MaxCyte, Inc. (MXCT) Earnings Call Transcript & Summary

Thank you. Good day. Thank you for standing by. Welcome to the Max Zeit Second Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. a question during the session, you will need to press star 1-1 on your telephone. You will then hear automated messages by your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Eric Abdel of Investment Relations. Please go ahead.

Good afternoon, everyone. Thank you for participating in today's conference call. Joining me on the call from MAC site, we have Mehr Masood, President and Chief Executive Officer, Parmeet Rahoja, Chief Financial Officer, and Shawn Menorquez, Senior Director of Business Development. Earlier today, MaxSight released financial results for the second quarter, ended June 30th, 2026. A copy of the press release is available on the company's website. Before we begin, I need to read the following statement. Statement or comments made during this call may be forward-looking statements within the meaning of federal securities laws. Any statements contained in this call other than statements of historical fact, including those that relate to expectations or predictions of future events, results, or performance, forward-looking statements. Actual results may differ materially from those expressed or implied in any forward-looking statement due to a variety of factors which are discussed in detail in our SEC filings. As is required by applicable law, the company has no obligation to publicly update any forward-looking statements whether because of new information, future events, or otherwise. And with that, I will turn the call over to Mehar.

Thank you, Eric. Good afternoon, everyone, and thank you for joining MagSight's second quarter 2026 earnings call. MagSight reported $7.3 million of total revenue in the second quarter, including $6.5 million of core revenue and $0.8 million of SPL program-related revenue, which consists of milestones and royalties. Results were ahead of our expectations and consistent with the free the framework we laid out coming into the year. As expected, we entered 2026 facing several headwinds, including inventory drawdown by our largest customer and headwinds resulting from the discontinuation of a few partner clinical programs last year. Despite those challenges, our objective was clear, stabilize revenue in the first half and return to growth in the second half. results reflects the stabilization where both our Q1 and Q2 revenues were ahead of our expectations and we remain confident in our ability to achieve our goal of returning to growth in the back half of the year. We achieve sequential revenue growth in Q2 compared to Q1, primarily driven by instrument placements across our portfolio, including our recently launched DTX platform. We also continue to see GTX placement across biotech and academic customers, reflecting ongoing program advancement. Processing Assembly revenue remains stable, sequentially, supported by our SPL portfolio. The second quarter reflected disciplined execution against our operating plan, resulting in improved first half financial results. We delivered a meaningful reduction in net loss year over year, despite the revenue headwinds we faced heading into 2026, and we expect to build on that progress as we execute against and return to revenue growth. Furthermore, we have continued to invest in R&D priorities that expand our platform and strengthen our long-term growth opportunities. Investments in expert DTX, secure, and newer strategic collaborations are designed to broaden how we engage with customers from early discovery through clinical development and commercial manufacturing while further diversifying MaxSight's revenue streams over time. Additionally, I want to highlight a significant milestone for the company as we recently announced our multi-platform technology license partnership with Genentech, which we believe reflects the growing recognition of Max-X technology across the ecosystem from early research all the way through commercial manufacturing. Under the agreement, MaxApp provides Genentech with access to our expert GTX platform and additional platform technologies, including our electroporation and analytical assessment capabilities across research, clinical development, and manufacturing workflows. The partnership is structured to support multiple programs and to enable Genentech's ex vivo cell engineering activities from early discovery. through CGMP manufacturing. I want to be clear about why I believe this agreement is so important for MaxSight. It is an evolution in how we partner with the largest players in our industry. Rather than licensing our technology on a single program basis, we've established an enterprise-level relationship with Genentech that supports multiple cell therapy programs under a single framework. We We believe this reflects how large pharmaceutical organizations increasingly want to deploy enabling technologies as enterprise-wide platforms that support multiple programs. We expect this trend will allow MagSight to participate more broadly across the development lifecycle of a customer's portfolio, not just one product at a time. The result is multiple platforms being used across a portfolio program programs rather than just for one program. We structure the parts with Genentech with the goal of creating long-term value for MagSight while shifting a great proportion of that value earlier in the customer life cycle. We expect that will mean greater revenue capture during research and clinical development across many of our platforms, durable recurring license and platform access revenue, complemented by milestone-based opportunities, and continued demand for our instruments, processing assemblies, and analytical technologies. The agreement also provides participation in commercial manufacturing through annual licensing and platform realization. While