STIFEL 2026 HEALTHCARE CONFERENCE - MAXCYTE INC

Okay, here we go. We're going to finish out the day at the 2026 Stiefel Healthcare Conference on the life sciences side. We are happy to have Max Light with us, CEO Meher Masood, CFO Parmeet Ahuja. Gentlemen, thanks very much for spending some time with us today. Dan, thanks for having us. Thank you, Dan. I think, Meher, the most logical place to start would be with the acquisition that you made this week, Akron Bio. deal 150 million dollars maybe you can just talk a little bit about that deal why you did it and why you think it's an important addition to the company yeah great question then it couldn't be more excited about this transaction this deal really so Akron is a leading cytokine growth factor and silly reagent company 20 year old company they've really built themselves as best-in-class reagents no different than how max size best-end-class exploration platform and it really does for us it extrinsic us index people market so what What Akron has, their reagents are used in all throughout ex vivo cell therapy, whether it's viral or non-viral. So if you look at where they're at, they are led by really a great leadership team already. Ezekiel Zilberberg is the head of operations there. Dave Smith, industry veteran, is the Head of Commercial there. President and CCO. They've grown this company over the years from 2018 all the way until now at 13% year-over-year growth, consistent growth. they're specced into four commercial therapies right now one of them from a large pharma where they've had consistent revenue growth very durable revenue growth what it does for us it broadens our breadth of offerings truly broadens the breadth of offering so their reagents are used pre and post engineering in the non-viral space that's pre and post our electropatient systems in the non-viral space in the viral space of cell therapy which is where predominantly most of the reagents are used right now they've become kind of ubiquitous with with reagents used for cell engineering. So really, it broadens us. It now deepens us in the ex vivo non-viral space, increases our TAM, where we're also in the viral space as well, where the majority of cell and gene therapies are. That's mostly ex vivo therapies. This was a competitive process. We've known the Akron team for quite some time. We know Dave, we know Ezekiel, we knew the team there. We're at conferences together oftentimes, many conferences together. This was us and a handful of other bidders in there as well, strategics that were, you know, really trying to ensure that we're the ones that end up winning the bid process. Jeffries was on one side, you know, marketing them. The Stifel team, he was an exclusive advisor, and it really came to light. When the two teams started talking to each other, it was clear that this is the right fit for MaxSight. This is the right fit for our future growth. This now a company where together we have the scale that we really never had before. We're going to be 60 million plus in revenues next year. They bring 28 millions of revenue. They're EBITDA positive. 78 million EBITda positive. Free cash flow. This is truly an ideal. It's a hand in glove. We can now become that consolidator of the space where we give best-in-class products to cell therapy developers. There's side kinds of reagents. I can go on and on. Truly on and On. They out-compete everyone. I'm sure you have other questions we can get into. Maybe along those lines without going too deep into it, but I'd love to just get a sense for the differentiation of the portfolio? I mean, there are other large and small GMP reagent providers out there. So, you know, where do they make their mark with customers? Yeah, absolutely. So what they've done over the years, they've built highly stable, high quality cytokines or growth factors. They have a closed liquid format. So they have a closed system, liquid bags that can be used straight into the manufacturing process. You You don't have to have lyophilized products. All their liquid cytokines growth factors can be stable at refrigerant temperature. No one has that. High quality, highly spec'd in into commercial products. They have four other registrational products that could be approved in the very near term as well that they're spec'd into. So really high quality. They have a drug master file that's also referenced by these developers when they're using their ancillary reagents, similar to MaxCyte's drug master file that's used for our electroporation platform. Just best-in-class products, higher quality, high stability, truly they're differentiating themselves by doing what they do best, which is in the reagent market, that's all they do. Similar to how MaxCyt does electroporation, we do it better than anybody else. And they can out-compete the big guys. Yeah, okay. I mean a lot of what you come to like about these deals where small companies with good technologies are acquired is is just bringing it to a bigger stage with a bigger sales force and getting it out to a broader base. Can you maybe talk a little bit about what you will do with your own commercial organization, what you'll do with their commercial organization and then what sales synergies you think might exist in the next one to two years as sort of tangible things to look for. Absolutely, absolutely. So that was one of the criteria's we're