# Maxcyte, Inc.: Form 10-Q for the period ended Jun 30, 2023

- Company: [Maxcyte, Inc.](/companies/mxct.md) (CIK 1287098)
- Form: 10-Q
- Filed: 2023-08-09
- Accepted by EDGAR: Aug 9, 2023, 16:55 ET
- Period: 2023-06-30
- Accession: 0001558370-23-014306
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1287098/000155837023014306/mxct-20230630x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1287098/000155837023014306/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-04-01 to 2023-06-30 | $5.6m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2023-01-01 to 2023-06-30 | $10.6m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-04-01 to 2023-06-30 | $1.4m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2023-01-01 to 2023-06-30 | $2.4m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2023-04-01 to 2023-06-30 | $7.7m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2023-01-01 to 2023-06-30 | $15.2m | us-gaap:GrossProfit |
| Research and development | 3 months, 2023-04-01 to 2023-06-30 | $5.7m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2023-01-01 to 2023-06-30 | $11.7m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2023-04-01 to 2023-06-30 | −$13.1m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2023-01-01 to 2023-06-30 | −$26.3m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2023-04-01 to 2023-06-30 | −$10.5m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-01-01 to 2023-06-30 | −$21.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-04-01 to 2023-06-30 | −$0.10 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2023-01-01 to 2023-06-30 | −$0.21 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-04-01 to 2023-06-30 | −$0.10 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-01-01 to 2023-06-30 | −$0.21 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-04-01 to 2023-06-30 | 103,063,606 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2023-01-01 to 2023-06-30 | 102,955,422 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2023-01-01 to 2023-06-30 | −$14.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2023-01-01 to 2023-06-30 | $2.1m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-06-30 | $54.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-06-30 | $236.6m | us-gaap:AssetsCurrent |
| Total assets | at 2023-06-30 | $271.2m | us-gaap:Assets |
| Current liabilities | at 2023-06-30 | $13.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-06-30 | $30.2m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-06-30 | $241.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 48,247 characters.

*You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our audited consolidated financial statements and related notes for the year ended December 31, 2022, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 15, 2023, as well as the information contained under Management’s Discussion and Analysis of Financial Condition and Results of Operations and "Risk Factors" contained in the Annual Report on Form 10-K, and Part II, Item 1A "Risk Factors" of this Quarterly Report on Form 10-Q, and other information provided from time to time in our other filings with the SEC.*

### Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements about us and our industry involve substantial risks, uncertainties, and assumptions, including those described elsewhere in this report. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

- our expected future growth and the success of our business model;
- the potential payments we may receive pursuant to our Strategic Platform Licenses (“SPLs”);
- the size and growth potential of the markets for our products, and our ability to serve those markets, increase our market share and achieve and maintain industry leadership, which ability is dependent upon, among other things, our ability to meet our customer’s expectations and needs relative to their regulatory obligations;
- our ability to expand our customer base and enter into additional SPL partnerships;
- the rate and degree of market acceptance of our products within the cell engineering market;
- the expected future growth of our manufacturing capabilities and sales, support and marketing capabilities;
- our ability to accurately forecast and manufacture appropriate quantities of our products to meet clinical or commercial demand;
- our expectations regarding development of the cell therapy market, including projected growth in adoption of non-viral delivery approaches and gene editing manipulation technologies;
- our expectation that partners will have access to capital markets to develop and commercialize their cell therapy programs;
- our ability to maintain our FDA Master File and Master Files and equivalent Technical Files in other countries and expand Master and Technical Files into additional countries;
- our research and development for any future products, including our intention to introduce new instruments and processing assemblies and move into new applications;
- the development, regulatory approval, and commercialization of competing products and our ability to compete with the companies that develop and sell such products;
- our ability to retain and hire senior management and key personnel;
- regulatory developments in the United States and foreign countries;
- our expectations regarding the period during which we qualify as an emerging growth company under the JOBS Act (as defined below);
- our ability to develop and maintain our corporate infrastructure, including our internal controls;
- our financial performance and capital requirements;
- our expectations regarding our ability to obtain and maintain intellectual property protection for our products, as well as our ability to operate our business without infringing the intellectual property rights of others; and
- our use of available capital resources.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described under the caption “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2022. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this report. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. And while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report to reflect events or circumstances after the date of this Quarterly Report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.

You should read this Quarterly Report and the documents that we file from time to time with the SEC with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

In this Quarterly Report on Form 10-Q, unless the context requires otherwise, all references to “we,” “our,” “us,” “MaxCyte” and the “Company” refer to MaxCyte, Inc.

