cloud computing or hosting arrangement. The
guidance aligns the accounting treatment of these costs incurred in
a hosting arrangement treated as a service contract with the
requirements for capitalisation and amortisation costs to develop
or obtain internal-use software. The adoption did not have a
material effect on the Company's consolidated financial
statements.
Unadopted
In June 2016, the FASB issued guidance with respect to measuring
credit losses on financial instruments, including trade
receivables. The guidance eliminates the probable initial
recognition threshold that was previously required prior to
recognising a credit loss on financial instruments. The credit loss
estimate can now reflect an entity's current estimate of all future
expected credit losses. Under the previous guidance, an entity only
considered past events and current conditions.
The guidance is effective for fiscal years beginning after 15
December 2022, including interim periods within those fiscal years.
Early adoption is permitted for fiscal years beginning after 15
December 2018, including interim periods within those fiscal years.
The adoption of certain amendments of this guidance must be applied
on a modified retrospective basis and the adoption of the remaining
amendments must be applied on a prospective basis. The Company is
currently evaluating the impact, if any, that this new accounting
pronouncement will have on its consolidated financial
statements.
In August 2020, the FASB issued guidance with respect to (i)
accounting for convertible instruments, (ii) accounting for
contracts in an entity's own equity as derivatives and (iii)
earnings per share calculations. The guidance attempts to simplify
the accounting for convertible instruments by eliminating the
requirement to separate embedded conversion options in certain
circumstances. The guidance also provides for updated disclosure
requirements for convertible instruments. The guidance further
updates the criteria for determining whether a contract in an
entity's own equity can be classified as equity. Lastly, the
guidance specifically addresses how to account for the effect of
convertible instruments and potential cash settled instruments in
calculating diluted earnings per share. The guidance is effective
for fiscal years beginning after 15 December 2021, including
interim periods within those fiscal years. Early adoption is
permitted for fiscal years beginning after 15 December 2020,
including interim periods within those fiscal years. The adoption
of this guidance may be applied on a modified retrospective basis
or a full retrospective basis. The Company is currently evaluating
the impact, if any, that this new accounting pronouncement will
have on its consolidated financial statements.
The Company has evaluated all other issued and unadopted
Accounting Standards Updates and believes the adoption of these
standards will not have a material impact on its results of
operations, financial position, or cash flows.
3. Revenue
Revenue is principally from the sale or lease of instruments and
processing assemblies, as well as from extended warranties. In some
arrangements, product and services have been sold together
representing distinct performance obligations. In such arrangements
the Company allocates the sale price to the various performance
obligations in the arrangement on a relative selling price basis.
Under this basis, the Company determines the estimated selling
price of each performance obligation in a manner that is consistent
with that used to determine the price to sell the deliverable on a
standalone basis.
Revenue is recognised at the time control is transferred to the
customer and the performance obligation is satisfied. Revenue from
the sale of instruments and processing assemblies is generally
recognised at the time of shipment to the customer, provided no
significant vendor obligations remain and collectability is
reasonably assured. Revenue from equipment leases are recognised
ratably over the contractual term of the lease agreement and when
specific milestones are achieved by a customer. Licensing fee
revenue is recognised ratably over the licence period. Revenue from
fees for research services is recognised when services have been
provided.
Disaggregated revenue for the six months ended 30 June 2020 is
as follows:
Revenue Revenue
from Contracts from Lease
with Customers Elements Total Revenue
--------------------
Product Sales $ 5,439,500 $ - $ 5,439,500
Leased Elements - 5,252,100 5,252,100
Other 200,800 - 200,800
Total $ 5,640,300 $ 5,252,100 $ 10,892,400
==================== ============== ================
Disaggregated revenue for the six months ended 30 June 2019 is
as follows:
Revenue Revenue
from Contracts from Lease
with Customers Elements Total Revenue
--------------------
Product Sales $ 4,828,900 $ - $ 4,828,900
Leased Elements - 3,380,900 3,380,900
Other 163,500 - 163,500
Total $ 4,992,400 $ 3,380,900 $8,373,300
==================== ============== ================
Additional disclosures relating to Revenue from Contracts with
Customers
Changes in deferred revenue for the six months ended 30 June
2020 were as follows:
Balance at 1 January 2020 $3,452,800
Revenue recognised in the current
period from
amounts included in the beginning
balance 2,527,400
Current period deferrals, net of
amounts
recognised in the current period 4,377,000
Balance at 30 June
2020 $ 5,302,400
==========================
Changes in deferred revenue for the six months ended 30 June
2019 were as follows:
Balance at 1 January 2019 $2,770,100
Revenue recognised in the current
period from
amounts included in the beginning
balance 1,849,500
Current period deferrals, net of
amounts
recognised in the current period 3,162,600
Balance at 30
June 2019 $4,083,200
================
Remaining contract consideration for which revenue has not been
recognised due to unsatisfied performance obligations with a
duration greater than one year was approximately $316,800 at 30
June 2020 of which the Company expects to recognise approximately
$86,600 in 2021, $86,600 in 2022, $51,400 in 2023 $37,400 in 2024
and $54,800 thereafter.
