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What changed in MAXCYTE, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of MAXCYTE, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+471 added−449 removedSource: 10-K (2024-03-12) vs 10-K (2023-03-15)

Top changes in MAXCYTE, INC.'s 2023 10-K

471 paragraphs added · 449 removed · 408 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

118 edited+11 added−8 removed74 unchanged
Biggest changeWe believe our ExPERT platform offers a compelling value proposition to our academic and biopharmaceutical customers due to: (i) the ability to use our technology to deliver almost any molecule into almost any cell type, including hard-to-transfect human primary cells, while maintaining high cell viability and function; (ii) the capacity to introduce larger and more diverse molecules, as well as multiple payloads, which exceeds the capabilities of other intracellular delivery technologies, such as viral vectors; and (iii) the flexibility to scale up from research to cGMP, manufacturing on a single platform—enabling the engineering of cells ranging from tens of thousands of cells to tens of billions of cells in a single transfection run in 30 minutes or less.
Biggest changeWe believe our ExPERT platform offers a compelling value proposition to our customers due to: (i) the ability to use our technology to deliver almost any molecule into almost any cell type, including hard-to-transfect human primary cells, while maintaining high cell viability and function; (ii) the capacity to introduce larger and more diverse molecules, as well as multiple payloads, which exceeds the capabilities of other intracellular delivery technologies, such as viral vectors; and (iii) the flexibility to scale up from research to cGMP, manufacturing on a single platform—enabling the engineering of cells ranging from tens of thousands of cells to tens of billions of cells in a single transfection run in 30 minutes or less. 11 Table of Contents We believe our ExPERT intracellular delivery platform provides value across numerous applications in the life sciences market, including research, discovery, development, and manufacturing of next-generation, cell-based therapeutics, as well as in biomanufacturing, such as transient protein production for drug discovery and manufacturing of other proteins, including biological therapeutics, viral vectors and vaccines, and small molecule drug discovery.
The FDA Master File and equivalent Technical Files in other countries can be referenced by our partners to support their own regulatory submissions with the goal of accelerating regulatory submissions processes for our partners.
The FDA Master File and equivalent Technical Files and Master Files in other countries can be referenced by our partners to support their own regulatory submissions with the goal of accelerating regulatory submissions processes for our partners.
Our Technology Platform The foundation of our technology is our proprietary and patented Flow Electroporation platform, which we have developed and optimized for more than 20 years.
Our Technology Platform The foundation of our technology platform is our proprietary and patented Flow Electroporation technology, which we have developed and optimized for more than 20 years.
The value of our ExPERT brand starts with Efficiency—with high delivery Efficiency , users can achieve Potency , with high Potency, users improve their chances of therapeutic Efficacy , and if this can be repeated, Reproducibly from patient to patient, users have a successful Therapy .
The value of our ExPERT brand starts with Efficiency—with high delivery Efficiency , users can achieve Potency ; with high Potency, users improve their chances of therapeutic Efficacy ; and if this can be repeated, Reproducibly from patient to patient, users can have a successful Therapy .
Concept DoE Optimization Verification Phase I Pivotal Validation Approval On-Market Disposables (referred to as processing assemblies) facilitate scale up on same GMP platform ​ ​ Overview of our ExPERT Platform Our Flow Electroporation Technology was designed to meet the stringent demands of clinical use— namely, the ability to safely and reproducibly modify a broad range of primary human cells with high efficiency, low cytotoxicity, and at the scale required to enable the treatment of patients across a diverse range of diseases.
Concept DoE Optimization Verification Phase I Pivotal Validation Approval On-Market Disposables (referred to as processing assemblies) facilitate scale up on same GMP platform ​ ​ Overview of our ExPERT Platform Our Flow Electroporation technology was designed to meet the stringent demands of clinical use— namely, the ability to safely and reproducibly modify a broad range of primary human cells with high efficiency, low cytotoxicity, at the scale required to enable the treatment of patients across a diverse range of diseases.
Our platform’s ability to engineer a diversity of cell types (including CAR-T, chimeric antigen receptor Natural Killer cells (“CAR-NK/NK”), T cell receptor (“TCR”) and stem cells) and cell sources (autologous and allogeneic) enhances our opportunity by potentially providing SPL partnership revenues regardless of which approaches advance in the coming years.
Our platform’s ability to engineer a diversity of cell types (including CAR-T, chimeric antigen receptor Natural Killer cells (“CAR-NK/NK”), T cell receptor cells (“TCR”) and stem cells) and cell sources (autologous and allogeneic) enhances our opportunity by potentially providing SPL partnership revenues regardless of which approaches advance in the coming years.
Our SPL customers typically pay an annual license fee per instrument per year for a research license (for preclinical use) or per instrument per year for a clinical license (for clinical or commercial use) or in certain circumstances may purchase an instrument for research use. Partners also purchase associated single-use disposables and consumables as needed.
Our SPL customers typically pay an annual license fee per instrument per year for a research license (for preclinical use) or per instrument per year for a clinical license (for clinical or commercial use) or in certain circumstances may purchase an instrument for research use. Partners may also purchase associated single-use disposables and consumables as needed.
The relevant submission can be referenced by our customers or licensees to support their own regulatory filings without the need for us to disclose the confidential information contained in the FDA Master File and Technical Files. We also seek to protect our brand through procurement of trademark rights.
The relevant submission can be referenced by our customers or licensees to support their own regulatory filings without the need for us to disclose the confidential information contained in the FDA Master File and Technical Files. We also seek to protect our brand through the procurement of trademark rights.
Our STx instrument has high efficiency and can rapidly transfect from 75,000 up to 20 billion cells. When combined with flexible media strategies, the STx allows for substantial improvement in yields of high-quality, transiently expressed proteins while enabling reduced media costs. Another key application area for the STx is expression of therapeutic targets for cell-based assays.
Our STx instrument has high efficiency and can rapidly transfect from 75,000 to 20 billion cells. When combined with flexible media strategies, the STx allows for substantial improvement in yields of high-quality, transiently expressed proteins while enabling reduced media costs. Another key application area for the STx is expression of therapeutic targets for cell-based assays.
The ATx instrument delivers high efficiency and viability at research scale and can utilize our range of PAs capable of transfecting from 75,000 up to 700 million cells. Additionally, our ATx instrument is compatible with all of our static PAs, which can also be used on our GTx instrument, allowing for a seamless transition to our clinical cGMP-compatible platform.
The ATx instrument delivers high efficiency and viability at research scale and can utilize our range of PAs capable of transfecting from 75,000 to 700 million cells. Additionally, our ATx instrument is compatible with all of our static PAs, which can also be used on our GTx instrument, allowing for a seamless transition to our clinical cGMP-compatible platform.
The platform is also supported by a robust intellectual property portfolio with more than 150 granted U.S. and foreign patents and more than 95 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.
The platform is also supported by a robust intellectual property portfolio with more than 150 granted U.S. and foreign patents and more than 95 pending patent applications worldwide. From leading commercial cell therapy drug and biologic developers and top biopharmaceutical companies to top academic and government research institutions, including the U.S.
Our business model enables us to generate substantial revenue from five sources: sales of instruments, disposables and consumables to new customers; additional sales of instruments, disposables and consumables to our existing installed base; annual instrument license fees from cell therapy customers; potential precommercial milestones under SPL partnerships; and potential commercial sales-based payments under SPL partnerships.
Our business model enables us to generate revenue from five sources: sales of instruments, disposables and consumables to new customers; additional sales of instruments, disposables and consumables to our existing installed base; annual instrument license fees from cell therapy customers; potential precommercial milestones under SPL partnerships; and potential commercial sales-based payments under SPL partnerships.
In addition, we have implemented a global scientific and regulatory support strategy for our customers that is designed to accelerate clinical development and streamline the regulatory submission process, thereby potentially saving time and reducing cost and development risk.
In addition, we have implemented a global scientific and regulatory support strategy for our customers that is designed to accelerate clinical development and help streamline the regulatory submission process, thereby potentially saving time and reducing cost and development risk.
However, clinical development involves a lengthy and expensive process with uncertain outcomes, including the results of pre-clinical research, as well as clinical trials demonstrating product safety and efficacy, and therefore our customers may not begin or complete clinical development, or may never receive FDA or other regulatory approval for all or any product candidates covered by their SPL partnership agreements with us, in which case we will not receive the full potential precommercial milestone payments or the sales-based commercial payments or royalties contemplated by our SPL agreements. 14 Table of Contents Our Products ExPERT Instruments The ExPERT instrument family was designed to provide a single unifying technology that can be used from concept to clinic, with both the research and clinical versions of the instrument incorporating the same underlying technology and protocols.
However, clinical development involves a lengthy and expensive process with uncertain outcomes, including the results of pre-clinical research, as well as clinical trials demonstrating product safety and efficacy, and therefore our customers may not begin or complete clinical development, and may never receive FDA or other regulatory approval for all or any product candidates covered by their SPL partnership agreements with us, in which case we will not receive the full potential precommercial milestone payments or the sales-based commercial payments or royalties contemplated by our SPL agreements. 15 Table of Contents Our Products ExPERT Instruments The ExPERT instrument family was designed to provide a single unifying technology that can be used from concept to clinic, with both the research and clinical versions of an instrument incorporating the same underlying technology and protocols.
Strategic Platform Licenses (SPLs) Given our value proposition in non-viral delivery, we have established strategic relationships in the form of SPL partnerships with a growing number of leading cell therapy developers as they work to bring next-generation cell therapies into and through the clinic and advance those candidates to potential commercialization. 12 Table of Contents Under these SPL partnerships and other license agreements with our customers, we retain title to the licensed instrument and associated intellectual property, and in exchange for an annual license fee per instrument, we provide our customers with non-exclusive access, for a defined field of use to our: • cGMP-compatible platform, which enables early-optimization and scale-up from pre-clinical research into clinical development using our intellectual property portfolio; • FDA Master File and Technical Files, which may accelerate and streamline development and reduce regulatory risk in the creation and development of our partners’ therapeutic drug candidates; • experienced team of sales personnel and application scientists who work directly with our customers to solve cell engineering problems; and • continuous know-how and cell engineering process improvements.
Strategic Platform Licenses (SPLs) Given our value proposition in non-viral delivery, we have established strategic relationships in the form of SPL partnerships with a growing number of leading cell therapy developers as they work to bring next-generation cell therapies into and through clinical development and advance those candidates to potential commercialization. 13 Table of Contents Under these SPL partnerships and other license agreements with our customers, we retain title to the licensed instrument and associated intellectual property, and in exchange for an annual license fee per instrument, we provide our customers with non-exclusive access, for a defined field of use, to our: • cGMP-compatible platform, which enables early-optimization and scale-up from pre-clinical research into clinical development using our intellectual property portfolio; • FDA Master File and Technical Files, which may help accelerate and streamline development and reduce regulatory risk in the creation and development of our partners’ therapeutic drug candidates; • experienced team of sales personnel and application scientists who work directly with our customers to solve cell engineering problems; and • continuous know-how and cell engineering process improvements.
In aggregate, given our SPLs entered into to-date, we have the potential to receive over $1.55 billion in precommercial milestone payments, if all of the programs were to be granted regulatory approvals. • Leadership team and workforce with deep domain knowledge. Our management team combines strong and broad subject matter expertise with a demonstrated history of commercial and operational execution.
In aggregate, given our SPLs entered into to-date, we have the potential to receive over $1.95 billion in precommercial milestone payments, if all of the programs were to be granted regulatory approvals. • Leadership team and workforce with deep domain knowledge. Our management team combines strong and broad subject matter expertise with a demonstrated history of commercial and operational execution.
Upon contract termination, our customers would be responsible for any further clinical studies or data development that regulators may require to allow a change in their cell engineering methodology. We have entered into 19 SPL partnerships with commercial cell therapy developers and, to date, none of our SPL partnership licensees has ever terminated their contract with us.
Upon contract termination, our customers would be responsible for any further clinical studies or data development that regulators may require to allow a change in their cell engineering methodology. We have entered into 26 SPL partnerships with commercial cell therapy developers and, to date, none of our SPL partnership licensees has ever terminated their contract with us.
In addition to the high performance and flexibility of the ExPERT platform, we believe our partnership model further reduces clinical risk and development timelines for our cell therapy partners. By entering into SPL partnerships with us, for example, our partners gain access to our FDA Master File to support their IND-enabling studies and potentially shorten clinical development.
In addition to the high performance and flexibility of the ExPERT platform, we believe our partnership model further reduces clinical risk and development timelines for our cell therapy partners. By entering into SPL partnerships with us, for example, our partners gain access to our FDA Master File to support their IND-enabling studies and potentially shortening clinical development.
We have entered into many research licenses to-date, either as (i) stand-alone research license agreements, (ii) research and clinical license agreements that do not have associated commercial rights or (iii) under an SPL partnership, which allows a customer to use the instrument for clinical development and potential commercial sale of a therapeutic product.
We have entered into many research licenses to-date, either as (i) instrument sales, (ii) stand-alone research license agreements, (iii) research and clinical license agreements that do not have associated commercial rights, or (iv) under an SPL partnership, which allows a customer to use the instrument for clinical development and potential commercial sale of a therapeutic product.
Given viruses used in gene therapy by default infect human cells, there continue to be questions around the safety profile associated with viruses. In particular, there are concerns over the potential for random integration of lentivirus and the widespread presence of neutralizing antibodies against many AAV serotypes used in gene therapies. • Costs and time to market.
Given viruses used in gene therapy by default infect human cells, there continue to be questions around the safety profile associated with viruses. In particular, there are concerns over the potential for random integration of lentiviruses and the widespread presence of neutralizing antibodies against many AAV serotypes used in gene therapies. • Costs and time to market.
We believe we are well positioned to increase our market share within the large and growing next-generation cell therapy market. Since the FDA approved the first engineered CAR-T cell therapies to treat blood-based cancers in 2017, the number of cell therapy candidates being evaluated pre-clinically and clinically has grown exponentially.
We believe we are well positioned to increase our market share within the large and growing next-generation cell therapy market. Since the FDA approved the first engineered CAR-T cell therapies to treat blood-based cancers in 2017, the number of cell therapy candidates being evaluated pre-clinically and clinically has grown significantly.
Specifically, if a customer wishes to use our products in the clinical phase of process development, they will need to enter into an SPL partnership, as a customer must obtain clinical rights to perform clinical process development, including for engineering runs. Customer discussion for an SPL partnership can take place any time during our engagement.
Specifically, if a customer wishes to use our products in the clinical phase of process development, they will need to enter into an agreement establishing an SPL partnership, as a customer must obtain clinical rights to perform clinical process development, including for engineering runs. Customer discussion for an SPL partnership can take place any time during our engagement.
Our PAs are capable of electroporating cell volumes from small to large scale, in single and multi-well formats, for both research and clinical use. Cells are placed into the sample bag in large scale PAs, or into the well or wells in small scale PAs, and the 17 Table of Contents PA is then connected to the instrument for processing.
Our PAs are capable of electroporating cell volumes from small to large scale, in single and multi-well formats, for both research and 18 Table of Contents clinical use. Cells are placed into the sample bag in large scale PAs, or into the well or wells in small scale PAs, and the PA is then connected to the instrument for processing.
Our FDA Master File, which is a submission to the FDA with confidential detailed information about our products, methods, processes and data, was originally established in 2002 and has been continuously updated as platform improvements are implemented to support different applications and cell types.
Our FDA Master File, which is a submission to the FDA with confidential detailed information about our products, methods, processes and data, was originally established in 2002 and has been continuously updated as platform improvements have been implemented to support different applications and cell types.
Such obligations may include, without limitation, the Federal Trade Commission Act , the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (“CPRA”) (collectively, “CCPA”), the European Union’s General Data Protection Regulation 2016/679 (“EU GDPR”), the EU GDPR as it forms part of United Kingdom law by virtue of section 3 of the European Union (Withdrawal) Act 2018 (“UK GDPR”), the ePrivacy Directive, and wiretapping laws.
Such obligations may include, without limitation, the Federal Trade Commission Act , the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (“CPRA”) (collectively, “CCPA”), the European Union’s General Data Protection 24 Table of Contents Regulation 2016/679 (“EU GDPR”), the EU GDPR as it forms part of United Kingdom law by virtue of section 3 of the European Union (Withdrawal) Act 2018 (“UK GDPR”), the ePrivacy Directive, and wiretapping laws.
