TIDMMXCT TIDMMXCR
RNS Number : 0903R
MaxCyte, Inc.
19 September 2017
MaxCyte, Inc.
("MaxCyte" or the "Company")
Results for the Six Months ended 30 June 2017
Maryland, USA - 19 September 2017 - MaxCyte (LSE: MXCT, MXCR), a
US-based global company driving the acceleration of the discovery,
development, manufacturing and commercialisation of
next-generation, cell-based medicines, announces today its
financial results for the six months ended 30 June 2017.
HIGHLIGHTS (including post-period end highlights)
Financial Highlights
-- Revenues of $6.2 million for the six months ended 30 June
2017, a 13.6% increase over $5.5 million for the same period of
2016
-- Gross margins remained stable over the six months ended 30
June 2017 and 2016 at approximately 90% for each period
-- Operating expenses increased to $9.5 million compared to $5.9
million for the same period of 2016, including a $1.6 million
increase in investments for CARMA (to $2.1 million for the current
period) and increases in costs related to research and development
(R&D) and expanding our global sales and marketing
capabilities
-- Net loss before the CARMA investment was $2.2 million for the
six months ended 30 June 2017, compared to net loss before the
CARMA investment of $0.8 million for the same period of 2016. Net
loss including the CARMA investment was $4.3 million over the
period, compared to $1.3 million for the same period of 2016
-- Short-term and long-term deferred revenues increased from
$2.7 million at 31 December 2016 to $3.7 million at 30 June 2017
due principally to growth in cell therapy licenses including the
commercial license with CRISPR Therapeutics and Casebia
Therapeutics signed in March 2017
-- The cash balance for the Company increased to $30.2 million
at 30 June 2017, compared to $11.7 million at 31 December 2016,
largely driven by the Company's GBP20.0 million (before expenses)
fund raise on the AIM market of the London Stock Exchange which
completed on 24 April 2017
First Half Corporate and Operational Highlights
-- Non-exclusive commercial license agreement signed March 2017
with CRISPR Therapeutics and Casebia Therapeutics to develop
CRISPR/Cas9-based therapies for hemoglobin-related diseases and
severe combined immunodeficiency (SCID). MaxCyte has received an
initial upfront payment during the six months ended 30 June 2017
and under the terms of the license will also receive milestone and
sales-based payments
-- Expansion to more than 45 high-value cell therapy partnered
programmes covering cutting-edge fields of immuno-oncology, gene
editing and regenerative medicine, delivering high-value recurring
licensing revenue, with more than 15 programmes licensed for
clinical use
-- Continued advancement of CARMA collaborations with Johns
Hopkins Kimmel Cancer Center and the Washington University in St.
Louis with the current intention being to submit the first
investigational new drug (IND) application for the CARMA programme
in the second half of 2017
-- Presentation at the American Association for Cancer Research
(AACR) Annual Meeting in Washington, DC of pre-clinical in vivo
research results demonstrating the potential of the CARMA platform
for use in developing immunotherapies for the treatment of solid
tumours
-- Cooperative Research and Development Agreement (CRADA) with
the National Institutes of Health's (NIH) National Institute of
Allergy and Infectious Diseases (NIAID) to develop treatments for
X-linked chronic granulomatous disease (CGD) using next-generation
gene correction, leveraging CRISPR/Cas9 and MaxCyte's Flow
Electroporation(TM) Platform. Science Translational Medicine
published results from a collaborative MaxCyte/NIAID study, which
demonstrated gene repair in stem cells from patients with this rare
immunodeficiency disorder
-- Presentation at the American Society of Gene and Cell Therapy
(ASGCT) Annual Meeting in May of new in vitro data demonstrating
the potential of MaxCyte's cGMP-compliant proprietary delivery
platform to enable CRISPR gene editing in the treatment of sickle
cell disease (SCD)
-- Continued investments in sales and marketing capabilities to
grow our customer base, comprised of leading pharmaceutical and
biotechnology companies, including nine of the top ten global
biopharmaceutical companies by revenue
-- Continued collaboration with world leaders in the CAR field
in both solid cancers and haematological malignancies, with nine
academic clinical trials using MaxCyte's technology
Commenting on MaxCyte's interim financial results, Doug
Doerfler, Chief Executive Officer, said: "We have continued to make
significant progress across all areas of the business and have
achieved another period of strong growth. For this year, given the
timing of certain contracts, we expect an increase in the normal
seasonal weighting of revenues towards the second half as compared
to the prior year. In April, we bolstered our cash position by
GBP20 million (before expenses) via a successful financing
completed at a premium to the market price and will continue to
apply prudent cash control to the business as we invest to drive
growth. Other business highlights have included the signature of a
commercial license agreement with CRISPR Therapeutics and Casebia
Therapeutics, MaxCyte's CRADA with the NIH's NIAID, expansion of
our cell therapy partnered programmes to more than 45, and
advancement of our CARMA programme and recent presentation and
publication of scientific data in gene correction.
"MaxCyte's proprietary technology continues to enable
cutting-edge treatments in immuno-oncology and gene editing with
world-leading companies in these fields. Having implemented several
key global sales and marketing initiatives in support of the
instrument business in the first half of the year, and recently
adding a new Executive Vice President of Global Marketing, the
Company remains focused on building momentum and on continuing to
deliver significant growth and long-term value for its
stakeholders," he added.
Conference call for analysts
A briefing for analysts will be held at 11.00 am BST on Tuesday
19 September 2017 at the offices of Panmure Gordon & Co., One
New Change, London, EC4M 9AF. There will be a simultaneous live
conference call with Q&A, and the presentation will be
available on MaxCyte's website at http://www.maxcyte.com/
Dial-in details:
Participant dial-in: 08006940257
International dial-in: +44 (0) 1452 555566
Participant code: 86361241
An audio replay file will be made available shortly afterwards
via the Company website:
http://www.maxcyte.com/
About MaxCyte
MaxCyte (LSE: MXCT, MXCR) is a US-based global company driving
the acceleration of the discovery, development, manufacturing and
commercialisation of next-generation, cell-based medicines. The
Company provides its patented, high-performance cell engineering
platform to biopharmaceutical partners engaged in drug discovery
and development, biomanufacturing, and cell therapy, including gene
editing and immuno-oncology. With its robust delivery platform,
MaxCyte's team of scientific experts helps its partners to unlock
their product potential and solve problems. This platform allows
for the engineering of nearly all cell types, including human
primary cells, with any molecule, at any scale. It also provides a
high degree of consistency and minimal cell disturbance, thereby
facilitating rapid, large-scale, clinical and commercial grade cell
engineering in a non-viral system and with low-toxicity concerns.