looking for is that we have complimentary sales and marketing teams here. This is not a case of one competing with the other one. The most of their presence and most of the revenue from the U.S. We have a fairly large European commercial team that's sales reps as well as field application scientists that really can begin to build up the revenue for them ex-U.S.. We have fairly robust Asia Pacific team as well, both sales reps and field application scientists that can begin complement Akron's team here as well. And really it's our reps in the U S and their reps in the US kind of just feeding each other and begin to work with each other. They're a fairly lean team, approximately 45 to 50 people that we're going to continue to support and continue to really do what they do great. We're here to support them. And really, it's a slow integration process. We have gotten the tailwinds behind us as a company. They have their tailwind. Now's the chance for us to really just work together and just boost our revenues together rather than one replacing the other one. This is complimentary sales teams. Okay. All right. And then just thinking about where they play and who their customers are. On the call, you mentioned that there's a CAR-T player in there. That's one of the commercial relationships. The registrational stuff, where are they with those in terms of therapeutic area or subcategory? And then more broadly amongst their customer base, can you just talk about autologous versus allergenic versus in vivo? Obviously, there's a large conversation about how the industry, cell therapy industry, is shifting within those. So I'd love to just sort of understand that a little bit yeah sure you may take that last one first on the on that one absolutely so you know you if you look at the majority of assets out there really it's still ex vivo that's the majority of assets these are clinical programs a vast majority are still ex-vivo and in fact the majority of the in vivo are pre-clinical programs you don't have very many clinical programs in vivo in vivo has a future and that's mostly on you know on the LMP side we'll see how that plays out but if you're looking at where all the commercial therapies are if you looking at what all the late-stage clinical programs are, those are all ex vivo, and it's usually a split between viral and non-viral based as well. You see a lot of investments going in, some investments beginning to shift a little bit into in vivo, but these are more for, you know, pre-clinical programs. So really, it's, I believe, you look at LEK data, DESI bio data, whatever data you want to see out there, 90 plus some percent are ex vivo therapies. In vivo is less than 10 percent, and we don't see that shift really moving down much more. In-vivo has its own complexity, as we know about. Any safety concerns you've seen have oftentimes been from in-viva clinical programs, not ex-vival programs as much. So it's still, ex-vivas are still a much bigger market then. Yeah, okay. I'll come back to that one because I just want to ask you about the way that the industry shifts over the next five years or so. But maybe just to stick with Akron and the comment that you made about 13% revenue growth, is there an intention to sort of talk about where you go from here? I mean, we haven't gotten to a 2027 guide yet. Parmeet will give that on the next call. But what level of accretion do you expect from this deal? And then if 13% goes to something higher because of the commercial benefits that we're talking about, what would we think about modeling-wise there? Parmeat, do you want to take that? Yeah, I mean the company has done very well from 2018 to now growing at a CAGR of about 13%. So we're certainly expecting that to grow at that same level next year for Akron. certainly why would that be the case just out of curiosity I mean it looks like there's so much for you guys to do there and the cell therapies field is on its way up I mean we can debate how much that is the case in certain court categories but why would you not be able to realize a higher level of growth in year one there we could I mean right now they're in for commercial therapies as they scale we certainly can see that if you look at the market data commercial cell therapies are growing 20 percent. Overall, including non-commercial, is growing about 13 percent. As that makes changes for Akron, as the commercial programs ramp up, we would start to see more. But I think starting off, we'd put that number to early to mid-teens as the right number for them. Okay. Do you want me to add to a little bit there as well? Part of it is, again, our commercial team can really begin to boost them. But you begin to see exactly what part of me was saying is we can begin to help them get into more of the pre-clinical programs, right? But you begin to see the real revenue growth once those programs progress at the commercial side of it so until that happens it's still really there I'd say traditional growth is what you should be looking at for next year okay and just to clarify 13% was a CAGR or 13% is what the business grew at is the CAGR okay yeah so if I presume that things were worse a couple of years ago because the cell therapy markets weren't as robust and we're at a higher level exiting 2027 We don't want to get ahead of ourselves yet. Skis, okay. My only point is that it feels like you're trying