### Overview

We are a leading commercial cell engineering company providing enabling platform technologies to advance the discovery, development and commercialization of next-generation cell therapeutics and to support innovative cell-based research and development. Over more than two decades, we have developed and commercialized our proprietary Flow Electroporation® platform, which facilitates complex engineering of a wide variety of cells. Electroporation is a method of transfection, or the process of deliberately introducing molecules into cells, that involves applying an electric field in order to temporarily increase the permeability of the cell membrane. This precisely controlled increase in permeability allows the intracellular delivery of molecules, such as genetic material and proteins, that would not normally be able to cross the cell membrane as easily.

Our ExPERT platform, which is based on our Flow Electroporation technology, has been designed to address this rapidly expanding cell therapy market and can be utilized across the continuum of the high-growth cell therapy sector, from discovery and development through commercialization of next-generation, cell-based medicines. The ExPERT™ family of products includes four instruments, which we call the ATx™, STx™, GTx™ and VLx™, as well as a portfolio of proprietary related disposables and consumables. We launched the ExPERT VLx™ instrument for very large-scale cell engineering in September 2022. Our disposables and consumables include processing assemblies (“PAs”) designed for use with our instruments, as well as accessories supporting PAs such as electroporation buffer solution and software protocols. We have garnered meaningful expertise in cell engineering via our internal research and development efforts as well as our customer-focused commercial approach, which includes a growing application scientist team. The platform is also supported by a robust intellectual property portfolio with more than 160 granted U.S. and foreign patents and more than 105 pending patent applications worldwide.

From leading commercial cell therapy drug developers and top biopharmaceutical companies to top academic and government research institutions, including the U.S. National Institutes of Health, our customers have extensively validated our technology. We believe the features and performance of our platform have led to sustained customer engagement. Our existing customer base ranges from large biopharmaceutical companies, including all of the top 10, and 20 of the top 25, pharmaceutical companies based on 2021 global revenue, to hundreds of biotechnology companies and academic centers focused on translational research.

Since our inception, we have incurred significant operating losses. Our ability to generate revenue sufficient to achieve profitability will depend on the successful further development, commercialization adoption and market acceptance of our products. We generated revenue of $17.6 million and incurred a net loss of $21.4 million for the six months ended June 30, 2023. As of June 30, 2023, we had an accumulated deficit of $159.3 million. We expect to continue to incur net losses as we focus on growing commercial sales of our products in both the United States and international markets, including growing our sales force, scaling our manufacturing operations, continuing research and development efforts to develop new products and further enhance our existing products.

### Recent Developments

We have continued to enter into SPL agreements with our cell therapy customers. These agreements are discussed in more detail in “Results of Operations” below and provide us with revenue from instrument sales and leases and disposables sales as well as pre-commercial milestones based on progress of our partners’ programs through the clinic and sales-based payments upon commercialization of our partners’ programs. In 2023, we have signed SPL agreements with Catamaran Bio, Walking Fish Therapeutics, Lyell Immunopharma, Vittoria Biotherapeutics, and Prime Medicine. We continue to grow our SPL pipeline and, while the specific timing of any agreement is uncertain, we expect to sign additional SPL agreements in the future.

### Results of Operations

### Comparison of the Three Months Ended June 30, 2023 and 2022

The following table sets forth our results of operations for the periods presented:

*(in thousands)*

| ​ ​ ​ ​ ​ ​ | ​ ​ ​ Three Months Ended ​ June 30, 2023 ​ ​ ​ | ​ ​ 2022 ​ ​ |
| --- | ---: | --- |
| Total revenue | $9,043 | $9,608 |
| Cost of goods sold | 1,376 | ​ 1,120 |
| Gross profit | 7,667 | ​ 8,487 |
| Operating expense |  | ​ |
| Research and development | 5,664 | ​ 4,696 |
| Sales and marketing | 6,436 | ​ 4,931 |
| General and administrative | 7,663 | ​ 7,103 |
| Depreciation and amortization | ​ 977 | ​ 497 |
| Total operating expense | 20,740 | ​ 17,226 |
| Operating loss | (13,073) | ​ (8,739) |
| Other income (expense) |  | ​ |
| Interest income | 2,562 | ​ 479 |
| Total other income (expense) | 2,562 | ​ 479 |
| Net loss | $(10,512) | $(8,260) |

### Revenue

We generate revenue principally from the sale of instruments and single-use PAs and buffer, and from the lease of instruments to our customers. Our SPL partnerships also include associated clinical progress milestones and sales-based payments to us, in addition to annual lease payments.

In order to evaluate how our sales are trending across key markets, as well as the contribution of program-related revenue from our SPL partnerships, we separately analyze revenue derived from our cell therapy customers and drug discovery customers, as well as the performance-based milestone revenues we recognize under our SPL partnerships. Cell therapy revenues include primarily revenue from instruments sold, annual license fees for instruments under lease, and sales of our proprietary disposables. Drug discovery revenue includes primarily revenue from instruments sold, sales of our proprietary disposables and, occasionally, instruments leased. Program-related revenues include clinical progress milestone and sales-based revenues derived from SPL agreements. Milestone revenues are recognized when a customer achieves the associated milestone event. To date, all program-related revenue has consisted entirely of pre-commercial milestone revenue.

