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Exhibit 10.21
Exhibit 10.20
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from___ to___
Commission file number: 001-40674
MaxCyte, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
52-2210438
(I.R.S. Employer Identification No.)
9713 Key West Avenue, Suite 400
Rockville, Maryland 20850
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (301) 944-1700
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common stock, par value $0.01 per share
Trading Symbol(s)
MXCT
Name of each exchange on which registered
The Nasdaq Stock Market LLC
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes☐ No☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes☐ No☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Smaller reporting company
☐ Accelerated filer
☒ Emerging growth company
☐ Non-accelerated filer
☒
☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error
to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive
officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the registrant’s voting and non-voting common stock held by non-affiliates as of June 30, 2023, the last business day of the registrant’s most recently
completed second fiscal quarter, based on the closing sale price of the registrant’s common stock of $4.59, as reported by the Nasdaq Global Select Market as of that date, was approximately
$467.5 million.
As of March 5, 2024, the registrant had 104,128,650 shares of common stock, $0.01 par value per share, issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement relating to the 2024 annual meeting of stockholders, which the registrant intends to file with the Securities and Exchange Commission
not later than 120 days after the registrant’s fiscal year ended December 31, 2023, are incorporated by reference into Part III of this Annual Report on Form 10-K.
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Table of Contents
Business
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
Form 10-K Summary
PART I
Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
Signatures
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Risk Factors Summary
Our business is subject to numerous risks that you should carefully consider. These risks are more fully described in the section titled
“Risk Factors” included in Item 1A of this Annual Report on Form 10-K. These risks, which could materially and adversely affect
our business, financial condition, operating results and prospects include, but are not limited to, the following:
● We are a cell engineering and life sciences company and have incurred significant losses since our inception, and we expect
to incur losses for the foreseeable future. We have limited product offerings approved for commercial sale and may never
achieve or maintain profitability.
● We are highly dependent on a limited number of product offerings. Our revenue has been primarily generated from the sale
and licensing of our instruments, as well as sales of single-use disposable processing assemblies (“PAs”), which require a
substantial sales cycle and are prone to quarterly fluctuations in revenue, as well as revenues earned based upon customer
clinical development progress events which are outside of our control and highly variable from period to period. We may
never generate a level of revenue that is sufficient to support our operations or achieve profitability.
● Our business is dependent on adoption of our products by organizations such as biopharmaceutical companies and academic
institutions for their research and development activities focused on cell-based therapeutics. If organizations such as
biopharmaceutical companies and academic institutions are unwilling to change current practices to adopt our products, it
may negatively affect our business, financial condition, prospects and results of operations.
● We may be unable to compete successfully against our existing or future competitors.
● If we cannot maintain and expand current partnerships and enter into new partnerships, that generate marketed licensed
products, our business could be adversely affected.
● The failure of our partners to meet their contractual obligations to us could adversely affect our business.
● Our partners may not achieve projected development, regulatory milestones or other anticipated key events in the expected
timelines or at all, or may discontinue some or all of their programs, which could have an adverse impact on our business
and could negatively impact our value.
● In recent periods, we have depended on a limited number of partners for our revenue, the loss of any of which could have
an adverse impact on our business.
● We may engage in future acquisitions that could disrupt our business, cause dilution to our stockholders or harm our
financial condition and operating results.
● We depend on continued supply of high quality components and raw materials for our ExPERT™ instruments and PAs from
third-party suppliers, and if shortages of these components or raw materials arise, we may be required to pay higher prices
for these components or may not be able to secure enough components to build new products to meet customer demand at
all.
● We have limited experience manufacturing our PAs and may be unable to successfully and consistently manufacture our
PAs in high-quality commercial quantities to meet demand, which could limit our growth.
● Our results of operations may be harmed if we are unable to accurately forecast customer demand for our products and
manage our inventory.
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● If we are unable to successfully develop new products, adapt to rapid and significant technological change, respond to
introductions of new products by competitors, make strategic and operational decisions to prioritize certain markets,
technology offerings or partnerships, or develop and capitalize on markets, technologies or partnerships, our business could
suffer.
● New product development involves a lengthy and complex process and we may be unable to develop or commercialize
products on a timely basis, or at all.
● Our systems are complex in design and may contain defects that are not detected until deployed by our customers, which
could harm our reputation, increase our costs or reduce our sales. If our products do not perform as expected or the
reliability of the technology on which our products are based is questioned, our operating results, reputation and business
may suffer.
● Failure or perceived failure to comply with existing or future laws, regulations, contracts, self-regulatory schemes,
standards, and other obligations related to data privacy and security (including security incidents) could harm our business.
Compliance or the actual or perceived failure to comply with such obligations could increase the costs of our products, limit
their use or adoption, and otherwise negatively affect our operating results and business.
● Our FDA Master File, and equivalent Master and Technical Files in foreign jurisdictions, are an important part of our
strategic offering which allows our partners to expedite their cellular therapies into and through clinical development.
Delays in filing or obtaining, or our inability to obtain or retain (as applicable in a given jurisdiction), acceptance of such
filings in individual countries could negatively impact the progress of our partners if they intend to run clinical trials in such
countries, and as a result, could negatively affect our reputation and revenues or require disclosure of confidential
information to our partners. Further, changes that we are required to make from time to time, or changes to regulations or
negative data or adverse events for our partners, could impact references to our FDA Master File and Master and Technical
Files by our partners.
● We may need additional funding and may be unable to raise capital when needed, which could require us to delay, reduce,
eliminate or abandon our commercialization efforts or product development programs. If we do raise additional capital
through public or private equity or convertible debt offerings, the ownership interest of our existing stockholders will be
diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’
rights. If we raise additional capital through debt financing (including refinancing our existing debt), we may be subject to
covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital
expenditures, or declaring dividends.
● Our partners may not achieve projected development and regulatory milestones and other anticipated key events in the
expected timelines or at all, or may discontinue some or all of their programs, which could have an adverse impact on our
business and could cause the price of our common stock to decline.
● Our common stock is traded on two separate stock markets and investors seeking to take advantage of price differences
between such markets may create unexpected volatility in our share price; in addition, investors may not be able to easily
move shares for trading between such markets.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995. These statements about us and our industry involve substantial known and
unknown risks, uncertainties, and assumptions, including those described in Item 1A under the heading “Risk Factors” and elsewhere
in this report, that may cause our actual results, performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking statements. All statements other than statements of
historical facts contained in this report, including statements regarding our future results of operations or financial condition, business
strategy and plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements
include, but are not limited to, statements about the Company’s preliminary results of operations, including fourth quarter and full
year 2023 total revenue, core revenue, and SPL program revenue and statements about possible or future results of operations or
financial position. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,”
“believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,”
“should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. These forward-looking
statements include, but are not limited to, statements concerning the following:
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our expected future growth and the success of our business model;
the potential payments we may receive pursuant to our Strategic Platform Licenses (“SPLs”);
the size and growth potential of the markets for our products, and our ability to serve those markets, increase our market
share and achieve and maintain industry leadership;
the market acceptance and demand for our technology and products, including in the cell therapeutics and bioprocessing
application markets;
the expected future growth of our manufacturing capabilities and sales, support and marketing capabilities;
our ability to expand our customer base and enter into additional SPL partnerships;
our ability to accurately forecast and manufacture appropriate quantities of our products to meet clinical or commercial
demand;
our expectations regarding development of the cell therapy market, including projected growth in adoption of non-viral
delivery approaches and gene editing manipulation technologies;
our expectation that our partners will have access to capital markets to develop and commercialize their cell therapy
programs;
our ability to maintain our FDA Master File and Master and Technical Files in other countries and expand Master and
Technical Files into additional countries;
our research and development for any future products, including our intention to introduce new instruments and processing
assemblies and move into new applications;
the development, regulatory approval and commercialization of competing products and our ability to compete with the
companies that develop and sell such products;
risks associated with our management transition and our ability to retain and hire senior management and key personnel;
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regulatory developments in the United States and foreign countries;
our expectations regarding the period during which we qualify as an emerging growth company under the JOBS Act (as
defined below);
our ability to develop and maintain our corporate infrastructure, including our internal controls;
our financial performance and capital requirements;
the adequacy of our cash resources and availability of financing on commercially reasonable terms;
our expectations regarding our ability to obtain and maintain intellectual property protection for our products, as well as our
ability to operate our business without infringing the intellectual property rights of others;
general market and economic conditions that may impact investor confidence in the biopharmaceutical industry and affect
the amount of capital such investors provide to our current and potential partners; and
•
our use of available capital resources.
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking
statements contained in this Annual Report primarily on our current expectations and projections about future events and trends that
we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-
looking statements is subject to risks, uncertainties and other factors described in Item 1A (“Risk Factors”) and elsewhere in this
Annual Report. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge
from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking
statements contained in this report. The results, events and circumstances reflected in the forward-looking statements may not be
achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking
statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These
statements are based on information available to us as of the date of this Annual Report on Form 10-K. And while we believe that
information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should
not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements
are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Annual Report on Form 10-K relate only to events as of the date on which the
statements are made. We undertake no obligation to update any forward-looking statements made in this Annual Report to reflect
events or circumstances after the date of this Annual Report or to reflect new information or the occurrence of unanticipated events,
except as required by law. Given these uncertainties, you should not place undue reliance on our forward-looking statements. Our
forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, or joint ventures.
You should read this Annual Report on Form 10-K and the documents that we file from time to time with the Securities and
Exchange Commission (the “SEC”) with the understanding that our actual future results, levels of activity, performance and events
and circumstances may be materially different from what we expect.
In this Annual Report on Form 10-K, unless the context requires otherwise, all references to “we,” “our,” “us,” “MaxCyte” and
the “Company” refer to MaxCyte, Inc.
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Trademarks
We have applied for various trademarks that we use in connection with the operation of our business. This Annual Report on
Form 10-K includes trademarks, service marks, and trade names owned by us or other companies. All trademarks, service marks,
and trade names included in this Annual Report on Form 10-K are the property of their respective owners. Solely for convenience,
the trademarks and trade names in this report may be referred to without the ® or TM symbols, but such references should not be
construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.
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Item 1. Business
Overview
PART I
We are a leading commercial cell engineering company focused on providing enabling platform technologies to advance the
discovery, development and commercialization of next-generation cell therapeutics including cell and gene therapies and to support
innovative cell-based research and development. Over more than two decades, we have developed and commercialized our
proprietary Flow Electroporation® technology, which is used by biopharmaceutical companies in the complex engineering of a wide
variety of cells.
Electroporation is a method of transfection, or the process of deliberately introducing molecules into cells, that involves
applying an electric field in order to temporarily increase the permeability of the cell membrane. This precisely controlled increase in
permeability allows the intracellular delivery of molecules, such as genetic material and proteins, that would not normally be able to
cross the cell membrane as easily.
With increased knowledge of cell complexity and systems biology in the scientific community, researchers have sought to
leverage or repurpose cell functions and/or machinery for research or therapeutic purposes. The ability to engineer living cells by
introducing foreign molecules, such as gene editing systems and transgenes, has led to a revolution in biological research and resulted
in numerous biological discoveries. Living human cells can also be engineered ex vivo, or outside the body, where they are repaired or
reprogrammed to fight disease. In this case, the engineered cell itself is the drug.
Cell therapy has emerged as one of the fastest growing and most promising treatment modalities to address a host of human
diseases. Recent developments in multiple U.S. Food and Drug Administration (the “FDA”) approved cell therapies in generating
promising data suggests that they may be able to provide long-lasting amelioration of symptoms or presence of disease has catalyzed
tremendous investment—leading to significant growth in cell-based therapies being evaluated for therapeutic applications. The
Alliance for Regenerative Medicine (“ARM”), an international advocacy organization, estimates that the regenerative medicine
sector, which consists of gene, cell, and tissue-based therapeutic developers raised an aggregate of $11.7 billion in 2023 and that, as
of February 2024, there were more than 1,900 active clinical trials focused on regenerative and advanced medicine, which includes
gene therapy, cell-based immuno-oncology, cell therapy and tissue engineering.
Our ExPERT platform, which is based on our Flow Electroporation technology, has been designed to address this rapidly
expanding cell therapy market and can be utilized across the continuum of the high-growth cell therapy sector, from discovery and
development through commercialization of next-generation, cell-based medicines. The ExPERT family of products includes four
instruments, which we call the ATx™, STx™, GTx™ and VLx™, as well as a portfolio of proprietary related disposables and
consumables. We launched the ExPERT VLx™ instrument for very large-scale cell engineering in September 2022. Our disposables
and consumables include PAs designed for use with our instruments, as well as accessories supporting PAs such as electroporation
buffer solution and software protocols. We have garnered meaningful expertise in cell engineering via our internal research and
development efforts as well as our customer-focused commercial approach, which includes a growing application scientist team. The
platform is also supported by a robust intellectual property portfolio with more than 150 granted U.S. and foreign patents and more
than 95 pending patent applications worldwide.
From leading commercial cell therapy drug and biologic developers and top biopharmaceutical companies to top academic and
government research institutions, including the U.S. National Institutes of Health (“NIH”), our customers have extensively validated
our technology. We believe the features and performance of our platform have led to sustained customer engagement. Our existing
customer base, which includes but is not limited to our 26 SPL partners, ranges from large biopharmaceutical companies, including a
majority of the top 25 pharmaceutical companies based on 2022 global revenue, to hundreds of biotechnology companies and
academic centers focused on translational research. Our Flow
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Electroporation technology is used by one of our SPL partners to engineer the first ex-vivo cell therapy approved by the FDA in
December 2023.