to say that there would be decelerating growth in 2027 on an asset that very obviously has some synergies attached to it, but you're having it. No, I wouldn't say that. I think we don't wanna get ahead of our skis here, Dan. Fair enough. Synergies will come. Like Meijer said, it'll take a little bit of time. What about cost efficiencies and just what you think you do with the overlap? Yeah, it's an OpEx Lite asset, Dan, We will see some savings in corporate functions in GNA. Broadly across the combined organization, we're looking at $3 million to $4 million in cost savings. We think we're going to start to realize that by the time we get to the second half of next year. But more to come when we guide for the full year. And these are just overlap of functions. That's right. You don't need to have two booths at every conference, so to speak. You see the public company costs, et cetera. Exactly. Yeah, okay. And can you maybe just talk a little bit about how this impacts the cash burn? I mean, that has been a part of the conversation on the stock, just where MaxSight's cash burn goes from here. This certainly helps the cause quite a bit. I'd love to just hear the way that you think the next couple of quarters and then the next few years roll out. Yeah, sure. Great question. So we started the year giving a $20 million cash burn. We're now expecting with our guide for full year that we gave yesterday, we'll end the year at 17 million sort of legacy max site cash burn next year with the addition of Akron as well as our own growth we expect the cash word to be below 10 million and then as revenue grows from there we'll continue to make progress further down okay and now I want to take a step back as well down we've done a lot in the past years as well we reduced our own cash burn by more than half as well right so that's the ability really has is continuing on, we're seeing it this year, that allows us to go into next year as well and feel confident that with the Akron's revenue, with our growth as well, we can continue to also get that cash flow even lower. So we should look back a little bit in the sense of what we did the past few years has really positioned us for the self-tape of growth that's coming in the future years. Do you see there being areas of integration risk? I mean, every deal has some level of concern when it comes to two companies coming together and then there being the ideal way that they come together and then the realistic way that they come to together. What do you see as the mission critical priorities in areas where the biggest questions lie? Sure, absolutely. There's always integration risk. However, here because we're buying an established company, a company with true leadership there as well, makes that risk a little bit less. We're not coming in to disrupt what's happening there. They're also expectant to for commercial programs already which allows us to really continue that business as it's going as well. And as I mentioned, this is a case where these are complimentary commercial teams. This is not a commercial team that has to impose its way of doing commercial on Acron or vice versa. So there's risk there obviously, but an established company with true leadership in Dave Smith and Ezekiel Zuliverberg, as well as the operational team there, they've been doing this for 20 years. I think the risk is less than I think many companies do when they have these kind of acquisitions. Okay. 60% or so gross margins i mean anybody looking at that would say that's a good number you have 80 gross margins so you have a high class problem when it comes to dilution there what do you think about getting akron's gross margins somewhere closer to yours what are the things that have to happen and you know how how easy or not easy are those things yeah i mean i would say first of all the combined company is going to be at a very healthy early 70s gross margins right so uh really, really good. I think as the two companies come together, we start to integrate on the operational side of things. Very limited in the coming year. This will happen over time, Dan. We certainly see opportunity to improve that further, but again, as you said, very healthy to begin with. Yep. Okay. It's also very healthy for MaxLight. Not many companies have the 80% gross margin, so. Yeah, you've got margin to play with. I mean, I think the P&L on this deal would line up pretty favorably for most people. It's just simply, you know, taking the different line items and say, okay, this one is higher than this one. And so what does that mean? And just also a question about where the areas are that you, even if it doesn't get to 80, if it gets to 65 or 70, where does that come from? I mean, I guess maybe that's a question. What are the things that when you looked at the business, you said, even though it's run really well by Dave and company, we see things that we can do. What would those things be? I think it's going to be up and down the P&L. A lot of opportunities in the G&A area, as I mentioned earlier. It's a well-run shop from an operations standpoint. I think we'll have to get in there to see where those savings would come from. There are things on the max site side of things that we're also looking at. So more to come on that. But that's part of our $3 million to $4 million this coming year, and more to comes after that. Also, as commercial