The following table provides details regarding the sources of our revenue for the periods presented:

*(in thousands, except percentages)*

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 ​ | ​ ​ | ​ ​ 2022 ​ | ​ ​ ​ | ​ ​ ​ Change Amount% ​ | ​ ​ ​ | ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: | --- |
| Cell therapy | ​ | $6,637 | ​ | $7,688 | ​ | $(1,051) | (14%) | ​ |
| Drug discovery | ​ | 1,652 | ​ | 1,916 | ​ | (264) | (14%) | ​ |
| Program-related | ​ | 754 | ​ | 4 | ​ | 750 | NM | ​ |
| Total revenue | ​ | $9,043 | ​ | $9,608 | ​ | $(565) | (6%) | ​ |

Total revenue for the three months ended June 30, 2023 was $9.0 million, a decrease of $0.6 million, or 6%, compared to revenue of $9.6 million during the three months ended June 30, 2022.

Our overall decrease in revenue was primarily driven by revenue decreases in the cell therapy and drug discovery markets. In the cell therapy market, revenue from instrument sales and disposable sales decreased by $0.3 million and $0.8 million, respectively, in part due to the timing of purchases by customers. The $0.3 million decrease in the drug discovery market was primarily driven by decrease in instrument sales. The decreases in the cell therapy and drug discovery market were offset by a $0.8 million increase in program-related revenues, which resulted from clinical progress of our SPL customers, consistent with the expected variability of milestone revenues from period to period given the small number of individual triggering events which currently generate this portion of revenue. We expect program-related revenue to experience variability for some time, although we anticipate that this variability may moderate as the volume of SPLs and associated milestones grow.

We expect total revenue to increase over time as our customers’ programs advance and our markets grow, resulting in additional instrument sales and leases and disposable sales and as the percentage of our installed base that are under cell therapy license agreements increases. We expect revenue from disposable and instrument sales and instrument licenses to cell therapy customers to continue to grow as those customers advance their preclinical pipeline programs into clinical development and move their existing drug development programs into later-stage clinical trials and, potentially, into commercialization. In addition, we expect new customers to continue to emerge and contribute to these revenues, based on the underlying growth in the cell therapy pipeline among companies in this market, the extent to which capital is available to support such companies, and in particular the switch by some cell therapy companies away from viral to non-viral approaches. We expect, however, that our revenue will fluctuate from period to period due to the timing of securing product sales and licenses, the inherently uncertain nature of the timing of our partners’ achievements of clinical progress and our dependence on the program decisions of our partners.

### Cost of Goods Sold and Gross Profit

Cost of goods sold primarily consists of costs for instrument and processing assembly components, contract manufacturer costs, salaries, overhead and other direct costs related to sales recognized as revenue in the period. Cost of goods sold associated with instrument lease revenue consists of leased equipment depreciation. Gross profit is calculated as revenue less cost of goods sold. Gross profit margin is gross profit expressed as a percentage of revenue.

Our gross profit in future periods will depend on a variety of factors, including sales mix among instruments, disposables and milestones, the specific mix among types of instruments or disposables, the proportion of revenues associated with instrument leases as opposed to sales, changes in the costs to produce our various products, the launch of new products or changes in existing products, our cost structure for manufacturing including changes in production volumes, and the pricing of our products which may be impacted by market conditions.

During the three months ended June 30, 2023, gross margin was 85%, compared to 88% in the same period of 2022. The decrease in gross margin was principally due to increased costs due to the initial scale-up of our in-house manufacturing processing assemblies. We price our instruments at a premium given what we believe to be the broad benefits of our platform, and the limited availability of alternative, clinically validated non-viral delivery approaches. Instrument pricing also depends upon the customer’s specific market. However, the market for non-viral delivery is highly competitive, and introduction of a GMP-grade platform by a competitor that delivers similar performance across a similar diversity of cell types could negatively impact our business and lead to increased price pressure that negatively impacts our gross margins.

*(in thousands, except percentages)*

| ​ ​ ​ | ​ ​ | ​ ​ Three Months Ended June 30, 2023 ​ | ​ ​ | ​ ​ 2022 ​ | ​ ​ | ​ ​ Change Amount% ​ | ​ ​ | ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Cost of goods sold | ​ | $1,376 | ​ | $1,120 | ​ | $255 | ​ | 23% | ​ |
| Gross profit | ​ | $7,667 | ​ | $8,487 | ​ | $(821) | ​ | (10)% | ​ |
| Gross margin | ​ | ​ 85% | ​ | ​ 88% | ​ | ​ ​ | ​ | ​ | ​ |

Cost of goods sold increased by $0.3 million, or 23%, for the three months ended June 30, 2023 compared to the three months ended June 30, 2022. The increase was primarily driven by increased costs due to initial scale-up of our in-house manufacturing processing assemblies. We initially expect initial higher in-house manufacturing costs due to lower utilization, however, we expect these manufacturing costs will decrease as we improve utilization, gain experience and implement automation.