Our Competitive Strengths
We believe our industry leadership position and continued growth will be driven by the following competitive strengths:
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Proprietary technology platform that can unlock the significant potential of cell-based therapeutics. We built our
ExPERT platform to advance the growing demands for non-viral delivery and next-generation cell and gene engineering
approaches. Our ExPERT platform enables delivery of almost any molecule into almost any cell type. We believe our
ExPERT platform leads the industry in performance, as measured by consistency, efficiency, viability, flexibility and scale.
Our ExPERT platform is further supported by a robust intellectual property portfolio.
Comprehensive, high-performance transfection platform. We believe our ExPERT platform offers a unique value
proposition given the flexibility to scale up from research to current good manufacturing practices (“cGMP”) manufacturing
on a single platform— enabling the engineering of cells ranging from tens of thousands of cells to more than tens of billions
of cells in a single transfection run taking 30 minutes or less. Our long-term internal engineering expertise is supplemented
by our customer focused approach—with a growing application scientist team working with our customers across
increasingly diverse applications.
Capitalizing on the large and growing next-generation cell therapy market with the ability to take advantage of rising
demand for non-viral approaches. We believe we are well positioned to increase our market share within the large and
growing next-generation cell therapy market. Since the FDA approved the first engineered CAR-T cell therapies to treat
blood-based cancers in 2017, the number of cell therapy candidates being evaluated pre-clinically and clinically has grown
significantly. We expect growth to continue given the remaining high unmet medical need in cancer and other chronic
conditions and predict increased investments in cell therapy product development across a variety of human diseases. We
expect to continue to grow our market share given the high performance of our platform and the ongoing adoption of non-
viral delivery methods as the cell and gene therapy industry has trended towards developing advanced cell-based therapies
with complex engineering strategies to improve efficacy, reduce time to patient treatment and expand into new indications.
Innovative partnership business model focused on value creation and shared success. Our SPL partnerships allow us to
participate in the value creation of our customers’ programs via precommercial milestones and in commercial sales-based
payments. We intend to continue to build a portfolio of strategic partnerships with cell therapy developers, which provide us
with a growing, diversified source of annual licenses and potential downstream revenue.
In addition to the high performance and flexibility of the ExPERT platform, we believe our partnership model further
reduces clinical risk and development timelines for our cell therapy partners. By entering into SPL partnerships with us, for
example, our partners gain access to our FDA Master File to support their IND-enabling studies and potentially shortening
clinical development. Our FDA Master File, which is a submission to the FDA with confidential detailed information about
our products, methods, processes and data, was originally established in 2002 and has been continuously updated as
platform improvements have been implemented to support different applications and cell types. The FDA Master File and
equivalent Technical Files and Master Files in other countries can be referenced by our partners to support their own
regulatory submissions with the goal of accelerating regulatory submissions processes for our partners. To date, our FDA
Master File and Technical Files have been referenced by our customers in over 60 clinical trials.
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Recurring revenue model provides high visibility, with drivers of potential long-term upside. Our business model enables
us to generate revenue from five sources: sales of instruments, disposables and consumables to new customers; additional
sales of instruments, disposables and consumables to our existing installed base; annual instrument license fees from cell
therapy customers; potential precommercial milestones under SPL partnerships; and potential commercial sales-based
payments under SPL partnerships. We generate recurring revenue from our ExPERT instrumentation licenses, as well as
disposables and consumables (or buffer) sales, which provides high visibility into future near-term revenue. In addition to
recurring revenue, we have the potential to receive meaningful precommercial and commercial payments under SPL
partnerships as our customers achieve success in advancing programs through the clinical stage and into the commercial
stage. In aggregate, given our SPLs entered into to-date, we have the potential to receive over $1.95 billion in
precommercial milestone payments, if all of the programs were to be granted regulatory approvals.
Leadership team and workforce with deep domain knowledge. Our management team combines strong and broad subject
matter expertise with a demonstrated history of commercial and operational execution. Moreover, our workforce has deep
domain knowledge across a range of scientific, engineering, regulatory and business disciplines. We have supplemented our
diverse technical experience by assembling a deep operational team with expertise in manufacturing, legal, sales, marketing,
customer service and finance. We believe the team we have assembled with talent from multiple disciplines and a science-
and customer-focused culture represents a significant competitive advantage for us. As of December 31, 2023, of our 143 full-
time employees, 81 have advanced degrees including 29 with Ph.D. degrees.
Our Technology Platform
The foundation of our technology platform is our proprietary and patented Flow Electroporation technology, which we have
developed and optimized for more than 20 years. Electroporation, or electro-permeabilization, leverages the fundamental properties
of cell membranes, the ability to create reversible permeability in the presence of an electric charge, as a universal method to
introduce foreign molecules, or transfect, eukaryotic cells, which are cells with a cell membrane and nucleus. Electroporation can be
applied to almost any eukaryotic cell type to deliver a broad range of molecules, including DNA, human messenger RNA (“mRNA”),
small interfering RNA (“siRNA”), and proteins. Our proprietary Flow Electroporation platform is fully scalable and can support
small-scale research and development through large-scale cell engineering for development of commercial therapeutics.
Our technology platform is marketed under the ExPERT brand, the elements of which are depicted in the graphic above. The
value of our ExPERT brand starts with Efficiency—with high delivery Efficiency, users can achieve Potency; with high Potency,
users improve their chances of therapeutic Efficacy; and if this can be repeated, Reproducibly from patient to patient, users can have
a successful Therapy. By delivering high efficiency at any scale, the ExPERT platform is designed to improve our customers’ ability
to achieve the required therapeutic index, enabling accelerated, cost-efficient translation of complex cellular therapies from research
to clinical development.
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Our ExPERT platform consists of four instruments, the ATx, STx, GTx and VLx, which use a broad range of PAs, or
disposables, of different volumes to enable scalable electroporation from tens of thousands to billions of cells to facilitate the
translation of complex cellular therapies from concept to clinical development, in support of the intended therapeutic
commercialization. Our family of instruments and disposables has been designed to support scale-up for cell therapy development, as
shown in the picture below.
Concept
DoE
Optimization
Verification
Phase I
Pivotal
Validation
Approval
On-Market
Disposables (referred to as processing assemblies) facilitate scale up on same GMP platform
Overview of our ExPERT Platform
Our Flow Electroporation technology was designed to meet the stringent demands of clinical use—namely, the ability to safely
and reproducibly modify a broad range of primary human cells with high efficiency, low cytotoxicity, at the scale required to enable
the treatment of patients across a diverse range of diseases.
We believe the current ExPERT instrument family represents the next generation of our clinically validated electroporation
technology for complex and scalable cellular engineering. By delivering high transfection efficiency with enhanced functionality and
ease of use, the ExPERT platform delivers the high-end performance that we believe is essential to enabling the next wave of
biological and cellular therapeutics. The combination of the ExPERT instruments, associated disposables and universal
electroporation buffer provides researchers, production scientists, and cGMP facilities with a solution to transfect cells with high
efficiency, viability and consistency, which are the three attributes that are consistently ranked by our customers as the top
requirements when choosing a cellular or gene engineering platform for clinical use. We believe our ExPERT platform is seen as a
critical enabling technology by our customers, many of whom are leading cell therapy companies, helping them work towards
achieving their program goals and milestones expeditiously. Our instruments are sold or licensed for research or clinical use, while
the associated disposables and electroporation buffer are sold to support pre-clinical research and development work and are
compatible for integration into cGMP manufacturing environments.
We believe that the following four components of our platform have allowed us to successfully address the increasing
complexity of cellular engineering approaches in the industry:
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instrument design;
electroporation and cell handling protocols;
PAs (disposables); and
universal electroporation buffer formulation (consumables).
In addition, we have implemented a global scientific and regulatory support strategy for our customers that is designed to
accelerate clinical development and help streamline the regulatory submission process, thereby potentially saving time and reducing
cost and development risk.
We believe our ExPERT platform offers a compelling value proposition to our customers due to: (i) the ability to use our
technology to deliver almost any molecule into almost any cell type, including hard-to-transfect human primary cells, while
maintaining high cell viability and function; (ii) the capacity to introduce larger and more diverse molecules, as well as multiple
payloads, which exceeds the capabilities of other intracellular delivery technologies, such as viral vectors; and (iii) the flexibility to
scale up from research to cGMP, manufacturing on a single platform—enabling the engineering of cells ranging from tens of
thousands of cells to tens of billions of cells in a single transfection run in 30 minutes or less.
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We believe our ExPERT intracellular delivery platform provides value across numerous applications in the life sciences market,
including research, discovery, development, and manufacturing of next-generation, cell-based therapeutics, as well as in
biomanufacturing, such as transient protein production for drug discovery and manufacturing of other proteins, including biological
therapeutics, viral vectors and vaccines, and small molecule drug discovery.
Our ExPERT technology platform is being used in the clinic to support the development of next-generation cell therapy approaches to treat
human disease. Following the successful clinical development leading to FDA approvals of CAR-T cell therapies in blood-based cancers,
developers have focused on improving efficacy, lowering the cost of manufacturing and/or expanding engineered cell therapies into new
indications, such as solid tumors, as well as autoimmune and neurogenerative diseases. To address these goals, the ex vivo cell therapy industry
has trended towards developing more complex therapies that require sophisticated engineering and gene manipulation as well as the use of
different starting cell types.
In addition, we are committed to continued research and development investments in technology and scientific innovation to
continue to build out our position as a market leader.
Our Industry Background
As the cell therapy market continues to evolve, developers face both the challenges of more complex approaches, which are
being deployed to improve efficacy, reduce time to treat patients and expand the application of cell therapy to additional indications .
The use of viral vectors carries several challenges, however, especially given the increase in complexity of these “next-generation” ex
vivo cell therapy approaches, such as:
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Viral payload limitations. Many methods of gene manipulation require insertion of relatively large molecules, including
proteins such as CAS9 RNP for CRISPR or plasmids. Viral vectors, particularly Adeno-Associated Virus (“AAV”), have
fundamental payload capacity limitations, curtailing their utility for complex engineering systems. Additionally, the cell
therapy industry has continued to shift to using complex molecules including combinations of proteins and mRNA which
cannot be delivered by viral means.
Concerns around toxicity. Given viruses used in gene therapy by default infect human cells, there continue to be questions
around the safety profile associated with viruses. In particular, there are concerns over the potential for random integration
of lentiviruses and the widespread presence of neutralizing antibodies against many AAV serotypes used in gene therapies.
Costs and time to market. Concerns exist regarding viral vector manufacturing capacity and the cost associated with viral
development and manufacturing. Additional bottlenecks arise from demand for viral approaches, which has led to
subsequent demand for cGMP plasmids. Furthermore, vein-to-vein manufacturing times remain high and efficiencies are
needed to deliver cell therapeutic medicines to patients faster.
Novel intracellular delivery approaches are needed to support the increased complexity of the burgeoning cell therapy pipeline.
Such characteristics include reducing immunogenicity risk of viral vectors, driving high efficiency of multi-molecule delivery while
maintaining high cell viability and potency, reducing the risk of potential genotoxicity of multiplex editing (potential for
translocations), delivering a large number of molecules at scale, the ability to deliver to a large number of cell types in a time
efficient matter, and manufacturing in a cGMP environment—all at a manageable cost.
The challenges of viral delivery methods and increased complexity of next-generation cell therapies has driven increased adoption of
non-viral delivery technologies, such as electroporation. We believe our ExPERT technology is well positioned as a non-viral
delivery platform in the cell therapy market. Originally developed in 1999 for the cell therapy market, we have systematically
designed and improved the platform to deliver any molecule, into any cell at any scale, with high efficiency and under cGMP
conditions. Our ExPERT platform is now the delivery backbone for a number of next-generation cell therapy programs, including
one that has received FDA approval and is presently being commercialized.
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Our Agreements with Customers
We have a diverse portfolio of clinical partners and licensees that mirror the overall next-generation engineered ex vivo cell
therapies. While difficult to predict given uncertainty around regulatory approvals and clinical risk, the first next-generation ex vivo
cell therapies using non-viral approaches was approved in the United States in 2023 using our platform.
Our platform’s ability to engineer a diversity of cell types (including CAR-T, chimeric antigen receptor Natural Killer cells
(“CAR-NK/NK”), T cell receptor cells (“TCR”) and stem cells) and cell sources (autologous and allogeneic) enhances our
opportunity by potentially providing SPL partnership revenues regardless of which approaches advance in the coming years.
Additionally, our instruments and platform have been used in over 60 clinical trials to date for drugs being developed to treat a
variety of indications, from hematological malignancies to solid tumors to inherited genetic disorders. We believe that the increasing
number of publications highlighting the performance of our platform compared to other electroporation, transfection and transduction
approaches will continue to drive acceptance of our products in the cellular engineering market segments.
In addition to sales of our instruments, as part of our business model we enter into the following types of instrument license
agreements with our customers:
Research Licenses
Research licenses are agreements with academic institutions or commercial entities which provide access to the use of our
instruments for preclinical research-only purposes, without the rights or ability to produce material for use in the clinic or
commercially. Research licenses are granted either (a) as part of the terms and conditions of a sale of an instrument to a cell therapy
user, or (b) in a licensing arrangement whereby we retain title to the instrument, while providing the customer with the ability to use
the platform for research in exchange for a non-refundable annual payment of typically $150,000 per instrument per year. We have
entered into many research licenses to-date, either as (i) instrument sales, (ii) stand-alone research license agreements, (iii) research
and clinical license agreements that do not have associated commercial rights, or (iv) under an SPL partnership, which allows a
customer to use the instrument for clinical development and potential commercial sale of a therapeutic product. Research licenses
under a stand-alone research license agreement, as well as instruments purchased for research use, could represent opportunities for
future SPL partnerships.
Clinical Licenses
Clinical licenses are agreements with academic institutions or commercial entities that provide access to the use of our
instruments for the clinical evaluation and development of a therapeutic product intended for human use. In a clinical license, we
retain title to the instrument and provide the customer with the ability to reference our FDA Master File (and international
equivalents), use the platform for production of clinical material for human clinical use, as well as access to our application scientist
team, all in exchange for an annual payment of typically $250,000 per instrument per year for commercial customers. Academic
clinical licenses can represent opportunities for future SPL partnerships to the extent that commercial entities seek and obtain rights
to such programs from the academic institution.