Healthcare Laws and Reform In the United States, there are federal and state healthcare laws that constrain the business or financial arrangements and relationships through which our customers who use our platform and we, if we develop a product, research, sell, market and distribute products.
Healthcare Laws and Reform In the United States, there are federal and state healthcare laws that constrain the business or financial arrangements and relationships through which our customers who use our platform and we, if we develop research, sell, market and distribute products.
The Flow Electroporation PA (Flow PA) allows for processing of cellular volumes ranging from 10 mL to 100 mL and up to tens of billions of cells. The Flow PA consists of bags and associated tubing, made from medical grade materials, that are connected to the electroporation cartridge.
The Flow Electroporation PA (“Flow PA”) allows for processing of cellular volumes ranging from 10 mL to 100 mL and up to tens of billions of cells. The Flow PA consists of bags and associated tubing, made from medical grade materials, that are connected to the electroporation cartridge.
As we expand into a new geography, we generally rely initially on third-party distributors until we are able to recruit a direct sales force, field application scientists and business development resources in the country or region.
When we expand into a new geography, we generally rely initially on third-party distributors until we are able to recruit a direct sales force, field application scientists and business development resources in the country or region.
In this case, the engineered cell itself is the drug. Cell therapy has emerged as one of the fastest growing and most promising treatment modalities to address a host of human diseases. The recent success of multiple U.S.
In this case, the engineered cell itself is the drug. Cell therapy has emerged as one of the fastest growing and most promising treatment modalities to address a host of human diseases. Recent developments in multiple U.S.
In a clinical license, we retain title to the instrument and provide the customer with the ability to reference our FDA Master File (and international equivalents), use the platform for production of clinical material for human clinical use, as well as access to our application scientist team, all in exchange for an annual lease payment that typically approximates $250,000 per instrument per year for commercial customers.
In a clinical license, we retain title to the instrument and provide the customer with the ability to reference our FDA Master File (and international equivalents), use the platform for production of clinical material for human clinical use, as well as access to our application scientist team, all in exchange for an annual payment of typically $250,000 per instrument per year for commercial customers.
Additionally, our instruments and platform have been used in over 40 clinical trials to date for drugs being developed to treat a variety of indications, from hematological malignancies to solid tumors to inherited genetic disorders.
Additionally, our instruments and platform have been used in over 60 clinical trials to date for drugs being developed to treat a variety of indications, from hematological malignancies to solid tumors to inherited genetic disorders.
The PAs are designed, developed, tested and shipped from our Maryland facility. We outsource supply and manufacturing of key PA components. Final clean-room disposables assembly is performed at our headquarters facility and at a third party.
The PAs are designed, developed, and shipped from our headquarters facility. We outsource supply and manufacturing of key PA components. Final clean-room disposables assembly is performed at our headquarters facility and at a third party.
The following chart summarizes the features of the four ExPERT instruments: ​ 15 Table of Contents ExPERT ATx: Research focused, static electroporation for small to medium scale transfection ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Our ExPERT ATx static electroporation instrument is a research focused, high performance electroporation platform for small to medium scale transfection.
The following chart summarizes the features of the four ExPERT instruments: ​ 16 Table of Contents ExPERT ATx: Research focused, static electroporation for small to medium scale transfection ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Our ExPERT ATx static electroporation instrument is a research focused, high performance electroporation platform for small to medium scale transfection.
Our SPL partnerships allow us to participate in the value creation of our customers’ programs via precommercial milestones and in nearly all cases commercial sales-based payments. We intend to continue to build a portfolio of strategic partnerships with cell therapy developers, which provide us with a growing, diversified source of annual licenses and potential downstream revenue.
Our SPL partnerships allow us to participate in the value creation of our customers’ programs via precommercial milestones and in commercial sales-based payments. We intend to continue to build a portfolio of strategic partnerships with cell therapy developers, which provide us with a growing, diversified source of annual licenses and potential downstream revenue.
In addition to recurring revenue, we have the potential to receive meaningful precommercial and commercial payments under SPL partnerships as our customers achieve success in advancing programs through the clinic and into the commercial stage.
In addition to recurring revenue, we have the potential to receive meaningful precommercial and commercial payments under SPL partnerships as our customers achieve success in advancing programs through the clinical stage and into the commercial stage.
Clinical trials then involve the administration of the investigational product to human subjects under the supervision of qualified investigators and are conducted under protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. 5 Our 19 SPL partnerships have the potential to generate over $1.55 billion in precommercial milestone payments if all of the licensed programs were to achieve regulatory approvals.
Clinical trials then involve the administration of the investigational product to human subjects under the supervision of qualified investigators and are conducted under protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. 5 Our 26 SPL partnerships have the potential to generate over $1.95 billion in precommercial milestone payments if all of the licensed programs were to achieve regulatory approvals.
The R-1L assembly allows for 18 Table of Contents large volume sample processing that can be adapted to a closed and sterile workflow for continuous end-product production.
The R-1L assembly 19 Table of Contents allows for large volume sample processing that can be adapted to a closed and sterile workflow for continuous end-product production.
Since the commercial launch of our first Flow Electroporation instrument, the installed base of our instruments has grown to more than 600 instruments globally. Our sales force and field application scientists and international partners inform our current and potential customers of current product offerings, new target applications and advances in our technologies and products.
Since the commercial launch of our first Flow Electroporation instrument in 2003, the installed base of our instruments has grown to more than 680 instruments globally. Our sales force and field application scientists and international partners inform our current and potential customers of current product offerings, new target applications and advances in our technologies and products.
Supply For both instrument and PA manufacturing, we regularly assess our supply chain to ensure availability of components, our ability to respond to customer demand for our products and to qualify multiple suppliers. We have relationships with multiple custom parts manufacturers and electronics suppliers that can provide components for our instruments, including components currently provided by a single source.
Supply For both instrument and PA manufacturing, we regularly assess our supply chain to ensure our ability to respond to customer demand for our products. We have relationships with multiple custom parts manufacturers and electronics suppliers that can provide components for our instruments, including components currently provided by a single source.
We expect to grow our market share given the high performance of our platform and the ongoing adoption of non-viral delivery as the industry has trended towards developing advanced cell-based therapies with complex engineering strategies to improve efficacy, reduce time to patient treatment and expand into new indications. • Innovative partnership business model focused on value creation and shared success .
We expect to continue to grow our market share given the high performance of our platform and the ongoing adoption of non-viral delivery methods as the cell and gene therapy industry has trended towards developing advanced cell-based therapies with complex engineering strategies to improve efficacy, reduce time to patient treatment and expand into new indications. ​ • Innovative partnership business model focused on value creation and shared success .
For our VLx Platform we introduced the R-1L Flow Electroporation Processing Assembly, which can process in 30 minutes or less between 100 mL and 1 Liter sample volume accommodating up to 200 billion cells in a single run.
At the same time, for our VLx Platform, we introduced the R-1L Flow Electroporation Processing Assembly, which can process in 30 minutes or less between 100 mL and 1 Liter sample volume accommodating up to 200 billion cells in a single run.
Data Privacy and Security Laws and Regulations In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, process) personal information, such as clinical 23 Table of Contents trial data and other health data.
Data Privacy and Security Laws and Regulations In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, process) personal information, such as clinical trial data and other health data.
Item 1. Business Overview We are a leading commercial cell engineering company focused on 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.
Item 1. Business Overview We are a leading commercial cell engineering company focused on providing enabling platform technologies to advance the discovery, development and commercialization of next-generation cell therapeutics including cell and gene therapies and to support innovative cell-based research and development.
Our family of instruments and disposables have been designed to support scale-up for cell therapy development, as shown in the picture below.
Our family of instruments and disposables has been designed to support scale-up for cell therapy development, as shown in the picture below.
Viral vectors, particularly Adeno-Associated Virus (“AAV”), have fundamental payload capacity limitations, curtailing their utility for complex engineering systems. Additionally, the industry has continued to shift to using complex molecules including combination of proteins and mRNA which cannot be delivered by viral means. • Concerns around toxicity.
Viral vectors, particularly Adeno-Associated Virus (“AAV”), have fundamental payload capacity limitations, curtailing their utility for complex engineering systems. Additionally, the cell therapy industry has continued to shift to using complex molecules including combinations of proteins and mRNA which cannot be delivered by viral means. • Concerns around toxicity.
The R-20K assembly will allow clients to develop therapies at small or mid-scale volumes with improved cell recovery in a closed process adaptable format to assist in de-risking their manufacturing process at the electroporation step.
The R-20K assembly allows clients to develop therapies at small or mid-scale volumes with improved cell recovery in a closed process adaptable format to assist in de-risking their manufacturing process at the electroporation step.
We view our ability to sign SPL partnerships as a key measure of our success in partnering with leading therapeutic developers in the clinic, which then supports the performance of our platform. 13 Table of Contents The following graphic is an example of typical single-product revenues from a representative SPL partnership: Our SPL partnerships and research and clinical licenses may be terminated at the option of our customers at any time.
We view our ability to establish SPL partnerships as a key measure of our success in partnering with leading therapeutic developers, which then supports the performance of our platform. 14 Table of Contents The following graphic is an example of typical single-product revenues from a representative SPL partnership: Our SPL partnerships and research and clinical licenses may be terminated at the option of our customers at any time.
Instruments Our range of ExPERT instruments are manufactured, tested and shipped from our Maryland facility under cGMP. Several custom components of our ExPERT instruments are fabricated by third-party suppliers. The assembly of technology-sensitive components and the final assembly is completed in-house.
Instruments Our range of ExPERT instruments are manufactured, tested and shipped from our Maryland facility. Several custom components of our ExPERT instruments are manufactured by third-party suppliers. The assembly of technology-sensitive components and the final assembly is completed in-house.
Sales and Marketing We follow a direct sales model in North America, the United Kingdom, and Europe, while also selling through third-party distributors in Asia and some regions of Europe. As of December 31, 2022, we had over 25 field sales and application scientists located in the United States, the United Kingdom, and several regions in Europe and Asia.
Sales and Marketing We follow a direct sales model in North America, the United Kingdom, and Europe, while also selling through third-party distributors in Asia and some regions of Europe. As of December 31, 2023, we had over 36 field sales and application scientists located in the United States, the United Kingdom, and several regions in Europe and Asia.
Using proprietary Flow Electroporation Technology, the VLx supports the ability to transfect up to 200 billion cells in less than 30 minutes—10 times the capacity of the STx and GTx. This system is designed for the rapid and large-scale production of recombinant proteins, monoclonal antibodies, viral vectors, vaccines, virus-like particles (“VLPs”), and allogeneic cell therapies.
Using proprietary Flow Electroporation technology, the VLx supports the ability to transfect up to 200 billion cells in less than 30 minutes—10 times the capacity of the STx and GTx. This system is designed for the rapid and large-scale production of recombinant proteins, monoclonal antibodies, viral vectors, vaccines, VLPs and allogeneic cell therapies.
In addition to sales of our instruments, as part of our business model we enter into the following types of instrument license agreements with our customers: Research Licenses Research licenses are agreements we have entered into with customers (which could be academic institutions or commercial entities), which provide access to the use of our instruments for preclinical research-only purposes, without the rights or ability to produce material for use in the clinic.
In addition to sales of our instruments, as part of our business model we enter into the following types of instrument license agreements with our customers: Research Licenses Research licenses are agreements with academic institutions or commercial entities which provide access to the use of our instruments for preclinical research-only purposes, without the rights or ability to produce material for use in the clinic or commercially.
As our primary point of contact in the marketplace, our field teams focus on delivering a consistent marketing message and high level of customer support, while also working to help us better understand the evolving market and customer needs. We intend to 19 Table of Contents expand our sales, support, and marketing efforts in regions such as the Asia-Pacific region.
As our primary point of contact in the marketplace, our field teams focus on delivering a consistent marketing message and high level of customer support, while also working to help us better understand the evolving market and customer needs. We intend to expand our sales, support, and marketing efforts in regions such as those within the Asia-Pacific region.
In return, these SPL partnerships provide us with the ability to receive downstream program-related precommercial milestone payments and, in most cases, commercial sales-based payments. In addition, from our SPL partnership customers, we receive both annual research and clinical license fees as well as payments from sales of our proprietary disposables as recurring revenue streams.
In return, these SPL partnerships provide us with the ability to receive downstream program-related precommercial milestone payments and, in most cases, commercial sales-based payments. In addition, from our SPL partnership customers, we receive annual research fees for certain products and clinical license fees for others as well as payments from sales of our proprietary disposables as recurring revenue streams.
We currently use distributors in countries in these regions, such as in China and Japan, supplemented by dedicated MaxCyte team members, and continuously assess the need for direct sales and local support personnel to supplement our distributors’ resources.
We currently use distributors in countries in these regions, such as in China and Japan, supplemented by dedicated MaxCyte team 20 Table of Contents members, and continuously assess the need for direct sales and local support personnel to supplement our distributors’ resources.
For further discussion of the risks we face as a result of competition, see “Risk Factors—Risks Related to Our Business and Growth Strategy—We may be unable to compete successfully against our existing or future competitors.” Intellectual Property Our intellectual property strategy has been, and still is, to obtain patent protection in relevant jurisdictions over our instruments, methods utilizing our instruments, as well as design patents over the ExPERT system.
For further discussion of the risks we face as a result of competition, see “Risk Factors—Risks Related to Our Business and Growth Strategy—We may be unable to compete successfully against our existing or future competitors.” Intellectual Property Our long-standing intellectual property strategy has been to obtain patent protection in relevant jurisdictions over our instruments and related methods, as well as design patents covering the ExPERT system.
The SEC maintains an internet site that contains reports, proxy and information statements and other information that we file electronically with the SEC. The address of the SEC's website is www.sec.gov. ​ 25 Table of Contents
The SEC maintains an internet site that contains reports, proxy and information statements and other information that we file electronically with the SEC. The address of the SEC's website is www.sec.gov. ​
To date, our FDA Master File and Technical Files have been referenced by our customers in over 40 clinical trials. 8 Table of Contents • Recurring revenue model provides high visibility, with drivers of potential long-term upside.
To date, our FDA Master File and Technical Files have been referenced by our customers in over 60 clinical trials. 9 Table of Contents • Recurring revenue model provides high visibility, with drivers of potential long-term upside.
Our years of accumulated know-how and the technical expertise of our employees provide us with a competitive advantage. We use our know-how and technical expertise to optimize and update our proprietary methods and protocols, such as cell handling and preparation techniques unique to different cells and target molecules, which we confidentially share with our customers.
Our years of accumulated know-how together with the technical expertise of our employees provide us with a competitive advantage. We use this know-how and technical expertise to optimize, revise and improve our proprietary methods and protocols, such as cell handling and preparation techniques unique to different cells and target molecules, which we confidentially share with our customers.
Once optimized for the biological function with smaller numbers of cells, the process can be replicated and scaled before being transferred to the clinical platform (GTx) for eventual manufacturing in the cGMP suite or to the STx platform for drug discovery and bioprocessing applications. ​ ExPERT STx: Flow Electroporation for protein production and drug development ​ ​ ​ ​ ​ Our ExPERT STx, which is used in the field of protein production as well as other drug discovery applications, also incorporates our proprietary Flow Electroporation Technology for high yield transient expression of complex proteins, viral vectors, vaccines and biologics.
Once optimized for the biological function with smaller numbers of cells, the process can be replicated and scaled before being transferred to the clinical platform (GTx) for eventual manufacturing in the cGMP suite or to the STx platform for drug discovery and bioprocessing applications. ​ ExPERT STx: Flow Electroporation for protein production and drug development ​ ​ ​ ​ ​ Our ExPERT STx instrument, which is generally used in the field of protein production and for other drug discovery applications, also incorporates our proprietary Flow Electroporation Technology for high yield transient expression of complex proteins, viral vectors, vaccines, virus like particles (“VLPs”) and biologics.
Our SPL partners also commit to pay precommercial milestone payments for each therapeutic licensed under the agreement and produced using our platform, as they achieve key precommercial clinical development events (including, for example, IND filing, dosing of an agreed number of patients in a Phase 1 clinical trial, initiating a pivotal clinical trial, and Biologics License applications (“BLA”) approvals in specified regions).
Our SPL partners also commit to pay precommercial milestone payments for each therapeutic licensed under the agreement and produced using our platform, to be paid as they achieve key precommercial clinical development events (including, for example, Investigational New Drug (“IND”) applications and approvals, filing, dosing of an agreed number of patients in a Phase 1 clinical trial, initiating a pivotal clinical trial, and Biologics License applications (“BLA”) approvals in specified regions).