Gross profit decreased by $0.8 million, or 10%, for the three months ended June 30, 2023 compared to the three months ended June 30, 2022. The decrease was primarily driven by decreased revenue from instrument and disposable sales as well as increased manufacturing costs.

We expect that our cost of goods sold will generally increase or decrease modestly as our instrument and disposables revenue increases or decreases. We expect our gross margin to benefit from realization of program-related revenue from our SPL agreements, to the extent that such revenue grows to be a significant proportion of overall revenues, as there is no cost of goods sold associated with such revenue. However, realization and timing of these potential milestone revenues is uncertain.

### Operating Expenses

#### Research and Development

*(in thousands, except percentages)*

| ​ ​ ​ | ​ ​ | ​ ​ Three Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ | ​ Change Amount% ​ | ​ ​ | ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | --- | ---: | ---: | --- |
| Research and development | ​ | $5,664 | ​ | $4,696 | ​ | ​ | $968 | 21% | ​ |

Research and development expenses consist primarily of costs incurred for our research activities related to advancing our technology and development of applications for our technology, including research into specific applications and associated data development, process development, product development (e.g. development of instruments and disposables, including hardware and software engineering) and design and other costs not directly charged to inventory or cost of goods sold.

These expenses principally include employee-related costs, such as salaries, benefits, incentive compensation, stock-based compensation, and travel, as well as consultant services, facilities, and laboratory supplies and materials. These expenses are exclusive of depreciation and amortization. We expense research and development costs as incurred in the period in which the underlying activity is undertaken.

Research and development expenses increased by $1.0 million, or 21%, for the three months ended June 30, 2023 compared to the three months ended June 30, 2022. The increase was primarily driven by a $0.3 million increase in compensation expenses as a result of increases in headcount, a $0.3 million increase in stock-based compensation, a $0.2 million increase in lab expense, and a $0.1 million increase in professional service fees relating to new product and regulatory consultants.

We believe that our continued investment in research and development is essential to our long-term competitive position. We expect to continue to incur substantial research and development expenses as we invest in research and development to support our customers, develop new uses for our existing technology and develop improved and/or new offerings for our customers and partners. As a result, we expect that our research and development expenses will continue to increase in absolute dollars in future periods and vary from period to period as a percentage of revenue.

#### Sales and Marketing

*(in thousands, except percentages)*

| ​ ​ ​ | ​ ​ | ​ ​ Three Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ | ​ ​ Change Amount% ​ | ​ ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: | --- |
| Sales and marketing | ​ | $6,436 | ​ | $4,931 | ​ | $1,506 | 31% | ​ |

Our sales and marketing expenses consist primarily of salaries, commissions and other variable compensation, benefits, stock-based compensation and travel costs for employees within our commercial sales and marketing functions, as well as third-party costs associated with our marketing activities. These expenses are exclusive of depreciation and amortization.

Sales and marketing expenses increased by $1.5 million, or 31%, for the three months ended June 30, 2023 compared to the three months ended June 30, 2022. The increase was primarily driven by a $0.9 million increase in compensation expenses as a result of increases in headcount, a $0.4 million increase in occupancy expenses, and a $0.2 million increase in stock-based compensation, and a $0.3 million decrease in marketing expenses.

We expect our recurring sales and marketing expenses to increase in absolute dollars in future periods as we expand our commercial sales, marketing and business development teams, expand our product offerings, expand our collaboration efforts, increase our presence globally, and increase marketing activities to drive awareness and adoption of our products. We expect that in the near term, sales and marketing expenses will increase as a percentage of revenue, and thereafter vary from period to period as a percentage of revenue. The effects of such sales and marketing investments could take a few quarters to materialize into revenue growth.

#### General and Administrative

*(in thousands, except percentages)*

| ​ ​ ​ | ​ ​ | ​ ​ Three Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ | ​ ​ Change Amount% ​ | ​ ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: | --- |
| General and administrative | ​ | $7,663 | ​ | $7,103 | ​ | $560 | 8% | ​ |

General and administrative expenses primarily consist of salaries, benefits, stock-based compensation and travel costs for employees in our executive, accounting and finance, legal, corporate development, human resources, information systems and office administration functions as well as professional services fees, such as consulting, audit, tax and legal fees, general corporate costs, facilities and allocated overhead expenses and public company fees associated with being a Nasdaq and AIM listed public company such as director fees, U.K. Nominated Adviser and broker fees, investor relations consultants and insurance costs. These expenses are exclusive of depreciation and amortization.