Strategic Platform Licenses (SPLs)
Given our value proposition in non-viral delivery, we have established strategic relationships in the form of SPL partnerships
with a growing number of leading cell therapy developers as they work to bring next-generation cell therapies into and through
clinical development and advance those candidates to potential commercialization.
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Under these SPL partnerships and other license agreements with our customers, we retain title to the licensed instrument and
associated intellectual property, and in exchange for an annual license fee per instrument, we provide our customers with non-
exclusive access, for a defined field of use, to our:
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cGMP-compatible platform, which enables early-optimization and scale-up from pre-clinical research into clinical
development using our intellectual property portfolio;
FDA Master File and Technical Files, which may help accelerate and streamline development and reduce regulatory risk in
the creation and development of our partners’ therapeutic drug candidates;
experienced team of sales personnel and application scientists who work directly with our customers to solve cell
engineering problems; and
continuous know-how and cell engineering process improvements.
In return, these SPL partnerships provide us with the ability to receive downstream program-related precommercial milestone
payments and, in most cases, commercial sales-based payments. In addition, from our SPL partnership customers, we receive annual
research fees for certain products and clinical license fees for others as well as payments from sales of our proprietary disposables as
recurring revenue streams. Given growth in the cell therapy pipeline and increased investment in the space, we estimate that the
number of potential SPL partnerships for us will continue to grow significantly, based on our estimates of growth in the cell therapy
pipeline, growth in the number of therapeutic delivery entrants into the market and ongoing shift in the industry to non-viral delivery.
A customer relationship may evolve to an SPL partnership after the customer’s drug candidate optimization and verification
process nears completion and the clinical process development stage begins. Specifically, if a customer wishes to use our products in
the clinical phase of process development, they will need to enter into an agreement establishing an SPL partnership, as a customer
must obtain clinical rights to perform clinical process development, including for engineering runs. Customer discussion for an SPL
partnership can take place any time during our engagement.
Our SPL customers typically pay an annual license fee per instrument per year for a research license (for preclinical use) or per
instrument per year for a clinical license (for clinical or commercial use) or in certain circumstances may purchase an instrument for
research use. Partners may also purchase associated single-use disposables and consumables as needed. Our SPL partners also
commit to pay precommercial milestone payments for each therapeutic licensed under the agreement and produced using our
platform, to be paid as they achieve key precommercial clinical development events (including, for example, Investigational New
Drug (“IND”) applications and approvals, filing, dosing of an agreed number of patients in a Phase 1 clinical trial, initiating a pivotal
clinical trial, and Biologics License applications (“BLA”) approvals in specified regions). Almost all of our SPL partnerships also
include a commitment to pay us post-approval sales-based payments for commercialized therapeutics.
We view our ability to establish SPL partnerships as a key measure of our success in partnering with leading therapeutic
developers, which then supports the performance of our platform.
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The following graphic is an example of typical single-product revenues from a representative SPL partnership:
Our SPL partnerships and research and clinical licenses may be terminated at the option of our customers at any time. Annual
instrument lease fees are non-refundable and customers may not use our instruments or process assemblies after terminating their
agreement with us. We retain title to the leased instrument in each of our licenses. Upon contract termination, our customers would
be responsible for any further clinical studies or data development that regulators may require to allow a change in their cell
engineering methodology. We have entered into 26 SPL partnerships with commercial cell therapy developers and, to date, none of
our SPL partnership licensees has ever terminated their contract with us.
Of the over 160 potential programs allowed under our current SPL partnerships, one is in the commercial stage and 16 are active
in clinical development, meaning they have at least an FDA-cleared IND application or foreign equivalent. An IND is a request for
authorization from the FDA to administer a therapeutic being investigated in humans in a clinical research setting and to ship such
products in interstate commerce for use in investigational clinical trials. An IND must become effective before human clinical trials
may begin. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time
period, raises safety concerns or questions about the proposed clinical trial. Clinical trials then involve the administration of the
investigational product to human subjects under the supervision of qualified investigators and are conducted under protocols
detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety and the effectiveness criteria
to be evaluated.
Our 26 SPL partnerships have the potential to generate over $1.95 billion in precommercial milestone payments if all of the
licensed programs were to achieve regulatory approvals. In addition, under the SPL partnerships, we typically have the potential to
receive significant, sales-based commercial payments for approved products. However, clinical development involves a lengthy and
expensive process with uncertain outcomes, including the results of pre-clinical research, as well as clinical trials demonstrating
product safety and efficacy, and therefore our customers may not begin or complete clinical development, and may never receive
FDA or other regulatory approval for all or any product candidates covered by their SPL partnership agreements with us, in which
case we will not receive the full potential precommercial milestone payments or the sales-based commercial payments or royalties
contemplated by our SPL agreements.
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Our Products
ExPERT Instruments
The ExPERT instrument family was designed to provide a single unifying technology that can be used from concept to clinic,
with both the research and clinical versions of an instrument incorporating the same underlying technology and protocols. Our
customers have a choice of four different instrument versions that are standardized on the same technology to deliver equivalent high
performance—ATx, STx, GTx and the VLx, as well as a portfolio of proprietary related disposables and consumables. Customers can
start with the lower to medium scale research instrument (ATx) and then scale up to the clinical version (GTx) without the need for
re-optimization or re-validation. The STx provides the same scale as the GTx but is used for drug discovery applications, such as
preclinical monoclonal antibody production, and not for human therapeutic use. VLx provides the capability for large-scall cell
engineering and drug discovery applications. The STx is not covered by our FDA Master File or our Technical Files.
We believe these systems will also be supportive of the commercial marketing of our partners’ therapeutic products which we
enable. Our platform allows our customers to perform their research and process optimization on a research platform and seamlessly
scale to a clinically validated, cGMP environment and 21 CFR Part 11 compatible clinical platform. Further, we believe our platform
provides an opportunity for our customers to realize significant time and cost savings.
All our instruments have been designed to provide customers with the key features required for a scalable high-performance
transfection solution. Each of our ExPERT instruments is benchtop with the same small footprint and has integrated touch screens
with an intuitive Graphical User Interface (“GUI”), designed for simple training and operation. To support use in the cGMP suite for
clinical manufacturing, our GTx ExPERT software is network capable to enable upload of electronic batch records to a local shared
drive and has a software intermediary to facilitate integration and automated data transfer to cloud-based data management solutions.
We have integrated hardware and software design solutions, manufactured under cGMP, that are tailored for use in cGMP
manufacturing of clinical products for advanced cellular therapies.
The following chart summarizes the features of the four ExPERT instruments:
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ExPERT ATx: Research focused, static electroporation for small to medium scale transfection
Our ExPERT ATx static electroporation instrument is a research
focused, high performance electroporation platform for small to medium
scale transfection. The ATx instrument delivers high efficiency and viability
at research scale and can utilize our range of PAs capable of transfecting
from 75,000 to 700 million cells. Additionally, our ATx instrument is
compatible with all of our static PAs, which can also be used on our GTx
instrument, allowing for a seamless transition to our clinical cGMP-
compatible platform. The ATx is designed and used by our customers for
early design of experiment and process optimization at small scale to
minimize cell acquisition and reagent costs. Once optimized for the
biological function with smaller numbers of cells, the process can be
replicated and scaled before being transferred to the clinical platform (GTx)
for eventual manufacturing in the cGMP suite or to the STx platform for
drug discovery and bioprocessing applications.
ExPERT STx: Flow Electroporation for protein production and drug development
Our ExPERT STx instrument, which is generally used in the field of
protein production and for other drug discovery applications, also
incorporates our proprietary Flow Electroporation Technology for high yield
transient expression of complex proteins, viral vectors, vaccines, virus like
particles (“VLPs”) and biologics. Our STx instrument has high efficiency
and can rapidly transfect from 75,000 to 20 billion cells. When combined
with flexible media strategies, the STx allows for substantial improvement in
yields of high-quality, transiently expressed proteins while enabling reduced
media costs.
Another key application area for the STx is expression of therapeutic
targets for cell-based assays. Traditionally, drug screening has been
performed using stable cell lines because conventional transfection
technologies, such as lipofection, may induce changes to membrane
composition, which does not offer the consistency and scalability that are
critical for sensitive, high throughput screens. By enabling high efficiency
transfection of multiple plasmids simultaneously into billions of cells, the
STx provides drug developers with the ability to express complex, multi-
subunit proteins, such as ion channels, in physiologically relevant cells. The
high viability of our transfected cells leads to robust assay responses on
multiple platforms, including automated electrophysiology and high content
screening technologies.
Moreover, precise control over loading efficiency gives assay developers the
ability to “dial in” optimal assay windows. By providing applications for
cell-based assays, the STx offers a unique opportunity to apply our
technology.
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ExPERT GTx: Flow Electroporation for large scale transfection in therapeutic applications
The ExPERT GTx incorporates our proprietary Flow Electroporation
technology for use in the cGMP manufacturing of cellular therapies with
clinical uses. By incorporating the Flow Electroporation technology, larger
volumes of up to 20 billion cells can be electroporated within 15 to 20
minutes. With a processing potential that ranges from 75,000 to 20 billion
cells on a cGMP, 21 CFR Part 11 compatible system, the GTx represents a
platform for clinical electroporation at large scale.
The GTx integrates several design features that are critical for use in a
cGMP setting, such as barcode reading capability to maintain positive
identification of patient samples, 21 CFR Part 11 compatible software and
networking capability for automated uploading of electronic batch records to
either a central server or to a cloud-based data management platform. The
GTx enables closed sample processing, on a system compatible with
integration into cGMP manufacturing environments, and that has an
established regulatory path supported by our FDA Master File and Technical
Files.
ExPERT VLx: Designed for very large volume cell-engineering
The ExPERT VLx Large-Scale Transfection System is a cGMP
compliant instrument specifically designed for very large volume cell-
engineering. Using proprietary Flow Electroporation technology, the VLx
supports the ability to transfect up to 200 billion cells in less than 30 minutes
—10 times the capacity of the STx and GTx. This system is designed for the
rapid and large-scale production of recombinant proteins, monoclonal
antibodies, viral vectors, vaccines, VLPs and allogeneic cell therapies. We
launched the VLx under the ExPERT brand in September 2022 to provide
customers with an easy to use, large-scale system that incorporates the
benefits of the ExPERT platform for large-scale bioprocessing. As of
September 2023, the VLx has an established regulatory path supported by
our FDA Master File.
Disposables—Processing Assemblies (PAs)
Our range of disposable PAs is an important differentiator for us. We are not aware of any other company with the breadth and
diversity of supported processing volumes that enable high efficiency electroporation flow, in single-well and multi-well formats, for
use in both the research and clinical settings. We view our PA designs as one of the key contributors to the capacities, high efficiency
and viability delivered by the ExPERT platform.
We have developed a broad range of PAs that are specially designed to process and electroporate the user’s chosen quantity of
cells. Each PA contains two electrodes, between which a medical-grade gasket is sandwiched that has a unique well design consistent
with the processing volume required and to allow maximum retrieval of cells. Our PAs are capable of electroporating cell volumes
from small to large scale, in single and multi-well formats, for both research and
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clinical use. Cells are placed into the sample bag in large scale PAs, or into the well or wells in small scale PAs, and the PA is then
connected to the instrument for processing. The instrument touch screen allows the operator to select the desired cell protocol that
encodes the electroporation parameters, select the type of PA to be used and enter any sample specific information. Once the sample
information has been entered, the operator will touch the “Start Processing” icon on the user interface and the sample will be rapidly
processed. Larger volumes of cells are accommodated by larger capacity PAs and a set of simple software commands through the
intuitive GUI.
Our ExPERT system uses two PA designs — a static cuvette used for smaller cell volumes (from 75,000 cells up to 200 million
cells) and a cartridge design that is used for both static and Flow Electroporation for larger cell volumes (700 million up to tens of
billions of cells). The Flow Electroporation PA (“Flow PA”) allows for processing of cellular volumes ranging from 10 mL to 100 mL
and up to tens of billions of cells. The Flow PA consists of bags and associated tubing, made from medical grade materials, that are
connected to the electroporation cartridge. Users transfer their cells and loading molecules to the sample bag, and the pump on either
the GTx or STx instrument pumps a fixed volume of cells into the cartridge chamber where they are electroporated. Once the
electroporation is complete, the cells are pumped to the collection bag and the chamber is filled with the next volume of cells for
electroporation. This process is repeated until the entire sample volume is processed. The maximum volume of 100 mL of cells can
be processed in approximately 15–20 minutes.
Examples of our two ExPERT PA designs are shown in the pictures below:
We have conducted extensive end-user research to continue improving the design of the PAs and the range of products available.
We launched the ExPERT cuvette in 2020 based on customer feedback, which incorporated a new design to improve handling and
ease of use, and we have continued to expand the availability of the ExPERT PA portfolio design. We have also expanded our
portfolio of multi-well cuvettes, which reduce manual handling and improve productivity in the lab, with the launch of our R-50x8.
The R-50x8 is an 8-well cuvette capable of processing up to 225,000 cells in each well. By enabling eight samples to be processed in
the same cuvette, a more efficient process can be achieved by users. We plan to continue to support customers using legacy
processing assemblies until they transition to our ExPERT products.