The Company's cell-engineering platform is FDA-accredited,
providing MaxCyte's customers and partners with an established
regulatory path to commercialise cell-based medicines. MaxCyte is
also developing CARMA, its proprietary, breakthrough platform in
immuno-oncology, to rapidly manufacture CAR therapies for a broad
range of cancer indications, including solid tumours where existing
CAR-T approaches face
significant challenges. For more information, visit http://www.maxcyte.com/
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S LETTER
We are pleased to report to shareholders today on the Company's
financial results for the six months to 30 June 2017, which we
believe represents another strong period of growth and progress
across all areas of the business. In April, MaxCyte bolstered its
cash position by GBP20 million (before expenses) via a successful
financing at a premium to the market price, which included shares
of a new common stock (MXCR) admitted to trading on the AIM. The
Company's ongoing strategy for use of the net proceeds includes the
following activities:
-- Accelerating its growth strategy and executing on the
significant commercial opportunities available, including those
related to the advancement and expansion of the CARMA platform;
-- Increasing engagement in high-value research, clinical and
commercial licenses in a diverse range of fields, including
immuno-oncology, gene editing and regenerative medicine, through
expansion of business development for the cell therapy market;
-- Continuing collaboration with leaders in the CAR-based immuno-oncology field;
-- Continuing investment in global sales and marketing efforts;
-- Expanding the use of its platform in large-scale
biopharmaceutical transient protein manufacturing; and
-- Leveraging its Asian distribution network to meet growing
market demand for its products and technology.
During the period, MaxCyte continued to work towards progressing
its ambitious growth strategy. In March, the Company announced the
signature of its second commercial license, this time with CRISPR
Therapeutics and Casebia Therapeutics, to develop CRISPR/Cas9-based
therapies for hemoglobin-related diseases and severe combined
immunodeficiency (SCID). This agreement contributed to increased
revenue during the six-month period and also includes provisions
for milestone and sales-based payments going forward. The Company
also continued to grow its client base and expanded to more than 45
high-value therapy partnered programs, more than 15 of which are
now licensed for clinical use, providing the Company with strong
recurring revenue.
MaxCyte has also continued to demonstrate its expertise and
leadership across a diverse range of gene and cell therapies
presenting pre-clinical in vivo results on the potential of CARMA,
its breakthrough, proprietary platform in immuno-oncology, at the
AACR Annual meeting, as well as presenting strong pre-clinical data
demonstrating its ability to enable CRISPR gene editing in treating
sickle cell disease at the ASGCT Annual Meeting. Furthermore, an
R&D agreement signed with the NIH and NIAID as well as
publication of results of a recent collaborative study between
MaxCyte and the NIH published in Science Translational Medicine,
demonstrating gene repair in certain stem cells, has further
underlined the applicability of MaxCyte's technology in the
exciting area of gene correction. These steps demonstrate the
breadth of the Company's work and relationships, as well as the
potential of its CARMA platform, Flow Electroporation(TM) Platform,
and other capabilities.
The Company intends to build on this progress and we believe
that the Company's performance, progress and investment during the
six months ended 30 June 2017 provide us with the foundation for
continued success going forward.
Financial Review
Revenues for the period totaled $6.2 million, representing a
13.6% increase over the same period of 2016 with gross margins
remaining stable over the period. This growth in revenue reflects
expansion of MaxCyte's customer base, and the CRISPR Therapeutics
and Casebia Therapeutics commercial deal signed in March 2017. This
contract, along with the growth in cell therapy licenses, drove the
increase in deferred revenues to $3.7 million at period close.
The Company's operating expenses for the period increased to
$9.5 million compared to $5.9 million for the same period of 2016
resulting principally from the $1.6 million increase in CARMA
investments and increased investments in sales and marketing, other
R&D activities and general and administrative expenses
(including a full period of public company expenses) all focused on
driving and supporting MaxCyte's growth.
MaxCyte's net loss before taking into consideration expenses
from the CARMA programme was $2.2 million over the period compared
to net loss of $0.8 million (also before taking into consideration
expenses from CARMA) for the same period of 2016. The Company's
investment in CARMA was $2.1 million for the current period
compared to $0.5 million for the same period of 2016 yielding an
overall net loss to the company of $4.3 million over the period
(including growth in CARMA investments), compared to $1.3 million
for the same period of 2016.
The Company completed a successful fund raise on the London AIM
market on 24 April 2017, raising GBP20.0 million (before expenses).
As of 30 June 2017, MaxCyte held cash and cash equivalents
amounting to $30.2 million compared to $11.7 million as of 31
December 2016.
Events Post Period End and Outlook
In August, the Company announced the appointment of
biopharmaceutical industry veteran Brad Calvin as Executive Vice
President, Global Marketing, to drive further growth of the
Company's drug discovery and cell therapy business.
Looking forward, the Company remains focused on progressing its
CARMA programme to clinical development and expects to file the IND
later this year leading to a clinical trial and first in human
study using CARMA commencing during 2018. Developments in
immuno-oncology CAR-T space continue apace with the rapid evolution
of the landscape both regulatory and corporate, resulting in
Gilead's recent purchase of Kite Pharma demonstrating the value and
opportunity in this area of cancer therapy. However, toxicity using
the current CAR methods continues to be a well-publicised problem.
CARMA, however, has exhibited in both animal models and in vitro
cell studies anti-tumour activity without toxicity owing to the
transient nature of MaxCyte's mRNA CAR platform. We remain focussed
on delivering this novel and proprietary CAR platform and the
resulting cell therapy drugs into the clinic.