In the six months ended 30 June 2020 and 2019, the Company did
not incur, and therefore did not defer, any material incremental
costs to obtain contracts or costs to fulfill contracts.
4. Debt
The Company originally entered into a credit facility with
Midcap Financial SBIC, LP ("MidCap") in March 2014. In February
2019, the Company paid off the MidCap credit facility in full in
accordance with its terms and conditions.
In November 2019, the Company entered into a new credit facility
with MidCap. The credit facility provided for a $5 million term
loan maturing on 01 November 2024. The term loan provides for (i)
an interest rate of one-month Libor plus 6.5% with a 1.5% Libor
floor, (ii) monthly interest payments, (iii) 30 monthly principal
payments of approximately $166,700 beginning June 2022 and (iv) a
3% final payment fee. The Company used the proceeds from the credit
facility for general operating purposes. The debt is collateralized
by substantially all assets of the Company.
In conjunction with the credit facility the Company issued the
lender a warrant to purchase 71,168 shares of common stock at a
price of GBP1.09081. The warrant is exercisable at any time through
the tenth anniversary of issuance (see Note 5). In connection with
the credit facility, the Company also incurred expenses of
approximately $47,300. The warrant and expenses resulted in
recording a debt discount which is amortised as interest expense
over the term of the loan. At 30 June 2020, the term loan had an
outstanding principal balance of $5 million and $93,900 of
unamortised debt discount.
In April 2020, the Company received a loan from Silicon Valley
Bank in the amount of $1,440,000 under the US Small Business
Administration's Paycheck Protection Program ("PPP"). The PPP was
established as part of the US Coronavirus Aid, Relief, and Economic
Security ("CARES") Act and provides for potential forgiveness of
the loan upon the Company meeting certain conditions as to the use
of the proceeds. The loan provided for interest at 1% and a
maturity date of April 2022. In May 2020, subsequent to the
Company's equity raise, the Company repaid the loan in full.
5. Stockholders' Equity
Common Stock
In March 2019, the Company completed an equity capital raise
issuing approximately 5.9 million shares of Common Stock at a price
of LIR1.70 (or approximately $2.25) per share. The transaction
generated gross proceeds of approximately LIR10 million (or
approximately $13.3 million). In conjunction with the transaction,
the Company incurred costs of approximately $1.0 million which
resulted in the Company receiving net proceeds of approximately
$12.3 million.
In May 2020, the Company completed an equity capital raise
issuing 19,181,423 shares of its common stock at a price of LIR1.31
(or approximately $1.60) per share in an unregistered offering. The
transaction generated gross proceeds of approximately LIR25.1
million (or $30.5 million). In conjunction with the transaction,
the Company incurred costs of approximately $1.9 million which
resulted in the Company receiving net proceeds of approximately
$28.6 million.
During the year six months ended 31 June 2019, the Company
issued 147,500 shares of Common Stock as a result of stock option
exercises, receiving gross proceeds of $117,600. There were no
options exercises in the six months ended 30 June 2020.
Warrant
In connection with the November 2019 credit facility the Company
issued the lender a warrant to purchase 71,168 shares of common
stock at an exercise price of GBP 1.09081. The warrant is
exercisable at any time through the tenth anniversary of issuance.