Violations of these laws can lead to significant administrative, civil and criminal penalties, including sanctions, damages, disgorgement, monetary fines, possible exclusion from participation in government healthcare programs such as Medicare and Medicaid, imprisonment, additional reporting requirements and/or oversight obligations, contractual damages, reputational harm, diminished profits and future earnings and curtailment or restructuring of operations.
Violations of these laws by our customers who are subject thereto can lead to significant administrative, civil and criminal penalties, including sanctions, damages, disgorgement, monetary fines, possible exclusion from participation in government healthcare programs such as Medicare and Medicaid, imprisonment, additional reporting requirements and/or oversight obligations, contractual damages, reputational harm, diminished profits and future earnings and curtailment or restructuring of operations.
Characteristics include reducing immunogenicity risk of viral vectors, the need to drive high efficiency of multi-molecule delivery while maintaining high cell viability and potency, reducing the risk of potential genotoxicity of multiplex editing (potential for translocations), the need to deliver a large number of molecules at scale, the ability to deliver to a large number of cell types in a time efficient matter, and the need to manufacture in a cGMP environment—all at a manageable cost.
Such characteristics include reducing immunogenicity risk of viral vectors, driving high efficiency of multi-molecule delivery while maintaining high cell viability and potency, reducing the risk of potential genotoxicity of multiplex editing (potential for translocations), delivering a large number of molecules at scale, the ability to deliver to a large number of cell types in a time efficient matter, and manufacturing in a cGMP environment—all at a manageable cost.
Presently, our Maryland manufacturing 20 Table of Contents facility can support the production of ExPERT instruments in excess of anticipated demand, and we plan to continue obtaining the space and staffing necessary to meet customer demand for the foreseeable future. Processing Assemblies Our PAs are only available from us and are designed for use only with our instruments.
Presently, our Maryland manufacturing facility can support the production of ExPERT instruments in excess of anticipated demand, and we plan to continue obtaining the space and staffing necessary to meet customer demand for the foreseeable future. 21 Table of Contents Processing Assemblies Our PAs are only available for purchase directly from us and our third-party distributors and are designed for use only with our instruments.
Electroporation can be applied to almost any eukaryotic cell type to deliver a broad range of molecules, including DNA, human messenger RNA (“mRNA”), siRNA and proteins.
Electroporation can be applied to almost any eukaryotic cell type to deliver a broad range of molecules, including DNA, human messenger RNA (“mRNA”), small interfering RNA (“siRNA”), and proteins.
Our customer relationships may evolve to an SPL partnership after the customer’s drug candidate optimization and verification process nears completion and the clinical process development stage begins.
A customer relationship may evolve to an SPL partnership after the customer’s drug candidate optimization and verification process nears completion and the clinical process development stage begins.
In order to support our customers’ use of our platform, we have voluntarily submitted a Master File to the FDA, Center for Biologics Evaluation and Research and Master Files or Technical Files to comparable regulatory authorities in other jurisdictions, including Canada, Japan, the United Kingdom and Austria, and provide nonexclusive Letters of Authorization to the Master or Technical Files under contractual agreements with our customers.
In order to support our customers’ use of our platform in regulatory submissions, we have submitted Master 23 Table of Contents Files to the FDA, Center for Biologics Evaluation and Research and Master Files and/or Technical Files to comparable regulatory authorities in other jurisdictions, including Canada, Japan, Australia, the United Kingdom and Austria, and provide nonexclusive Letters of Authorization to the Master or Technical Files under contractual agreements with our customers.
As of March 8, 2023, we have more than 150 granted U.S. and foreign patents, including in foreign jurisdictions such as Australia, Canada, Japan, China, South Korea and certain countries in Europe, as well as over 95 pending patent applications worldwide.
As of March 1, 2024, we have more than 150 granted U.S. and foreign patents, including in Australia, Canada, Japan, China, South Korea, and certain countries in Europe, as well as over 95 pending patent applications worldwide.
The principal purposes of our equity incentive plans are to attract, retain and reward personnel through the granting of equity-based compensation awards in order to increase shareholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives.
We have implemented an equity incentive plan, the principal purposes of which are to attract, retain and reward personnel through the granting of equity-based compensation awards in order to increase shareholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives.
Our in-house manufacturing and design function is certified as ISO 9001 compliant and our manufacturing facility and controlled-access shipping, receiving and storage spaces are located at our current headquarters in Maryland. We relocated our operations, including inventory and manufacturing, to a significantly larger space in a new facility during 2022.
Our in-house PA manufacturing and design function is certified as ISO 9001 compliant and our manufacturing facility and controlled-access shipping, receiving and storage spaces are located at our current headquarters in Maryland. We relocated our operations, including inventory and manufacturing, to a significantly larger space in a new facility during 2022, as described more fully under Item 2 hereof.
Our long-term internal engineering expertise is supplemented by our customer focused approach—with a growing application scientist team working with our customers across increasingly diverse applications. • Recognition as a leader in the large and growing next-generation cell therapy market with the ability to capitalize on rising demand for non-viral approaches.
Our long-term internal engineering expertise is supplemented by our customer focused approach—with a growing application scientist team working with our customers across increasingly diverse applications. • Capitalizing on the large and growing next-generation cell therapy market with the ability to take advantage of rising demand for non-viral approaches.
We believe the team we have assembled with talent from multiple disciplines and a science- and customer-focused culture represents a significant competitive advantage for us. As of December 31, 2022, of our 125 full-time employees, 68 have advanced degrees including 25 with Ph.D. degrees.
We believe the team we have assembled with talent from multiple disciplines and a science- and customer-focused culture represents a significant competitive advantage for us. As of December 31, 2023, of our 143 full-time employees, 81 have advanced degrees including 29 with Ph.D. degrees.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge through our website as soon as reasonably practicable after they are electronically filed with or furnished to the SEC.
Our website and information included in or linked to our website are not part of this Annual Report. 25 Table of Contents Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge through our website as soon as reasonably practicable after they are electronically filed with or furnished to the SEC.
The Alliance for Regenerative Medicine (“ARM”), an international advocacy organization, estimates that the regenerative medicine sector, which consists of gene, cell, and tissue-based therapeutic developers raised an aggregate of $12.6 billion in 2022 and that, as of January 2023, there were more than 2,220 active clinical trials focused on regenerative and advanced medicine, which includes gene therapy, cell-based immuno-oncology, cell therapy and tissue engineering.
The Alliance for Regenerative Medicine (“ARM”), an international advocacy organization, estimates that the regenerative medicine sector, which consists of gene, cell, and tissue-based therapeutic developers raised an aggregate of $11.7 billion in 2023 and that, as of February 2024, there were more than 1,900 active clinical trials focused on regenerative and advanced medicine, which includes gene therapy, cell-based immuno-oncology, cell therapy and tissue engineering.
Employees and Human Capital As of December 31, 2022, we had 125 full-time employees, 68 of which have advanced degrees, including 25 with Ph.D. degrees. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, training, incentivizing and integrating our existing and new employees, advisors and consultants.
Employees and Human Capital As of December 31, 2023, we had 143 full-time employees, 81 of whom have advanced degrees, including 29 with Ph.D. degrees. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, training, incentivizing and integrating our existing and new employees, advisors and consultants.
Our biopharmaceutical and life sciences customers are subject to extensive regulations by the FDA and equivalent regulatory authorities in other countries, regarding the conduct of preclinical studies and clinical trials, in the manufacture of product candidates and products for use in humans (i.e., “Good Manufacturing Practice” laws and regulations) and the marketing authorization and commercialization of biological drug products.
Our biopharmaceutical and life sciences customers are subject to extensive regulations by the FDA and similar federal, state, and local authorities, as well as their foreign equivalents, regarding the conduct of preclinical studies and clinical trials, in the manufacture of product candidates and products for use in humans (i.e., “Good Manufacturing Practice” laws and regulations) and the marketing authorization and commercialization of biological and drug products.
An IND must become effective before human clinical trials may begin. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises safety concerns or questions about the proposed clinical trial.
The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises safety concerns or questions about the proposed clinical trial.
We believe our ExPERT platform is seen as a critical enabling technology by many of the leading cell therapy companies, helping them to achieve their program goals and milestones expeditiously.
We believe our ExPERT platform is seen as a critical enabling technology by our customers, many of whom are leading cell therapy companies, helping them work towards achieving their program goals and milestones expeditiously.
We plan to continue to support customers using legacy processing assemblies until they transition to our ExPERT products. In 2022, we added the R-20K Flow Electroporation Processing Assembly for our STx and GTx platforms, which can process between 5 mL and 20 mL sample volumes, which can accommodate between 200 million and up to 4 billion cells.
In 2022, we added the R-20K Flow Electroporation Processing Assembly for our STx and GTx platforms, which can process between 5 mL and 20 mL sample volumes, which can accommodate between 200 million and up to 4 billion cells.
Research and development expenses totaled $19.5 million and $15.4 million in the years ended December 31, 2022 and 2021, respectively.
Research and development expenses totaled $23.8 million and $19.5 million in the years ended December 31, 2023 and 2022, respectively.
Although we are not engaged in directly regulated activities, our customers will generally assess our products for sufficiency in meeting their regulatory needs, and may impose rigorous quality or other regulatory compliance requirements on us as their supplier through supplier qualification processes and customer contracts.
Although our products are not intended to treat patients directly, they are used in manufacturing therapeutics by our customers to treat patients. Therefore, our customers will generally assess our products for sufficiency in meeting their regulatory needs, and may impose rigorous quality or other regulatory compliance requirements on us as their supplier through supplier qualification processes and customer contracts.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe anticipate that our expenses will increase as we: • continue to advance our ex vivo cell engineering platforms and develop new technologies related to our platform; • acquire and license technologies aligned with our ex vivo cell engineering platforms; • expand our operational, financial and management systems and increase personnel, including staff to support our research and development, manufacturing and commercialization efforts; • continue to develop, prosecute and defend our intellectual property portfolio; and • incur additional legal, accounting and other expenses in operating our business, including the additional costs associated with operating as a public company in the United States.
Biggest changeWe anticipate that our expenses will increase as we: • continue to advance our ex vivo cell engineering platforms and develop new technologies related to our platform; • acquire and license technologies aligned with our ex vivo cell engineering platforms; • expand our operational, financial and management systems and increase personnel, including staff to support our research and development, manufacturing and commercialization efforts; • continue to develop, prosecute and defend our intellectual property portfolio; and • incur additional legal, accounting and other expenses in operating our business, including the additional costs associated with operating as a public company in the United States. 26 Table of Contents We have devoted a significant portion of our financial resources and efforts to building our organization, developing our ex vivo cell engineering platforms, acquiring technology, building out our manufacturing capabilities, organizing and staffing the company, business planning, establishing our intellectual property portfolio, raising capital, securing license and partnership arrangements with customers and providing general and administrative support for these operations.
The variables that go into the calculation of our market opportunity are subject to change over time , and there is no guarantee that any particular number or percentage of customers covered by our market opportunity estimates will purchase our products at all or generate any particular level of revenue for us.
The variables that go into the calculation of our market opportunity are subject to change over time , and there is no guarantee that any particular number or percentage of customers covered by our market opportunity estimates will purchase our products or generate any particular level of revenue for us at all.
In addition to our financial results, our management regularly reviews a number of operating and financial metrics, including a breakdown of product and leased revenue into instrument sales, PAs, leased revenue (recurring revenue), product placements, cumulative product placements, revenue by customer market (cell therapy and drug discovery), and status or number of installed instruments, SPLs, program licenses (research, clinical and SPL) and potential precommercial milestones, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.
In addition to our financial results, our management regularly reviews a number of operating and financial metrics, including a breakdown of product and leased revenue into instrument sales, PAs, leased revenue (recurring revenue), product placements, cumulative product placements, revenue by customer market (cell therapy and drug discovery), status or number of installed instruments, SPLs, program licenses (research, clinical and SPL), and potential precommercial milestones, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.
In addition, the demand for our products may 31 Table of Contents depend upon the research and development budgets of these customers, which are impacted by factors beyond our control, such as: • macroeconomic conditions and the political climate; • investor confidence in the biopharmaceutical industry and the amount of capital such investors provide to our potential customers; • reduced pricing of approved therapeutics; • scientists’ and customers’ opinions of the utility of new products or services; • changes in the regulatory environment; • differences in budgetary cycles; • competitor product offerings or pricing; • merger and acquisition activity within the industry; • market-driven pressures to consolidate operations and reduce costs; • market acceptance of relatively new technologies, such as ours; • clinical trial or milestone failures that impact our customers’ ability to raise capital; and • inability to sustain capital requirements or bankruptcy.
In addition, the demand for our products may depend upon the research and development budgets of these customers, which are impacted by factors beyond our control, such as: 31 Table of Contents • macroeconomic conditions, and the political climate; • investor confidence in the biopharmaceutical industry and the amount of capital such investors provide to our potential customers; • reduced pricing of approved therapeutics; • scientists’ and customers’ opinions of the utility of new products or services; • changes in the regulatory environment; • differences in budgetary cycles; • competitor product offerings or pricing; • merger and acquisition activity within the industry; • market-driven pressures to consolidate operations and reduce costs; • market acceptance of relatively new technologies, such as ours; • clinical trial or milestone failures that impact our customers’ ability to raise capital; and • inability to sustain capital requirements or bankruptcy.
We may not be able to identify, secure or 38 Table of Contents complete any such transactions or arrangements in a timely manner, on a cost-effective basis on acceptable terms or at all. We have limited experience with respect to these business development activities.
We may not be able to identify, secure or complete any such transactions or arrangements in a timely manner, on a cost-effective basis on acceptable terms or at all. 38 Table of Contents We have limited experience with respect to these business development activities.
Any future acquisitions we make could subject us to a number of risks, including: 39 Table of Contents • Purchase prices we pay could significantly deplete our cash reserves, impair our future operating flexibility or result in dilution to our existing stockholders; • We may find that the acquired company, assets or technology does not further improve our financial and strategic position as planned; • We may find that we overpaid for the company, asset or technology, or that the economic conditions underlying our acquisition have changed; • We may have difficulty integrating the operations and personnel of the acquired company; • We may have difficulty retaining the employees with the technical skills needed to enhance and provide services with respect to the acquired assets or technologies; • Acquisitions may be viewed negatively by customers, financial markets, or investors; • We may have difficulty incorporating the acquired technologies or products with our existing products; • We may encounter difficulty entering and competing in new product or geographic markets; • We may encounter a competitive response, including price competition or intellectual property litigation; • We may have product liability, customer liability or intellectual property liability associated with the sale of the acquired company’s products; • We may be subject to litigation by terminated employees or third parties; • We may incur debt and restructuring charges; • We may acquire goodwill and other intangible assets that are subject to impairment tests, which could result in future impairment charges; • Our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the complexity of managing geographically or culturally diverse enterprises; and • Our due diligence process may fail to identify significant existing issues with the target company’s product quality, product architecture, financial disclosures, accounting practices, internal controls, legal contingencies, intellectual property and other matters.
Any future acquisitions we make could subject us to a number of risks, including: • Purchase prices we pay could significantly deplete our cash reserves, impair our future operating flexibility or result in dilution to our existing stockholders; 39 Table of Contents • We may find that the acquired company, assets or technology does not further improve our financial and strategic position as planned; • We may find that we overpaid for the company, asset or technology, or that the economic conditions underlying our acquisition have changed; • We may have difficulty integrating the operations and personnel of the acquired company; • We may have difficulty retaining the employees with the technical skills needed to enhance and provide services with respect to the acquired assets or technologies; • Acquisitions may be viewed negatively by customers, financial markets, or investors; • We may have difficulty incorporating the acquired technologies or products with our existing products; • We may encounter difficulty entering and competing in new product or geographic markets; • We may encounter a competitive response, including price competition or intellectual property litigation; • We may have product liability, customer liability or intellectual property liability associated with the sale of the acquired company’s products; • We may be subject to litigation by terminated employees or third parties; • We may incur debt and restructuring charges; • We may acquire goodwill and other intangible assets that are subject to impairment tests, which could result in future impairment charges; • Our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the complexity of managing geographically or culturally diverse enterprises; and • Our due diligence process may fail to identify significant existing issues with the target company’s product quality, product architecture, financial disclosures, accounting practices, internal controls, legal contingencies, intellectual property and other matters.