the structure differs from a traditional SPL, we believe the risk adjusted economics are more favorable on a partnership level, given the enterprise portfolio based relationship across the entire development lifecycle. This enterprise based model monetizes multiple revenue streams across the customer relationship while reducing our dependence on the outcome of any single clinical program. This agreement structure our SPL model. It does not replace it. We believe SPL has remained the right commercial solution for many of our biotech customers who are developing individual therapeutic programs and we expect to continue signing SPLs going forward. Over the past several years, we have consistently maintained strong royalty-based economics across our SPL partnerships and our Our current pipeline gives us confidence in our ability to continue doing so, reflecting the value of our offering to cell and gene therapy developers. Our existing SBA agreements continue under the contractual terms, including acquired entity provisions where applicable. Our pipeline continues to support attractive royalty-based SPL opportunities, and we expect both commercial models to coexist, each serving different customer needs. Beyond our relationship with Genentech, we believe this partnership establishes a commercial framework that can be applied with other large pharmaceutical organizations over time. It helps validate the breadth and strength of MaxSight's technology portfolio, expand our addressable market within large pharma, and demonstrate our ability to engage a leading global biopharmaceutical company at an enterprise level. very excited about what this partnership represents for MaxLight and about the opportunities it creates for the future. On the instrument side, expert DTX adoption continues to build with encouraging early traction across discovery and early optimization workflows in both ex vivo and in vivo cell and gene therapy. As I've discussed on prior calls, the DTX is fully compatible with the rest of our expert platform, which gives customers who adopt the instrument in discovery a seamless path to scale on our STX and GTX instruments for CGMP manufacturing and ultimately into a partnership agreement. We expect DTX adoption to build through the balance of 2026 and into next year. We also continue to see steady progress with SECURE in the quarter. The regulatory environment continues to evolve in our favor, and we continue to expect year-over-year growth for SECURE assay services and licenses in 2026. We firmly believe that SECURE assays will become part of the industry standard for off-target risk assessment and gene editing. Turning to SPL program related revenue, we recognize 0.8 million in the second quarter, which was comprised of nearly all royalties. EarthEx reported approximately 76 million of cash chevy revenue for the second quarter of 2026, reflecting approximately 75% sequential growth versus Q1, 2026 and 150% year over year growth. On its earnings call, all. Vertex noted that more cash-heavy infusions were completed in the first half of 2026 than in all of 2025. Additionally, Vertex also indicated that more than 100 patients initiated their treatment journey for CasGevvy during the second quarter, which marked the third consecutive quarter with more than 100 patient initiations. We also noted that regulatory submissions for CASH Chevy are now complete in Saudi Arabia and the UK in the five to 11 age group, and they are seeing continuing strong uptake in the UK, Italy, and Middle East. Overall, we remain very encouraged by CASH Chevy's continued commercial trajectory, and we truly believe in its long-term transformative potential for patients. customers. We have 30 total licensed partnerships, which includes 29 SPL partners and our recently announced multi-platform enterprise partnership with Genentech. We continue to see encouraging progression across our partner pipeline with multiple clinical stage programs moving towards late stage development. Importantly, we have five partner programs with the potential to begin commercial launches in the next couple of years, including as early as next year. any individual programs carries clinical or commercial risk. We believe that breadth and diversification are multiple shots on goal. Give us a high probability of generating meaningful core revenue, regulatory milestones, and commercial royalties over time. Our SPL portfolio remains a key driver of long-term value, as is evident by the growing commercial royalty revenue and the advancement of a significant number of SPL programs through the clinic. Looking to the second half of the year, we remain confident in our return to revenue growth. We expect growth to be driven primarily by instrument placements, supported by stable license revenue, and processing assembly demand from our SPL partners, including our recently announced partnership, the continued rollout of ExpertDTX, and a healthy commercial funnel across both new and existing customers. On the processing assembly side, a significant portion of the inventory drawdown from the largest customer is now behind us. We expect stable processing assembly demand as the SPL-related program headwinds we experienced in the first half also have largely subsided. Taken together, these factors give us strong confidence in our outlook for 2026. To close, I am pleased with the execution of our team in this year. second quarter. The Genentech partnership agreement represents a meaningful step forward in how we engage with our customers and reinforces the growing role our platform plays across the cell and gene therapy ecosystem. We are proud of our accomplishments and our positioning for long-term growth and plan to continue to invest in the business with financial and commercial discipline as we execute in the second half of 2026 and beyond. I will now turn the call over to Parmeet. Thank you, Meher.