MaxCyte's leadership team offers sincere thanks to the Company's
original investors, Board members and collaborators who have helped
the Company drive to its present level of success, and who shared
the vision of a new way to engineer cells to treat disease, and to
its investors who supported its original initial public offering
(IPO) on AIM, and to the existing and new investors who
participated in the financing in April. MaxCyte continues to look
forward to new partnership and collaboration opportunities as the
Company develops technologies and products that advance a new
generation of cell-based medicines.
Doug Doerfler
President and Chief Executive Officer
J. Stark Thompson, Ph.D.
Non-executive Chairman
19 September 2017
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014 (MAR).
For further information, please contact:
MaxCyte Inc.
Doug Doerfler, Chief Executive
Officer
Ron Holtz, Chief Financial
Officer +1 301 944 1660
Nominated Adviser and Broker
Panmure Gordon
Freddy Crossley (Corporate
Finance)
Duncan Monteith
Ryan McCarthy
Tom Salvesen (Corporate Broking) +44 (0) 20 7886 2500
Financial PR Adviser
Consilium Strategic Communications
Mary-Jane Elliott +44 (0)203 709 5700
Chris Welsh maxcyte@consilium-comms.com
Lindsey Neville
MaxCyte, Incorporated
Unaudited Condensed Financial Statements
as of 30 June 30 2017 and 31 December 2016
and for the six months ended
30 June 2017 and 2016
MaxCyte, Inc.
Unaudited Condensed Balance Sheets
(amounts in U.S. dollars)
30 June 31 December
2017 2016
----------------- -----------------------
Assets
Current assets:
Cash and cash
equivalents $ 30,162,900 $ 11,727,000
Accounts
receivable 3,742,000 2,410,700
Inventory 1,519,800 1,334,600
Prepaid expenses 1,194,600 318,400
----------------- -----------------------
Total current
assets 36,619,300 15,790,700
Property and equipment,
net 341,000 281,500
Total Assets $ 36,960,300 $ 16,072,200
================= =======================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $ 3,234,400 $ 3,174,500
Deferred
revenue 3,538,800 2,463,100
Current portion
of capital lease
obligations 10,500 14,400
------------------ ---------------------
Total current
liabilities 6,783,700 5,652,000
Note payable, net of discount and
deferred fees 5,008,100 4,989,100
Capital lease obligations, net of
current portion - 3,100
Other liabilities 361,500 344,600
----------------- -----------------------
Total liabilities 12,153,300 10,988,800
Commitments and contingencies (Note
6)
Stockholders'
equity
Common stock, $0.01 par; 200,000,000
shares authorized, 50,836,962 and
43,539,527 shares issued and outstanding
at 30 June 2017 and 31 December 2016,
respectively. 508,400 435,400
Additional paid-in
capital 80,323,900 56,372,700
Accumulated
deficit (56,025,300) (51,724,700)
----------------- -----------------------
Total stockholders'
equity 24,807,000 5,083,400
Total liabilities and stockholder's
equity $ 36,960,300 $ 16,072,200
================= =======================
See accompanying notes to the unaudited condensed financial
statements.
MaxCyte, Inc.
Unaudited Condensed Statements of Operations
For the Six Months Ended 30 June,
(amounts in U.S. dollars)
2017 2016
----------------- -------------------
Revenue $ 6,210,100 $ 5,467,200
Costs of goods
sold 648,900 571,600
----------------- -------------------
Gross profit 5,561,200 4,895,600
----------------- -------------------
Operating
expenses:
Research and development 4,192,600 2,052,900
Sales and
marketing 2,948,000 1,977,000
General and administrative 2,405,900 1,821,100
----------------- -------------------
Total operating expenses 9,546,500 5,851,000
Operating
loss (3,985,300) (955,400)
----------------- -------------------
Other income (expense):
Interest expense (315,300) (327,000)
Other income - 15,700
----------------- -------------------
Total other income (expense) (315,300) (311,300)
Net
loss (4,300,600) (1,266,700)
Cumulative preferred stock
dividends - (505,400)
Net loss attributable to
common stock $ (4,300,600) $ (1,772,100)
================= ===================
Basic and diluted net loss
per share $ (0.09) $ (0.08)
================= ===================
Weighted average shares outstanding,
basic and diluted 46,401,189 23,411,270
================= ===================
See accompanying notes to the unaudited condensed financial
statements.
MaxCyte, Inc.
Unaudited Condensed Statements of Cash Flows
For the Six Months Ended 30 June,
(amounts in U.S. dollars)
2017 2016
------------------ ---------------
Cash flows from operating activities:
Net loss $ (4,300,600) $ (1,266,700)
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation and amortization 56,400 50,800
Net book value of consigned
equipment sold 27,000 9,100
Stock-based compensation 120,600 65,500
Non-cash interest expense 19,000 23,400
Changes in operating assets and
liabilities:
Accounts receivable (1,331,300) (776,000)
Inventory (185,200) (184,000)
Prepaid expenses (876,200) (340,300)
Accounts payable and accrued
expenses 59,900 (313,600)
Deferred revenue 1,075,700 634,500
Other liabilities 16,900 42,700
------------------ ---------------
Net cash used in operating
activities (5,317,800) (2,054,600)
------------------ ---------------
Cash flows from investing activities:
Purchases of property and equipment (142,900) (46,700)
------------------ ---------------
Net cash used in investing
activities (142,900) (46,700)
------------------ ---------------
Cash flows from financing activities:
Issuance costs related to debt
amendment - (62,900)
Proceeds from exercise of stock
options 4,000 6,800
Principal payments on capital leases (7,000) (10,100)
Net proceeds from issuance of common
stock 23,899,600 11,936,200
Net cash provided by financing
activities 23,896,600 11,870,000
------------------ ---------------
Net increase in cash and cash equivalents 18,435,900 9,768,700
Cash and cash equivalents, beginning
of period 11,727,000 2,411,900
Cash and cash equivalents, end
of period $ 30,162,900 $ 12,180,600
================== ===============
Supplemental cash flow information:
Cash paid for interest $ 268,200 $ 264,400
Supplemental disclosure of non-cash investing
and financing activities:
Conversion of preferred stock in
conjunction with IPO $ - $ 48,528,900
Exchange of stock warrants in conjunction
with IPO $ - $ 85,400
See accompanying notes to the unaudited condensed financial
statements.