General and administrative expense increased by $0.6 million, or 8%, for the three months ended June 30, 2023 compared to the three months ended June 30, 2022. The increase was primarily driven by a $0.5 million increase in strategic consulting expenses, a $0.4 million increase in legal fees, and a $0.3 million in general office expenses, partially offset by a $0.3 million decrease in occupancy expenses, a $0.3 million reduction in public company fees, and a $0.2 million decrease in compensation expense.

We expect that our general and administrative expenses will continue to increase in absolute dollars in future periods, primarily due to increased headcount to support anticipated growth in the business and due to incremental costs associated with operating as a public company listed on a U.S. exchange. We expect these expenses to vary from period to period as a percentage of revenue.

#### Depreciation and Amortization

Depreciation expense consists of the depreciation of property and equipment used actively in the business, primarily by research and development activities. Amortization expense includes the amortization of intangible assets over their respective useful lives.

*(in thousands, except percentages)*

| ​ ​ ​ | ​ ​ | ​ ​ Three Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ | ​ ​ Change Amount% ​ | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: |
| Depreciation and amortization | ​ | $977 | ​ | $497 | ​ | $480 | 97% |

Depreciation and amortization expense increased by $0.5 million, or 97%, for the three months ended June 30, 2023, compared to the three months ended June 30, 2022. The increase was primarily driven by increases in leasehold improvements and purchases in laboratory equipment.

### Interest and Other Income

*(in thousands, except percentages)*

| ​ ​ ​ | ​ ​ | ​ ​ Three Months Ended June 30, 2023 ​ | ​ | ​ 2022 ​ | ​ | ​ ​ | ​ ​ Change Amount% ​ | ​ ​ | ​ ​ ​ |
| --- | --- | ---: | --- | --- | ---: | --- | ---: | ---: | --- |
| Interest income | ​ | $2,562 | ​ | ​ | 479 | ​ | $2,083 | 435% | ​ |

Interest income represents interest on our cash balances and short-term investments, which increased by $2.1 million for the three months ended June 30, 2023. The increase was driven by increases in interest rates and a higher weighted average balance of interest-bearing securities held during the three months ended June 30, 2023.

### Comparison of the Six Months Ended June 30, 2023 and 2022

The following table sets forth our results of operations for the periods presented:

*(in thousands)*

| ​ ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 | ​ | ​ ​ 2022 |
| --- | --- | --- | --- | --- |
| Total revenue |  | $17,619 |  | $21,195 |
| Cost of goods sold |  | ​ 2,376 |  | ​ 2,183 |
| Gross profit |  | ​ 15,243 |  | ​ 19,012 |
| Operating expense |  | ​ |  | ​ |
| Research and development |  | ​ 11,711 |  | ​ 8,461 |
| Sales and marketing |  | ​ 12,732 |  | ​ 8,769 |
| General and administrative |  | ​ 15,161 |  | ​ 13,735 |
| Depreciation and amortization | ​ | ​ 1,890 | ​ | ​ 945 |
| Total operating expense |  | ​ 41,494 |  | ​ 31,910 |
| Operating loss |  | ​ (26,251) |  | ​ (12,898) |
| Other income (expense) |  | ​ |  | ​ |
| Interest and other income |  | ​ 4,857 |  | ​ 571 |
| Total other income (expense) |  | ​ 4,857 |  | ​ 571 |
| Net loss | ​ | $(21,393) | ​ | $(12,328) |

24

### Revenue

The following table provides details regarding the sources of our revenue for the periods presented:

*(in thousands, except percentages)*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ ​ | ​ ​ ​ ​ Change Amount% ​ | ​ ​ ​ ​ | ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: | --- |
| Cell therapy | ​ | $12,611 | ​ | $15,104 | ​ | $(2,493) | (17%) | ​ |
| Drug discovery | ​ | 3,450 | ​ | 4,083 | ​ | (633) | (16%) | ​ |
| Program-related | ​ | 1,558 | ​ | 2,008 | ​ | (450) | (22%) | ​ |
| Total revenue | ​ | $17,619 | ​ | $21,195 | ​ | $(3,576) | (17%) | ​ |

Total revenue for the six months ended June 30, 2023 was $17.6 million, a decrease of $3.6 million, or 17%, compared to revenue of $21.2 million during the six months ended June 30, 2022. Our overall decrease in revenue was primarily driven by revenue decreases in the cell therapy market and drug discovery markets. In the cell therapy market, revenue from instrument sales and disposable sales decreased by $1.1 million and $1.5 million, respectively, in part due to the timing of purchases by customers. The $0.6 million decrease in the drug discovery market was primarily driven by a decrease in disposable sales. The $0.5 million decrease in program-related revenues resulted from expected variability of milestone revenues from period to period given the small number of individual triggering events which currently generate this portion of revenue. We expect program-related revenue to experience variability for some time, although we anticipate that this variability may moderate as the volume of SPLs and associated milestones grow.