revenues begin to grow for them and for us, those gross margins also begin to increase as well. That's a natural progression in the future years. Yeah, that makes sense. Okay. All right. So we may come back to Akron because I'm sure that will play into just the way that we talk about growth going forward. But I'd love to just sort of transition to the MaxSight side of the business and talk about the way that we see things today. You reported third quarter. It was a very good quarter. How do you feel about the state of affairs in your markets right now? You know, what measurable evidence would you suggest we think about when it just comes to thinking about stabilization in the market and then where we can go from here absolutely so I think let's take a step back and look at just there's a barter market trends that we look at but then there's also the the trends of the funding for our space as well specifically for the expo space and the self that the cell therapy space itself 24 to 25 relatively stable funding environment for the most part I think there was 19% growth in terms of funding of clinical programs in 25 versus 24, but it was also from selective programs as well. It was less programs funded in 25, a little bit less. Overall funding more, but just showing stability. Dan, this is now 24, 25, 3 billion funded in 24, 3.5 billion funded into 25. Let's just call it stability there. I don't want to call it that much growth. We're seeing just programs that are closer to being commercial or later stage, that's where the funding is coming from. And that actually is exactly one of the reasons, I keep going back to Acron, acquiring a company like Acron that has so much exposure to the commercial space, and then our exposure as well, allows us to begin to capture that growth over the years at the cell therapy spaces as you're seeing. We see numbers out there that says 20% growth year over year. Those are more tools companies are supporting commercial programs. That's where you're saying that growth come in. We're seeing stability, and I think this is two straight years. We believe 26 will probably be the same type of funding that they had in 25. We're seeing stability here where we can begin to grow from here in the future years. Yeah, so said another way, I mean, we just think about where the industry's been over the last couple of years. Program rationalization risk, which has been something that you guys have had to deal with, that feels like it should have at least bottomed right now. And so barring the unexpected, you wouldn't expect to have to talk about the number of active programs being lower than it has been in the past. You should hopefully be on the way up. That should be the hope. And right now I have 13 active programs by 12 developers. These are mostly their lead assets. This is biotech. You're always going to have one or two come here. there. But at the same time, we expect more clinical programs to go into the clinic as well from the therapeutic developers and pre-clinic right now that we're supporting. So it feels stable right now. And I think the rationalization we saw, or I like to say the culling of programs in 25 that really had an effect on us, that's largely behind us. Great to hear. Okay. All right. And then on the 3Q quarter, instrument revenues were up pretty big. I think it was like 100% growth for instrumentation. And then consumables were up 20%. On the instrument side, that was helped by Genentech, if I remember correctly, but it wasn't just Genentec. So maybe just talk a little bit about how you feel like the instrument placement is evolving. You know, based on our comments, it feels like it's just a function of some stability coming back into the markets. But what is your outlook for now placing systems going forward? Yeah, I mean, we've been talking about this last couple of quarters. As we looked through our funnel, we saw good instrument pickup happening. Adjusting for Genentech, it was still double-digit growth in Q3. It was a handle starting with seven. You know, it's still early to guide for 2027, Dan, but certainly as we look into the funnel, it's a very broad-based funnel from research through GMP manufacturing, from our GTX, DTX, entire instrument portfolio. And I think we'll continue to see that as a tailwind moving forward. Okay, and then on the PA side, you know, what are you seeing in terms of improvements from SPL and non-SPL customers? There were some inventory drawdown issues that you guys have dealt with in the past. Fair to say that those are behind you as well. My assumption is yes, but you never know. You want to just make sure that you can check the box those things just talk about the reagent the recurring revenue stream from here as well sure yeah very much I think as you alluded to the largest customer of ours that inventory drawdown is behind us we saw growth there even with the other SPL programs though that rationalization of programs you talked about is behind so we see growth I would say kind of in the mid single digit consistent growth from this stable base is certainly something we'll look at for next year okay can you just spend a minute on the genentech deal i mean that was um an interesting move in the sense that there was a switch there uh it doesn't happen all the time and i don't know how much you want to get into that but i'd love to just sort of conceptually