In 2022, we added the R-20K Flow Electroporation Processing Assembly for our STx and GTx platforms, which can process
between 5 mL and 20 mL sample volumes, which can accommodate between 200 million and up to 4 billion cells. The R-20K
assembly allows clients to develop therapies at small or mid-scale volumes with improved cell recovery in a closed process adaptable
format to assist in de-risking their manufacturing process at the electroporation step. To further support our customers’ sterile closed
process workflows, we also introduced ‘Closed Process Electroporation Buffer’ products in two volume sizes, 500 mL and 1 Liter,
which allow for the addition of our proprietary electroporation buffer to concentrated cell samples before electroporation. At the
same time, for our VLx Platform, we introduced the R-1L Flow Electroporation Processing Assembly, which can process in 30
minutes or less between 100 mL and 1 Liter sample volume accommodating up to 200 billion cells in a single run. The R-1L
assembly
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allows for large volume sample processing that can be adapted to a closed and sterile workflow for continuous end-product
production.
The following matrix shows our full line of currently available PAs and their respective specifications and features, including the
ExPERT instruments with which they can be used:
We are committed to strategically investing in improvements in the PA design and range of products to ensure that customers
have solutions that address all of their volume and use requirements, in both research and clinical settings, including current
development of advancements for PA that support the VLx.
Supporting Products
Our proprietary electroporation buffer, a balanced salt solution that protects cells during transfection, is formulated for use with
all our instrument platforms and PAs. This consumable is used for all cell types, eliminating the need to change buffers as users
switch protocols, cell types or scale up. The buffer is made in a cGMP facility, is fully chemically defined and is free of human or
animal components, and is tested to meet technical, sterility and endotoxin specifications. This buffer formulation is a key
contributing factor, in combination with instrument and PA design features, to the flexibility, high efficiency and viability that can be
achieved by customers across the broad range of cell types processed using our platform.
Sales and Marketing
We follow a direct sales model in North America, the United Kingdom, and Europe, while also selling through third-party
distributors in Asia and some regions of Europe. As of December 31, 2023, we had over 36 field sales and application scientists
located in the United States, the United Kingdom, and several regions in Europe and Asia. Since the commercial launch of our first
Flow Electroporation instrument in 2003, the installed base of our instruments has grown to more than 680 instruments globally.
Our sales force and field application scientists and international partners inform our current and potential customers of current
product offerings, new target applications and advances in our technologies and products. As our primary point of contact in the
marketplace, our field teams focus on delivering a consistent marketing message and high level of customer support, while also
working to help us better understand the evolving market and customer needs. We intend to expand our sales, support, and marketing
efforts in regions such as those within the Asia-Pacific region. We currently use distributors in countries in these regions, such as in
China and Japan, supplemented by dedicated MaxCyte team
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members, and continuously assess the need for direct sales and local support personnel to supplement our distributors’ resources.
When we expand into a new geography, we generally rely initially on third-party distributors until we are able to recruit a direct sales
force, field application scientists and business development resources in the country or region.
Our business model is focused on identifying new applications in cell engineering to enable our customers to develop better
medicines and maximize use across our customers’ value chains. This is enabled through customer partnerships that allows us to
further understand the critical applications for our technology and inform our future developments and market expansion.
Research and Development
Investment in research and development is at the core of our business strategy. Members of our research and development team
specialize in many functional areas including molecular biology, cellular biology, physics, gene editing, cell culture, protein
manufacturing, process development, mechanical engineering, cell handling processes, electroporation algorithm development and
customer technical support.
Our research and development teams are aligned into two teams, applications and instrumentation. The application team is
responsible for developing data on key applications, including improving approaches to cell handling and cell culture; designing,
developing and enhancing electroporation protocols; developing and enhancing cell engineering applications, and performing product
testing and quality assurance activities. The instrumentation engineering team focuses on developing and improving electroporation
instruments and PA disposables to meet our partners’ wide range of needs from research to commercialization in a GMP
environment. The research and development functional teams work together as a core team, following a stage-gate process to
develop, qualify and launch new products to market.
Other research and development activities include customer technical support such as cell processing techniques, instrumentation
training and application support. Most of our research and development operations are conducted in our Maryland facility.
We have made substantial investments in product and technology development since our inception. Research and development
expenses totaled $23.8 million and $19.5 million in the years ended December 31, 2023 and 2022, respectively.
We expect our research and development expenses to increase significantly for the foreseeable future as we develop data
supporting the use of our products in various applications and continue to enhance our existing products as well as develop new
products for our current and new markets.
Manufacturing and Supply
We design and develop our PA disposables and conduct final functional testing in our Maryland facility. PAs are manufactured
both in our Maryland facility and at a third-party manufacturer. In addition, we design, develop and manufacture our ExPERT
instruments in-house. Our in-house PA manufacturing and design function is certified as ISO 9001 compliant and our manufacturing
facility and controlled-access shipping, receiving and storage spaces are located at our current headquarters in Maryland. We
relocated our operations, including inventory and manufacturing, to a significantly larger space in a new facility during 2022, as
described more fully under Item 2 hereof.
Instruments
Our range of ExPERT instruments are manufactured, tested and shipped from our Maryland facility. Several custom components
of our ExPERT instruments are manufactured by third-party suppliers. The assembly of technology-sensitive components and the
final assembly is completed in-house. Presently, our Maryland manufacturing facility can support the production of ExPERT
instruments in excess of anticipated demand, and we plan to continue obtaining the space and staffing necessary to meet customer
demand for the foreseeable future.
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Processing Assemblies
Our PAs are only available for purchase directly from us and our third-party distributors and are designed for use only with our
instruments. The PAs are designed, developed, and shipped from our headquarters facility. We outsource supply and manufacturing
of key PA components. Final clean-room disposables assembly is performed at our headquarters facility and at a third party. In-house
cleanroom PA assembly activities were initiated in 2022 to enhance operational control over quality, expand capacity, enable
automation implementation, provide for multiple manufacturing sites and improve other areas of operations. In addition, in-house
manufacturing allows research and development teams located in the same facility to more rapidly develop new products and
enhancements.
Supply
For both instrument and PA manufacturing, we regularly assess our supply chain to ensure our ability to respond to customer
demand for our products. We have relationships with multiple custom parts manufacturers and electronics suppliers that can provide
components for our instruments, including components currently provided by a single source. Approximately 56% of inventory for
the year ended December 31, 2023 was purchased from one supplier. Single source suppliers are chosen for their business stability
and scalability to minimize risk. If a single source supplier has a part or process that is time-consuming to transfer to another
supplier, our approach is to hold enough inventory of that part to allow adequate time for technical transfer and qualification
wherever possible. Our ongoing strategy is to maintain adequate levels of inventories at all times and we plan to continue the
diversification of our supply chain as we scale. This inventory strategy was designed to minimize supply chain risk and as a result we
are currently able to ship on demand and to date have never had a backorder for a product.
Competition
The life sciences market is highly competitive and dynamic, reflecting rapid technological evolution and continually evolving
customer requirements. There are other companies, both established and early-stage, that have or are developing electroporation and
other non-viral delivery technologies that could be applicable to both bioprocessing and cell engineering, and who are or may
compete directly with our business. These companies include Lonza Group AG, Thermo Fisher Scientific Inc., Miltenyi Biotec, Bio-
Rad Laboratories, Inc. and Harvard Biosciences Inc. (BTX), as well as several other smaller companies, including spinouts from
academic labs.
Some of these companies may have substantially greater financial and other resources than us, including larger research and
development staff or more established sales forces. Other competitors are in the process of developing novel technologies for the life
sciences market which may lead to products that rival or replace our products.
For further discussion of the risks we face as a result of competition, see “Risk Factors—Risks Related to Our Business and
Growth Strategy—We may be unable to compete successfully against our existing or future competitors.”
Intellectual Property
Our long-standing intellectual property strategy has been to obtain patent protection in relevant jurisdictions over our
instruments and related methods, as well as design patents covering the ExPERT system. As part of this strategy, we have focused on
obtaining protection for our non-viral delivery platform to the extent possible, particularly in the United States and other key
jurisdictions of commercial value. As of March 1, 2024, we have more than 150 granted U.S. and foreign patents, including in
Australia, Canada, Japan, China, South Korea, and certain countries in Europe, as well as over 95 pending patent applications
worldwide. Our portfolio protects our core technology, the Flow Electroporation® process, the processing assemblies and
consumables, control and process elements, and application methods of using our non-viral delivery platform. The protection over
our instruments and related methods is estimated to last through at least 2028 and through 2034 for our electroporation applications.
Our design protection covering the ExPERT system has the potential to provide protection through at least 2036.
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In addition to our granted patents and filed applications, we maintain protection over a number of trade secrets related to our cell
processing technology and other core technology areas, including our electroporation protocols, pulsing patterns, proprietary buffer,
and other formulations we have developed. Our years of accumulated know-how together with the technical expertise of our
employees provide us with a competitive advantage. We use this know-how and technical expertise to optimize, revise and improve
our proprietary methods and protocols, such as cell handling and preparation techniques unique to different cells and target
molecules, which we confidentially share with our customers.
We maintain the confidentiality of our trade secrets, know-how and proprietary methods and protocols to protect our intellectual
property from competitors including through confidentiality provisions in our agreements with our SPL partners and execution of
non-disclosure agreements with prospective clients. One key element of this protection is our FDA Master File and Technical Files
described in more detail below, which allow us to submit to the regulatory authorities confidential detailed information about our
ExPERT system and disposables. The relevant submission can be referenced by our customers or licensees to support their own
regulatory filings without the need for us to disclose the confidential information contained in the FDA Master File and Technical
Files.
We also seek to protect our brand through the procurement of trademark rights. As of March 1, 2024, we owned 17 registered
trademarks in the United States, over 190 registered foreign trademarks, 13 pending U.S. trademark applications, and more than 30
pending foreign trademark applications. This collection includes trademarks for our company name, logos and stylized versions of
our ExPERT product line names. In order to supplement the protection of our brand, we maintain registration of several internet
domain names.
Government Regulation
The FDA and other federal, state, and local governmental authorities, as well as their foreign equivalents, regulate, among other
things, the research, development, testing, manufacturing, safety, effectiveness, clearance, approval, labeling, packaging, quality
control, storage, recordkeeping, advertising, promotion, marketing, distribution, post-market monitoring and reporting, as well as
import and export of technologies including biological and drug products.
Our biopharmaceutical and life sciences customers are subject to extensive regulations by the FDA and similar federal, state, and
local authorities, as well as their foreign equivalents, regarding the conduct of preclinical studies and clinical trials, in the
manufacture of product candidates and products for use in humans (i.e., “Good Manufacturing Practice” laws and regulations) and
the marketing authorization and commercialization of biological and drug products.
The activities of sponsors, applicants and manufacturers are subject to regulation of those jurisdictions where the research or
manufacturing occur, and also jurisdictions for which applications are planned or have been made and the product is intended to be
marketed.
Although our products are not intended to treat patients directly, they are used in manufacturing therapeutics by our customers to
treat patients. Therefore, our customers will generally assess our products for sufficiency in meeting their regulatory needs, and may
impose rigorous quality or other regulatory compliance requirements on us as their supplier through supplier qualification processes
and customer contracts.
We have established a quality management system (under ISO 9001:2015 standards) which is designed to respond to customer
expectations and needs and support customer adherence to applicable regulatory requirements. The technologies we offer for
potential use by customers in a cGMP environment are produced under this ISO 9001:2015 quality management system.
Master Files and Technical Files to Support Customer Regulatory Submissions
Our core business is focused on developing our proprietary and patented electroporation technology platform, which is used by
our customers in research and development applications as well as for manufacture of commercial cell therapies. In order to support
our customers’ use of our platform in regulatory submissions, we have submitted Master
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Files to the FDA, Center for Biologics Evaluation and Research and Master Files and/or Technical Files to comparable regulatory
authorities in other jurisdictions, including Canada, Japan, Australia, the United Kingdom and Austria, and provide nonexclusive
Letters of Authorization to the Master or Technical Files under contractual agreements with our customers. In this way, the
regulatory body may review information on our platform in the context of its utilization by our partners in regulated products, for
example, as described in our customers’ INDs or BLAs. We continuously update the Master and Technical Files in order to support
the regulatory activities of our customers. The FDA allows Master Files, but they do not approve them. Rather, they review them in
the context of evaluating the submissions by our customers that reference our files.
U.S. Healthcare Laws and Reform
In the United States, there are federal and state healthcare laws that constrain the business or financial arrangements and
relationships through which our customers who use our platform and we, if we develop research, sell, market and distribute products.
Such laws include federal and state anti-kickback laws, false claims laws, transparency laws and health information privacy and
security laws. Violations of these laws by our customers who are subject thereto can lead to significant administrative, civil and
criminal penalties, including sanctions, damages, disgorgement, monetary fines, possible exclusion from participation in government
healthcare programs such as Medicare and Medicaid, imprisonment, additional reporting requirements and/or oversight obligations,
contractual damages, reputational harm, diminished profits and future earnings and curtailment or restructuring of operations.
Additionally, in the United States and some foreign jurisdictions there have been, and continue to be, several legislative and
regulatory changes and proposed reforms of the healthcare system in an effort to contain costs, improve quality, and expand access to
care, including the proposed modification to some of the aforementioned laws. In the United States, there have been and continue to
be a number of healthcare-related legislative initiatives that have significantly affected the healthcare industry. These reform
initiatives may, among other things, result in modifications to the aforementioned laws and/or the implementation of new laws
affecting the healthcare industry. Similarly, a significant trend in the healthcare industry is cost containment. Third-party payors have
attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Our customers and
collaborators’ ability to commercialize their products successfully, will depend in part on the extent to which coverage and adequate
reimbursement for these products will be available from third-party payors. As such, cost containment reform efforts may result in an
adverse effect on our operations.
The Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act (“FCPA”), prohibits any U.S. individual or business from paying, offering, or authorizing
payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of
influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The
FCPA also obligates companies whose securities are listed in the United States to comply with accounting provisions requiring the
company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international
subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.
Data Privacy and Security Laws and Regulations
In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect,
secure, dispose of, transmit, and share (collectively, process) personal information, such as clinical trial data and other health data.