Moreover, in the event that we transition to a new manufacturer, particularly from any of our single source manufacturers, doing so could be time-consuming and expensive, may result in interruptions in our ability to supply our products to the market and could affect the performance of our PAs, resulting in increased costs and negative customer perception and could have a material adverse effect on our business, financial condition and results of operations.
Moreover, in the event that we transition to a new manufacturer, particularly from any of our single source manufacturers, doing so could be time-consuming and expensive, may result in interruptions in our ability to supply our products to the market, could affect the performance of our PAs, resulting in increased costs and negative customer perception, and could have a material adverse effect on our business, financial condition and results of operations.
Further, changes that we are required to make from time to time, or changes to regulations or negative data or adverse events for our partners, could impact references to our FDA Master File and Technical Files by our partners.
Further, changes that we are required to make from time to time, or changes to regulations or negative data or adverse events for our partners, could impact references to our FDA Master File and Master and Technical Files by our partners.
In addition, while we believe our FDA Master File and equivalent Technical Files have the potential to create certain efficiencies and reduce certain regulatory development risks for our customers, there is no guarantee that referencing our FDA Master File or Technical File, as applicable, will result in success in customers’ submissions seeking authorization for clinical trials or marketing authorization.
In addition, while we believe our FDA Master Files and equivalent Master and Technical Files have the potential to create certain efficiencies and reduce certain regulatory development risks for our customers, there is no guarantee that referencing our FDA Master File or Master and Technical Files, as applicable, will result in success in customers’ submissions seeking authorization for clinical trials or marketing authorization.
Under the EU and UK GDPR, government regulators 48 Table of Contents may impose temporary or definitive bans on data processing and other corrective actions; fines of up to €20 million (£17.5 million under the UK GDPR) or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher; or private litigation related to the processing of personal information brought by classes of data subjects or consumer protection organizations authorized at law to represent their incidents.
Under the EU GDPR and UK GDPR, government regulators may impose temporary or definitive bans on data processing and other corrective actions; fines of up to €20 million (£17.5 million under the UK GDPR) or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher; or private litigation related to the processing of personal information brought by classes of data subjects or consumer protection organizations 48 Table of Contents authorized at law to represent their incidents.
Moreover, the rights granted under any issued patents may not provide us with proprietary protection, barriers to entry or competitive advantages, and, as with any technology, competitors may be able to develop and obtain patents for technologies that are similar to or superior to our technologies.
Moreover, the rights granted under any issued patents may not provide us with proprietary protection, barriers to entry or competitive advantages, and, as with any technology, competitors may be able to develop and obtain patents for technologies that are similar or superior to our technologies.
We may be sued by third parties for alleged infringement of their proprietary rights, which could be costly, time-consuming and limit our ability to use certain technologies in the future or to develop future products. We may be subject to claims that our technologies infringe upon the intellectual property or other proprietary rights of third parties.
We may be sued by third parties for alleged infringement of their proprietary rights, which could be costly and time-consuming and which could limit our ability to use certain technologies in the future or to develop future products. We may be subject to claims that our technologies infringe upon the intellectual property or other proprietary rights of third parties.
The market price of our common stock may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control, including: • actual or anticipated fluctuations in our financial condition or results of operations; • variance in our financial performance from expectations of securities analysts; • changes in our projected operating and financial results; • announcements by us or our competitors of significant business developments, acquisitions, or new offerings; • announcements by our partners on clinical development delays for products being enabled by our technology; • announcements or concerns regarding real or perceived safety or efficacy issues with our products or similar products of our competitors; • adoption of new regulations applicable to our industry or the expectations concerning future regulatory developments; • our involvement in litigation; • future sales of our common stock by us or our stockholders; • changes in senior management, the board of directors or key personnel; • the trading volume of our common stock; • changes in the anticipated future size and growth rate of our market; and • general economic and market conditions.
The market price of our common stock may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control, including: • actual or anticipated fluctuations in our financial condition or results of operations; • variance in our financial performance from expectations of securities analysts; • changes in our projected operating and financial results; • announcements by us or our competitors of significant business developments, acquisitions, or new offerings; • announcements by our partners on clinical development delays for products being enabled by our technology; • announcements or concerns regarding real or perceived safety or efficacy issues with our products or similar products of our competitors; • adoption of new regulations applicable to our industry or the expectations concerning future regulatory developments; • our involvement in litigation; • future sales of our common stock by us or our stockholders; • changes in senior management, the board of directors or key personnel; • the trading volume of our common stock; • changes in the anticipated future size and growth rate of our market; and • general economic, macroeconomic and market conditions.
While the number of customers using our products has increased in recent years, many biopharmaceutical companies and academic institutions have not yet adopted our products, and such institutions and companies may choose not to adopt our products for a number of reasons, including: • inability to convince potential customers that our products are an attractive alternative to existing technologies and reluctance of potential customers to replace those existing technologies; • inadequate recruiting or training of talented sales force and field application scientists in existing and new markets to facilitate outreach and further adoption and awareness of our products; • lack of experience of potential customers with our products for cell engineering; • perceived inadequacy of evidence supporting benefits or cost-effectiveness of our products over existing alternatives or negative publicity regarding cell engineering technologies; • liability risks generally associated with the use of new products and processes; • time and training required for potential customers to use and validate our products; • delays in research and development activities using our products; • competing products and alternatives; and • introduction of other novel alternative products for cell engineering.
While the number of customers using our products has increased in recent years, many biopharmaceutical companies and academic institutions have not yet adopted our products, and such institutions and companies may choose not to adopt our products for a number of reasons, including: • inability to convince potential customers that our products are an attractive alternative to existing technologies and reluctance of potential customers to replace those existing technologies; • inadequate recruiting or training of talented sales force and field application scientists in existing and new markets to facilitate outreach and further adoption and awareness of our products; • lack of experience of potential customers with our products for cell engineering; • perceived inadequacy of evidence supporting benefits or cost-effectiveness of our products over existing alternatives or negative publicity regarding cell engineering technologies; • liability risks generally associated with the use of new products and processes; • time and training required for potential customers to use and validate our products; • delays in research and development activities involving our products; • competing products and alternatives; and • introduction of other novel alternative products for cell engineering.
Furthermore, partners, collaborators or other parties to such transactions or arrangements may fail to fully perform their obligations or meet our expectations or cooperate with us satisfactorily for various reasons and subject us to potential risks, including the following: • Partners, collaborators or other parties have significant discretion in determining the efforts and resources that they will apply to a transaction or arrangement; • Partners, collaborators or other parties could independently develop, or develop with third parties, services and products that compete directly or indirectly with our product candidates; • Partners, collaborators or other parties may stop, delay or discontinue clinical trials as well as repeat clinical trials or conduct new clinical trials by using our intellectual property or proprietary information; • Partners, collaborators or other parties may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liabilities; • Disputes may arise between us and partners, collaborators or other parties that cause the delay or termination of the research, development or commercialization of our product candidates, or that result in costly litigation or arbitration that diverts management’s attention and resources; • Partners, collaborators or other parties may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable services and products; and • Partners, collaborators or other parties may own or co-own intellectual properties covering our product candidates that results from our collaborating with them, and in such cases, we would not have the exclusive right to commercialize such intellectual properties.
Furthermore, partners, collaborators or other parties to such transactions or arrangements may fail to fully perform their obligations or meet our expectations or cooperate with us satisfactorily for various reasons and subject us to potential risks, including the following: • Partners, collaborators or other parties have significant discretion in determining the efforts and resources that they will apply to a transaction or arrangement; • Partners, collaborators or other parties could independently develop, or develop with third parties, services and products that compete directly or indirectly with our products or product candidates; • Partners, collaborators or other parties may stop, delay or discontinue clinical trials as well as conduct new clinical trials by using our intellectual property or proprietary information; • Partners, collaborators or other parties may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liabilities; • Disputes may arise between us and partners, collaborators or other parties that cause the delay or termination of the research, development or commercialization of product candidates, or that result in costly litigation or arbitration that diverts management’s attention and resources; • Partners, collaborators or other parties may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable services and products; and • Partners, collaborators or other parties may own or co-own intellectual properties covering our product candidates that results from our collaborating with them, and in such cases, we may not have the exclusive right to commercialize such intellectual properties.
In particular, if we are unable to develop additional relevant products and applications for markets such as cell therapy or large-scale bioprocessing, it could slow or stop our business growth and negatively impact our business, financial condition, results of operations and prospects. 29 Table of Contents Our business is dependent on adoption of our products by biopharmaceutical companies and academic institutions for their research and development activities focused on cell-based therapeutics.
In particular, if we are unable to develop additional relevant products and applications for markets such as cell therapy or large-scale bioprocessing, it could slow or stop our business growth and negatively impact our business, financial condition, results of operations and prospects. 29 Table of Contents Our business is dependent on adoption of our products by organizations such as biopharmaceutical companies and academic institutions for their research and development activities focused on cell-based therapeutics.
Our current certificate of incorporation and bylaws include provisions that: • authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock; 67 Table of Contents • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, or our chief executive officer; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; • establish that our board of directors is divided into three classes, with each class serving three- year staggered terms; • prohibit cumulative voting in the election of directors; • provide that our directors may be removed (i) with or without cause, upon the vote of at least 50% of the outstanding shares of voting stock or (ii) with cause, by the affirmative vote or consent of at least two-thirds of the other members of our board of directors; and • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum.
Our current certificate of incorporation and bylaws include provisions that: • authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock; 68 Table of Contents • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, or our chief executive officer; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; • establish that our board of directors is divided into three classes, with each class serving three- year staggered terms; • prohibit cumulative voting in the election of directors; • provide that our directors may be removed (i) with or without cause, upon the vote of at least 50% of the outstanding shares of voting stock or (ii) with cause, by the affirmative vote or consent of at least two-thirds of the other members of our board of directors; and • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum.
Our reliance on our partners poses a number of additional risks, including the risk that they may not perform their contractual obligations to us to our standards, in compliance with applicable legal or contractual requirements, in a timely manner or at all; they may not maintain the confidentiality of our proprietary information; and disagreements or disputes could arise that could cause delays in, or termination of, the research, development or commercialization of therapeutic candidates produced using our instruments and PAs.
Our reliance on our partners poses a number of additional risks, including the risk that they may not perform their contractual obligations to our standards, in compliance with applicable legal or contractual requirements, in a timely manner or at all; they may not maintain the confidentiality of our proprietary information; and disagreements or disputes could arise that could cause delays in, or termination of, the research, development or commercialization of therapeutic candidates produced using our instruments and PAs.
To date, there have been multiple peer-reviewed articles published, including in prominent journals, using data generated through the use of our technology across a wide range of key scientific research areas, including research, discovery, development and manufacturing of next-generation, cell-based therapeutics, as well as drug discovery including protein production for biological therapeutics, viral vectors, vaccines and small molecule discovery.
To date, there have been multiple peer-reviewed articles published, including in prominent journals, using data generated through the use of our technology across a wide range of key scientific research areas, including research, discovery, development and manufacturing of next-generation, cell-based therapeutics, as well as drug and biologic discovery including protein production for biological therapeutics, viral vectors, vaccines and small molecule discovery.
These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Misconduct by these parties could also involve the improper use of individually identifiable information, which could result in regulatory sanctions and serious harm to our reputation.
Applicable laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Misconduct by these parties could also involve the improper use of individually identifiable information, which could result in regulatory sanctions and serious harm to our reputation.
As a result, stockholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our common stock. Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud.
As a result, stockholders could lose confidence in our financial and other public reporting, which could harm our business and the trading price of our common stock. Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud.
Accordingly, we may be more dependent on the success of a limited number of our customers’ programs than we would be if our revenue was derived more broadly from many customer contracts. The loss of any of our large customers, or significant delays or discontinuations in our customers’ programs, would have an adverse effect on our ability to generate revenue.
Accordingly, we may be more dependent on the success of a limited number of our customers’ programs than we would be if our revenue was derived more broadly from many customer contracts. The loss of any of our large customers, or significant delays or discontinuations in our customers’ programs, could have an adverse effect on our ability to generate revenue.
Any defects, errors or recalls could be expensive and generate negative publicity, which could impair our ability to market or sell our products, and adversely affect our results of operations. Our inability, or that of our suppliers, to find and retain the necessary qualified employees to achieve our manufacturing goals would also negatively impact our ability to meet customer needs.
Any defects, errors or recalls could be expensive and generate negative publicity, which could impair our ability to market or sell our products, and adversely affect our results of operations. Our inability, or that of our suppliers, to find and retain the necessary qualified employees to achieve our manufacturing goals could also negatively impact our ability to meet customer needs.
The number of our customers has grown significantly and such growth, as well as any future growth, will put additional pressure on our field application scientists and customer service organization. We may be unable to hire qualified staff quickly enough or to the extent necessary to accommodate increases in demand.
The number of our customers has grown significantly and such growth, as well as any future growth, may put additional pressure on our field application scientists and customer service organization. We may be unable to hire qualified staff quickly enough or to the extent necessary to accommodate increases in demand.
Furthermore, regulatory agencies may introduce new submission requirements or implement new regulations for cell and gene therapies which could result in extended timelines for our partners, creating uncertainty or delays in achieving milestones. Such delays in these milestones will materially affect our ability to forecast and receive milestone payments outlined in our license agreements.
Furthermore, regulatory agencies may introduce new submission requirements or implement new regulations for cell and gene therapies which could result in extended timelines for our partners, creating uncertainty or delays in achieving milestones. Such delays in these milestones could materially affect our ability to forecast and receive milestone payments outlined in our license agreements.
Should our manufacturing facilities or the facilities of our suppliers be damaged or destroyed by natural or man-made disasters, such as earthquakes, fires or other events, or should events such as political unrest unfold, it could take months to relocate or rebuild, during which time our manufacturing and the operations of our suppliers would cease or be delayed and our products may be unavailable.
Should our manufacturing facilities or the facilities of our suppliers be damaged or destroyed by natural or man-made disasters, such as earthquakes, fires or other events, or should events such as political unrest unfold, it could take months to relocate or rebuild, during which time our manufacturing and the operations of our suppliers could cease or be delayed and our products may be unavailable.
Likewise, our partners have to make decisions about which clinical stage and preclinical drug and therapeutic candidates to develop and advance, and our partners may not have the resources to invest in all of the drug or therapeutic candidates that are produced using our platform, or clinical data and other development considerations may not support the advancement of one or more drug candidates developed using our platform.
Likewise, our partners have to make decisions about which clinical stage and preclinical drug, biologic and therapeutic candidates to develop and advance, and our partners may not have the resources to invest in all of the drug, biologic or therapeutic candidates that are produced using our platform, or clinical data and other development considerations may not support the advancement of one or more drug candidates developed using our platform.
Domestic and international equity and debt markets experienced in 2022, and may continue to experience, heightened volatility and turmoil, including, among other things, severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages, increases in inflation rates, higher interest rates and uncertainty about economic stability.
Domestic and international equity and debt markets experienced in 2022 and 2023, and may continue to experience, heightened volatility and turmoil, including, among other things, severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages, increases in inflation rates, higher interest rates and uncertainty about economic stability.
As a result, our future growth is dependent on the ability of our partners to successfully develop and commercialize therapies discovered or produced using our platform. Due to our reliance on our partners, the risks relating to product development, regulatory clearance, authorization or approval and commercialization apply to us derivatively through the activities of our partners.
As a result, our future growth is dependent on the ability of our partners to successfully develop and commercialize therapies discovered or produced using our platform. Due to our reliance on our partners, the risks relating to product development, regulatory authorization or approval and commercialization apply to us derivatively through the activities of our partners.
Dollar and decreases in the value of foreign currencies could result in the dollar equivalent of our revenue being lower, which would negatively affect our reported results of operations. Risks Related to Our Intellectual Property Our ability to compete and the success of our business could be jeopardized if we are unable to protect our intellectual property adequately.
Dollar and decreases in the value of foreign currencies could result in the dollar equivalent of our revenue being lower, which could negatively affect our reported results of operations. Risks Related to Our Intellectual Property Our ability to compete and the success of our business could be jeopardized if we are unable to protect our intellectual property adequately.
It is possible that none of these drug or therapeutic candidates will ever receive regulatory approval and, even if approved, such drug candidates may never be successfully commercialized resulting in clinical progress milestones and commercial sales-based payments not being earned.