understand what was switched from and why they switched to max site and then what that might mean for deals like it coming down the pike because it seemed like a proof of principle type thing but i don'T want to GET too carried away and just assume that there are going to be others behind it. Sure, absolutely. So let me talk about the switching for a second. This actually, Dan, this is now the fourth therapy that we've switched out when they're in a phase one trial from a competing system to our system. I think it speaks to the breadth of our platform, how well it works in the clinic. It speaks tothe breadth ofour scientific team as well. So the Genentech deal, the way it came about was this was an 18-month process where we're working with them, not just negotiating the contract itself, but really going head-to-head with the current system in the clinic, head-to-head with competing systems there to displace that system in that clinic. And after 18 months, it was clear our platform is what they're using in the clinical compared to the current platform and compared to other competing platforms. That's happened, as I mentioned, I believe with three other programs as well, where we displaced programs, competing systems in the clinics for therapeutic products at phase one. So this was a relationship we've built over the last 18 months maybe even a little before that as well. It gives us the opportunity now where we can work with them across the breadth of all their programs, preclinical as well as any clinical programs as well. So a bit different than our standard SPLs, right, while it doesn't have the backend royalty as we mentioned in the past that we have with the majority of our SPL's, this is an opportunity for us to work with large pharma in a model that allows us to monetize really the upfront economics much more. Many more systems in place for all of their programs, current or future programs for all all the clinical programs, allows us to participate. Really, I call it have more shots on goal. If you're working with a developer that's not just taking one program into the clinic but has a healthy number of pre-clinical programs that they can take into the clinic, really gets us into that large pharma space that we've never been in before. Yeah. Okay. Parmeet, on just, well, two questions. On the instrument acceptance trajectory for those guys, is obviously to our point before there was a placement number for 3Q, Will they successively take instruments across the next several quarters? And then how are the economics structured around the Genentech deal? Yeah, let me take the last one. Very lucrative. Obviously, this is a different model from an SPL model. The baby biotechs, you know, conserving cash. The licensing model works a lot better for them. Comfortable giving up royalties. Large pharma like Genentec, really not a cash challenge. very comfortable with purchases upfront don't like royalties so two complementary commercial models the economics on an overall customer basis very lucrative with a large pharma like like Genentech and certainly looking forward to more of these to come in terms of placement further we certainly expect another bolus of instruments to come in next year they have just started to install these systems so we certainly are expecting pa revenue to tick up here in q4 as well as going into next year as our fas's start working with them getting these instruments installed but multiple systems expecting that next year do you think you'll have visibility on those or is that kind of a let's just hope they don't ask for them right before the no i think i think visibility is building in the funnel a little bit early at this stage given that they've had a bolus of purchases but certainly more to come next. Okay all right and then you made a comment that you expect more of these to come is that to say that you know it's easy to say this is proof of principle and that others will follow behind it but do you see your sales funnel reflecting this and do you think that there are I don't know if you want to call this an enterprise deal but it's a large deal do you that we start to see more of those you know maybe not over the near term or the midterm? I do think so. With large pharma, I do think so, the reason being is we now have, it's a proof of concept, right? That's what it is. It also has validated us. A company like Genentech is willing to work with us in the clinic and preclinical, and we have a model now that can work, right, so the SPL model is always going to be part of our business model for small to mid biotechs, but this large enterprise model, which we call the pharma model, I think can really begin to get us into those companies as well. Granted, then, you have less large phharma in this space than the baby biotechs so you have a handful maybe two handfuls of pharma that will be in the space but the goal is to begin to really mimic this for every year from from here on out okay what do you think your exposure you mentioned the baby bio techs what is a good number for us to use on exposure to small biotech obviously that comes up in conversation when you go several quarters and the financing activity doesn't look good or all of a sudden you start thinking about who might get frugal with their money. I mean, that's a conversation across the space. What would you say a number for you guys would be? Put