### Cost of Goods Sold and Gross Profit

*(in thousands, except percentages)*

| ​ ​ ​ | ​ ​ | ​ ​ Six Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ | ​ ​ Change Amount% ​ | ​ | ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| Cost of goods sold | ​ | $2,376 | ​ | $2,183 | ​ | $193 |  | 9% | ​ |
| Gross profit | ​ | $15,243 | ​ | $19,012 | ​ | $(3,769) |  | (20)% | ​ |
| Gross margin | ​ | ​ 87% | ​ | ​ 90% | ​ | ​ ​ | ​ | ​ | ​ |

Cost of goods sold increased by $0.2 million, or 9%, for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The increase was primarily driven increased costs due to initial scale-up of our in-house manufacturing processing assemblies.

Gross profit decreased by $3.8 million, or 20%, for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The decrease was primarily driven by decreased revenue from instrument and disposable sales and program-related revenue, as well as increased manufacturing costs.

During the six months ended June 30, 2023, gross margin was 87%, compared to 90% in the same period of 2022. The decrease was primarily driven an increase in cost of goods due to initial scale-up of our in-house manufacturing processing assemblies.

### Operating Expenses

#### Research and Development

*(in thousands, except percentages)*

| ​ ​ ​ | ​ ​ | ​ ​ Six Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ | ​ Change Amount% ​ | ​ ​ | ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | --- | ---: | ---: | --- |
| Research and development | ​ | $11,711 | ​ | $8,461 | ​ | ​ | $3,250 | 38% | ​ |

Research and development expenses increased by $3.3 million, or 38%, for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The increase was primarily driven by a $1.1 million increase in compensation expenses as a result of increases in headcount, a $0.7 million increase in stock-based compensation, a $0.5 million increase in lab expense and new product development, and a $0.4 million increase in professional service fees relating to new product and regulatory consultants.

#### Sales and Marketing

*(in thousands, except percentages)*

| ​ ​ ​ | ​ ​ | ​ ​ Six Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ | ​ ​ Change Amount% ​ | ​ ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: | --- |
| Sales and marketing | ​ | $12,732 | ​ | $8,769 | ​ | $3,963 | 45% | ​ |

Sales and marketing expenses increased by $4.0 million, or 45%, for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The increase was primarily driven by a $2.2 million increase in compensation expenses as a result of increases in headcount, a $0.6 million increase in marketing and travel expenses, a $0.5 million increase in stock-based compensation, and a $0.3 million increase in occupancy expenses.

#### General and Administrative

*(in thousands, except percentages)*

| ​ ​ ​ | ​ ​ | ​ ​ Six Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ | ​ ​ Change Amount% ​ | ​ ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: | --- |
| General and administrative | ​ | $15,161 | ​ | $13,735 | ​ | $1,426 | 10% | ​ |

General and administrative expense increased by $1.4 million, or 10%, for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. The increase was primarily driven by a $1.3 million increase in strategic consulting expenses, a $0.3 million increase in legal fees, and a $0.2 million increase in stock based compensation, partially offset by a $0.6 million reduction in public company fees, and a $0.4 million decrease in occupancy expenses.

#### Depreciation and Amortization

*(in thousands, except percentages)*

| ​ ​ ​ | ​ ​ | ​ ​ Six Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ | ​ ​ Change Amount% ​ | ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | ---: |
| Depreciation and amortization | ​ | $1,890 | ​ | $945 | ​ | $945 | 100% |

Depreciation and amortization expense increased by $0.9 million, or 100%, for the six months ended June 30, 2023, compared to the six months ended June 30, 2022. The increase was primarily driven by increases in leasehold improvements and purchases in laboratory equipment.

### Interest and Other Income

*(in thousands, except percentages)*

| ​ ​ ​ | ​ ​ | ​ ​ Six Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ | ​ Change Amount% ​ | ​ ​ | ​ | ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | --- | ---: | ---: | --- |
| Interest and other income | ​ | $4,857 | ​ | $571 | ​ | ​ | $4,287 | 751% | ​ |

The increase was driven by increases in interest rates and a higher weighted average balance of interest-bearing securities held during the six months ended June 30, 2023.

### Liquidity and Capital Resources

Since our inception, we have experienced losses and negative cash flows from operations. For the six months ended June 30, 2023, we incurred a net loss of $21.3 million. As of June 30, 2023, we had an accumulated deficit of $159.3 million. We have funded our operations primarily with proceeds from sales of common stock, including our initial public offering of common stock in the United States (the “IPO”) in 2021, as well as revenues associated with sales and licenses of our products to customers. As of June 30, 2023, we had cash and cash equivalents and short-term investments of $216.1 million.

We expect to incur near-term operating losses as we continue to invest in expanding our business through growing our sales and marketing efforts, continued research and development, product development and expanding our product offerings. Based on our current business plan, we believe our existing cash and cash equivalents and short-term investments will enable us to fund our operating expenses and capital expenditure requirements for the foreseeable future.