It is possible that none of these drug, biologic or therapeutic candidates will ever receive regulatory approval and, even if approved, such candidates may never be successfully commercialized resulting in clinical progress milestones and commercial sales-based payments not being earned.
In addition, as we continue to grow our operations and reach a global customer base, we need to be able to provide efficient customer service that meets our customers’ needs globally at scale. In geographies where we sell through distributors, we often rely on those distributors to provide customer service.
In addition, as we continue to grow our operations and reach a global customer base, we will need to be able to provide efficient customer service that meets our customers’ needs globally at scale. In geographies where we sell through distributors, we often rely on those distributors to provide customer service.
To effectively support current and potential customers, we will need to hire, maintain, train and grow globally the number of our applications scientists and add to our customer support staff. If we are unable to maintain, attract, train or retain the number of qualified support personnel that our business needs, our business and prospects will suffer.
To effectively support current and potential customers, we will need to hire, maintain, train and grow globally the number of our applications scientists and add to our customer support staff. If we are unable to maintain, attract, train or retain the number of qualified support personnel that our business needs, our business and prospects may suffer.
We cannot be certain that the FDA or foreign regulators will not require audits of and information on our ExPERT systems used in the clinic as our partners advance their cellular therapies from preclinical through clinical development toward marketing approval.
We cannot be certain that the FDA or foreign regulators will not require audits of and information on our ExPERT systems used in clinical development as our partners advance their cellular therapies from preclinical through clinical development toward marketing approval.
We will remain an emerging growth company 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 66 Table of Contents 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 will remain an emerging growth company 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 67 Table of Contents 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.
The Federal Reserve recently raised interest rates multiple times in response to concerns about inflation and it may raise them again. Higher interest rates, coupled with reduced government spending and volatility in financial markets may increase economic uncertainty and affect consumer or business spending.
The Federal Reserve raised interest rates multiple times in response to concerns about inflation and it may raise them again. Higher interest rates, coupled with reduced government spending and volatility in financial markets may increase economic uncertainty and affect consumer or business spending.
As a result of our lengthy and unpredictable sales cycle, we will be prone to quarterly fluctuations in our revenue. Quarterly fluctuations may make it difficult for us to predict our future operating results. Consequently, comparisons of our operating results on a period-to-period basis may not be meaningful.
As a result of our lengthy and unpredictable sales cycle, we may be prone to quarterly fluctuations in our revenue. Quarterly fluctuations may make it difficult for us to predict our future operating results. Consequently, comparisons of our operating results on a period-to-period basis may not be meaningful.
Providing our customers with an established regulatory path for use of our technology in the development of their therapeutics is an important value we provide to our customers. We have established and maintained an FDA Master File and equivalent Technical Files in certain other countries to provide that regulatory path.
Providing our customers with an established regulatory path for use of our technology in the development of their therapeutics is an important value we provide to our customers. We have established and maintained FDA Master Files and equivalent Master and Technical Files in certain other countries to provide that regulatory path.
Additionally, subject to its contractual obligations to us, if one or more of our partners is involved in a business combination, the partner might deemphasize or terminate the development or commercialization of any drug or therapeutic candidate that utilizes our platform.
Additionally, subject to its contractual obligations to us, if one or more of our partners is involved in a business combination, the partner might deemphasize or terminate the development or commercialization of any drug, biologic or therapeutic candidate that utilizes our platform.
There can be no assurance that we would be able to obtain a license from the third party asserting the claim on commercially reasonable terms, if at all, that we would be able to develop alternative technology on a timely basis, if at all, or that we would be able to obtain a license to use a suitable alternative technology to permit us to continue offering, and our customers to continue using, our affected product. 62 Table of Contents Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.
There can be no assurance that we would be able to obtain a license from the third party asserting the claim on commercially reasonable terms, if at all, that we would be able to develop alternative technology on a timely basis, if at all, or that we would be able to obtain a license to use a suitable alternative technology to permit us to continue offering, and our customers to continue using, our affected product. 63 Table of Contents Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.
We offer our cell engineering platform to partners who are engaged in drug and therapeutics discovery and development. These partners include large pharmaceutical companies, biotechnology companies of all sizes and non-profit and academic institutions.
We offer our cell engineering platform to partners who are engaged in drug, biologics and therapeutics discovery and development. These partners include large pharmaceutical companies, biotechnology companies of all sizes and non-profit and academic institutions.
Our offerings include products such as instruments, single-use disposables and the provision of support services to our customers with the goal of supporting the advancement of our customers’ cell-therapies and/or drug discovery activities.
Our offerings include products such as instruments, single-use disposables and the provision of support services to our customers with the goal of supporting the advancement of our customers’ cell-therapies and/or drug or biologic discovery activities.
If we are unable to meet customer demand, we could lose our existing customers or lose our ability to acquire new customers, which would also negatively impact our business, financial condition and results of operations.
If we are unable to meet customer demand, we could lose our existing customers or lose our ability to acquire new customers, which could also negatively impact our business, financial condition and results of operations.
Our ability to accurately forecast demand for our products could be negatively affected by many factors, many of which are beyond our control, including our failure to accurately manage our expansion strategy, product introductions or failures by competitors, an increase or decrease in customer demand for our products or for products of our competitors, the availability of capital for our customers, our failure to accurately forecast the success of our customers’ therapeutic products, market acceptance of new products, changes in general market conditions, seasonal demands, regulatory matters or strengthening or weakening of general economic conditions.
Our ability to accurately forecast demand for our products could be negatively affected by a number of factors, many of which are beyond our control, including our failure to accurately manage our expansion strategy, product introductions or failures by competitors, an increase or decrease in customer demand for our products or for products of our competitors, the availability of capital for our customers, our failure to accurately forecast the success of our customers’ therapeutic products, market acceptance of new products, changes in general market conditions, seasonal demands, regulatory matters or strengthening or weakening of general economic conditions.
Any of these events could have a material adverse effect on our reputation, business or financial condition, including but not limited to: loss of actual or prospective customers, collaborators or partners; interruptions or stoppages in our business operations (including clinical trials); inability to process personal information or to operate in certain jurisdictions; limited ability to develop or commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or revision or restructuring of our business model or operations.
Any of these events could have a material adverse effect on our reputation, business or financial condition, including but not limited to: loss of actual or prospective customers, collaborators or partners; interruptions or stoppages in our business operations; inability to process personal information or to operate in certain jurisdictions; limited ability to develop or commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or revision or restructuring of our business model or operations.
You should be aware that the value of our shares of common stock may be influenced by many factors, some of which may be specific to us and some of which may affect AIM companies generally, including the depth and liquidity of the market, 63 Table of Contents our performance, a large or small volume of trading in our shares of common stock, legislative changes and general economic, political or regulatory conditions, and that the prices may be volatile and subject to extensive fluctuations.
You should be aware that the value of our shares of common stock may be influenced by many factors, some of 64 Table of Contents which may be specific to us and some of which may affect AIM companies generally, including the depth and liquidity of the market, our performance, a large or small volume of trading in our shares of common stock, legislative changes and general economic, political or regulatory conditions, and that the prices may be volatile and subject to extensive fluctuations.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to the: • level of demand for any of our products, which may vary significantly; • timing and cost of, and level of investment in, research, development, manufacturing, regulatory approval and commercialization activities relating to our products, which may change from time to time; • size, seasonality and customer mix of the cell engineering market; 52 Table of Contents • start, milestone attainment and completion of programs in which our platform is utilized; • sales and marketing efforts and expenses we incur; • rate at which we grow our sales force and the speed at which newly-hired salespeople become effective; changes in the productivity of our sales force; • positive or negative coverage in the media or publications of our products or competitive products; • cost of manufacturing our products, which may vary depending on the quantity of production and the terms of our arrangements with our suppliers; • degree of competition in our industry and any change in the competitive landscape of our industry, including the introduction of new products or enhancements or technologies by us or others in the cell engineering market and competition-related pricing pressures; • changes in governmental regulations or in the status of our regulatory approvals or applications; • future accounting pronouncements or changes in our accounting policies; • disruptions to our business and operations or to the business and operations of our suppliers, distributors, and other third parties with whom we conduct business resulting from the COVID-19 pandemic or other widespread health crises; • future global financial crises and economic downturns, including those caused by widespread public health crises or geopolitical tensions; and • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to the: • level of demand for any of our products, which may vary significantly; • timing and cost of, and level of investment in, research, development, manufacturing, regulatory approval and commercialization activities for partners relating to our products, which may change from time to time; • size, seasonality and customer mix of the cell engineering market; • start, milestone attainment and completion of programs in which our platform is utilized; • sales and marketing efforts and expenses we incur; 52 Table of Contents • rate at which we grow our sales force and the speed at which newly-hired salespeople become effective; changes in the productivity of our sales force; • positive or negative coverage in the media or publications of our products or competitive products; • cost of manufacturing our products, which may vary depending on the quantity of production and the terms of our arrangements with our suppliers; • degree of competition in our industry and any change in the competitive landscape of our industry, including the introduction of new products or enhancements or technologies by us or others in the cell engineering market and competition-related pricing pressures; • changes in governmental regulations or in the status of regulatory approvals or applications; • future accounting pronouncements or changes in our accounting policies; • disruptions to our business and operations or to the business and operations of our suppliers, distributors, and other third parties with whom we conduct business resulting from the COVID-19 public health emergency or other widespread public health emergencies; • future global financial crises and economic downturns, including those caused by widespread public health emergencies or geopolitical conflicts; and • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
In addition, in the future, we may issue additional shares of common stock or other equity or debt securities convertible 65 Table of Contents into common stock in connection with a financing, acquisition, litigation settlement, employee arrangements or otherwise. Any such future issuance could result in substantial dilution to our existing stockholders and could cause our stock price to decline.
In addition, in the future, we may issue additional shares of common stock or other equity or debt securities convertible 66 Table of Contents into common stock in connection with a financing, acquisition, litigation settlement, employee arrangements or otherwise. Any such future issuance could result in substantial dilution to our existing stockholders and could cause our stock price to decline.
If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar); litigation (including class-related claims);additional reporting requirements and/or oversight; temporary or permanent bans on all or some processing of personal information; orders to destroy or not use personal information; and imprisonment of company officials.
If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited 49 Table of Contents to: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar); litigation (including class-related claims);additional reporting requirements and/or oversight; temporary or permanent bans on all or some processing of personal information; orders to destroy or not use personal information; and imprisonment of company officials.
Delays in filing or obtaining (as applicable in a given jurisdiction), or our inability to obtain or retain, acceptance of such filings in individual countries could negatively impact the progress of our partners if they intend to run clinical trials in such countries, and as a result, could negatively affect our reputation and revenues or require disclosure of confidential information to our partners.
Delays in filing or obtaining (as applicable in each jurisdiction), or our inability to obtain or retain, acceptance of such filings in individual countries could negatively impact the progress of our partners if they intend to run clinical trials in such countries, and as a result, could negatively affect our reputation and revenues or require disclosure of confidential information to our partners.
Our ability to commercialize any of our products successfully, and our customers and collaborators’ ability to commercialize their products successfully, will depend in part on the extent to which coverage and adequate reimbursement for these products and will be available from third-party payors. As such, cost containment reform efforts may result in an adverse effect on our operations.
Our customers and collaborators’ ability to commercialize their products successfully, will depend in part on the extent to which coverage and adequate reimbursement for these products and will be available from third-party payors. As such, cost containment reform efforts may result in an adverse effect on our operations.
Investors could seek to sell or buy our common stock to take advantage of any price differences between the two markets through a practice referred to as arbitrage. Any arbitrage activity could create unexpected volatility in both our common stock prices on either exchange and the volumes of shares of our common stock available for trading on either exchange.
Investors could seek to sell or buy our common stock to take advantage of any price differences between the two markets through a practice referred to as arbitrage. Any arbitrage activity could create unexpected volatility in both our common stock prices on either market and the volumes of shares of our common stock available for trading on either market.
If we fail to establish a regulatory Technical File in any jurisdiction, this could make customers in such jurisdictions less likely to adopt our instruments, and the geographic market for our products could be limited. We believe there are several opportunities to grow our sales and product line.
If we fail to establish a regulatory Master or Technical File in any jurisdiction, this could make customers in such jurisdictions less likely to adopt our instruments, and the geographic market for our products could be limited. We believe there are several opportunities to grow our sales and product line.
Biopharmaceutical drug and therapeutics development is inherently uncertain, and it is possible that none of the drug or therapeutic candidates discovered using our platform that are further developed by our partners will receive marketing approval or become viable commercial products, on a timely basis or at all.
Biopharmaceutical drug , biologics and therapeutics development is inherently uncertain, and it is possible that none of the drug, biologic or therapeutic candidates discovered using our platform that are further developed by our partners will receive marketing approval or become viable commercial products on a timely basis or at all.
Broad market and industry fluctuations, as well as general economic, political, regulatory and market conditions, may also negatively impact the market price of our common stock. 64 Table of Contents If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, the price of our common stock and our trading volume could decline.
Broad market and industry fluctuations, as well as general economic, political, regulatory and market conditions, may also negatively impact the market price of our common stock. 65 Table of Contents If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, the price of our common stock and our trading volume could decline.
However, we have limited financial and managerial resources, and we may forego or delay pursuit of growth opportunities that later prove to have greater value to our business. Our resource allocation decisions may cause us to fail to capitalize on viable opportunities, and we could spend resources on strategies that are not ultimately successful.
However, we have limited financial and managerial resources, and we may forgo or delay pursuit of growth opportunities that later prove to have greater value to our business. Our resource allocation decisions may cause us to fail to capitalize on viable opportunities, and we could spend resources on strategies that are not ultimately successful.
In such circumstances, we would not generate any substantial revenues from such a collaboration in the form of milestone payments, royalties or otherwise. Speculation in the industry about our existing or potential partnerships can be a catalyst for adverse speculation about us which can adversely affect our reputation and our business.
In such circumstances, we may not generate any substantial revenues from such a collaboration in the form of milestone payments, royalties or otherwise. Speculation in the industry about our existing or potential partnerships can be a catalyst for adverse speculation about us which can adversely affect our reputation and our business.
In addition, quality issues can impair our relationships with new or existing customers and adversely affect our brand image, and our reputation could suffer, which could adversely affect our business, financial condition, results of operations, cash flows and prospects. The failure of our partners to meet their contractual obligations to us could adversely affect our business.
In addition, quality issues may impair our relationships with new or existing customers and adversely affect our brand image, and our reputation could suffer, which could adversely affect our business, financial condition, results of operations, cash flows and prospects. The failure of our partners to meet their contractual obligations to us could adversely affect our business.
We may pursue collaborations or licensing arrangements, joint ventures, strategic alliances, partnerships or other strategic investment or arrangements, which may fail to produce anticipated benefits and adversely affect our operations. We may pursue opportunities for collaboration, out-license, joint ventures, acquisitions of products, assets or technology, strategic alliances or partnerships that we believe would advance our development.
We may pursue collaborations or licensing arrangements, joint ventures, strategic alliances, partnerships or other strategic investment or arrangements, which may fail to produce anticipated benefits and adversely affect our operations. We may pursue opportunities for collaboration, out-license, joint ventures, acquisitions of products, assets or technology, strategic alliances or partnerships that we believe could advance our development.
To the extent that we do not achieve and maintain our projected quality or product reliability, our reputation, business, operating results, financial condition and customer relationships would be adversely affected. Our customers may discover defects in our products after the products have been fully installed and operated.
To the extent that we do not achieve and maintain our projected quality or product reliability, our reputation, business, operating results, financial condition and customer relationships could be adversely affected. Our customers may discover defects in our products after the products have been fully installed and operated.
Although our partners have repeatedly been able to reference our FDA Master File in the United States and our Technical Files in some other countries in the course of clinical development of their therapeutic products, we cannot ensure that we will obtain or establish a regulatory Technical File in other countries.
Although our partners have historically been able to reference our FDA Master File in the United States and our Master and Technical Files in some other countries in the course of clinical development of their therapeutic products, we cannot ensure that we will obtain or establish a regulatory Master or Technical File in other countries.
In addition, even if these drug or therapeutic candidates receive regulatory approval in the United States, our partners may never obtain approval or commercialize them outside of the United States, which would limit their full market potential and therefore our ability to realize their potential downstream value.