1. Organization and Description of Business
MaxCyte, Inc. (the "Company" or "MaxCyte") was incorporated as a
majority owned subsidiary of EntreMed, Inc. ("EntreMed") on 31 July
1998, under the laws and provisions of the state of Delaware, and
commenced operations on 1 July 1999. In November 2002, MaxCyte was
recapitalized and EntreMed was no longer deemed to control the
Company.
MaxCyte is a developer and supplier of proprietary
electroporation technology to biotechnology and pharmaceutical
firms engaged in cell therapy, including gene editing and
immuno-oncology and in drug discovery and development and
biomanufacturing. The Company licenses its instruments and
technology and sells its consumables to developers of cell
therapies. The Company also sells and leases its instruments and
sells its consumables to pharmaceutical and biotechnology companies
for use in drug discovery and development and biomanufacturing.
On 29 March 2016, the Company completed its initial public
offering ("IPO") of its Common Stock on the AIM sub-market of the
London Stock Exchange ("AIM IPO"). The Company issued approximately
14.3 million shares of its Common Stock at an initial price of
LIR0.70 per share (or approximately $1.01 per share), generating
gross proceeds of approximately LIR10 million (or approximately
$14.4 million). See Note 4.
In January 2016, the Board of Directors approved an amended Plan
of Recapitalization (the "Plan of Recapitalization," which replaced
the previous Plan of Conditional Recapitalization which had been
approved in December 2014). The Plan of Recapitalization provided
that, immediately prior to completion of an AIM IPO, (i) all Series
A-1, B, C and D preferred stock shall be converted automatically
into Common Stock based on a formula set out in and otherwise in
accordance with the terms of the Recapitalization and (ii) the
Series E preferred stock shall be converted automatically into
Common Stock at a discount from the AIM IPO placing price.
Additionally, holders of the outstanding Series D Preferred Stock
Warrants shall have confirmed that such warrants would be exchanged
for Common Stock based on a formula as set out in, and otherwise in
accordance with, the terms of the warrants and the Plan of
Recapitalization. The Plan of Recapitalization was effective on 29
March 2016 upon the Company's completion of its AIM IPO.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited interim condensed financial
statements have been prepared in accordance with accounting
principles generally accepted in the United States of America
("U.S. GAAP"). These unaudited interim condensed financial
statements do not include all the information and footnotes
required by U.S. GAAP for complete audited financial statements.
These unaudited interim condensed financial statements should be
read in conjunction with the audited financial statements and
accompanying notes for the year ended 31 December 2016. In the
opinion of management, the unaudited interim condensed financial
statements reflect all the adjustments (consisting of normal
recurring adjustments) necessary to state fairly the Company's
financial position as of 30 June 2017 and the results of operations
for the six months ended 30 June 2017 and 2016. The interim
condensed results of operations are not necessarily indicative of
the results that may occur for the full fiscal year. The 31
December 2016 balance sheet included herein was derived from the
audited financial statements, but do not include all disclosures
including notes required by U.S. GAAP for complete audited
financial statements.
The Company operates in a single business segment.
Use of Estimates
The preparation of financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of revenues and
expenses during the reporting period. In the accompanying financial
statements, estimates are used for, but not limited to, stock-based
compensation, allowance for doubtful accounts, allowance for
inventory obsolescence, valuation of derivative liabilities and
other financial instruments, accruals for contingent liabilities,
deferred taxes and valuation allowance, and the depreciable lives
of fixed assets. Actual results could differ from those
estimates.
Concentration
During the six months ended 30 June 2016, one customer
represented approximately 13% of net revenues. During the six
months ended 30 June 2017, no single customer represented more than
10% of net revenues.
During each of the six months ended 30 June 2017 and 2016, the
Company purchased approximately 42% and 56%, respectively of
inventory from one supplier. As of 30 June 2017, amounts payable to
this supplier totaled approximately 12% of total accounts
payable.
Foreign Currency
The Company's functional currency is the U.S. dollar;
transactions denominated in foreign currencies are transacted at
the exchange rate in effect at the date of each transaction.
Effects of the differences in exchange rates during the period
between the date a transaction denominated in foreign currency is
consummated and the date on which it is either settled or at the
reporting date are recognized in the Statement of Operations. The
foreign currency transaction loss was $40,200 and $33,000 for the
six months ended 30 June 2017 and 2016, respectively.
Fair Value
Fair value is the price that would be received from the sale of
an asset or paid to transfer a liability assuming an orderly
transaction in the most advantageous market at the measurement
date. U.S. GAAP establishes a hierarchical disclosure framework
which prioritizes and ranks the level of observability of inputs
used in measuring fair value. These tiers include:
-- Level 1-Quoted prices (unadjusted) in active markets that are
accessible at the measurement date for identical assets or
liabilities. The fair value hierarchy gives the highest priority to
Level 1 inputs.
-- Level 2-Observable market-based inputs other than quoted
prices in active markets for identical assets or liabilities.
-- Level 3-Unobservable inputs are used when little or no market
data is available. The fair value hierarchy gives the lowest
priority to Level 3 inputs.
See Note 5 for additional information regarding fair value.
Cash and Cash Equivalents
Cash and cash equivalents consist of financial instruments with
original maturities of less than three months. At times the
Company's cash balances may exceed federally insured limits. The
Company does not believe that this results in any significant
credit risk.
Inventory
The Company sells or leases products to customers. The Company
uses the average cost method of accounting for its inventory and
adjustments resulting from periodic physical inventory counts are
reflected in costs of goods sold in the period of the adjustment.