We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. Our future funding requirements will depend on many factors, including:

- transaction and capital expenditures necessitated by strategic activities;
- market acceptance of our products;
- the cost and timing of establishing additional sales, marketing and distribution capabilities;
- the cost of our research and development activities and successful development of data supporting use of our products for new applications, and timely launch of new features and products;
- sales to existing and new customers and the progress of our SPL partners in developing their pipelines of product candidates;
- our ability to enter into additional SPL partnerships and licenses for clinical use of our platform in the future;
- changes in the amount of capital available to existing and emerging customers in our target markets;
- the effect of competing technological and market developments; and
- the level of our selling, general and administrative expenses.

If we are unable to execute on our business plan and adequately fund operations, or if our business plans require a level of spending in excess of cash resources, we will have to seek additional equity or debt financing. If additional financings are required from outside sources, we may not be able to raise such capital on terms acceptable to us or at all. To the extent that we raise additional capital through the sale of equity or debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include covenants restricting our ability to take specific actions, such as incurring additional debt, selling or licensing our assets, making product acquisitions, making capital expenditures or declaring dividends. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish some rights to our technologies or our products, or grant licenses on terms that are not favorable to us. If we are unable to raise additional capital when desired, we may have to delay development or commercialization of future products. We also may have to reduce marketing, customer support or other resources devoted to our existing products.

### Cash Flows

The following table summarizes our uses and sources of cash for the periods presented:

*(in thousands)*

| ​ ​ ​ Net cash provided by (used in): | ​ ​ | ​ ​ Six Months Ended June 30, 2023 ​ ​ | ​ ​ | ​ ​ 2022 ​ ​ |
| --- | --- | ---: | --- | ---: |
| Operating activities | ​ | $(14,430) | ​ | $(2,776) |
| Investing activities | ​ | 56,309 | ​ | 62,944 |
| Financing activities | ​ | 1,613 | ​ | 1,218 |
| Net increase in cash and cash equivalents | ​ | $43,492 | ​ | $61,386 |

#### Operating Activities

Net cash used in operating activities for the six months ended June 30, 2023 was $14.3 million, and consisted primarily of our net loss of $21.3 million, offset in part by net non-cash expenses of $5.4 million, including stock-based compensation of $6.8 million and depreciation and amortization expenses of $2.0 million, reduced by amortization of discounts on investments of $3.6 million. We also had net cash inflows of $1.5 million due to changes in our operating assets and liabilities. Net changes in our operating assets and liabilities consisted primarily of a decrease in account receivable of $3.8 million due to increased cash collections, a decrease in tenant improvements allowance (“TIA”) receivable of $1.9 million, a decrease in prepaid expense and other current assets of $0.9 million, and a decrease in other assets of $0.2 million, partially offset by a $2.5 million increase in inventory and a $2.0 million decrease in deferred revenue, and a decrease in accounts payable and accrued expenses of $1.0 million due to timing considerations.

Net cash used in operating activities for the six months ended June 30, 2022 was $2.8 million, and consisted primarily of our net loss of $12.3 million, offset in part by net non-cash expenses of $6.3 million, including stock-based compensation of $5.4 million and depreciation and amortization expenses of $1.0 million. We also had net cash inflows of $3.2 million due to net changes in our operating assets and liabilities. Net changes in our operating assets and liabilities consisted primarily of an increase in the net effect of our right-of-use assets and lease liabilities of $4.1 million, a decrease in prepaid expense and other current assets of $2.0 million, a decrease in accounts payable and accrued expenses of $0.9 million and an increase in deferred revenue (consisting primarily of unrecognized instrument license revenue) of $0.6 million, partially offset by a $2.6 million increase in inventory, a $0.5 million increase in TIA receivable, a $0.5 million increase in accounts receivable and a $0.6 million increase in other assets.

#### Investing Activities

Net cash provided by investing activities during the six months ended June 30, 2023 was $56.3 million, which was primarily attributable to maturities of short-term marketable securities of $163.3 million, partially offset by purchases of short-term marketable securities of $105.0 million and purchases of laboratory equipment of $2.1 million.

Net cash provided by investing activities during the six months ended June 30, 2022 was $62.9 million, which was primarily attributable to maturities of short-term marketable securities of $207.3 million, partially offset by purchases of short-term marketable securities of $131.5 million and capitalized lease-related construction expenses of $11.6 million and purchase of equipment of $1.2 million. Purchases and sales of short-term marketable securities are made as part of ordinary course investing activities in compliance with our investment policy which has as its primary objective preservation of principal.

#### Financing Activities

Net cash provided by financing activities during the six months ended June 30, 2023 and 2022 was $1.6 million and $1.2 million, respectively, which was attributable to the exercise of stock options.