In addition, even if these drug, biologic or therapeutic candidates receive regulatory approval in the United States, our partners may never obtain approval or commercialize them outside of the United States, which would limit their full market potential and therefore may impact our ability to realize their potential downstream value.
There can be no assurance that we will not encounter such problems in the future. If we are unable to manufacture PAs consistently and in sufficient quantities to meet anticipated customer demand, our business, financial condition, results of operations and prospects would be harmed.
There can be no assurance that we will not encounter such problems in the future. If we are unable to manufacture PAs consistently and in sufficient quantities to meet anticipated customer demand, our business, financial condition, results of operations and prospects could be harmed.
Since a large portion of our revenue is derived from sales of our PAs, which can only be used when our instruments are functioning, if our instruments fail to function and our customers choose to use alternative cell engineering methods our financial condition and results of operations would suffer.
Since a large portion of our revenue is derived from sales of our PAs, which can only be used when our instruments are functioning, if our instruments fail to function and our customers choose to use alternative cell engineering methods our financial condition and results of operations could suffer.
If regulators at any point find that such filings have not been sufficiently maintained or are insufficient to support clinical trials or drug approvals, as a result we may need to disclose confidential information to our partners to allow them to include such information in their filings.
If regulators at any point find that such filings have not been sufficiently maintained or are insufficient to support clinical trials or product approvals, as a result we may need to disclose confidential information to our partners to allow them to include such information in their filings.
These disputes may result in increased tariffs, duties or taxes that will increase the cost of the components and we may have to increase the price of our products, or incur an impact on our margins, both of which can materially affect customer demand and resulting revenues.
These events may result in increased tariffs, duties or taxes that will increase the cost of the components and we may have to increase the price of our products, or incur an impact on our margins, both of which can materially affect customer demand and resulting revenues.
The actual timing of these events and any resultant revenue to us can vary dramatically due to a number of factors such as delays or failures in our or our current and future partners’ therapeutic discovery and development programs and the numerous uncertainties inherent in the development of therapeutics.
The actual timing of these events and any resultant revenue to us may vary dramatically due to a number of factors such as delays or failures in our or our current and future partners’ therapeutic discovery and development programs and the numerous uncertainties inherent in the development of therapeutics.
If we fail to transfer production processes effectively, develop product enhancements or introduce new products or enabling services in sufficient quantities to meet the needs of our customers, or effectively coordinate with our suppliers, our sales may be reduced and our business would be harmed.
If we fail to transfer production processes effectively, develop product enhancements or introduce new products or enabling services in sufficient quantities to meet the needs of our customers, or effectively coordinate with our suppliers, our sales may be reduced and our business could be harmed.
In addition, holders of common stock on either market will not be immediately able to transfer such common stock for trading on the other market without affecting necessary procedures with our transfer agent. This could result in time delays and additional costs for our stockholders.
In addition, holders of common stock on either market will not be immediately able to transfer such common stock for trading on the other market without effecting necessary procedures with our transfer agent. This could result in time delays and additional costs for our stockholders.
While we have developed significant resources for remote training and customer service, including our virtual product demonstration process, if our customers do not adopt these resources, we may be required to increase the staffing of our customer service team, which would increase our costs.
While we have developed significant resources for remote training and customer service, including our virtual product demonstration process, if our customers do not adopt these resources, we may be required to increase the staffing of our customer service team, which could increase our costs.
Even if we are 59 Table of Contents successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. ​ Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.
Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. 60 Table of Contents ​ Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.
Investment in equities traded on AIM is sometimes perceived to carry a higher risk than an investment in equities quoted on exchanges with more stringent listing requirements, such as the main market of the London Stock Exchange, New York Stock Exchange or Nasdaq.
Investment in equities traded on AIM is sometimes perceived to carry a higher risk than an investment in equities quoted on markets with more stringent listing requirements, such as the main market of the London Stock Exchange, New York Stock Exchange or Nasdaq.
Qualifying new suppliers may be required from time to time and qualification can take many months. If we were to lose one or more of our sole or single source manufacturers or suppliers, it would take significant time and effort to qualify alternative suppliers, if available.
Qualifying new suppliers may be required from time to time and qualification can take many months. If we were to lose one or more of our sole or single source manufacturers or suppliers, it could take significant time and effort to qualify alternative suppliers, if available.
Furthermore, approved drugs or therapeutics may not achieve broad market acceptance among physicians, patients, the medical community and third-party payors, in which case revenue generated from their sales would be limited. Third-party payers may opt to implement efficacy-based payment mechanisms over a multi-year period, which could impact potential product sales in any given year.
Furthermore, approved drugs, biologics or therapeutics may not achieve broad market acceptance among physicians, patients, the medical community and third-party payors, in which case revenue generated from their sales could be limited. Third-party payors may opt to implement efficacy-based payment mechanisms over a multi-year period, which could impact potential product sales in any given year.
Risks Related to Our Financial Position and Capital Requirements We may need additional funding and may be unable to raise capital when needed, which would force us to delay, reduce, eliminate or abandon our commercialization efforts or product development programs.
Risks Related to Our Financial Position and Capital Requirements We may need additional funding and may be unable to raise capital when needed, which could force us to delay, reduce, eliminate or abandon our commercialization efforts or product development programs.
Our operations, including our manufacturing operations, and the operations of our customers, partners, distributors and collaborators could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and pandemics, including the COVID-19 pandemic, and other natural or man-made disasters or business interruptions, for which we are predominantly self-insured.
Our operations, including our manufacturing operations, and the operations of our customers, partners, distributors and collaborators could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and pandemics, including COVID-19, other natural or man-made disasters or business interruptions, and geopolitical conflicts, for which we are predominantly self-insured.
In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our information technology systems (including our products) or the third-party information technology systems that support us and our services.
In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and 55 Table of Contents infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our information technology systems (including our products) or the third-party information technology systems that support us and our services.
The number of new drug applications and biologics license applications approved by the FDA varies significantly over time and if there were to be an extended reduction in the number of new drug applications and biologics license applications approved by the FDA, the industry would contract and our business would be materially harmed.
The number of new drug applications and biologics license applications approved by the FDA varies significantly over time and if there were to be an extended reduction in the number of new drug applications and biologics license applications approved by the FDA, the industry could contract and our business could be materially harmed.
Similarly, our potential decisions to delay, terminate or collaborate with third parties in respect of certain markets may subsequently also prove to be suboptimal and could cause us to miss valuable opportunities.
Similarly, our potential decisions to delay, terminate or collaborate with third parties in respect of certain markets may subsequently also prove to be suboptimal and could cause us to miss out on valuable opportunities.
Our officers, employees, independent contractors, consultants and commercial partners may engage in misconduct or activities that are improper under other laws and regulations, or make significant errors, which would create liability for us.
Our officers, employees, independent contractors, consultants and commercial partners may engage in misconduct or activities that are improper under other laws and regulations, or make significant errors, which could create liability for us.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are not currently a party to any material legal proceedings, and we are not aware of any pending or threatened legal proceedings against us that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations. Item 4. Mine Safety Disclosures.
Biggest changeWe are not currently a party to any material legal proceedings, and we are not aware of any pending or threatened legal 71 Table of Contents proceedings against us that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations. Item 4. Mine Safety Disclosures.
Not applicable . ​ 69 Table of Contents PART II
Not applicable . ​ 72 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of the date of this filing, there has been no material change in the planned use of proceeds from the IPO as described in the final prospectus for our IPO. Issuer Purchases of Equity Securities None.
Biggest changeAs of the date of this filing, there has been no material change in the planned use of proceeds from the IPO as described in the final prospectus for our IPO. Issuer Purchases of Equity Securities None. 73 Table of Contents Item 6. [Reserved] ​
Use of Proceeds from Initial Public Offering On August 3, 2021, we closed our IPO, in which we issued and sold 15,525,000 shares of common stock at a price to the public of $13.00 per share, inclusive of 2,025,000 shares sold pursuant to the full exercise of the underwriters’ option to purchase additional shares.
Use of Proceeds from Registered Securities Initial Public Offering On August 3, 2021, we closed our IPO, in which we issued and sold 15,525,000 shares of common stock at a price to the public of $13.00 per share, inclusive of 2,025,000 shares sold pursuant to the full exercise of the underwriters’ option to purchase additional shares.
Since 2016, our common stock has traded on AIM, and currently trades on AIM under the symbol “MXCT.” ​ Holders of Our Common Stock ​ As of March 8, 2023, there were approximately 160 holders of record of our common stock.
Since 2016, our common stock has traded on AIM, and currently trades on AIM under the symbol “MXCT.” ​ Holders of Our Common Stock ​ As of March 5, 2024, there were approximately 35 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following tables set forth our results of operations for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2022 2021 ​ ​ (in thousands) Total revenue $ 44,262 $ 33,894 Cost of goods sold ​ 5,098 ​ 3,647 Gross profit ​ 39,163 ​ 30,247 Operating expense ​ ​ Research and development ​ 19,514 ​ 15,407 Sales and marketing ​ 18,653 ​ 13,003 General and administrative ​ 25,829 ​ 18,676 Depreciation and amortization ​ ​ 2,528 ​ ​ 1,349 Total operating expense ​ 66,524 ​ 48,435 Operating loss ​ (27,361) ​ (18,189) Other income (expense) ​ ​ Interest and other expense ​ (127) ​ (1,044) Interest and other income ​ 3,917 ​ 151 Total other income (expense) ​ 3,790 ​ (894) Net loss ​ $ (23,571) ​ $ (19,082) ​ Revenue The following table provides details regarding the sources of our revenue for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Change ​ ​ 2022 2021 Amount % ​ (in thousands, except percentages) ​ ​ ​ ​ Cell therapy ​ $ 30,546 ​ $ 22,984 ​ $ 7,562 33% ​ Drug discovery ​ 9,100 ​ 8,395 ​ 705 8% ​ Program-related ​ 4,616 ​ 2,515 ​ 2,101 83% ​ Total revenue ​ $ 44,262 ​ $ 33,894 ​ $ 10,367 31% ​ ​ Total revenue for the year ended December 31, 2022 was $44.3 million, an increase of $10.4 million, or 31%, compared to revenue of $33.9 million during the year ended December 31, 2021. 80 Table of Contents Our overall increase in revenue was primarily driven by growth in sales and licenses of instruments and sales of disposables to cell therapy customers.
Biggest changeThe following tables set forth our results of operations for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2023 2022 ​ ​ (in thousands) Total revenue $ 41,288 $ 44,261 Cost of goods sold ​ 4,742 ​ 5,098 Gross profit ​ 36,546 ​ 39,163 Operating expense ​ ​ Research and development ​ 23,817 ​ 19,514 Sales and marketing ​ 26,975 ​ 18,653 General and administrative ​ 30,068 ​ 25,829 Depreciation and amortization ​ ​ 3,985 ​ ​ 2,528 Total operating expense ​ 84,845 ​ 66,524 Operating loss ​ (48,299) ​ (27,361) Other income (expense) ​ ​ Other expense ​ ​ — ​ ​ (127) Interest and other income ​ 10,376 ​ 3,917 Total other income (expense) ​ 10,376 ​ 3,790 Net loss ​ $ (37,923) ​ $ (23,571) ​ Revenue The following table provides details regarding the sources of revenue for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ Change ​ 2023 2022 Amount % (in thousands, except percentages) ​ ​ ​ Core Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cell therapy ​ $ 22,829 ​ $ 30,546 ​ $ (7,717) (25%) Drug discovery ​ 6,994 ​ 9,100 ​ (2,106) (23%) Total core revenue ​ ​ 29,823 ​ ​ 39,646 ​ ​ (9,823) (25%) Program-related ​ ​ 11,465 ​ ​ 4,615 ​ ​ 6,850 ​ 148% Total revenue ​ $ 41,288 ​ $ 44,261 ​ $ (2,973) ​ (7%) ​ 83 Table of Contents The following table provides details regarding our core business revenue for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ Change ​ 2023 2022 Amount % (in thousands, except percentages) ​ ​ ​ Core revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Instrument revenue ​ $ 8,317 ​ $ 11,704 ​ $ (3,387) (29%) Disposables revenue ​ ​ 10,283 ​ ​ 16,027 ​ ​ (5,744) ​ (36%) Lease revenue ​ ​ 10,326 ​ ​ 10,897 ​ ​ (571) ​ (5%) Other revenue ​ 897 ​ 1,018 ​ (121) (12%) Total core revenue ​ $ 29,823 ​ $ 39,646 ​ $ (9,823) (25%) ​ Total revenue for the year ended December 31, 2023 was $41.3 million, a decrease of $3.0 million, or 7%, compared to revenue of $44.3 million during the year ended December 31, 2022.
The platform is also supported by a robust intellectual property portfolio with more than 150 granted U.S. and foreign patents and more than 95 pending patent applications worldwide. From leading commercial cell therapy drug developers and top biopharmaceutical companies to top academic and government research institutions, including the NIH, our customers have extensively validated our technology.
The platform is also supported by a robust intellectual property portfolio with more than 150 granted U.S. and foreign patents and more than 95 pending patent applications worldwide. From leading commercial cell therapy drug and biologic developers and top biopharmaceutical companies to top academic and government research institutions, including the NIH, our customers have extensively validated our technology.
It is possible, however, that our future lease revenue could be impacted by failure of the customer therapeutic candidates to progress through clinical development for reasons unrelated to the successful use of our instruments, such as drug toxicity, lack of efficacy, funding constraints, changes in development priorities, patient access limitations or regulatory challenges.
It is possible, however, that our future lease revenue could be impacted by failure of the customer therapeutic candidates to progress through clinical development for reasons unrelated to the successful use of our instruments, such as toxicity, lack of efficacy, funding constraints, changes in development priorities, patient access limitations or regulatory challenges.
Our customers typically negotiate the terms of those licenses during research and preclinical development. We refer to these arrangements as SPL partnerships, the terms of which contain not only higher annual, non-exclusive license fees for the clinical use of the instrument, but also allow us to share in the economics of the customer’s programs.
Our customers typically negotiate the terms of those licenses during research and preclinical development. We refer to these arrangements as SPL partnerships, the terms of which contain not only higher annual, non-exclusive fees for the clinical use of the instrument, but also allow us to share in the economics of the customer’s programs.
When we sell an instrument, we also provide a non-exclusive license to our intellectual property for the customer to use the instrument broadly for research or drug discovery, as applicable. In the case of a sale, title to the instrument conveys to the buyer, but we retain ownership of intellectual property rights and software and protocols loaded onto the instruments.
When we sell an instrument, we also provide a non-exclusive license to our intellectual property for the customer to use the instrument broadly for research or discovery, as applicable. In the case of a sale, title to the instrument conveys to the buyer, but we retain ownership of intellectual property rights and software and protocols loaded onto the instruments.
Our sales model varies based on the activity of the end customer, such as whether they are a translational research center, an academic center, a company focused on drug discovery, or a company engaged in cell therapy development, and the customer’s intended use of our platform.
Our sales model varies based on the activity of the end customer, such as whether they are a translational research center, an academic center, a company focused on drug or biologic discovery, or a company engaged in cell therapy development, and the customer’s intended use of our platform.
If our customer intends to use our platform for research or drug discovery only, we typically sell the instrument outright. Each of the ATx, STx, GTx and VLx instruments have different prices based on the instrument’s features, with the VLx being the most expensive.
If our customer intends to use our platform for research or discovery only, we typically sell the instrument outright. Each of the ATx, STx, GTx and VLx instruments have different prices based on the instrument’s features, with the VLx being the most expensive.
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. 78 Table of Contents Sales and Marketing 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.
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. 81 Table of Contents Sales and Marketing 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.
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.
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; 86 Table of Contents • the effect of competing technological and market developments; and • the level of our selling, general and administrative expenses.
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.
Over more than two decades, we have developed and commercialized our proprietary Flow Electroporation technology, 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.
However, both the number of PAs used per instrument, as well as the specific PA used, is highly variable across our customer base and depends on several factors, including: 73 Table of Contents • the purpose for which the customer is using the platform; • the relative pricing of our PAs; • the progression of cell therapy products through preclinical and clinical development; • whether the cell therapy customer uses a centralized or decentralized manufacturing process; • the customer’s target indication, which can result in variations in patient numbers needed for clinical trials; and • whether the cells to be processed using our platform are patient-derived, donor-derived or cell line-derived.