Accordingly, we may be subject to numerous data privacy and security obligations, including federal, state, local, and foreign laws,
regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements and other
obligations related to data privacy and security. These frameworks are evolving and may impose potentially conflicting obligations.
Such obligations may include, without limitation, the Federal Trade Commission Act , the California Consumer Privacy Act of 2018,
as amended by the California Privacy Rights Act of 2020 (“CPRA”) (collectively, “CCPA”), the European Union’s General Data
Protection
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Regulation 2016/679 (“EU GDPR”), the EU GDPR as it forms part of United Kingdom law by virtue of section 3 of the European
Union (Withdrawal) Act 2018 (“UK GDPR”), the ePrivacy Directive, and wiretapping laws. Further, the federal Health Insurance
Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical
Health Act (“HITECH”), imposes specific requirements relating to the privacy, security, and transmission of individually identifiable
health information. In addition, several states within the United States, such as Virginia, Colorado, Connecticut, and Utah, have
enacted comprehensive data privacy laws, and similar laws are being considered at the federal, state, and local levels.
The EU GDPR, UK GDPR, and CCPA are examples of the increasingly stringent and evolving regulatory frameworks related to
personal information processing that may increase our compliance obligations and exposure for any noncompliance. European data
privacy and security laws (including the EU GDPR and UK GDPR) impose significant and complex compliance obligations on
companies that are subject to those laws, notably with respect to the processing of health-related data from European Economic Area
(“EEA”) or United Kingdom-based individuals. Additionally, the CCPA applies to personal information of consumers, business
representative, and employees who are California residents, imposes specific requirements on covered businesses, provides for
administrative fines of up to $7,500 per violation and allows private litigants affected by certain data breaches to recover significant
statutory damages. In addition, the CPRA expanded the CCPA’s requirements. Furthermore, U.S. federal and state consumer
protection laws may require us to publish statements that accurately and fairly describe how we handle personal information and
choices individuals may have about the way we handle their personal information.
See the section titled “Risk Factors – Risks Related to Our Regulatory Environment and Our Industry” for additional information
about the laws and regulations to which we are or may become subject and about the risks to our business associated with such laws
and regulations.
Employees and Human Capital
As of December 31, 2023, we had 143 full-time employees, 81 of whom have advanced degrees, including 29 with Ph.D.
degrees.
Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, training, incentivizing and
integrating our existing and new employees, advisors and consultants. We have implemented an equity incentive plan, the principal
purposes of which are to attract, retain and reward personnel through the granting of equity-based compensation awards in order to
increase shareholder value and the success of our company by motivating such individuals to perform to the best of their abilities and
achieve our objectives. More information about our equity incentive plan will be available in our proxy statement for the 2024
annual meeting of stockholders.
None of our employees is represented by a labor organization or under any collective-bargaining arrangements. We consider our
employee relations to be good.
Corporate Information
We were incorporated under the laws of the State of Delaware in July 1998 under the name Theramed, Inc. and changed our
name to MaxCyte, Inc. in 2001. Our principal executive offices are located at 9713 Key West Avenue, Suite 400, Rockville,
Maryland 20850, and our telephone number is (301) 944-1700.
Available Information
Our website address is www.maxcyte.com. In addition to the information about us and our subsidiaries contained in this Annual
Report, information about us can be found on our website. Our website and information included in or linked to our website are not
part of this Annual Report.
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Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge through our website as
soon as reasonably practicable after they are electronically filed with or furnished to the SEC. The SEC maintains an internet site that
contains reports, proxy and information statements and other information that we file electronically with the SEC. The address of the
SEC's website is www.sec.gov.
Item 1A. Risk Factors
You should consider carefully the following risks and other information contained in this Annual Report on Form 10-K,
including the section of this report captioned “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and our financial statements and related notes. If any of the events contemplated by the following discussion of risks
should occur, our business, results of operations, financial condition and growth prospects could suffer significantly. The risks below
are not the only ones we face. Additional risks that we currently do not know about or that we currently believe to be immaterial may
also impair our business.
Risks Related to Our Business and Growth Strategy
We are a cell engineering and life sciences company and have incurred significant losses since our inception, and we expect to
incur losses for the foreseeable future. We have limited product offerings approved for commercial sale and may never achieve or
maintain profitability.
We are a cell engineering and life sciences company focused on advancing the discovery, development and commercialization
of next-generation cell-based medicines. The biopharmaceutical development industry, where the majority of our customers operate,
is a highly speculative undertaking and involves a substantial degree of risk. We have incurred significant losses since inception and
have financed our operations principally through private financings and public offerings of our securities. We have historically relied
on sales and licensing of our instruments, as well as sales of our portfolio of single-use disposable PAs for the significant majority of
our revenue. We may be unable to sell or license our instruments to new customers and existing customers may cease or reduce their
utilization of our instruments or fail to renew licenses of our instruments. Our net losses were $37.9 million and $23.6 million for the
years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, we had an accumulated deficit of $175.8 million.
Our losses have resulted principally from expenses incurred for research and development for our cell engineering platforms and from
sales and marketing costs, manufacturing expenses, management and administrative costs as well as other expenses that we have
incurred while building our business infrastructure.
We expect that our expenses and operating losses may continue for the foreseeable future as we expand our research and
development efforts, expand the capabilities of our cell engineering platforms and operate as a public company in the United States.
We anticipate that our expenses will increase as we:
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continue to advance our ex vivo cell engineering platforms and develop new technologies related to our platform;
acquire and license technologies aligned with our ex vivo cell engineering platforms;
expand our operational, financial and management systems and increase personnel, including staff to support our research
and development, manufacturing and commercialization efforts;
continue to develop, prosecute and defend our intellectual property portfolio; and
incur additional legal, accounting and other expenses in operating our business, including the additional costs associated
with operating as a public company in the United States.
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We have devoted a significant portion of our financial resources and efforts to building our organization, developing our ex vivo
cell engineering platforms, acquiring technology, building out our manufacturing capabilities, organizing and staffing the company,
business planning, establishing our intellectual property portfolio, raising capital, securing license and partnership arrangements with
customers and providing general and administrative support for these operations.
To become and remain profitable, we must succeed in realizing meaningful precommercial milestone payments from our current
SPLs and potentially secure future commercial partnership, licensing or collaboration arrangements for use of our cell engineering
platforms and similar arrangements for cell therapy programs in development that have not yet been partnered. This will require us to
be successful in a range of challenging activities, including continuing to develop our technology and products, accessing, developing
and advancing manufacturing capacity, advancing our sales and marketing capabilities and commercializing and selling our products.
We may never succeed in any or all of these activities and, even if we do, we may never generate a level of revenue that is sufficient to
achieve profitability. Even if we do achieve profitability, we may not be able to sustain profitability or meet outside expectations for our
financial results, including profitability. If we are unable to achieve or sustain profitability or to meet outside expectations for our
financial results, the value of our shares of common stock could be materially adversely affected.
We are highly dependent on a limited number of product offerings. Our revenue has been primarily generated from the sale and
licensing of our instruments, as well as sales of single-use disposable PAs, which require a substantial sales cycle and are prone
to quarterly fluctuations in revenue, as well as revenues earned based upon customer clinical development progress events which
are outside of our control and highly variable from period to period.
Our ExPERT technology platform and family of instruments was commercially launched in April 2019 with a new instrument
launched in late 2022. Sales and licensing of ExPERT technology systems and related instruments together accounted for 45% and
51% of our revenue for the years ended December 31, 2023 and 2022, respectively. We expect that, for at least the foreseeable future,
sales and licensing of our ExPERT technology systems will continue to account for a substantial portion of our revenue. The sales
cycle for our cell engineering instruments is complex and can take up to 12 months or longer to complete.
Material, one-time milestone payments earned as SPL partners achieve clinical progress are also a significant portion of our
revenue, although such milestone payments are not in our control, are unpredictable because of the early-stage nature of cell therapy
clinical development, and may contribute materially to the volatility of our revenue. As a result of our lengthy and unpredictable sales
cycle, we may be prone to quarterly fluctuations in our revenue. Quarterly fluctuations may make it difficult for us to predict our
future operating results. Consequently, comparisons of our operating results on a period-to-period basis may not be meaningful.
Investors should not rely on our past results as an indication of our future performance.
As a result of variability and unpredictability, we may also fail to meet the expectations of industry or financial analysts or
investors for any period. If our revenue or operating results fall short of the expectations of analysts or investors or any guidance we
may provide, or if the guidance we provide falls short of the expectations of analysts or investors, the price of our common stock
could decline substantially. Such a stock price decline could occur even when we have met or exceeded any previously publicly stated
guidance we may have provided.
We may be unable to successfully execute on our growth strategy.
We intend to grow our business and market opportunity by continuing to invest in technology and scientific innovation,
broadening our distribution capabilities to expand our installed base of ExPERT products, pursuing SPLs with target customers,
expanding our commercial infrastructure and considering opportunistic investments, partnerships and acquisitions, among other
initiatives. Each of these growth strategies will require considerable time and resources, and we may not be successful in executing
any or all of these strategies.
One of the components of our growth strategy is to sell our recently launched ExPERT VLx platform for large-scale
bioprocessing applications, including viral vector production in suspension cell cultures and rapid production of proteins,
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including monoclonal antibodies. The success of the VLx, including new engineering modifications to the platform, may depend in
part on the availability, compatibility and capability of appropriate technologies upstream and downstream of electroporation to
support potential large-scale applications enabled by the VLx platform, our ability to develop and launch GMP-compliant processing
assemblies, and willingness of customers to adopt the VLx for new applications. We expect that additional investment will be needed
to build out process development capabilities, manufacturing capacity, new processing assembly design and the addition of large-
scale bioprocessing-specific field resources and those investments may not be successful. Further, we could encounter delays and
setbacks in implementing engineering modifications necessary for certain large-scale applications, resulting in delayed acceptance by
future customers and partners of such a large-scale system. In addition, the sales and implementation cycles of customers for such a
large-scale platform may require more time than originally assumed as we may encounter delays in acceptance by potential
customers for the VLx platform in large-scale applications, which could negatively impact forecasted revenues.
Another component of our growth strategy is expanding our SPL model, through which we build collaborative relationships
with our customers as we facilitate their efforts to bring critical cell-based medicines to market. Even if we are able to enter into
additional future SPL arrangements and similar arrangements for future therapeutic products that have not yet been partnered, there
can be no assurance that any of the therapeutic products that are being or might be developed by our partners using our technology
will continue to advance through clinical development, receive regulatory approvals or be successfully developed into commercially
viable products. As a result, we may suffer setbacks in increasing awareness and adoption of our products in addition to the material
impact on our financial results as a result of milestones not being realized and leased instruments being returned. Further, setbacks in
the clinical trials of our current or future partners, such as serious adverse events, including patient deaths, could significantly impact
capital available to customers and our ability to enter into future SPL agreements with new therapeutic product companies.
Our growth strategy also involves expanding our international operations. In addition to risks associated with international
operations in general, we will also need to navigate complex foreign regulatory requirements with which we may not be familiar or
have experience. To operate successfully, or for our partners to obtain regulatory approval in other countries, we must comply with
numerous and varying regulatory requirements imposed by such countries regarding safety, efficacy, manufacturing, clinical trials,
commercial sales, pricing and distribution of our products. Although our partners have historically been able to reference our FDA
Master File in the United States and our Master and Technical Files in some other countries in the course of clinical development of
their therapeutic products, we cannot ensure that we will obtain or establish a regulatory Master or Technical File in other countries.
If we fail to establish a regulatory Master or Technical File in any jurisdiction, this could make customers in such jurisdictions less
likely to adopt our instruments, and the geographic market for our products could be limited.
We believe there are several opportunities to grow our sales and product line. However, we have limited financial and
managerial resources, and we may forgo or delay pursuit of growth opportunities that later prove to have greater value to our
business. Our resource allocation decisions may cause us to fail to capitalize on viable opportunities, and we could spend resources
on strategies that are not ultimately successful.
Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the markets in which
we compete are as large as we estimate or achieve their forecasted growth, our business could fail to grow at projected rates, if at
all.
Market opportunity estimates and growth forecasts on which we develop our business strategies, including those estimates and
forecasts we have generated ourselves, are subject to significant uncertainty and are based on assumptions and estimates that may not
prove to be accurate. The variables that go into the calculation of our market opportunity are subject to change over time, and there is
no guarantee that any particular number or percentage of customers covered by our market opportunity estimates will purchase our
products or generate any particular level of revenue for us at all. Any expansion in our market depends on a number of factors,
including the cost and perceived value associated with our products and those of our competitors. Even if the markets in which we
compete meet our size estimates and growth forecasts, our business could fail to grow at projected rates, if at all. Our growth is
subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties.
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We rely on assumptions, estimates and data to calculate certain of our key metrics, and real or perceived inaccuracies in such
metrics may harm our reputation and negatively affect our business.
In addition to our financial results, our management regularly reviews a number of operating and financial metrics, including a
breakdown of product and leased revenue into instrument sales, PAs, leased revenue (recurring revenue), product placements,
cumulative product placements, revenue by customer market (cell therapy and drug discovery), status or number of installed
instruments, SPLs, program licenses (research, clinical and SPL), and potential precommercial milestones, to evaluate our business,
measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. As
both our business and the industry in which we operate evolve, the metrics by which we evaluate our performance may also change. In
addition, while the calculation of the metrics we use is based on what we believe to be reasonable estimates, our internal tools are not
independently verified by a third party and have a number of limitations and, furthermore, our methodologies for tracking these
metrics may change over time.
Our future success is dependent upon our ability to increase penetration in our existing markets and expand into adjacent
markets.