revenue in the second quarter of 2026 was 7.3 million compared to 8.5 million in the second quarter of 2025 representing a 15 percent decrease We reported core revenue of 6.5 million compared to 8.2 million in the comparable prior year quarter representing a 21% decrease. WITHIN CORE REVENUE, INSTRUMENT REVENUE WAS 1.8 MILLION COMPARED TO 2.1 MILLION IN THE SECOND QUARTER OF 2025. License revenue was $1.8 million compared to $2.6 million in the second quarter of 2025, and processing assembly, or PA revenue, was $2.3 million compared to $3.1 million. Core revenue in the second quarter was primarily impacted by lower license revenue due to discontinued partner programs, the timing of instrument placements, and a difficult year-over-year comparison driven by PA purchases in the second quarter of 2025 that were accelerated by tariff related dynamics. Excluding these one-time tariff-driven purchases, PA revenue is relatively flat year-over-year, reflecting a stabilization in activity across our customer base. Secure saw continued positive year-over-year momentum in the quarter, with total revenue of $0.5 million, which includes both license and services revenue. SPL program-related revenue in the second quarter was $0.8 million, consisting almost entirely of royalty revenue, compared to $0.3 million of SPL program-related revenue in the second quarter of 2025. The year-over-year increase reflects continued growth in royalty revenue as Kastjevi adoption and commercial sales continue to build. Moving down the P&L, gross margin was 77% in the second quarter of 2026 compared to 82% in the second quarter of 2025. Excluding inventory provisions and SPL program-related revenue, non-GAAP adjusted gross margin was 77% in the second quarter of 2026 compared to non-GAAP adjusted gross margin of 83% in the second quarter of 2025. The gross margin for the quarter was primarily impacted by product mix, driven by a higher proportion of instrument revenue which carries lower gross margins than our licenses. Looking forward, and as discussed on last quarter's call, we expect these trends to continue in the back half of the year, with gross margins in the mid-70s. Total operating expenses for the second quarter of 2026 were $15.8 million compared to $21.2 million in the second quarter of 2025, a decrease of approximately $5 million or 25%. We continue to remain disciplined in managing our cost structure. The reduction in operating expenses reflects the full run rate benefit of the restructuring and cost efficiency actions we took in 2025, which are now being realized across the P&L. Looking forward, we do not expect operating expenses to grow meaningfully from these current levels, even though we continue to make investments in product development, which we believe will contribute to our continued return to growth. As revenue growth returns in the second half of the year, we expect the combination of discipline, cost management, and revenue growth to further reduce cash burn. We ended the second quarter with combined total cash, cash equivalents, and investments of $141.9 million and no debt. Last quarter, we announced the board's authorization of a $10 million share repurchase program. As previously indicated, we intend to execute the majority of the program before year-end. Since the authorization, we have repurchased approximately $5.5 million of MaxSight stock as of today. Our balance sheet is well positioned moving forward, enabling us to continue to invest strategically in our business. Continuing to our 2026 guidance, we are reiterating our 2026 outlook and expect total revenue to be in the range of 30 to 32 million, consisting of 25 to 27 million of core revenue and 5 million of SPL milestones and royalties. For the back half of 2026, we expect low single-digit year-over-year revenue growth. On the quarterly cadence, we expect usual seasonality, with Q4 being slightly higher than Q3, driven by typical year-end budget flush dynamics. For SPL Milestones and Royalties Guidance, we expect $3 million of revenue for milestones and $2 million of royalty revenues, with $3 million of milestone revenue already received in Q1. Lastly, we anticipate ending 2026 with at least $130.5 million in cash, cash equivalents, and investments, excluding any further capital deployed towards our repurchase program.

Now, I'll turn the call back over to Mehar. Thank you, Parmeet. And thank you to everyone at Maxar for their hard work and dedication each and every day to move our company and mission forward. I look forward to updating you on our next quarterly call. With that, I will turn the call back over to the operator for the Q&A. Operator?.