However, both the number of PAs used per instrument, as well as the specific PA used, is highly variable across our customer base and depends on several factors, including: • the purpose for which the customer is using the platform; • the relative pricing of our PAs; • the progression of cell therapy products through preclinical and clinical development; • whether the cell therapy customer uses a centralized or decentralized manufacturing process; • the customer’s target indication, which can result in variations in patient numbers needed for clinical trials; and • whether the cells to be processed using our platform are patient-derived, donor-derived or cell line-derived.
Although customers are not contractually obligated to renew their instrument leases or to purchase additional disposables and may decide not to do so solely at their own discretion, leased instruments and disposables revenue streams have historically formed an important component of our future revenues, and we believe they provide insight into our future performance.
Although customers are not contractually obligated to renew their instrument leases or to purchase additional disposables and may decide not to do so solely in their own discretion, leased instruments and disposables revenue streams have historically formed an important component of our revenues, and we believe they provide insight into our future performance.
These key metrics include: • the number of cumulative instruments that we have placed with our customers, either by sale or lease, which we refer to as our installed base and consider to be an indication of our traction within the non-viral delivery market and other markets and indicative of the potential future recurring revenue generated from those instruments, including disposables and annual license fees; • the number of active (customers with rights to develop one or more clinical programs) SPL partnerships that we have entered into with cell therapy developers, as well as the total number of our customers’ clinical programs, whether active or contemplated, that are covered by such active SPL partnerships and the percentage of those 75 Table of Contents clinical programs that are under an active IND application (or foreign equivalent), meaning that the customer is cleared to commence clinical trials; • the aggregate potential precommercial milestone payments under active SPL partnerships, representing the maximum potential milestone payments to us if all programs covered by each SPL partnership were to achieve regulatory approval; • the aggregate number of potential programs licensed for clinical use, whether active or contemplated, that are covered by our SPL partnerships; and • the aggregate number of programs licensed for clinical use and covered by our SPL partnerships that are currently in the clinic.
These key metrics include: 78 Table of Contents • the number of cumulative instruments that we have placed with our customers, either by sale or lease, which we refer to as our installed base and consider to be an indication of our traction within the non-viral delivery market and other markets and indicative of the potential future recurring revenue generated from those instruments, including disposables and annual fees; • the number of active (customers with rights to develop one or more clinical programs) SPL partnerships that we have entered into with cell therapy developers, as well as the total number of our customers’ clinical programs, whether active or contemplated, that are covered by such active SPL partnerships and the percentage of those clinical programs that are under an active IND application (or foreign equivalent), meaning that the customer is cleared to commence clinical trials; • the aggregate potential precommercial milestone payments under active SPL partnerships, representing the maximum potential milestone payments to us if all programs covered by each SPL partnership were to achieve regulatory approval; • the aggregate number of potential programs licensed for clinical use, whether active or contemplated, that are covered by our SPL partnerships; and • the aggregate number of programs licensed for clinical use and covered by our SPL partnerships that are currently in clinical development.
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.
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 therapies.
Our future milestone revenue under our SPL partnerships will depend in large part on the clinical and regulatory achievements of our customers. Generally, precommercial milestone payments become larger as programs move through the clinic. We rely in part on our customers’ public disclosures around regulatory timelines to forecast our receipt of precommercial milestone payments.
Our future milestone revenue under our SPL partnerships will depend in large part on the clinical and regulatory achievements of our customers. Generally, precommercial milestone payments become larger as programs move through clinical development. We rely in part on our customers’ public disclosures around regulatory timelines to forecast our receipt of precommercial milestone payments.
We recognize revenue from the sale of extended warranty and service plans over the respective coverage period, which approximates the service effort provided by us. Warranties are typically not a material revenue stream for us. Product Sales Revenue from contracts with customers includes revenue from the sale of instruments, PAs and buffer.
We recognize revenue from the sale of extended warranty and service plans over the respective coverage period, which approximates the service effort provided by us. Warranties are typically not a material revenue stream for us. Product Sales Revenue from contracts with customers includes revenue from the sale of instruments, PAs and buffers.
While we expect our forecasting ability to improve over time as more of our customers’ programs advance through the clinic and the number of clinical programs covered by our licenses expands, given the early nature of the cell therapy clinical market, we expect our realization of precommercial milestones to be somewhat unpredictable.
While we expect our forecasting ability to improve over time as more of our customers’ programs advance through clinical development and the number of clinical programs covered by our licenses expands, given the early nature of the cell therapy clinical market, we expect our realization of precommercial milestones to be somewhat unpredictable.
To achieve this goal, we intend to further expand our commercial infrastructure, including through the expansion of our sales force and field application scientists. We have expanded our sales force and field application scientist count over the past several years and now have over 25 dedicated field sales and application scientist professionals globally.
To achieve this goal, we intend to further expand our commercial infrastructure, including through the expansion of our sales force and field application scientists. We have expanded our sales force and field application scientist count over the past several years and now have over 36 dedicated field sales and application scientist professionals globally.
If we are unable to execute on our business plan and adequately fund operations, or if the business plan requires a level of spending in excess of cash resources, we will have to seek additional equity or debt financing.
If we are unable to execute on our business plan and adequately fund operations, or if the business plan requires a level of spending in excess of cash resources, we may have to seek additional equity or debt financing.
We expect revenue from instruments leased to cell therapy customers to continue to grow as those customers move their existing drug development programs into later-stage clinical trials and advance their preclinical pipeline programs into clinical development.
We expect revenue from instruments leased to cell therapy customers to continue to grow as those customers move their existing drug or biologic development programs into later-stage clinical trials and advance their preclinical pipeline programs into clinical development.
We record revenue from the sale of instruments or PAs upon shipment to a customer. Instrument leases are 76 Table of Contents typically invoiced annually at the start of each instrument license period and are accounted for as monthly revenue over the lease term with the expectation of continuing customer renewals of their instrument leases.
We record revenue from the sale of instruments or PAs upon shipment to a customer. Instrument leases are typically invoiced annually at the start of each instrument license period and are accounted for as monthly revenue over the lease term with the expectation of continuing customer renewals of their instrument leases.
The sales cycle for our cell engineering instruments varies widely and typically ranges from approximately six to approximately 12 months, with the actual period depending on project stage, budget process, equipment prioritization and the general financial status of the customer or the market in general.
The sales cycle for our cell engineering instruments varies widely and typically ranges from approximately six to approximately 12 months, with the actual period depending on project stage, budget process, equipment prioritization 75 Table of Contents and the general financial status of the customer or the market in general.
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.
However, the market for non-viral delivery is highly competitive, and introduction of a cGMP-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 could negatively impact our gross margins.
While we expect our forecasting ability to improve over time as more of our customers’ programs move through the clinic and the number of clinical programs covered by our licenses expands, given the early nature of the cell therapy clinical market, we expect our realization of precommercial milestones to be somewhat unpredictable.
While we expect our forecasting ability to continue to improve over time as more of our customers’ programs move through clinical development and the number of clinical programs covered by our licenses expands, given the early nature of the cell therapy clinical market, we expect our realization of precommercial milestones to be somewhat unpredictable.
To date, we have funded our operations primarily with proceeds from sales of common stock, borrowings under loan agreements and cash flows associated with sales and licenses of our products to customers. On August 3, 2021, we completed our Nasdaq IPO, generating gross proceeds of $201.8 million.
To date, we have funded our operations primarily with proceeds from sales of common stock, borrowings under loan agreements and cash flows associated with sales and licenses of our products to customers. On August 3, 2021, we completed our U.S. IPO, generating gross proceeds of $201.8 million.
While we also price PAs based on the value provided to the customer, introduction of new PAs could cannibalize our existing PA portfolio more than we had anticipated as customers find the new products to be a better solution for their applications or workflows.
While we also price PAs based on the value provided to the customer, introduction of new PAs could cannibalize our existing PA portfolio more than we anticipated if customers find the new products to be a better solution for their applications or workflows.
We measure stock-based compensation expense on the date of grant and recognize the corresponding compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award. We record forfeitures as they occur.
We measure stock-based compensation expense on the 89 Table of Contents date of grant and recognize the corresponding compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award. We record forfeitures as they occur.
However, our actual milestone revenue from these agreements will likely be considerably lower than this amount, as not all programs covered by each agreement will become and remain active programs in a customer’s development pipeline or successfully complete the clinical development process.
However, our actual milestone revenue from these agreements will likely be considerably lower than this amount, as not all programs covered by each agreement will become and remain active programs in a 77 Table of Contents customer’s development pipeline or successfully complete the clinical development process.
Investing Activities Cash used in investing activities during the year ended December 31, 2022 was $24.8 million, which was primarily attributable to maturities of short-term marketable securities of $284.6 million, partially offset by purchases of short-term marketable securities of $290.9 million, capitalized lease-related construction expenses of $14.2 million, purchases of equipment and furniture of $3.9 million and capitalized internal-use software of $1.0 million.
Cash used in investing activities during the year ended December 31, 2022 was $24.8 million, which was primarily attributable to maturities of investments of $284.6 million, partially offset by purchases of investments of $290.9 million, capitalized lease-related construction expenses of $14.2 million, purchases of equipment and furniture of $3.9 million and capitalized internal-use software of $1.0 million.
We plan to further grow our installed base of ExPERT instruments through additional sales and leases to our current customers and through the sale or lease of instruments to new cell therapy, drug discovery and academic customers.
We plan to further grow our installed base of ExPERT instruments through additional sales and leases to our current customers and through the sale or lease of instruments to new cell therapy, product discovery, academic and other customers.
As of December 31, 2022, we had U.S. net operating loss carryforwards of $93.9 million, which may be available to offset future taxable income and begin to expire in 2025, as well as net operating losses in the various states in which we file.
As of December 31, 2023, we had U.S. net operating loss carryforwards of $88.9 million, which may be available to offset future taxable income and begin to expire in 2025, as well as net operating losses in the various states in which we file.
Our 19 SPLs have the potential to generate over $1.55 billion in precommercial milestone payments, if all product candidates allowed under those agreements were to fully progress through clinical development and obtain regulatory approval.
Our 26 SPLs have the potential to generate over $1.95 billion in precommercial milestone payments, if all product candidates allowed under those agreements were to fully progress through clinical development and obtain regulatory approval.
As of December 31, 2022, we have placed more than 600 of our electroporation instruments worldwide. Historically, we have financed our operations primarily from the issuance and sale of equity securities, previous debt borrowings and cash flows from operations. On August 3, 2021, we issued and sold 15,525,000 shares of common stock in our U.S.
As of December 31, 2023, we have placed more than 680 of our electroporation instruments with customers worldwide. Historically, we have financed our operations primarily from the issuance and sale of equity securities, previous debt borrowings and cash flows from operations. On August 3, 2021, we issued and sold 15,525,000 shares of common stock in our U.S.
From 2017 through February 2023, we have entered into 19 SPL partnerships with commercial cell therapy developers, and those licenses currently allow for over 125 clinical development programs in the aggregate. On average, our current SPL partnerships allow for approximately six product candidates per license, although this average may change over time.
From 2017 through February 2024, we have entered into 26 SPL partnerships with commercial cell therapy developers, and those licenses currently allow for over 160 clinical development programs in the aggregate. On average, our current SPL partnerships allow for approximately six product candidates per license, although this average may change over time.
We received net proceeds of $184.3 million after deducting aggregate underwriting commissions and offering expenses of $17.6 million. As of December 31, 2022, we had cash and cash equivalents and short-term investments of $227.3 million.
We received net proceeds of $184.3 million after deducting aggregate underwriting commissions and offering expenses of $17.6 million. As of December 31, 2023, we had cash and cash equivalents and short-term investments of $168.3 million.
We expect that as our installed instrument base grows, our sales of PAs and electroporation buffer solutions will grow accordingly, especially as cell therapy programs continue to progress through the clinic and potentially become commercial-stage, thereby increasing the number of PAs needed by customers.
We expect that as our installed instrument base grows, our sales of PAs and electroporation buffer solutions will grow accordingly, especially as cell therapy programs continue to progress through clinical development and potentially 76 Table of Contents become commercial-stage, thereby increasing the number of PAs needed by customers.
We estimate the fair value of stock options granted to our employees and directors based on the closing price of our common stock on the grant date and the resulting stock-based compensation expense using the Black-Scholes option-pricing model.
We estimate the fair value of stock options granted to our employees and directors based on the closing price of our common stock on the grant date and the resulting stock-based compensation expense using the Black-Scholes option-pricing model. The fair value is based on the value of our common stock on the Nasdaq Global Select Market on the grant date.
The $2.1 million increase in program-related revenues resulted from achievement of contractually specified clinical progress milestones and reflects the expected variability from period to period in the level of program-related revenue given the small number of individual triggering events which currently generate this portion of revenue.
The $6.9 million increase in program-related revenues resulted from achievement of contractually specified clinical and regulatory milestones and reflects the expected variability from period to period in the level of program-related revenue given the small number of individual triggering events which currently generate this portion of revenue.
Our ability to generate revenue sufficient to achieve profitability will depend on the successful further development and commercialization of our products. We generated revenue of $44.3 million and $33.9 million for the years ended December 31, 2022 and 2021, respectively, and incurred net losses of $23.6 million and $19.1 million for those same years.
Our ability to generate revenue sufficient to achieve profitability will depend on the successful further development and commercialization of our products. We generated revenue of $41.3 million and $44.3 million for the years ended December 31, 2023 and 2022, respectively, and incurred net losses of $37.9 million and $23.6 million for those same years.
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.
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 a majority of the top 25 pharmaceutical companies based on 2022 global revenue, to hundreds of biotechnology companies and academic centers focused on translational research.
NOMAD and broker fees, investor relations consultants and insurance costs. These expenses are exclusive of depreciation and amortization.
Nominated Advisor and broker fees, investor relations consultants and insurance costs. These expenses are exclusive of depreciation and amortization.
Gross Margins We have generated overall gross margins of near 90% for the past several years, although our margins vary depending on our revenue mix from instruments, PAs and milestones under SPL partnerships and other factors.
Gross Margins We have generated overall gross margins of nearly 90% for the last six years, although our margins vary depending on our revenue mix from instruments, PAs and milestones under SPL partnerships and other factors.
Purchases 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.
Purchases of investments are made as part of ordinary course investing activities in compliance with our investment policy which has as its primary objective preservation of principal.
Liquidity and Capital Resources Since our inception, we have experienced losses and negative cash flows from operations. For the years ended December 31, 2022 and 2021, we incurred net losses of $23.6 million and $19.1 million, respectively. As of December 31, 2022, we had an accumulated deficit of $137.9 million.
Liquidity and Capital Resources Since our inception, we have experienced losses and negative cash flows from operations. For the years ended December 31, 2023 and 2022, we incurred net losses of $37.9 million and $23.6 million, respectively. As of December 31, 2023, we had an accumulated deficit of $175.8 million.
In June 2022, we exercised our option to early terminate our remaining subleased office, laboratory, manufacturing and other spaces associated with our former headquarters facility, which became effective in July and August 2022. These subleases previously had expiration dates in October 2023.
In June 2022, we exercised our option to early terminate our remaining subleased office, laboratory, manufacturing and other spaces associated with our former headquarters facility, which became effective in July and August 2022. These subleases previously had expiration dates in October 2023. We had no debt obligations as of December 31, 2023 or 2022.
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.
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 leasehold improvements over their respective lease terms.
The amount of each milestone payment is typically correlated in size with value-creating, precommercial clinical progress events or commercial sales levels. Of the over 125 programs associated with our current SPLs, 16 of those programs are currently active in the clinic, meaning they have at least an FDA-cleared IND.
The amount of each milestone payment is typically correlated in size with value-creating, precommercial clinical progress events or commercial sales levels. Of the over 160 programs associated with our current SPLs, one is in commercial stage, and 16 of those programs are currently active in clinical development, meaning they have at least an FDA-cleared IND application or foreign equivalent.
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 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.
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 $6.2 million, an increase in other liabilities of $0.9 million and a decrease in prepaid expenses and other current assets of $0.5 million, partially offset by a $4.8 million increase in accounts receivable, a $3.5 million increase in inventory, a $1.9 million increase in tenant improvement allowances receivable and a $0.5 million decrease in other assets.
Net changes in our operating assets and liabilities consisted primarily of a $5.2 million decrease in accounts receivable, a $1.9 million decrease in tenant improvement allowances receivable, a $3.3 million increase in accounts payable, accrued expenses and other, and a $0.4 million decrease in other assets, offset by a $4.5 million increase in inventory, a $1.6 million decrease in deferred revenue, a $0.6 million decrease in prepaid expenses and other current assets, and a $0.2 million decrease in operating lease and other liabilities.