Inventory consisted of the following:
30 June 31 December
2017 2016
------------ -------------------
US$ US$
Raw materials inventory $ 546,200 $ 426,000
Finished goods
inventory 973,600 908,600
Total Inventory $ 1,519,800 $ 1,334,600
============ ===================
Accounts Receivable
Accounts receivable are reduced by an allowance for doubtful
accounts, if needed. The allowance for doubtful accounts reflects
the best estimate of probable losses determined principally on the
basis of historical experience and specific allowances for known
troubled accounts. All accounts or portions thereof that are deemed
to be uncollectible or to require an excessive collection cost are
written off to the allowance for doubtful accounts. The Company
determined that no allowance was necessary at 30 June 2017 or 31
December 2016.
Property and Equipment
Property and equipment are stated at cost. Depreciation is
computed using the straight-line method. Office equipment
(principally computers) is depreciated over an estimated useful
life of three years. Laboratory equipment is depreciated over an
estimated useful life of five years. Furniture is depreciated over
a useful life of seven years. Leasehold improvements are amortized
over the shorter of the estimated lease term or its useful life.
Consigned instruments represent equipment held at a customer's site
that is typically leased to customers on a short-term basis and is
depreciated over an estimated useful life of five years. Property
and equipment consist of the following:
30 June 31 December
2017 2016
--------------- ----------------
Furniture and equipment $ 1,132,000 $ 1,084,100
Consigned instruments 419,700 443,900
Leasehold improvements 100,000 72,500
Accumulated depreciation
and amortization (1,310,700) (1,319,000)
Property and equipment,
net $ 341,000 $ 281,500
=============== ================
Management reviews property and equipment for impairment
whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability
of the long-lived asset is measured by a comparison of the carrying
amount of the asset to future undiscounted net cash flows expected
to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount
by which the carrying amount of the assets exceeds the estimated
fair value of the assets. Assets held for disposal are reportable
at the lower of the carrying amount or fair value, less costs to
sell. Management did not identify any such events or changes in
circumstances during the six months ended 30 June 2017 and 2016. No
assets were held for disposal as of 30 June 2017.
Revenue Recognition
Revenue is recognized when there is persuasive evidence that an
arrangement exists, delivery has occurred, the sales price is fixed
and determinable, and collection is reasonably assured.
Revenue is principally from the sale or lease of instruments and
processing assemblies, as well as from warranties, installation and
maintenance. In some arrangements, product and services have been
sold together in multiple element arrangements. In such
arrangements, when the delivered elements have standalone value to
the customer, the Company allocates the sale price to the various
elements in the arrangement on a relative selling price basis.
Under this basis, the Company determines the estimated selling
price of each element in a manner that is consistent with that used
to determine the price to sell the deliverable on a standalone
basis.
Revenue from the sale of instruments and disposables is
generally recognized at the time of shipment to the customer,
provided no significant vendor obligations remain and
collectability is probable. Revenue from equipment leases are
recognized ratably over the contractual term of the lease
agreement. Licensing fee revenue is recognized ratably over the
license period.
Research and Development Costs
Research and development costs consist of independent
proprietary research and development costs, and the costs
associated with work performed for fees from third parties.
Research and development costs are expensed as incurred. Costs for
research projects performed in exchange for fees from third parties
are included in cost of goods sold.
Stock-Based Compensation
The Company grants stock-based awards in exchange for employee,
consultants and non-employee director services. The value of the
award is recognized as expense on a straight-line basis over the
requisite service period.
The Company utilizes the Black-Scholes option pricing model for
estimating fair value of its stock options granted. Option
valuation models, including the Black-Scholes model, require the
input of highly subjective assumptions, and changes in the
assumptions used can materially affect the grant-date fair value of
an award. These assumptions include the risk-free rate of interest,
expected dividend yield, expected volatility and the expected life
of the award. A discussion of management's methodology for
developing each of the assumptions used in the Black-Scholes model
is as follows:
Fair value of common stock
Fair value of the Company's common stock subsequent to the IPO
is based on quoted market prices. Prior to the IPO, the Company's
Board of Directors determined the fair value of the common stock.
In the absence of a public market, the Company believed that it was
appropriate to consider a range of factors to determine the fair
value of the common stock at each grant date. The factors included,
but were not limited to: (1) the achievement of operational
milestones by the Company; (2) the status of strategic
relationships with collaborators; (3) the significant risks
associated with the Company's stage of development; (4) capital
market conditions for life science and medical diagnostic
companies, particularly similarly situated, privately held,
early-stage companies; (5) the Company's available cash, financial
condition and results of operations; (6) the most recent sales of
the Company's preferred stock; and (7) the preferential rights of
the outstanding preferred stock.
Expected volatility
Volatility is a measure of the amount by which a financial
variable such as a share price has fluctuated (historical
volatility) or is expected to fluctuate (expected volatility)
during a period. The Company does not currently have enough history
with its common stock post its 2016 IPO. The Company has been able
to identify several public entities of similar size, complexity and
stage of development; accordingly, historical volatility has been
calculated at between 47% and 48% for 2017 and 35% and 48% for 2016
using the volatility of these companies.
Expected dividend yield
The Company has never declared or paid common stock dividends
and has no plans to do so in the foreseeable future.
Risk-free interest rate
This approximates the U.S. Treasury rate for the day of each
option grant during the year, having a term that closely resembles
the expected term of the option. The risk-free interest rate was
between 1.8% and 2.1% for 2017 grants and 1.1% and 2.2% for 2016
grants.
Expected term
This is the period of time that the options granted are expected
to remain unexercised. Options granted have a maximum term of 10
years. The Company estimates the expected term of the option to be
6.25 years for options with a standard four-year vesting period,
using the simplified method. Over time, management intends to track
estimates of the expected term of the option term so that estimates
will approximate actual behavior for similar options.
Expected forfeiture rate
Prior to the adoption of new accounting guidance on 1 January
2017, the Company estimated forfeitures based on turnover data with
further consideration given to the class of the employees to whom
the options were granted. With the adoption of the new accounting
guidance, the Company no longer estimates forfeiture rates in
calculating expense; all forfeitures are recognized as incurred.