Our customer base includes biopharmaceutical and biotechnology companies and academic institutions focused on cell-based
therapeutics. Our success will depend in part upon our ability to increase our market penetration by expanding sales to existing
customers and acquiring new customers and partnerships within our existing markets, and our ability to market new products and
applications to existing and new customers. Attracting new customers and introducing new products and applications require
substantial time and expense. For example, it may be difficult to identify, engage and market to customers who are unfamiliar with our
current products. We cannot guarantee that we will be able to further penetrate our existing markets or that these markets will be able
to sustain our current and future product and service offerings. Any failure to increase penetration in our existing markets could
adversely affect our ability to improve our operating results.
Our success will also depend on our ability to further expand into adjacent markets, such as penetrating non-commercial
customer opportunities, including translational academic centers. Our inability to further expand in adjacent markets and attract new
customers could adversely affect our ability to improve our operating results.
Due to the significant resources required to enable access in new markets, we must make strategic and operational decisions to
prioritize certain markets, technology offerings and partnerships, and there can be no assurance that we will expend our
resources successfully or in a way that results in meaningful revenue or capitalizes on potential new markets.
We believe our platform has potential applications across a wide range of markets, and we have targeted certain markets in
which we believe we have a higher probability of success or revenue opportunity or for which the path to commercialize products and
realizing or achieving revenue is shorter. For example, we believe our products have applications in markets for engineered cell
therapies in immuno-oncology and inherited disorders. We seek to continue to prioritize opportunities and allocate our resources
among our programs to maintain a balance between advancing near-term opportunities and exploring additional markets for our
technology. However, due to the significant resources required for the development of new markets, we must make decisions
regarding which markets to pursue and the amount of resources to allocate to each. Our decisions concerning the allocation of
research, development, collaboration, management and financial resources toward particular markets or workflows may not lead to the
development of any viable product and may divert resources away from other opportunities that may ultimately be better-suited to
our business. Similarly, our potential decisions to delay, terminate or collaborate with third parties in respect of certain markets may
subsequently also prove to be suboptimal and could cause us to miss out on valuable opportunities. In particular, if we are unable to
develop additional relevant products and applications for markets such as cell therapy or large-scale bioprocessing, it could slow or
stop our business growth and negatively impact our business, financial condition, results of operations and prospects.
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Our business is dependent on adoption of our products by organizations such as biopharmaceutical companies and academic
institutions for their research and development activities focused on cell-based therapeutics. If organizations such as
biopharmaceutical companies and academic institutions are unwilling to change current practices to adopt our products, it may
negatively affect our business, financial condition, prospects and results of operations.
Our primary strategy to grow our revenue is to market our products across key stakeholders in cell-based therapeutics, such as
biopharmaceutical companies and academic institutions. Most of our potential customers already use expensive research systems in
their laboratories and may be reluctant to replace those systems. While the number of customers using our products has increased in
recent years, many biopharmaceutical companies and academic institutions have not yet adopted our products, and such institutions
and companies may choose not to adopt our products for a number of reasons, including:
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inability to convince potential customers that our products are an attractive alternative to existing technologies and
reluctance of potential customers to replace those existing technologies;
inadequate recruiting or training of talented sales force and field application scientists in existing and new markets to
facilitate outreach and further adoption and awareness of our products;
lack of experience of potential customers with our products for cell engineering;
perceived inadequacy of evidence supporting benefits or cost-effectiveness of our products over existing alternatives or
negative publicity regarding cell engineering technologies;
liability risks generally associated with the use of new products and processes;
time and training required for potential customers to use and validate our products;
delays in research and development activities involving our products;
competing products and alternatives; and
introduction of other novel alternative products for cell engineering.
In addition, our customers may experience a change of control or otherwise consolidate with other biopharmaceutical companies
and academic institutions. If, as a result of such change of control, our customers choose or are forced to modify or terminate cell
therapy strategies, adopt other products, or otherwise reduce their use of our products, our ability to execute our growth strategy
could be impaired, which may negatively affect our business, financial condition, prospects and results of operations.
We believe that educating notable industry key opinion leaders (“KOLs”), and representatives of biopharmaceutical companies
and academic institutions about the merits and benefits of our products for Flow Electroporation and cell engineering is one of the key
elements of increasing the adoption of our products. If these KOLs, institutions and companies do not adopt our products for any
reason, including those listed above, acceptance and adoption of our products may be slowed and our ability to execute our growth
strategy may be impaired, which may negatively affect our business, financial condition, prospects and results of operations.
We may be unable to compete successfully against our existing or future competitors.
We operate in a highly competitive market characterized by rapid technological change, evolving industry standards, changes in
customer needs, emerging competition, new product introductions and strong price competition. We currently compete with both
established and early-stage life sciences technologies companies that design,
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manufacture and market electroporation and other non-viral cell engineering technology based on efficacy, price, ease of use,
reimbursement and customer support services.
Our success depends, in part, on our ability to maintain a competitive position in the development of technologies,
enhancements and products for use by our customers. Many of the companies developing or marketing competing or alternative
products have competitive advantages when compared to us, including:
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greater financial and human resources for product development, sales and marketing;
greater domestic and international name recognition and more product familiarity among users;
broader and more established relationships with pharmaceutical companies and academic institutions;
broader product lines and the ability to offer lower prices or rebates, integrate technologies more successfully to offer
better workflow solutions, bundle products to offer greater discounts or incentives or offer more attractive milestone and
partnership terms;
broader intellectual property protection for their technology and products;
larger sales forces and broader and more established domestic and international sales and marketing and distribution
networks; and
more experience in conducting research and development, manufacturing and preparing regulatory submissions, both in the
United States and in foreign jurisdictions.
We primarily compete against products marketed by Lonza Group AG, Thermo Fisher Scientific Inc., Miltenyi Biotec, Bio-Rad
Laboratories, Inc. and Harvard Bioscience, Inc. (BTX), as well as several other smaller companies, including spinouts from academic
labs.
In addition to already marketed products, we also face competition from products that are or could be under development and
that target the same applications as our products or applications that we may address in the future. Such product candidates may be
developed by the above-mentioned entities and others, including life sciences tools companies, biotechnology companies,
pharmaceutical companies, private and public research institutions and academic institutions or may come about as the result of
consolidation in our industry. Our competitors may develop and patent processes or products earlier than we can and develop more
effective and/or less expensive products or technologies that render our technology or products obsolete or non-competitive. Despite
the steps we have taken to maintain and protect our intellectual property, competitors may nevertheless attempt to, or succeed in,
developing similar electroporation technology, including Flow Electroporation. We also compete with other organizations in
recruiting and retaining qualified scientific and management personnel. If our competitors are more successful than us in these
matters, we may be unable to compete successfully against our existing or future competitors.
Our business currently depends significantly on research and development spending by biopharmaceutical companies, a
reduction in which could limit demand for our products and adversely affect our business and operating results.
A portion of our revenue is derived from sales to biopharmaceutical companies and academic institutions. Much of their funding
is, in turn, provided by public and private financings, including investments from venture capital funds and, for public companies, the
capital markets. In the near term, we expect that a portion of our revenue will continue to be derived from sales to biopharmaceutical
companies and academic institutions. Accordingly, the spending policies and practices of these customers—which have been
impacted by market conditions and other factors—could have a significant effect on the demand for our products. In addition, the
demand for our products may depend upon the research and development budgets of these customers, which are impacted by factors
beyond our control, such as:
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macroeconomic conditions, and the political climate;
investor confidence in the biopharmaceutical industry and the amount of capital such investors provide to our potential
customers;
reduced pricing of approved therapeutics;
scientists’ and customers’ opinions of the utility of new products or services;
changes in the regulatory environment;
differences in budgetary cycles;
competitor product offerings or pricing;
merger and acquisition activity within the industry;
market-driven pressures to consolidate operations and reduce costs;
market acceptance of relatively new technologies, such as ours;
clinical trial or milestone failures that impact our customers’ ability to raise capital; and
inability to sustain capital requirements or bankruptcy.
In addition, while the majority of our revenues are derived from biopharmaceutical customers, various state, federal and foreign
agencies that provide grants and other funding may be subject to stringent budgetary constraints that could result in spending
reductions, reduced grant making, reduced allocations or budget cutbacks, which could jeopardize the ability of these customers, or
the customers to whom they provide funding, to purchase our products. For example, congressional appropriations to the National
Institutes of Health (“NIH”) have generally increased year-over-year in recent years, but the NIH also experiences occasional year-
over-year decreases in appropriations. There is no guarantee that NIH appropriations will not decrease or cease in the future. A
decrease in the amount of, or delay in the approval of, appropriations to NIH or other similar United States or foreign organizations,
such as the Medical Research Council in the United Kingdom, could result in fewer grants benefiting life sciences research. These
reductions or delays could also result in a decrease in the aggregate amount of grants awarded for life sciences research or the
redirection of existing funding to other projects or priorities, any of which in turn could cause our customers and potential customers
to reduce or delay purchases or licensing of our products.
Our operating results may fluctuate substantially due to the potential changes in our customers' resources as described above.
Any decrease in our customers’ budgets or expenditures, or in the size, scope or frequency of their capital or operating expenditures,
could materially and adversely affect our business, operating results and financial condition.
Our current research and development efforts may not produce significant revenue for several years, if at all.
Developing our products is expensive, and the investment in product development may involve a long payback cycle. Our
investment in research and development may not result in the data we hope to develop to support marketing of our products or in
marketable products or may result in products that take longer to generate revenue, or generate less revenue, than we anticipate. For
the years ended December 31, 2023 and 2022, our research and development expenses were $23.8 million and $19.5 million,
respectively, or approximately 58% and 44%, respectively, of our total revenue. Our future plans include increased significant
investments in research and development of product opportunities for expansion of our products and new application areas for our
products. We believe that we must continue to dedicate a
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significant amount of resources to our research and development efforts to maintain our competitive position. However, we may not
receive significant revenue from these investments for several years, if at all.
Our international operations may raise additional risks, which could have an adverse effect on our operating results.
International customers have typically accounted for a meaningful portion of our revenue. For the year ended December 31,
2023, approximately 21% of our revenue was derived from international customers, with the most significant markets being the
United Kingdom, Switzerland, Canada and China. We expect that our international revenue and operations will continue to expand in
the future. Our international operations are subject to a variety of risks that we do not face in the United States, including:
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difficulty of increased travel, infrastructure and legal compliance costs associated with developing international revenue;
difficulties in enforcing contracts, collecting accounts receivable and longer payment cycles, especially in emerging
markets;
general economic conditions in the countries in which we operate;
additional withholding taxes or other taxes on our foreign income, and tariffs or other restrictions on foreign trade or
investment;
compliance with data privacy and security requirements in foreign jurisdictions in which we operate;
imposition of, or unexpected adverse changes in, foreign laws or regulatory requirements, many of which differ from those
in the United States;
costs and delays associated with developing products or technology in multiple languages, such as the software embedded
in our products;
compliance with foreign technical standards;
increased length of time for shipping and acceptance of our products;
increased exposure to foreign currency exchange rate risk;
uncertainties related to geopolitical and economic environments;
reduced protection for intellectual property rights in some countries, particularly in China; and
political unrest, war, incidents of terrorism, or responses to such events.
In connection with the ongoing armed conflict between Russia and Ukraine, the U.S. government, United Kingdom and
European Union countries have imposed enhanced export controls on certain products and sanctions on certain industry sectors and
parties in Russia and the regions of Donetsk and Luhansk, as well as enhanced export controls on certain products and industries.
These and any additional sanctions and export controls, as well as any counter responses by the governments of Russia or other
jurisdictions, could adversely affect, directly or indirectly, the levels of government spending or the global supply chain. Conflicts
between Russia and Ukraine, in the Middle East, or elsewhere may directly or indirectly affect our supply chain, which may lead to
negative implications on the availability and prices of raw materials, energy prices, and our customers, as well as the global financial
markets. Although we do not currently conduct any operations in Russia, Ukraine or the Middle East further escalation of
geopolitical tensions could have a broader impact that expands into other markets where we do business or conduct operations, which
could adversely affect our business and sales of our products.
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As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and
effectively manage these and other risks associated with our international operations.
Our overall success in international markets depends, in part, on our ability to succeed in differing legal, regulatory, economic,
social and political conditions. We may not be successful in developing and implementing policies and strategies that will be effective
in managing these risks in each country where we do business. Our failure to manage these risks successfully could harm our
international operations, reduce our international sales and increase our costs, thus adversely affecting our business, operating results
and financial condition.
If we fail to offer high-quality customer service, our business and reputation could suffer.
We differentiate ourselves from our competition through our commitment to an exceptional customer experience. Accordingly,
high-quality customer service is important for the growth of our business and any failure to maintain such standards of customer
service, or a related market perception, could affect our ability to sell products to existing and prospective customers. The number of
our customers has grown significantly and such growth, as well as any future growth, may put additional pressure on our field
application scientists and customer service organization. We may be unable to hire qualified staff quickly enough or to the extent
necessary to accommodate increases in demand. Providing an exceptional customer experience requires significant time and
resources from our customer service team. Therefore, failure to scale our customer service organization adequately may adversely
impact our business results and financial condition.
Customers utilize our service teams and online content for help with a variety of topics, including how to use our products
efficiently, how to integrate our products into existing workflows, and how to resolve technical, analysis and operational issues if and
when they arise. While we have developed significant resources for remote training and customer service, including our virtual product
demonstration process, if our customers do not adopt these resources, we may be required to increase the staffing of our customer
service team, which could increase our costs. Also, as our business scales, we may need to engage third-party customer service
providers, which could increase our costs and negatively impact the quality of the customer experience if such third parties are
unable to provide service levels equivalent to ours.
In addition, as we continue to grow our operations and reach a global customer base, we will need to be able to provide efficient
customer service that meets our customers’ needs globally at scale. In geographies where we sell through distributors, we often rely
on those distributors to provide customer service. If these third-party distributors do not provide a high-quality customer experience,
our business operations and reputation may suffer.