We currently market four versions of our instruments, the ATx, the STx, the GTx and the VLx. The ATx is primarily sold in all our markets.
We currently market four versions of our instruments, the ATx, the STx, the GTx and the VLx. The ATx is primarily sold across geographic markets in which we currently sell our technology.
Cell therapy includes revenue from instruments sold, annual license fees for instruments under lease, and sales of our proprietary disposables. Drug discovery includes revenue from instruments sold, sales of our proprietary disposables and, occasionally, instruments leased, in each case under contracts with drug discovery customers. Program-related revenue includes precommercial milestones earned and recognized as revenue during the period.
Cell therapy includes revenue from instruments sold, annual license fees for instruments under lease, and sales of our proprietary disposables. Drug discovery includes revenue from instruments sold, sales of our proprietary disposables and, occasionally, instruments leased, in each case under contracts with drug discovery customers.
Because of the size of the drug discovery market and our long history in that market, the installed base of instruments is currently weighted more heavily towards instruments sold for drug discovery and research applications.
This installed base includes both instruments sold to customers and instruments licensed for research and clinical use. Because of the size of the drug and biologic discovery market and our long history in that market, the installed base of instruments is currently weighted more heavily towards instruments sold for discovery and research applications.
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.
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 88 Table of Contents the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.
We received aggregate net proceeds of $184.3 million after deducting aggregate underwriting commissions and offering costs of $17.6 million. 71 Table of Contents We believe that our current cash, cash equivalents and short-term investments will enable us to fund our operating expenses and capital expenditure requirements for the foreseeable future.
We received aggregate net proceeds of $184.3 million after deducting aggregate underwriting commissions and offering costs of $17.6 million. 74 Table of Contents We believe that our current cash, cash equivalents and short-term investments will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months from the date of the filing of this Annual Report.
We also had net cash outflows of $1.6 million due to net changes in our operating assets and liabilities.
We also had net cash inflows of $3.8 million due to net changes in our operating assets and liabilities.
General and Administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2022 2021 Amount % ​ (in thousands, except percentages) ​ ​ ​ ​ General and administrative ​ $ 25,829 ​ $ 18,676 ​ $ 7,153 38% ​ ​ General and administrative expense increased by $7.2 million, or 38%, for the year ended December 31, 2022, compared to the year ended December 31, 2021.
General and Administrative ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2023 2022 Amount % ​ (in thousands, except percentages) ​ ​ ​ ​ General and administrative ​ $ 30,068 ​ $ 25,829 ​ $ 4,239 16% ​ ​ General and administrative expense increased by $4.2 million, or 16%, for the year ended December 31, 2023, compared to the year ended December 31, 2022.
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 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 expect leased elements revenue to increase in future periods as our market and customer base grow. 77 Table of Contents Cost of Goods Sold Cost of goods sold primarily consists of costs for raw material parts, contract manufacturer costs, salaries, overhead, other direct costs related to sales recognized as revenue in the period, and leased equipment depreciation.
Cost of Goods Sold Cost of goods sold primarily consists of costs for raw material parts, contract manufacturer costs, salaries, overhead, other direct costs related to sales recognized as revenue in the period, and leased equipment depreciation.
As a result of this lengthy and unpredictable sales cycle, we expect that we will be prone to quarterly fluctuations in our instrument sales revenue. 72 Table of Contents For cell therapy customers who use our technology to develop engineered cells for human therapeutic use in clinical trials or, if approved by regulatory authorities, for commercial sale, we license our platform on a non-exclusive basis in exchange for an annual fee per instrument licensed.
For cell therapy customers who use our technology to develop engineered cells for human therapeutic use in clinical trials or, if approved by regulatory authorities, for commercial sale, we license our platform on a non-exclusive basis in exchange for an annual fee per instrument licensed.
We entered into three agreements in 2022 and one so far in 2023. 74 Table of Contents For the year ended December 31, 2022, one cell therapy company with which we have entered into an SPL accounted for 23% of our total revenue, and our six largest SPL partners accounted for an aggregate of approximately 40% of our total revenue for the year through a combination of instrument license fees, milestones realized and processing assembly revenue.
For the year ended December 31, 2023, two cell therapy companies with which we have entered into an SPL accounted for 39% of our total revenue, and our five largest SPL partners accounted for an aggregate of approximately 52% of our total revenue for the year through a combination of instrument license fees, milestones realized and processing assembly revenue.
Typically, instrument leases that provide for clinical or commercial use also include sales-based milestone payments (and/or sales-based royalties in some cases) upon the commercialization of the customer's product.
Our leases of instruments to customers consist of fixed license/lease payments and variable milestone payments that are dependent on our customer's achievement of clinical milestones. Typically, instrument leases that provide for clinical or commercial use also include sales-based milestone payments (and/or sales-based royalties in some cases) upon the commercialization of the customer's product.
Customers purchase an ATx, STx, GTx or VLx depending upon their intended use and all customers purchase PAs for use with our instruments. Commercial customers may not use a purchased instrument for clinical or commercial processes. We expect product sales revenue to increase in future periods as our market and customer base grow.
Customers purchase an ATx, STx, GTx or VLx depending upon their intended use and all customers purchase PAs for use with our instruments. Commercial customers may not use a purchased instrument for clinical or commercial processes.
Depreciation and Amortization ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2022 2021 Amount % (in thousands, except percentages) ​ ​ ​ Depreciation and amortization ​ $ 2,528 ​ $ 1,349 ​ $ 1,179 87% ​ Depreciation and amortization expense increased by $1.2 million, or 87%, for the year ended December 31, 2022, compared to the year ended December 31, 2021.
Depreciation and Amortization ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2023 2022 Amount % (in thousands, except percentages) ​ ​ ​ Depreciation and amortization ​ $ 3,985 ​ $ 2,528 ​ $ 1,457 58% ​ 85 Table of Contents Depreciation and amortization expense increased by $1.5 million, or 58%, for the year ended December 31, 2023, compared to the year ended December 31, 2022.
Cash Flows The following table summarizes our uses and sources of cash for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, (in thousands) 2022 2021 Net cash provided by (used in): ​ ​ ​ ​ ​ Operating activities ​ $ (14,783) ​ $ (10,680) Investing activities ​ (24,823) ​ (195,013) Financing activities ​ 2,889 ​ 234,720 Net (decrease) increase in cash and cash equivalents ​ $ (36,718) ​ $ 29,027 ​ Operating Activities Net cash used in operating activities for the year ended December 31, 2022 was $14.8 million, and consisted primarily of our net loss of $23.6 million, offset in part by net non-cash expenses of $12.0 million, including stock-based compensation of $11.8 million, depreciation and amortization expenses of $2.7 million, offset by the amortization of $2.7 million of discounts on short-term investments.
Cash Flows The following table summarizes our uses and sources of cash for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, (in thousands) 2023 2022 Net cash provided by (used in): ​ ​ ​ ​ ​ Operating activities ​ $ (21,686) ​ $ (14,783) Investing activities ​ 54,984 ​ (24,823) Financing activities ​ 2,143 ​ 2,888 Net increase (decrease) in cash and cash equivalents ​ $ 35,441 ​ $ (36,718) ​ Operating Activities Net cash used in operating activities for the year ended December 31, 2023 was $21.7 million, and consisted primarily of our net loss of $37.9 million, offset in part by net non-cash expenses of $12.4 million, including stock-based compensation of $14.0 million, depreciation and amortization expenses of $4.2 million, an increase in our inventory reserve of $0.7 million, and other non-cash expenses totaling $0.6 million, offset by the amortization of $7.1 million of discounts on investments.
On June 8, 2021, we exercised our option to early terminate one of our office and lab space lease arrangements associated with our former headquarters facility. That amended office lease expired on June 7, 2022.
See Part I, Item 2, “Facilities” in this Annual Report for additional information regarding the new office lease. On June 8, 2021, we exercised our option to early terminate one of our office and lab space lease arrangements associated with our former headquarters facility. That amended office lease expired on June 7, 2022.
This number may fluctuate due to the success of our commercial partners. Additionally, the addition of a large multi-product (program) SPL partnership may dilute the percentage of commercial programs currently in the clinic.
This number may fluctuate due to the success of our commercial partners. Additionally, the addition of a large SPL partnership in which one SPL partner uses multiple instruments as part of their research, clinical or commercial program, may dilute the percentage of commercial programs currently in the clinic.
As of December 31, 2022, we had an accumulated deficit of $137.9 million.
As of December 31, 2023, we had an accumulated deficit of $175.8 million.
Net cash used in operating activities for the year ended December 31, 2021 was $10.7 million, and consisted primarily of our net loss of $19.1 million, offset in part by net non-cash expenses of $10.0 million, including stock-based compensation of $8.0 million, depreciation and amortization expenses of $1.4 million, and warrant liability fair value adjustments of $0.6 million.
Net cash used in operating activities for the year ended December 31, 2022 was $14.8 million, and consisted primarily of our net loss of $23.6 million, offset in part by net non-cash expenses of $12.8 million, including stock-based compensation of $11.8 million, depreciation and amortization expenses of $2.7 million, non-cash lease expense and other non-cash charges of $1.0 million, offset by the amortization of $2.7 million of discounts on investments.
As of the dates presented, our key metrics described above were as follows: ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2022 2021 2020* Installed base of instruments (sold or leased) ​ >600 >500 >400 Number of active SPL partnerships ​ 18 15 12 Total number of licensed clinical programs (SPL partnerships only) ​ >125 >95 >75 Total number of active licensed clinical programs under SPL partnerships currently in the clinic ** ​ 16 15 7 Total potential precommercial milestones under SPL partnerships ​ >$1.55 billion >$1.25 billion >$950 million * Amounts presented as of December 31, 2020 give effect to one SPL partnership entered into and additional INDs cleared in January 2021. ** Number of licensed clinical programs under SPL partnerships are by number of product candidates and not by indication. ​ Components of Our Results of Operations Revenue We generate revenue principally from the sale of instruments, single-use PAs and buffer as well as from the lease of instruments to our customers.
As of the dates presented, our key metrics described above were as follows: ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ 2023 2022 2021 Installed base of instruments (sold or leased) ​ 683 616 502 Core revenue generated by SPL clients as a percentage of core revenue ​ 48% 42% 40% Number of active SPLs ​ 23 18 15 Total number of licensed clinical programs (SPL clients only) ​ >160 >125 >95 Total number of licensed clinical programs under SPLs currently in the clinic ​ 16 16 15 Total number of licensed clinical programs under SPLs currently commercial ​ 1 - - Total potential pre-commercial milestones under SPLs ​ >$1.95 billion >$1.55 billion >$1.25 billion * Number of licensed clinical programs under SPL partnerships are by number of product candidates and not by indication. ​ 79 Table of Contents Components of Our Results of Operations Revenue We generate revenue principally from the sale of instruments, single-use PAs and buffers as well as from the lease of instruments to our customers.
The increase was primarily driven by a $2.5 million increase in compensation expenses as a result of increases in headcount and commissions on sales, a $2.0 million increase in marketing and travel expenses, and a $1.1 million increase in stock-based compensation expense.
The increase was primarily driven by a $4.3 million increase in compensation expenses as a result of increases in headcount, a $1.2 million increase in occupancy expenses, a $0.8 million increase in travel expenses, a $0.7 million increase in stock-based compensation, a $0.6 million increase in marketing expenses, a $0.4 million increase in professional fees, and a $0.3 million increase in general office expenses.
We also provide scientific and regulatory support to our clinical use licensees to help them improve process optimization and facilitate their regulatory submission process.
We also provide scientific and regulatory support to our clinical use licensees to help them improve process optimization and facilitate their regulatory submission process. We expect leased elements revenue to increase in future periods as our market and customer base grow.
Emerging Growth Company Status We are an “emerging growth company,” or EGC, under 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.
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.
Revenue Recognition We derive revenue from two primary sources, product sales, which are comprised primarily of instrument and disposables revenue, and leased elements, which are comprised of revenue associated with instrument leases. 85 Table of Contents For revenue generated pursuant to contracts with customers, we recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services.
For revenue generated pursuant to contracts with customers, we recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services.
Cost of Goods Sold and Gross Profit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2022 2021 Amount % ​ (in thousands, except percentages) ​ ​ ​ ​ Cost of goods sold ​ $ 5,098 ​ $ 3,647 ​ $ 1,451 40% ​ Gross profit ​ $ 39,163 ​ $ 30,247 ​ $ 8,916 29% ​ Gross margin ​ ​ 88% ​ ​ 89% ​ ​ ​ ​ ​ ​ ​ Cost of goods sold increased by $1.5 million, or 40%, for the year ended December 31, 2022, compared to the year ended December 31, 2021.
Cost of Goods Sold and Gross Profit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2023 2022 Amount % ​ (in thousands, except percentages) ​ ​ ​ ​ Cost of goods sold ​ $ 4,742 ​ $ 5,098 ​ $ (356) (7%) ​ Gross profit ​ $ 36,546 ​ $ 39,163 ​ $ (2,617) (7%) ​ Gross margin ​ ​ 89% ​ ​ 88% ​ ​ ​ ​ ​ ​ ​ Cost of goods sold decreased by $0.4 million, or 7%, for the year ended December 31, 2023, compared to the year ended December 31, 2022.
We designed and constructed the leasehold improvements with the approval of the landlord. The lease provides that the landlord will reimburse us for costs of property improvements up to amounts specified in the lease. The total incremental non-cancellable lease payments under the lease agreement are $29.6 million through the lease term.
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 costs of property improvements up to amounts specified in the lease.
For any of these reasons, a customer could determine not to renew or to enter into additional instrument leases with us. Our installed base of electroporation instruments has grown to over 600 instruments as of December 31, 2022. This installed base includes both instruments sold to customers and instruments licensed for research and clinical use.
For any of these reasons, a customer could determine not to renew or to enter into additional instrument leases with us, which could result in our actual future lease revenues differing from our estimates and projections. Our installed base of electroporation instruments has grown to over 680 instruments as of December 31, 2023.
We have recorded a full valuation allowance against our net deferred tax assets at each balance sheet date since, due to our history of net losses, we have determined that it is not currently more likely than not that our net deferred tax assets are recoverable.
We have recorded a full valuation allowance against our net deferred tax assets at each balance sheet date since, due to our history of net losses, we have determined that it is not currently more likely than not that our net deferred tax assets are recoverable. 82 Table of Contents Results of Operations Comparison of the Years Ended December 31, 2023 and 2022 The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and notes included elsewhere in this Annual Report.
The assumptions include expected volatility using either publicly traded peer group companies’ common stock (for grants before July 1, 2022) or the Company’s own common stock (for grants beginning on July 1, 2022), expected dividend yield, risk-free rate of interest and the expected term using the simplified method. 86 Table of Contents 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 consolidated financial statements in this Annual Report.
The assumptions include expected volatility using either publicly traded peer group companies’ common stock (for grants before July 1, 2022) or the Company’s own common stock (for grants beginning on July 1, 2022), expected dividend yield, risk-free rate of interest and the expected term using the simplified method.
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 before November 1, 2023. The lease term for all phases expires on August 31, 2035.
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, Phase 2 having commenced in the first quarter of 2022 and Phase 3 commenced in November 2023.
Other income (expense), net also includes interest earned on cash balances in our cash accounts and interest earned on money market funds, commercial paper and corporate bonds as well as miscellaneous income unrelated to our core operations. 79 Table of Contents Provision for Income Taxes We did not recognize a benefit for the net operating losses we incurred for the years ended December 31, 2022 and 2021.
Other Income (Expense) Interest income includes interest earned on cash balances in our cash accounts and interest earned on money market funds, commercial paper and corporate bonds as well as miscellaneous income unrelated to our core operations.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs 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. Foreign Currency Risk We are exposed to financial risks as a result of exchange rate fluctuations between the U.S.
Biggest changeAs 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. 90 Table of Contents Foreign Currency Risk We are exposed to financial risks as a result of exchange rate fluctuations between the U.S.
We are unable to predict whether inflation or changing prices will materially affect our business in the foreseeable future. 87 Table of Contents
We are unable to predict whether inflation or changing prices will materially affect our business in the foreseeable future. ​ 91 Table of Contents ​

Other MXCT 10-K year-over-year comparisons