The cumulative effect of the adjustment for this change in
accounting was immaterial to the Company's financial
statements.
Income Taxes
The Company uses the asset and liability method of accounting
for income taxes. Deferred tax assets and liabilities are
determined based on differences between the financial reporting and
tax basis of assets and liabilities and are measured using the
enacted tax rates and laws that are expected to be in effect when
the differences are expected to reverse. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
the period that such tax rate changes are enacted. The measurement
of a deferred tax asset is reduced, if necessary, by a valuation
allowance if it is more-likely-than-not that all or a portion of
the deferred tax asset will not be realized.
Management uses a recognition threshold and a measurement
attribute for the financial statement recognition and measurement
of tax positions taken or expected to be taken in a tax return, as
well as guidance on derecognition, classification, interest and
penalties and financial statement reporting disclosures. For those
benefits to be recognized, a tax position must be more-likely-
than-not to be sustained upon examination by taxing authorities.
The Company recognizes interest and penalties accrued on any
unrecognized tax exposures as a component of income tax expense.
The Company has not identified any uncertain income tax positions
that could have a material impact to the financial statements.
The Company is subject to taxation in various jurisdictions in
the United States and abroad and remains subject to examination by
taxing jurisdictions for 2013 and all subsequent periods. The
Company had a Net Operating Loss ("NOL") carry forward of $22.8
million as of 31 December 2016, which was generally available as a
deduction against future income for US federal corporate income tax
purposes, subject to applicable carryforward limitations. As a
result of the March 2016 AIM IPO, the Company's NOLs are limited on
an annual basis, subject to certain carryforward provisions,
pursuant to Section 382 of the Internal Revenue Code of 1986, as
amended, as a result of a greater than fifty percent change in
ownership that occurred in the three-year period ending at the time
of the March 2016 AIM IPO. The Company has calculated that for the
period ending on 31 December 2022, the cumulative limitation amount
is in excess of the NOLs subject to the limitation.
Loss Per Share
Basic loss per share is computed by dividing net loss available
to common shareholders by the weighted average number of shares of
Common Stock outstanding during the period.
For periods of net income, and when the effects are not
anti-dilutive, diluted earnings per share is computed by dividing
net income available to common shareholders by the weighted-average
number of shares outstanding plus the impact of all potential
dilutive common shares, consisting primarily of Common Stock
options and stock purchase warrants using the treasury stock
method, and convertible preferred stock using the if-converted
method.
For periods of net loss, diluted loss per share is calculated
similarly to basic loss per share because the impact of all
dilutive potential common shares is anti-dilutive. The number of
anti-dilutive shares, consisting of (i) Common Stock options, (ii)
stock purchase warrants, and (iii) for periods prior to conversion,
convertible preferred stock exchangeable into Common Stock, which
has been excluded from the computation of diluted loss per share,
was 5.9 million and 5.4 million for the six months ended 30 June
2017 and 2016, respectively.
The Company's convertible preferred stock, prior to its
conversion, contains non-forfeitable rights to dividends, and
therefore is considered to be a participating security; the
calculation of basic and diluted income (loss) per share excludes
net income (but not net loss) attributable to the convertible
preferred stock from the numerator and excludes the impact of those
shares from the denominator.
Recent Accounting Pronouncements
Recently Adopted
In July 2015, the FASB issued guidance for inventory requiring
an entity to measure inventory at the lower of cost or net
realizable value, except when inventory is measured using LIFO or
the retail inventory method. Net realizable value is the estimated
selling price in the ordinary course of business, less reasonably
predictable costs of completion, disposal, and transportation. In
addition, the FASB has amended some of the other inventory guidance
to more clearly articulate the requirements for the measurement and
disclosure of inventory. The guidance is effective for reporting
periods beginning after 15 December 2016 and early adoption is
permitted. The Company adopted this guidance on 1 January 2017. The
adoption of this new guidance did not have a material impact on the
Company's financial statements.
In March 2016, the FASB issued guidance to clarify the
requirements for assessing whether contingent call or put options
that can accelerate the payment of principal on debt instruments
are clearly and closely related to their debt hosts. The guidance
is effective for reporting periods beginning after 15 December
2016, and early adoption is permitted. Entities are required to
apply the guidance to existing debt instruments using a modified
retrospective transition method as of the beginning of the fiscal
year of adoption. The Company adopted this guidance on 1 January
2017. The adoption of this new guidance did not have a material
impact on the Company's financial statements.
In March 2016, the FASB issued guidance simplifying the
accounting for and financial statement disclosure of stock-based
compensation awards. Under the guidance, all excess tax benefits
and tax deficiencies related to stock-based compensation awards are
to be recognized as income tax expenses or benefits in the income
statement and excess tax benefits should be classified along with
other income tax cash flows in the operating activities section of
the statement of cash flows. Under the guidance, companies can also
elect to either estimate the number of awards that are expected to
vest or account for forfeitures as they occur. In addition, the
guidance amends some of the other stock-based compensation awards
guidance to more clearly articulate the requirements and cash flow
presentation for withholding shares for tax-withholding purposes.
The guidance is effective for reporting periods beginning after 15
December 2016 and early adoption is permitted, though all
amendments of the guidance must be adopted in the same period. The
adoption of certain amendments of the guidance must be applied
prospectively, and adoption of the remaining amendments must be
applied either on a modified retrospective basis or retrospectively
to all periods presented. The Company adopted this guidance for the
year ended 31 December 2017 and elected to account for forfeitures
as they occur. The adoption of this new guidance did not have a
material impact on the Company's financial statements.
Unadopted
In May 2014, the Financial Accounting Standards Board ("FASB")
issued guidance for revenue recognition for contracts, superseding
the previous revenue recognition requirements, along with most
existing industry-specific guidance. The guidance requires an
entity to review contracts in five steps: 1) identify the contract,
2) identify performance obligations, 3) determine the transaction
price, 4) allocate the transaction price, and 5) recognize revenue.