The warrant is classified as a liability as its strike price is in
a currency other than the Company's functional currency. The
warrant is recorded at fair value each reporting period with
changes going through the statement of operations (see Note 6).
Stock Options
The Company adopted the MaxCyte, Inc. Long-Term Incentive Plan
(the "Plan") in January of 2016 to amend and restate the MaxCyte
2000 Long-Term Incentive Plan to provide for the awarding of (i)
stock options, (ii) restricted stock, (iii) incentive shares, and
(iv) performance awards to employees, officers, and directors of
the Company and to other individuals as determined by the Board of
Directors. Under the Plan, as amended, the maximum number of shares
of Common Stock of the Company that the Company may issue is (a)
6,264,682 shares plus (b) ten percent (10%) of the shares that are
issued and outstanding at the time awards are made under the
Plan.
On 21 February 2018 and 10 December 2019, the Company's Board
resolved to increase the number of stock options under the Plan by
2,000,000 and 3,000,000, respectively to provide sufficient shares
to allow competitive equity compensation in its primary markets for
staff and consistent with practices of comparable companies.
The Company has not issued any restricted stock, incentive
shares, or performance awards under the Plan. Stock options granted
under the Plan may be either incentive stock options as defined by
the Internal Revenue Code or non-qualified stock options. The Board
of Directors determines who will receive options under the Plan and
determines the vesting period. The options can have a maximum term
of no more than 10 years. The exercise price of options granted
under the Plan is determined by the Board of Directors and must be
at least equal to the fair market value of the Common Stock of the
Company on the date of grant.
In the six months ended 30 June 2020, the Company granted
2,292,400 stock options with a weighted-average exercise price of
$1.73 per share. The weighted-average fair value of the options
granted during the six months ended 30 June 2020 and 2019 was
estimated to be $0.87 and $1.60, respectively.
At 30 June 2020, there were 12,308,400 stock options outstanding
with a weighted-average exercise price of $1.54 per share. As of 30
June 2020, total unrecognised compensation expense was $5,267,700
which will be recognized over the next 4.0 years.
Stock-based compensation expense for the six months ended 30
June was as follows:
2020 2019
-------------
General and administrative $ 519,900 $ 85,800
Sales and marketing 218,000 146,300
Research and development 368,700 291,800
Total $ 1,106,600 $823,900
============= ==========
6. Fair Value
The Company's Consolidated Balance Sheets include various
financial instruments (primarily cash and cash equivalents,
short-term investments, accounts receivable and accounts payable)
that are carried at cost, which approximates fair value due to the
short-term nature of the instruments. Notes payable are reflective
of fair value based on market comparable instruments with similar
terms.
Financial Assets and Liabilities Measured at Fair Value on a
Recurring Basis
The Company has an outstanding warrant originally issued in
connection with the November 2019 debt financing (see Note 4) that
is accounted for as a liability whose fair value is determined
using Level 3 inputs. The following table identifies the carrying
amounts of this warrant at 30 June 2020:
Level Level Level 3 Total
1 2
Liabilities
Liability classified
warrant $ - $ - $ 126,000 $ 126,000
-------- -------- ---------- ----------
Total at 30 June
2020 $ - $ - $ 126,000 $ 126,000
======== ======== ========== ==========
The following table identifies the carrying amounts of this
warrant at 31 December 2019:
Level Level Level 3 Total
1 2
Liabilities
Liability classified
warrant $ - $ - $ 74,700 $ 74,700
-------- -------- --------- ---------
Total at 31 December
2019 $ - $ - $ 74,700 $ 74,700
======== ======== ========= =========
The following table presents the activity for those items
measured at fair value on a recurring basis using Level 3 inputs
for the six months ended 30 June 2020:
Mark-to-market
liabilities
- warrant
Balance at 31 December
2019 $ 74,700
Issuance -
Change in fair value 51,300
-------------------------
Balance at 30 June
2020 $ 126,000
=========================
The Company had no recurring Level 3 liabilities in the six
months ended 30 June 2019.