Thank you. At this time, we'll conduct the question and answer session. As a reminder to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. And our first question comes from the line of Julie Simmons of PaymentWord Libero. Your line is now open.

Thank you very much. Thank you for taking the question. A couple of questions. Firstly on the step up in instrument revenue, which is slightly higher than I was looking for. I was just wondering whether you could give any sort of indication as to where that's coming from, particularly in terms of your instrument portfolio. And then secondly, just on the guidance on the non-core business revenue, that looks a little bit low to me given what you've already received in milestones and also the run rate that Vertex is demonstrating currently. Any reasons why you haven't?.

I haven't changed that yet. Sure, let me take the first one, Julie, and then, pardon me, if you want to take the second part of the question. The instrument side, Julie was across the board. We saw it in research, process development, and clinical as well. So there's not any one particular. It's a product mix. We saw some early traction with DTX, continued traction in the clinical with the GTX and STX for process development. So really it's a mix. We feel good where we are in the year and where we got it for the year in terms of instrument revenue as well.

It's within our expectations, a little bit higher than our expectations actually. We feel good exactly it's going to the year that it would be around here. Parmeet, did you want to take the second part? Yes, Julie, you pointed to our non-core revenue guidance. So of the 2 million royalty, we recognize when 2 million through first half, and 0.4 million Q1 and 0.8 million Q2. As you pointed out, Castelli beat market expectations this quarter and we're starting to see real traction. which supports the remaining royalty. And as we've discussed before, they can be quarter-to-quarter variability as cash JV ramps consistent with what Vertex has communicated on their earnings call. You know, fundamentally, we're excited about the continued progress with Castagevi with significant growth sequentially and year over year. And you know, as commercial sales continue to build, we will start to see the royalty revenue truly materialized in our P&L. Can I add something there as well? Pardon me. So Julie, obviously Vertex comments on that.

call. We've now had three consecutive quarters of 100 patient initiations, more patients infused so far in the first half than all of last year. We just don't want to comment on our partners and BERT-Texas program. That's for them, but we are very excited about what we're seeing. So I'll leave it there.

Okay, thank you. Okay, I can repeat. Thank you. We'll move on to our next question. Our next question comes from a line of Hannah Rayford of Stevens Inc. The line is now open.

hey good afternoon thanks for taking the questions it's good to see instrument demand kind of stabilized and it sounds like that was pretty much across the board are you still seeing any pockets of hesitancy around capex or do you feel like that headwind is kind of behind you.

And pardon me, let me take that. Yes. So we see stabilization, both on the instrument side and on the processing assembly side as well, PAs. We feel the headwinds that we had last year are behind us. And we don't see any more pockets of headwind demands in any way. So we feel good. This is a return back to stability and get back to growth in the second half. And it's exactly where we are. I mean, this is a good quarter for us. We have a good year ahead of us. exactly what we expect. We're seeing the funding exactly what we expect to go into the year, stability there, it's come back. And we're growing from there. I mean, we've done, and we're seeing across the board, if you look at our revenue, it was both on the SPL and non-SPL side as well. So a very good quarter for us.

We don't see any pockets of headwinds ahead. Yes, and maybe to build on that a little bit, Maher, as we look ahead, Hannah, in a funnel scenario, we're continuing to expect instrument revenue to be a primary driver. And much like this quarter, across both academic and industry, with a healthy distribution across our instrument portfolio. You know, we certainly have had a recently announced partnership with Genentech that will play a role in the second half, as well as the continued rollout of the DTX.

Awesome, thank you. And then as it relates to that Genentech partnership, can we expect to see more of those coming up? How does this kind of change your strategy going forward? Could you just talk about what we can expect there? Absolutely. Great question, Hannah. So it's – the strategy is twofold. The SPL.