If we cannot maintain and expand current partnerships and enter into new partnerships that generate marketed licensed
products, our business could be adversely affected.
We do not have our own pipeline of therapeutic candidates, and instead we focus our efforts on the development of our cell
engineering offerings, including our ExPERT platform. Our partners then use our instruments and PAs for cell engineering to develop
their own therapeutic candidates without our direct involvement. As a result, our success depends on our ability to expand the number
and scope of our partnerships. Many factors may impact the success of these partnerships, including our ability to perform our
obligations, our partners’ satisfaction with our products, competitive offerings of other companies, our partners’ ability to
successfully develop, secure regulatory approval for and commercialize therapeutic candidates using our products, our partners’
internal priorities (including fluctuations in research and developments budgets), our partners’ resource allocation decisions and
competitive opportunities, disagreements with our partners, the costs required of either party to the partnerships and related financing
needs, and operating, legal and other risks in any relevant jurisdiction, as well as severe adverse events in cell therapy trials regardless
of association with our partners.
We engage in conversations with companies regarding potential partnerships on an ongoing basis. These conversations may not
result in commercial agreement. Even if agreement is reached, the resulting relationship may not be successful, including due to
factors beyond our control, such as our partners’ inability to successfully develop or
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commercialize their therapeutic candidates. In such circumstances, we may not generate any substantial revenues from such a
collaboration in the form of milestone payments, royalties or otherwise. Speculation in the industry about our existing or potential
partnerships can be a catalyst for adverse speculation about us which can adversely affect our reputation and our business.
Further, our customers are subject to the extensive risks and uncertainties that apply to product candidates in this area including
those associated with preclinical and clinical research and development and related regulatory and Institutional Review Board
authorization and oversight, manufacturing challenges and compliance standards, the data requirements and review process for
seeking marketing authorization, and the potential for safety and efficacy concerns to emerge at any stage of product development
and even after approval.
If the quality or delivery of our products does not meet our customers’ expectations and needs relative to their regulatory
obligations, our reputation could suffer and ultimately our sales and financial results could be negatively impacted.
Our customers operate in highly regulated industries. In the course of conducting our business, our customers will expect us to
adequately address any quality issues suspected to be associated with our products, including defects in our engineering, design,
manufacturing and delivery processes, as well as defects in third-party components included in our products. The occurrence of
defects in our products may increase as we continue to introduce new products and rapidly scale up manufacturing to meet
potentially increased customer demand. Although we have established internal procedures designed to reduce the risks of product
quality issues that may arise, there can be no assurance that we will be able to eliminate or mitigate occurrences of these issues and
associated potential liabilities. In addition, identifying the root cause of quality issues may be difficult, which may increase the time
needed to address quality issues as they arise and increase the risk that similar problems could recur. Finding solutions to quality
issues can be expensive and we may incur significant costs or lost revenue in connection with, for example, shipment holds, product
recalls or other service obligations. In addition, quality issues may impair our relationships with new or existing customers and
adversely affect our brand image, and our reputation could suffer, which could adversely affect our business, financial condition,
results of operations, cash flows and prospects.
The failure of our partners to meet their contractual obligations to us could adversely affect our business.
Our reliance on our partners poses a number of additional risks, including the risk that they may not perform their contractual
obligations to our standards, in compliance with applicable legal or contractual requirements, in a timely manner or at all; they may
not maintain the confidentiality of our proprietary information; and disagreements or disputes could arise that could cause delays in,
or termination of, the research, development or commercialization of therapeutic candidates produced using our instruments and PAs.
In addition, certain of our partners are large, multinational organizations that run many programs concurrently, and we are
dependent on their ability to accurately track and make milestone payments to us pursuant to the terms of our agreements with them.
Any failure by them to inform us when milestones are reached and make related payments to us could adversely affect our results of
operations.
Some of our partners operate in markets subject to political and social risk, corruption, infrastructure problems and
natural disasters, and are often subject to country-specific data privacy and data security risk as well as burdensome legal
and regulatory requirements. Any of these factors could adversely impact their financial condition and results of
operations, which could impair their ability to meet their contractual obligations to us, which may have a material
adverse effect on our business, financial condition and results of operations.
Our partners have significant discretion in determining when and whether to make announcements, if any, about the status of
their clinical developments and timelines for advancing collaborative programs, and the price of our common stock may decline
as a result of announcements of unexpected results or developments.
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Our partners have significant discretion in determining when and whether to make announcements about the status of their
programs that use our technology, including their preclinical and clinical programs, such as setbacks or terminations, and timelines for
advancing therapeutic candidates developed using our platform. We do not plan to disclose, and historically, have not disclosed, the
development status and progress of individual therapeutic candidates of our partners. Our partners may wish to report such
information more or less frequently than we prefer or may not wish to report such information at all. In addition, if partners choose to
announce a collaboration with us or their progress, there is no guarantee that we will concurrently recognize any fees or that such
announcement will be indicative of future fees to us, as such fees are not due to us until our partner reaches certain specific activities
or clinical progress events, for example IND submissions or start of pivotal trials. The price of our common stock may decline as a
result of the public announcement of unexpected results or developments in our partnerships, or as a result of our partners withholding
such information.
Our partners may not achieve projected development and regulatory milestones and other anticipated key events in the expected
timelines or at all, or may discontinue some or all of their programs, which could have an adverse impact on our business and
could cause the price of our common stock to decline.
From time to time, we may make public statements regarding the expected timing of certain milestones and key events, as well
as regarding developments and milestones under our partnerships, to the extent that our partners have publicly disclosed such
information or permit us to make such disclosures. Certain of our partners have also made public statements regarding their
expectations for the development of programs under partnership with us and they and other partners may in the future make
additional statements about their goals and expectations for the progress of their programs and/or their partnerships with us. The
actual timing of these events and any resultant revenue to us may vary dramatically due to a number of factors such as delays or
failures in our or our current and future partners’ therapeutic discovery and development programs and the numerous uncertainties
inherent in the development of therapeutics. As a result, there can be no assurance that our partners’ current and future programs will
advance or be completed in the time frames we or they expect, or at all.
In addition, we have very little visibility into, or advance notice of, any changes in our partners’ development timelines and
expectations, which means that we may not be able to swiftly react and adapt to changed expectations related to the achievement and
payment of milestones under our agreements. If our partners fail to achieve one or more of these milestones or other key events as we
or they expect, our business could be materially adversely affected and the price of our common stock could decline.
Biopharmaceutical drug, biologics and therapeutics development is inherently uncertain, and it is possible that none of the drug,
biologic or therapeutic candidates discovered using our platform that are further developed by our partners will receive marketing
approval or become viable commercial products on a timely basis or at all.
We offer our cell engineering platform to partners who are engaged in drug, biologics and therapeutics discovery and
development. These partners include large pharmaceutical companies, biotechnology companies of all sizes and non-profit and
academic institutions. While we receive early payments generated through sales of our ExPERT instruments and PAs and recurring
revenue through the annual licenses of the ExPERT instrument to our partners, we estimate that the vast majority of the economic
value of the SPL partnerships that we enter into with our partners is in the downstream payments that are payable if certain
milestones are met or approved products are sold. As a result, our future growth is dependent on the ability of our partners to
successfully develop and commercialize therapies discovered or produced using our platform. Due to our reliance on our partners, the
risks relating to product development, regulatory authorization or approval and commercialization apply to us derivatively through
the activities of our partners. There can be no assurance that our partners will successfully develop, secure marketing approvals for
and commercialize any drug, biologic or therapeutic candidates discovered or produced with our instruments. As a result, we may not
realize the intended benefits of our partnerships. We have entered into 26 SPL partnerships resulting in a growing number of clinical
milestone payments and the first licensed program to receive regulatory marketing approval occurred in 2023.
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Due to the uncertain, time-consuming and costly clinical development and regulatory approval process, our partners may not
successfully develop any drug, biologic or therapeutic candidates with our platform, or our partners may choose to discontinue the
development of these candidates for a variety of reasons, including due to safety, risk versus benefit profile, exclusivity, competitive
landscape, manufacturing challenges, commercialization potential, production limitations or prioritization of their resources. For
product candidates of the type expected to be developed using our technology, there is the potential they could create a safety risk to
patients and can also limit product efficacy. It is possible that none of these drug, biologic or therapeutic candidates will ever receive
regulatory approval and, even if approved, such candidates may never be successfully commercialized resulting in clinical progress
milestones and commercial sales-based payments not being earned.
Regulatory authorities have substantial discretion in the review and approval process and may refuse to accept any application or
may decide that our partners’ data are insufficient to support progression to further stages of preclinical or clinical development or for
marketing approval and require additional preclinical, clinical or other studies. The number and types of preclinical studies and
clinical trials that will be required for regulatory approval also varies depending on the product candidate (including cell therapies,
for which development is inherently challenging), the disease or condition that the product candidate is designed to address, and the
regulations applicable to any particular product candidate. Application of the legal and regulatory standards for approval, and the
type and amount of clinical data and data supporting chemistry, manufacturing and control necessary to gain approval may change
during the course of a product candidate’s clinical development and may vary among jurisdictions. It is possible that any product
candidates our partners may seek to develop in the future will never obtain the appropriate, necessary regulatory approvals.
In addition, even if these drug, biologic or therapeutic candidates receive regulatory approval in the United States, our partners
may never obtain approval or commercialize them outside of the United States, which would limit their full market potential and
therefore may impact our ability to realize their potential downstream value. Furthermore, approved drugs, biologics or therapeutics
may not achieve broad market acceptance among physicians, patients, the medical community and third-party payors, in which case
revenue generated from their sales could be limited. Third-party payors may opt to implement efficacy-based payment mechanisms
over a multi-year period, which could impact potential product sales in any given year. Likewise, our partners have to make decisions
about which clinical stage and preclinical drug, biologic and therapeutic candidates to develop and advance, and our partners may not
have the resources to invest in all of the drug, biologic or therapeutic candidates that are produced using our platform, or clinical data
and other development considerations may not support the advancement of one or more drug candidates developed using our
platform. Decision-making about which drug or therapeutic candidates to prioritize involves inherent uncertainty, and our partners’
development program decision-making and resource prioritization decisions, which are outside of our control, may adversely affect
the potential value of those partnerships. Additionally, subject to its contractual obligations to us, if one or more of our partners is
involved in a business combination, the partner might deemphasize or terminate the development or commercialization of any drug,
biologic or therapeutic candidate that utilizes our platform. If one of our SPL customers terminates its agreement with us, we may
find it more difficult to attract new partners.
Our partners, and therefore our potential financial outcomes under our agreements, are also subject to inherent industry-wide
FDA and other regulatory risk. The number of new drug applications and biologics license applications approved by the FDA varies
significantly over time and if there were to be an extended reduction in the number of new drug applications and biologics license
applications approved by the FDA, the industry could contract and our business could be materially harmed. Furthermore, regulatory
agencies may introduce new submission requirements or implement new regulations for cell and gene therapies which could result in
extended timelines for our partners, creating uncertainty or delays in achieving milestones. Such delays in these milestones could
materially affect our ability to forecast and receive milestone payments outlined in our license agreements.
Our partners’ failure to effectively advance, market and sell suitable drug, biologic and therapeutic candidates developed using our
platform could have a material adverse effect on our business, financial condition, results of operations and prospects, and cause the
market price of our common stock to decline. In addition to the inherent uncertainty in development addressed above, our ability to
forecast our future revenues may be limited.
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In recent periods, we have depended on a limited number of partners for our revenue, the loss of any of which could have an
adverse impact on our business.
For the year ended December 31, 2023, two cell therapy companies with which we have entered into an SPL partnership
accounted for 39% of our total revenue, and our five largest customers accounted for an aggregate of approximately 52% of our total
revenue for the year through a combination of instrument license fees, milestones realized and processing assembly revenue. These
partnerships cover a large number of programs under contract, and therefore represent a large portion of potential downstream value.
In addition, our partnership agreements are typically terminable at will. As a result, if we fail to maintain our relationships with our
partners or if any of our partners discontinue their programs or transition to alternative cell engineering technologies, our future results
of operations could be materially and adversely affected.
An increasing portion of our revenue is derived from milestone payments from our SPL customers. Accordingly, we may be
more dependent on the success of a limited number of our customers’ programs than we would be if our revenue was derived more
broadly from many customer contracts. The loss of any of our large customers, or significant delays or discontinuations in our
customers’ programs, could have an adverse effect on our ability to generate revenue.
Our customers’ products or product candidates may cause undesirable side effects or have other properties that could delay or
prevent their regulatory approval, limit their commercial potential or result in significant negative consequences following any
potential marketing approval, which could cause our future results of operations to be materially and adversely affected.
Serious adverse events or undesirable side effects caused by our customers’ products or product candidates could cause
regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of
regulatory approval by the FDA, the European Medicines Agency or other authorities. Results of our customers’ clinical trials could
reveal a high and unacceptable severity and prevalence of side effects, toxicities or unexpected characteristics, including death.
If unacceptable side effects or deaths arise in the development of our customers’ product candidates, the Institutional Review
Boards at the institutions in which their studies are conducted, the FDA or any comparable foreign regulatory authority could suspend
or terminate our customers’ clinical trials or the FDA or other regulatory authorities could order them to cease clinical trials or deny
approval of their product candidates for any or all targeted indications. Undesirable side effects or deaths in clinical trials with our
customers’ product candidates may cause the FDA or comparable foreign regulatory authorities to place a clinical hold on the
associated clinical trials, to require additional studies or otherwise, to delay or deny approval of our customers’ product candidates
for any or all targeted indications. Treatment-related side effects could also affect patient recruitment or the ability of enrolled
patients to complete the trial or result in potential product liability claims. In addition, these side effects may not be appropriately
recognized or managed by the treating medical staff. Any of these occurrences could negatively impact the availability of capital for
the broader cell therapy development market, reduce the demand for our products and harm our business, financial condition and
prospects significantly.