### Contractual Obligations and Commitments

Our contractual obligations and commitments as of June 30, 2023 consisted exclusively of operating lease obligations. In May 2021, we entered into an operating lease for new office, lab and warehouse/manufacturing space. The lease for the new facility consists of three phases, with Phase 1 having commenced in December 2021 and Phase 2 having commenced in the first quarter of 2022. Phase 3 is expected to begin in the second half of 2023. The lease term for all phases expires on August 31, 2035. We designed and constructed the leasehold improvements with the approval of the landlord. The lease provides that the landlord will reimburse us for $6.3 million in costs of leasehold improvement construction. As of June 30, 2023, we received all reimbursements from the TIA. The total incremental non-cancellable lease payments under the lease agreement are $29.6 million through the lease term. We expect to be able to fund our obligations under this lease, both in the short term and in the long term, from cash on hand, short-term investments and operating cash flows.

In June 2022, we exercised our option to early terminate the remaining subleased office, laboratory, manufacturing and other spaces associated with our former headquarters facility, which terminations became effective in July and August

2022\. In addition, our lease of space at the same location expired on June 7, 2022. The lease and subleases previously had expiration dates in October 2023.

We had no debt obligations as of June 30, 2023 and December 31, 2022.

Purchase orders or contracts for the purchase of supplies and other goods and services are based on our current procurement or development needs and are generally fulfilled by our vendors within short time horizons.

### Critical Accounting Estimates

We have prepared our condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. Our preparation of these condensed consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Actual results could therefore differ materially from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting policies and estimates from those disclosed in our consolidated financial statements and the related notes and other financial information included in the Annual Report on Form 10-K filed with SEC on March 15, 2023.

### JOBS Act Accounting Election

We are an “emerging growth company,” (“EGC”), under the Jumpstart Our Business Startups Act of 2012, (the “JOBS Act”). Section 107 of the JOBS Act provides that an EGC can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of the delayed adoption of new and revised accounting standards and, therefore, we will be subject to the same requirements to adopt new or revised accounting standards as private entities. We also intend to rely on other exemptions provided by the JOBS Act, including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.

We will remain an EGC until the earliest of: (i) December 31, 2026, which is the last day of the fiscal year following the fifth anniversary of our initial public offering in the United States; (ii) the last day of the first fiscal year in which our annual gross revenue is $1.235 billion or more; (iii) the date on which we have, during the previous rolling three-year period, issued more than $1 billion in non-convertible debt securities; and (iv) the last day of the fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of June 30 of such fiscal year.

We are also a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million as of the last business day of our second fiscal quarter or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million as of the last business day of our second fiscal quarter. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

### Recent Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

## Market risk

As filed, 1,791 characters.

### Interest Rate Risk

We are exposed to market risk for changes in interest rates related primarily to balances of our financial instruments including cash and cash equivalents and short-term investments. The primary objective of our investment approach is to preserve principal and provide liquidity. As a result, a 10% change in the level of market interest rates would not be expected to have a material effect on our business, financial condition or results of operations.

As we do not currently have indebtedness we are not exposed to interest rate risk from increases in interest rates.

### Foreign Currency Risk

We are exposed to financial risks as a result of exchange rate fluctuations between the U.S. Dollar and certain foreign currencies and the volatility of these rates. In the normal course of business, we earn revenue primarily denominated in U.S. Dollars as well as in Euros and British Pounds. We incur expenses primarily in U.S. Dollars as well as in Euros, British Pounds and other currencies. Our reporting currency is the U.S. Dollar. We hold our cash primarily in U.S. Dollars as well as in Euros and British Pounds. We do not expect that foreign currency gains or losses will have a material effect on our financial position or results of operations in the foreseeable future. We have not entered into any hedging arrangements with respect to foreign currency risk. As our international operations grow, we will continue to reassess our approach to managing risks relating to fluctuations in currency exchange rates.

### Inflation Risk

During the last two years, inflation and changing prices have not had a material effect on our business. We are unable to predict whether inflation or changing prices will materially affect our business in the foreseeable future.

## Controls and procedures

As filed, 3,140 characters.

### Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Based on our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective as of June 30, 2023 at the reasonable assurance level.

### Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### Limitations on the Effectiveness of Controls

Control systems, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control systems’ objectives are being met. Further, the design of any system of controls must reflect the fact that there are resource constraints, and the benefits of all controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of error or mistake. Control systems can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

## Risk factors

As filed, 651 characters.

There have been no material changes to the risk factors set forth in the Annual Report on Form 10-K filed with the SEC on March 15, 2023. However, the risk factors described in this report and in the Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business. If any such risks materialize, it could have a material adverse effect on our business, financial condition, results of operations and growth prospects and cause the trading price of our common stock to decline.

Filed Aug 9, 2023.
Source: SEC EDGAR, the filing index for accession 0001558370-23-014306. Last ingested by Listed: Nov 2, 2026, 10:20 ET. No prices; not investment advice.