The gains and losses resulting from the changes in the fair
value of the liability classified warrant are classified as other
income or expense in the accompanying statements of operations. The
fair value of the common stock purchase warrants is determined
based on the Black-Scholes option pricing model or other option
pricing models as appropriate and includes the use of unobservable
inputs such as the expected term, anticipated volatility and
expected dividends. Changes in any of the assumptions related to
such unobservable inputs identified above may change the embedded
conversion options' fair value; increases in expected term,
anticipated volatility and expected dividends generally result in
increases in fair value, while decreases in these unobservable
inputs generally result in decreases in fair value.
The Company has no other financial assets or liabilities
measured at fair value on a recurring basis.
Financial Assets and Liabilities Measured at Fair Value on a
Non-Recurring Basis
Money market funds and commercial paper classified as
held-to-maturity are measured at fair value on a non-recurring
basis when they are deemed to be impaired on an
other-than-temporary basis. No such fair value impairment was
recognised during the six months ended 30 June 2020 or 2019.
Non-Financial Assets and Liabilities Measured at Fair Value on a
Recurring Basis
The Company has no non-financial assets and liabilities that are
measured at fair value on a recurring basis.
Non-Financial Assets and Liabilities Measured at Fair Value on a
Non-Recurring Basis
The Company measures its long-lived assets, including property
and equipment, at fair value on a non-recurring basis. These assets
are recognised at fair value when they are deemed to be impaired.
No such fair value impairment was recognised during the six months
ended 30 June 2020 or 2019.
7. Retirement Plan
The Company sponsors a defined-contribution 401(k) retirement
plan covering eligible employees. Participating employees may
voluntarily contribute up to limits provided by the Internal
Revenue Code. The Company matches employee contributions equal to
50% of the salary deferral contributions, with a maximum Company
contribution of 3% of the employees' eligible compensation. In the
six months ended 30 June 2020 and 2019, Company matching
contributions amounted to $142,700 and $111,400, respectively.
8. Commitments and Contingencies
Operating Leases
From 2009 through September 2019 the Company entered into
various new and amended leases for office and laboratory space. A
member of the Company's Board of Directors is the CEO and Board
member of the lessor of certain of these leases for which the rent
payments totaled $310,500 and $157,900 in the six months ended 30
June 2020 and 2019, respectively.
All the Company's office and laboratory leases expire in October
2023 and provide for annual increases to the base rent of between
3% and 5%. The current monthly base lease payment for all office
and laboratory leases is approximately $55,800. In addition to base
rent, the Company pays a pro-rated share of common area maintenance
("CAM") costs for the entire building, which is adjusted annually
based on actual expenses incurred. None of the Company's current
operating leases contain any renewal provisions.
All the Company's office and laboratory leases are classified as
operating leases. The Company used a discount rate of 8% in
calculating its lease liability under its operating leases. The
September 2019 lease agreements and modifications resulted in the
Company establishing approximately $2,209,200 of ROU assets and
$2,247,400 of lease liabilities.
At 30 June 2020, the Company had a $1,995,100 ROU asset, a
$539,300 short-term lease liability and $1,527,900 long-term lease
liability related to its operating leases.
Finance Leases
In 2020, the Company entered into a three-year laboratory
equipment lease that expires in April 2023. The lease provides for
monthly payments of approximately $9,200 per month and includes an
end of lease bargain purchase option. The lease is classified as a
finance lease. The Company used a discount rate of 5.5% in
calculating its lease liability under this finance lease resulting
in the establishment of approximately a $301,700 ROU asset and
offsetting lease liabilities.
At 30 June 2020, the Company had a $266,000 ROU asset, a $97,300
short-term lease liability included in "Accrued expenses and other"
and $192,800 long-term lease liability included in "Other
liabilities" related to its finance lease.
9. Subsequent Events
In preparing these consolidated financial statements, the
Company has evaluated events and transactions for potential
recognition or disclosure through 21 September 2020 the date the
consolidated financial statements were available to be issued.
[1] Information in table is as of 30 June 2020 and 30 June 2019,
respectively.
[2] CARMA investment includes stock-based compensation of $0.1m
and $0.2m in H1 2019 and 2020, respectively.
3 Excluding associated non-cash stock-based compensation of
$0.7m and $0.9m in H1 2019 and H1 2020, respectively.
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IR PPUBPBUPUPGU
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September 21, 2020 02:00 ET (06:00 GMT)
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