me on the spot. Just a number. I mean Flickr right now, so in terms of exposure, right now our largest customer is roughly 27% of our revenue. So our exposure, one-third is from a large customer, a large pharma customer. I'd say it's probably less than 30% is from small baby biotech. The rest is from large phharma, mid-biotech companies. If you look at our SPL programs as well, you look who we're working with, we're working with very well-funded companies. That's why it's 13 programs from 12 companies. It's less than, I'd say, 25% is from small biotech. Okay. So Parmeet, 3Q will have been the first quarter of growth in a while and up more than we were thinking. I mean, that was a beat for sure, a couple million. How do you feel about just sort of the trajectory of growth quarterly? Obviously, you want the business to grow annually, and you know that there's lumpiness inherent in some of the quarters, but it also is nice when you get positive and you stay positive on a quarterly basis. Is that something that without guidance for 2027 you think we can roughly kind of assume is a fair possibility at this point? Yeah, I mean, first of all, we expect to grow next year for sure, right? the objective we laid out at the beginning of the year, we knew coming into the year first half will be challenging, second half we were expecting growth. We were expecting low single-digit growth, obviously with this guide will be 15%, second half. Some of the tailwinds that we have seen here are expected to continue. I talked about the instrument funnel being very robust across research and GMP manufacturing. PA strength is there. Inventory drawdowns are behind us. So, you know, at this point, we're focused on executing for Q4, making that happen, but certainly expect to grow next year. Okay. Meher, is the size of the commercial organization changing in a way that a greater number of reps is allowing for you guys to have a better sales funnel? or is the sales funnel improvement really strictly a function of the operating environment and just what's going on out there? I think it's a combination of both. So we've brought in some top leadership here from Sartorius, from Stem Cell Therapeutics, from Thermo, GE Healthcare. That's in the U.S. and Europe as well as in Asia Pacific as well. It's also the stability of the space itself is allowing our reps to really go out there, our FASs to go out There were some things there that were just out of our control in 25. If we lost programs that we could not control in the clinic, that affects our revenue. That also is now behind us, so that's helping us. But really, we have a true, robust commercial team now. In the U.S., Europe, and Asia Pacific, we've done a good job in the past, I'd say, 18 months building that team, and that's given us the traction that we're seeing now. Parmeet, Kes Jevi, lumpy thing to predict. I know it's just sort of a function of the way that that relationship exists. $1.2 million in the first half of the year. The expectation is for $2 million for the overall year. The label's expanding. I think reimbursement is getting better there. We're in the portion of the session where I ask you about things you haven't really said you're going to talk about yet, which is 2027. But is there any reason why, from what you can see, contributions there next year wouldn't be higher from Cass Jetty? Yeah, I mean, like you said, we don't want to get ahead of our skis don't want to we've had lots of lessons learned here in 2025 in terms of guidance so we're going to remain prudent but it's very heartening to see our customers success continue to trend very well up towards the right so and we are certainly benefactors of that I would say you can expect growth next to okay great what does the SPL pipeline look like I mean you were for a while Lyle Maxside has had the goal of signing three deals. There have been years where you've been at three deals halfway through the year. What would be the right way to think about things from here? Yeah, I mean, it's still a healthy pipeline. We're still right now in the midst of negotiation, late-stage negotiations with a few companies. This is just the timing. We could sign them maybe this year, maybe early next year. The goal I've given where it's three to five, some years might be less than that, some years more than that. It's timing. But it's a healthy timeline. There's a few late-age companies that we're speaking with right now that could sign any time now. So it's still very healthy then, I'd say. Okay. Yeah. Parmin, let me just sort of finish with a question on the model and the way that we, on the life sciences side, tend to model these businesses, which is like you have a box and then you've got a pull-through rate on that box. And we use that to guide what we think about revenue growth next year. Do you think that consumables per box next year on an annualized basis should be up relative to this year? I would say so. I would say so, Ali. We've had challenges, as you know, in the first half of the year, all related to inventory drawdown. Largest customer, as well as number of SPLs shutting down. We're getting stability, like I said. You know, if you look at the trend line over the last 12 months, 6% growth. I would say we should see growth. Yeah. Okay. That is our time. So, gentlemen, thank you very much for being here. Yeah, appreciate that. Thank you.