The new standard will result in enhanced disclosures regarding the
nature, amount, timing, and uncertainty of revenue arising from
contracts with customers. In August 2015, the FASB issued guidance
approving a one-year deferral, making the standard effective for
reporting periods beginning after 15 December 2017 for public
business entities, with early adoption permitted only for reporting
periods beginning after 15 December 2016. In March 2016, the FASB
issued guidance to clarify the implementation guidance on principal
versus agent considerations for reporting revenue gross rather than
net, with the same deferred effective date. In April 2016, the FASB
issued guidance to clarify the identification of performance
obligations and licensing arrangements. In May 2016, the FASB
issued guidance addressing the presentation of sales and other
similar taxes collected from customers, providing clarification of
the collectability criterion assessment, as well as clarifying
certain transition requirements. The Company is currently
evaluating the impact, if any, that this guidance will have on its
financial statements.
In February 2016, the FASB issued guidance for the accounting
for leases. The guidance requires lessees to recognize assets and
liabilities related to long-term leases on the balance sheet and
expands disclosure requirements regarding leasing arrangements. The
guidance is effective for reporting periods beginning after 15
December 2018 for public business entities and early adoption is
permitted. The guidance must be adopted on a modified retrospective
basis and provides for certain practical expedients. The Company is
currently evaluating the impact, if any, that this new accounting
pronouncement will have on its financial statements.
In June 2016, the FASB issued guidance with respect to measuring
credit losses on financial instruments, including trade
receivables. The guidance eliminates the probable initial
recognition threshold that was previously required prior to
recognising a credit loss on financial instruments. The credit loss
estimate can now reflect an entity's current estimate of all future
expected credit losses. Under the previous guidance, an entity only
considered past events and current conditions. The guidance is
effective for fiscal years beginning after 15 December 2020 for
public business entities, including interim periods within those
fiscal years. Early adoption is permitted for fiscal years
beginning after 15 December 2018, including interim periods within
those fiscal years. The adoption of certain amendments of this
guidance must be applied on a modified retrospective basis and the
adoption of the remaining amendments must be applied on a
prospective basis. The Company is currently evaluating the impact,
if any, that this new accounting pronouncement will have on its
financial statements.
In May 2017, the FASB issued guidance clarifying when changes in
the terms or conditions of share-based payment awards should be
accounted for as modifications. This guidance is effective for
fiscal years beginning after 15 December 2017 and early adoption is
permitted. This guidance must be applied prospectively to awards
modified after the adoption date. The Company is currently
evaluating the impact, if any, that this new accounting
pronouncement will have on its financial statements.
In July 2017, the FASB issued guidance addressing several issues
involving financial instruments. Part I of the guidance simplifies
the accounting for certain equity-linked financial instruments and
embedded features with down round features that reduce the exercise
price when the pricing of a future round of financing is lower
("down round protection"). Current accounting guidance provides
that instruments with down round protection be classified as
derivative liabilities with changes in fair value recorded through
earnings. The updated guidance provides that instruments with down
round protection are no longer precluded from being classified as
equity. This guidance is effective for fiscal years beginning after
15 December 2018 for public business entities and early adoption is
permitted. This guidance must be applied retrospectively. The
Company is currently evaluating the impact, if any, that this new
accounting pronouncement will have on its financial statements.
The Company has evaluated all other issued and unadopted
Accounting Standards Updates and believes the adoption of these
standards will not have a material impact on its results of
operations, financial position, or cash flows.
3. Debt
The Company entered into a credit facility in March 2014 with
Midcap Financial SBIC, LP ("MidCap") and subsequently amended the
facility in 2015 and 2016; the facility now provides up to
$5,105,400 in total borrowing capacity. All amendments have been
accounted for as "debt modifications." The facility carries a
variable interest rate equal to the greater of (i) 1.50% above the
LIBOR then in effect, or (ii) 10.00%. The facility is
collateralized by substantially all tangible assets of the Company.
The facility also provides the following terms: (i) maturity date
of 1 June 2021 (ii) interest only payments through 1 July 2018 and
(iii) an exit fee of 6.75%.
Deferred fees incurred in conjunction with the amendments are
being amortized using the effective interest method over the
remaining term of the amended debt. Unamortized deferred financing
costs were approximately $90,100 and $107,700 at 30 June 2017 and
31 December 2016, respectively, and are included as reductions to
the note payable balance.
In connection with this facility, in March 2014 and December
2014, the Company issued stock purchase warrants to MidCap to
purchase shares of its series D perpetual preferred stock at an
exercise price of $1.00 per share. The warrants were recorded as a
liability with an offsetting debt discount at their estimated fair
value and such discount was being amortized as interest expense
over the term of the debt using the effective interest method (see
Note 5). The warrants were exercised in whole in March 2016 in
conjunction with the Company's AIM IPO (see Note 4).
The total balance of the MidCap credit facility at both 30 June
2017 and 31 December 2016 was $5,105,400, with an interest rate of
10%; the balance of the unamortized debt discount at 30 June 2017
and 31 December 2016 was $7,200 and $8,700, respectively. Future
minimum principal payments under the MidCap credit facility are
expected to be approximately $850,000 in 2018, approximately
$1,702,000 in 2019 and 2020, and approximately $851,000 in
2021.
4. Stockholders' Equity
Common Stock
On 29 March 2016, the Company completed its initial public
offering ("IPO") of its Common Stock on the AIM sub-market of the
London Stock Exchange. The Company issued approximately 14.3
million shares of its Common Stock at an initial price of LIR0.70
per share (or approximately $1.01 per share), generating gross
proceeds of approximately LIR10 million (or approximately $14.4
million). In conjunction with the transaction the Company incurred
costs of approximately $3.1 million which resulted in the Company
receiving net proceeds of approximately $11.3 million.
In conjunction with the AIM IPO and in accordance with the Plan
of Recapitalization, the Company issued 27,151,531 shares of Common
Stock upon the conversion of all of its outstanding shares of
preferred stock. The Company also issued 85,914 shares of Common
Stock upon the exchange of all outstanding stock purchase
warrants.