are still a big driver of the future growth of this company. We now have two ways of working with industry, one with biotechs through the SPLs and through enterprise-level multi-partnership agreements with Genentech and other large pharma and large biotech. So it allows us to really now get into large pharma, which we've never done before. We're able to monitor. times a year on a multi-program basis, not just one program. So we feel good where we are. We have a good funnel for the SPLs for the rest of the year, going to next year as well. We now have an ability to get a model that works very well with large pharma, which will look to continue to negotiate with other large pharmas. So this is a complementary basis. It's not one or the other. And this really shows the power of our platform. This is a case where with Genentech specifically, we're supporting them with two of their clinical allop programs now, as well as their preclinical research program. So it's a multi-platform agreement. It shows the power and strength of our platform. I keep reiterating that we are best in class, right? The investments we've made as well with the DTX, where we now are the only company that has something that can take you from research all the way to commercial without needing any further scale up. No one can do that. That's us. So we feel very good where we are. The S-fields are our future. These multi-partnership agreements are our future as well. We believe in the space, the cell therapy space has stabilized. We feel the future of the cell therapy space, and we're diversifying our revenues now throughout cell therapy. It's not just small or smaller biotechs. It's biotechs, large biotechs, large pharma, multiple ways through analytical capabilities as well, with the secure acquisition, which was part of the Genentech acquisition. partnership as well. So we feel very good about this, Hannah. All right. Thanks for the color. I'll leave it there. Absolutely. Thank you, Hannah.

Thank you. One moment for our next question. Our next question comes from a line of Matt Hewitt of Greyhound Capital Group. Your line is now open.

Good afternoon and congratulations on the progress made during the quarter. I'm curious, regarding the Genentech agreement, How have the discussions with some of your other larger SPL customers changed, if at all? And as you go into that next round of discussions with those that maybe were in the pipeline, How do you decide who the better fit is as far as for SPL versus the multi-platform agreement? Is it purely based on size? Is it the number of targets that the customer is looking at? Any color there would be helpful. Yes, very good question. So let me take a.

first part, it hasn't changed the tenure of the conversation with any of the current SPL future partners in the funnel. All of those, for the most part, are those biotech companies. The Genentech deal is a multi-platform deal. It's across the entire spectrum of the electroporation side as well as the analytical secure side. That's the color where... Genentech that we would pursue with other larger biotechs or with a large pharma as well. It also allows us, with the Genentech deal, we're able to monetize the value much further up in the relationship. That's something that obviously with the baby biotechs, that's not a flavor for them. That's more of the Genentechs and those types of companies. I say it again, Matt. We have a model now for both our SPL biotech companies as well as the Genentech and other large pharma, and we're pursuing those. We're speaking with other large pharma as well. We'll continue to do so. They take time to transpire. These are, even with the SPLs, these are negotiations sometimes and discussions and working with them early can take 18 months to develop. plus, and that's part of our model, but we now have a way to work with what we always said, the large pharma model. So not concerned in any way that's going to change any of our current discussions, and I.

there any changes, it's always in a good way. Got it. And then maybe shifting gears, you noted an uptick or at least some improvement in academic a couple of times in your prepared remarks. I'm just curious what you're seeing there. Obviously, the funding environment from an academic perspective, my sense remains pretty challenging. So the fact that you're seeing some improvement there, I think, bodes well. And I'm just curious your expect.

over the remainder of the year for that market segment. Thanks. Yes, absolutely. So we're seeing on the academic side, we are seeing traction there. A lot of it is also related to these are academic that are taking clinical trials. So these are pursuing clinical trials. So these are GMP-based academic partners that we're working with, and we're seeing that traction. We've always said that. That's what's going to see the future biotechs, the future SPLs. So, we've made a conscious decision to go, when we talked about going earlier in research, going earlier with the researchers. That's part of what we meant, and that's what we're seeing. It's not a surprise to us. It was actually part of our execution plan going into this year. Let's go after, let's diversify our revenue model. And that's one of the ways. So that's what you're seeing there, Matt. It's really a way for us to capture the future SPLs. it, you know, we always said it before, the only platform anybody should be using for cell therapy is MaxLyse platform. So we get in there early in the academic for these clinical trials that eventually will become future industry sponsored companies and trials. They should be working with us and that's what we're doing.

Great. Thank you. Absolutely. Thank you, Matt. Thank you. One moment for our next question. Our next question comes from Mark Massaro of PTIG. Your line is now open.

This is Megan on for Mark. Thank you guys for taking our questions. You touched on it a bit earlier, but with the 141.9M in cash and investments on the balance sheet. What are you seeing in your inorganic deal pipeline?.

In our inorganic deal pipe. So ask that question one more time and I want to make sure we're clear what you're asking.