On 21 April 2017, the Company completed an equity capital raise
issuing 7,275,000 shares of Common Stock to new and existing
investors at a price of LIR2.75 per share (or approximately $3.51
per share). The transaction generated gross proceeds of
approximately LIR20 million (or approximately $25.5 million). In
conjunction with the transaction the Company incurred costs of
approximately $1.6 million which resulted in the Company receiving
net proceeds of approximately $23.9 million.
During the first six months of 2017, the Company issued 22,435
shares of Common Stock as a result of stock option exercises,
receiving gross proceeds of approximately $4,000.
Stock Options
The Company adopted the MaxCyte, Inc. Long-Term Incentive Plan
(the "Plan") in January 2016 to amend and restate the MaxCyte 2000
Long Term Incentive Plan to provide for the awarding of (i) stock
options, (ii) restricted stock, (iii) incentive shares, and (iv)
performance awards to employees, officers, and directors of the
Company and to other individuals as determined by the Board of
Directors. Under the Plan, the maximum number of shares of Common
Stock of the Company that the Company may issue is (a) 6,264,682
shares plus (b) ten percent (10%) of the shares that are issued and
outstanding at the time awards are made under the Plan.
The Company has not issued any restricted stock, incentive
shares, or performance awards under the Plan. Stock options granted
under the Plan may be either incentive stock options as defined by
the Internal Revenue Code or non-qualified stock options. The Board
of Directors determines who will receive options under the Plan and
determines the vesting period. The options can have a maximum term
of no more than 10 years. The exercise price of options granted
under the Plan is determined by the Board of Directors and must be
at least equal to the fair market value of the Common Stock of the
Company on the date of grant.
In the six months ended 30 June 2017, the Company awarded
140,000 stock options with an average exercise price of $3.17 per
share and a weighted average grant date fair value of $1.51 per
share.
At 30 June 2017, there were 5,873,297 stock options outstanding
with an average exercise price of $0.46 per share. As of 30 June
2017, total unrecognized compensation expense was $742,300, which
will be recognized over the next 3.5 years.
Stock-based compensation expense for the six months ended 30
June was as follows:
2017 2016
US$ US$
------------- -------------
General and administrative $ 45,700 $ 1,000
Sales and marketing 32,700 63,800
Research and development 42,200 700
Total $ 120,600 $ 65,500
============= =============
Stock Purchase Warrants
Immediately prior to the Company's AIM IPO and pursuant to the
Plan of Recapitalization, on 29 March 2016 all stock purchase
warrants were exchanged for 85,914 shares of Common Stock. Prior to
such exercise, the warrants were classified as liabilities. At 30
June 2017, the Company had no outstanding stock purchase
warrants.
5. Fair Value
The Company's Balance Sheets include various financial
instruments (primarily cash and cash equivalents, accounts
receivable and accounts payable and accrued expenses) that are
carried at cost, which approximates fair value due to the
short-term nature of the instruments. Notes payable and capital
lease obligations are reflective of fair value based on market
comparable instruments with similar terms.
Financial Assets and Liabilities Measured at Fair Value on a
Recurring Basis
After the adoption of the Plan of Conditional Recapitalization
and prior to their exercise in March 2016, the Company's stock
purchase warrants were exchangeable into Series D Preferred which
could have been required to be settled by issuance of a variable
number of shares; as such, the warrants were classified as
liabilities, measured at fair value and marked to market each
reporting period until settlement. The fair value of the warrants
was measured using Level 3 inputs and was determined based on the
value of the warrants relative to the value of the Company's other
equity securities assuming an AIM IPO and effectiveness of the Plan
of Conditional Recapitalization. The primary Level 3 unobservable
inputs included various assumptions about the potential AIM IPO.
The warrants were exchanged for 85,914 shares of Common Stock on 29
March 2016.
The Company had no financial assets or liabilities measured at
fair value on a recurring basis at 30 June 2017 or 31 December
2016. The following table presents a summary of changes in the fair
value of Level 3 warrant liabilities measured at fair value on a
recurring basis for the six months ended 30 June 2016:
Description Balance Exchanged Change Balance
at for Common in fair at
1 January Stock in value 30 June
2016 2016 in 2016 2016
Warrant
liabilities $ 85,400 $ (85,400) $ - $ -
Financial Assets and Liabilities Measured at Fair Value on a
Non-Recurring Basis
The Company has no financial assets and liabilities that are
measured at fair value on a non-recurring basis.
Non-Financial Assets and Liabilities Measured at Fair Value on a
Recurring Basis
The Company has no non-financial assets and liabilities that are
measured at fair value on a recurring basis.
Non-Financial Assets and Liabilities Measured at Fair Value on a
Non-Recurring Basis
The Company measures its long-lived assets, including property
and equipment, at fair value on a non-recurring basis. These assets
are recognized at fair value when they are deemed to be impaired.
No such fair value impairment was recognized in the six months
ended 30 June 2017 or 2016.
6. Commitments and Contingencies
The Company entered into a five-year non-cancelable operating
lease agreement for office and laboratory space in February 2009
with an initial expiration of 31 January 2014 which was
subsequently extended in 2013. In April 2017, the Company entered
into leases for additional office and laboratory space. All of the
Company's office and laboratory leases expire in January 2020 and
provide for annual 3% increases to the based rent. The current
monthly base lease payment for all leases is approximately $41,000.
In addition to base rent, the Company pays a pro-rated share of
common area maintenance ("CAM") costs for the entire building,
which is adjusted annually based on actual expenses incurred.
Total rent expense, including base rent and CAM for the six
months ended 30 June 2017 and 2016, was $222,600, and $166,600,
respectively. Rent expense is recognized on a straight-line basis
in the accompanying financial statements.
7. Subsequent Events
In preparing these financial statements, the Company has
evaluated events and transactions for potential recognition or
disclosure through 18 September 2017 the date the financial
statements were available to be issued.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGUBCBUPMGQR
(END) Dow Jones Newswires
September 19, 2017 02:00 ET (06:00 GMT)
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