We may pursue collaborations or licensing arrangements, joint ventures, strategic alliances, partnerships or other strategic
investment or arrangements, which may fail to produce anticipated benefits and adversely affect our operations.
We may pursue opportunities for collaboration, out-license, joint ventures, acquisitions of products, assets or technology,
strategic alliances or partnerships that we believe could advance our development. We may consider pursuing growth through the
acquisition of technology, assets or other businesses that may enable us to enhance our technologies and capabilities. Proposing,
negotiating and implementing these opportunities may be a lengthy and complex process. Other companies, including those with
substantially greater financial, marketing, technology or other business resources, may compete with us for these opportunities or
arrangements. We may not be able to identify, secure or complete any such transactions or arrangements in a timely manner, on a cost-
effective basis on acceptable terms or at all.
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We have limited experience with respect to these business development activities. Management and integration of a licensing
arrangement, collaboration, joint venture or other strategic arrangement may disrupt our current operations, decrease our profitability,
result in significant expenses or divert management resources that otherwise would be available for our existing business. We may
not realize the anticipated benefits of any such transaction or arrangement.
Furthermore, partners, collaborators or other parties to such transactions or arrangements may fail to fully perform their
obligations or meet our expectations or cooperate with us satisfactorily for various reasons and subject us to potential risks, including
the following:
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Partners, collaborators or other parties have significant discretion in determining the efforts and resources that they will
apply to a transaction or arrangement;
Partners, collaborators or other parties could independently develop, or develop with third parties, services and products
that compete directly or indirectly with our products or product candidates;
Partners, collaborators or other parties may stop, delay or discontinue clinical trials as well as conduct new clinical trials by
using our intellectual property or proprietary information;
Partners, collaborators or other parties may not properly maintain or defend our intellectual property rights or may use our
intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize
or invalidate our intellectual property or proprietary information or expose us to potential liabilities;
Disputes may arise between us and partners, collaborators or other parties that cause the delay or termination of the
research, development or commercialization of product candidates, or that result in costly litigation or arbitration that
diverts management’s attention and resources;
Partners, collaborators or other parties may be terminated and, if terminated, may result in a need for additional capital to
pursue further development or commercialization of the applicable services and products; and
Partners, collaborators or other parties may own or co-own intellectual properties covering our product candidates that
results from our collaborating with them, and in such cases, we may not have the exclusive right to commercialize such
intellectual properties.
Any such transactions or arrangements may also require actions, consents, approval, waiver, participation or involvement of
various degrees from third parties, such as regulators, government authorities, creditors, licensors or licensees, related individuals,
suppliers, distributors, shareholders or other stakeholders or interested parties. There is no assurance that such third parties will be
cooperative as we desire, or at all, in which case we may be unable to carry out the relevant transactions or arrangements.
We may engage in future acquisitions that could disrupt our business, cause dilution to our stockholders and harm our financial
condition and operating results.
In the future, we may acquire companies, assets or technologies in an effort to complement our existing offerings to enhance our
market position. We have not made any acquisitions to date and we currently have no arrangements or commitments with respect to
any acquisition. Should we choose to pursue an acquisition in the future, we may not be able to find suitable acquisition candidates
and we may not be able to complete acquisitions on favorable terms, if at all. Any future acquisitions we make could subject us to a
number of risks, including:
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Purchase prices we pay could significantly deplete our cash reserves, impair our future operating flexibility or result in
dilution to our existing stockholders;
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• We may find that the acquired company, assets or technology does not further improve our financial and strategic position
as planned;
• We may find that we overpaid for the company, asset or technology, or that the economic conditions underlying our
acquisition have changed;
• We may have difficulty integrating the operations and personnel of the acquired company;
• We may have difficulty retaining the employees with the technical skills needed to enhance and provide services with
respect to the acquired assets or technologies;
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Acquisitions may be viewed negatively by customers, financial markets, or investors;
• We may have difficulty incorporating the acquired technologies or products with our existing products;
• We may encounter difficulty entering and competing in new product or geographic markets;
• We may encounter a competitive response, including price competition or intellectual property litigation;
• We may have product liability, customer liability or intellectual property liability associated with the sale of the acquired
company’s products;
• We may be subject to litigation by terminated employees or third parties;
• We may incur debt and restructuring charges;
• We may acquire goodwill and other intangible assets that are subject to impairment tests, which could result in future
impairment charges;
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Our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the
complexity of managing geographically or culturally diverse enterprises; and
Our due diligence process may fail to identify significant existing issues with the target company’s product quality, product
architecture, financial disclosures, accounting practices, internal controls, legal contingencies, intellectual property and
other matters.
Acquisitions may not generate sufficient revenue to offset the associated costs of the transactions or may result in other adverse
effects, which could have a material adverse effect on our business, operating results, and financial condition. In addition,
negotiations for acquisitions, collaborations or investments that are not ultimately consummated could result in significant diversion
of management time, as well as substantial out-of-pocket costs, any of which could have a material adverse effect on our business,
operating results and financial condition.
Risks Related to the Supply and Manufacturing of Our Products
We depend on continued supply of high-quality components and raw materials for our ExPERT instruments and PAs from third-
party suppliers, and if shortages of these components or raw materials arise, we may not be able to secure enough components to
build new products to meet customer demand or we may be forced to pay higher prices for these components.
We rely on a limited number of suppliers for certain key components utilized in the assembly of our ExPERT instruments and
manufacture of our PAs and buffer, and in some cases, such as certain instrument components (e.g., CPU chips or PA electrodes), we
rely on a single supplier for a particular component, subassembly or consumable. Approximately 56% of our inventory purchased
during the year ended December 31, 2023 was purchased from one
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supplier. Although in many cases we use standard components in our products, in some cases, components may only be purchased
from a limited number of suppliers or a single supplier. Identifying and qualifying alternate sources may take time and involve
additional expense, and there is no guarantee that current suppliers or alternate sources will timely deliver materials that meet our
needs. If our customers experience a shortage or delay in delivery of our ExPERT instruments, PAs or buffers our business could be
materially and adversely impacted.
We presently do not have long-term supply contracts for these components, and none of our third-party suppliers is obligated to
supply products to us for any specific period or in any specific quantities, except as may be provided for in submitted and accepted
purchase orders. We are not a major customer of many of our suppliers, and these suppliers may therefore give other customers’
needs higher priority than ours. Our industry has experienced component shortages and delivery delays in the past, and we may
experience shortages or delays of critical components in the future as a result of strong demand in the industry, high demand in unrelated
industries such as shortages of electronic components due to digitization in the automotive industry, or other factors. Many of the
other components required to build our ExPERT instruments are also occasionally in short supply. Global supply chain constraints
during 2021 and 2022 have resulted in some of our suppliers having to prioritize certain customers. While we seek to maintain priority with
our suppliers and have not experienced significant delays to date, there can be no guarantee that we will not experience shortages as a result of
supply chain issues. In addition, geopolitical tensions, and sanctions imposed in response thereto, may create new supply chain issues or
exacerbate current supply chain challenges. If shortages or delays arise, we may not be able to timely secure enough components at
reasonable prices or of acceptable quality to build new products, resulting in an inability to meet customer demand or our own
operating goals, which could adversely affect our customer relationships, business, operating results and financial condition.
Many of the components that we use are part of the global supply chain and may be manufactured overseas. Therefore, our
access to, or ability to acquire, components may be impacted by trade disputes, geopolitical conflicts, public health emergencies, or
importation restrictions resulting from such trade disputes between governments. These events may result in increased tariffs, duties
or taxes that will increase the cost of the components and we may have to increase the price of our products, or incur an impact on our
margins, both of which can materially affect customer demand and resulting revenues.
Additionally, damage to a manufacturing facility or other property of any of our suppliers or their distribution channels due to
fire, flood or other natural disaster or casualty event may have a material adverse effect on our business, financial condition and
results of operations.
We have limited experience manufacturing our PAs and may be unable to manufacture our PAs in high-quality commercial
quantities successfully and consistently to meet demand, which could limit our growth.
We have limited experience manufacturing our products and only began to manufacture our PAs in-house in 2022. To manufacture
our PAs in the quantities that we believe will be required to meet the currently anticipated market demand, we will need to increase
manufacturing capacity, which will involve significant challenges and may require additional quality controls. We may not
successfully complete any required increase to existing manufacturing capacity in a timely manner, or at all.
If there is a disruption to our manufacturing operations or inventory management, we may have limited or no other means of
producing our products until we resolve such issues with our manufacturing facilities, develop alternative manufacturing facilities or
contract with third-party manufacturers capable of producing our products. Additionally, any damage to or destruction of our
manufacturing facilities and/or inventory or equipment may significantly impair our ability to supply PAs on a timely basis. There
may also be unforeseen occurrences that increase our costs, such as increased prices of the components of our PAs, changes to labor
costs or less favorable terms with third-party suppliers. There can be no assurance that we will not encounter such problems in the
future.
If we are unable to manufacture PAs consistently and in sufficient quantities to meet anticipated customer demand, our business,
financial condition, results of operations and prospects could be harmed. If we choose to scale the commercial production of our PA
and increase our manufacturing capacity, we may encounter quality issues that could
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result in product defects, errors or recalls. Manufacturing delays related to quality control could negatively impact our ability to bring
our PAs to market, harm our reputation and decrease our revenue. Any defects, errors or recalls could be expensive and generate
negative publicity, which could impair our ability to market or sell our products, and adversely affect our results of operations. Our
inability, or that of our suppliers, to find and retain the necessary qualified employees to achieve our manufacturing goals could also
negatively impact our ability to meet customer needs.
Historically we have sourced components for our PAs from a limited number of manufacturers and, in some cases, sole source
manufacturers. In 2022, we also began manufacturing PAs in our own facilities, however, we expect to continue to outsource a
portion of the manufacturing of PAs for the foreseeable future. With respect to our PA manufacturers, we are neither a major
customer of such manufacturers, nor do we have long-term supply contracts with them. These manufacturers may therefore give
other customers’ needs higher priority than ours, and we may not be able to obtain adequate supply in a timely manner or on
commercially reasonable terms. Qualifying new suppliers may be required from time to time and qualification can take many
months. If we were to lose one or more of our sole or single source manufacturers or suppliers, it could take significant time and
effort to qualify alternative suppliers, if available. Moreover, in the event that we transition to a new manufacturer, particularly from
any of our single source manufacturers, doing so could be time-consuming and expensive, may result in interruptions in our ability to
supply our products to the market, could affect the performance of our PAs, resulting in increased costs and negative customer
perception, and could have a material adverse effect on our business, financial condition and results of operations.
Our results of operations will be harmed if we are unable to accurately forecast customer demand for our products and manage
our inventory.
To ensure adequate supply of our instruments, PAs and other products, we must forecast the inventory needs of our current and
prospective customers and manufacture our products based on our estimates of future demand. Our ability to accurately forecast
demand for our products could be negatively affected by a number of factors, many of which are beyond our control, including our
failure to accurately manage our expansion strategy, product introductions or failures by competitors, an increase or decrease in
customer demand for our products or for products of our competitors, the availability of capital for our customers, our failure to
accurately forecast the success of our customers’ therapeutic products, market acceptance of new products, changes in general market
conditions, seasonal demands, regulatory matters or strengthening or weakening of general economic conditions.
We seek to maintain sufficient levels of inventory of our instruments and other products to protect ourselves from supply
interruptions. We rely in part on our commercial team and distributors to supply forecasts of anticipated product orders in their
respective territories. If we fail to accurately estimate customer demand for our products, our inventory forecasts may be inaccurate,
resulting in shortages or excesses of inventory. Inventory levels in excess of customer demand may result in inventory write-downs or
write-offs, which could negatively impact our business, prospects, financial condition and results of operations. Conversely, if we
underestimate customer demand for our products, we may not be able to deliver products in a timely manner or at all, and this could
result in reduced revenue and damage to our reputation and customer relationships. In addition, if we experience a significant increase
in demand, we may not have adequate manufacturing capacity to meet such demand, and additional supplies may not be available
when required on terms that are acceptable to us, or at all, or suppliers may not be able to allocate sufficient capacity in order to meet
our increased requirements, all of which could negatively affect our business, financial condition and results of operations. If we are
unable to meet customer demand, we could lose our existing customers or lose our ability to acquire new customers, which could also
negatively impact our business, financial condition and results of operations.
Risks Related to Our Product Sales
Our future success depends on our ability to develop and successfully introduce new and enhanced products that meet the needs
of our customers.
Our offerings include products such as instruments, single-use disposables and the provision of support services to our
customers with the goal of supporting the advancement of our customers’ cell-therapies and/or drug or biologic discovery activities.
We aim to provide our customers with a single, integrated platform to discover, develop and
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manufacture safer, more targeted and increasingly complex cell-based therapies, designed for integration into customers’ current good
manufacturing practices environments. We cannot guarantee that the market for our current products will continue to generate
significant or consistent demand. Demand for our current products could be significantly diminished by competitive technologies or
products that replace them or render them obsolete or less desirable. Accordingly, we must continue to invest in research and
development to develop competitive products.
Our future success depends on our ability to anticipate our customers’ needs and develop new products and enhance current
products to address those needs. Introduction of new products and product enhancements will require that we effectively transfer
production processes from research and development to manufacturing and coordinate our efforts with those of our suppliers to
achieve the desired level of production. If we fail to transfer production processes effectively, develop product enhancements or
introduce new products or enabling services in sufficient quantities to meet the needs of our customers, or effectively coordinate with
our suppliers, our sales may be reduced and our business could be harmed.
The commercial success of all of our products will depend upon their acceptance by the life science and biopharmaceutical
industries. Some of the products that we are developing are based upon new technologies or approaches. As a result, there can be no
assurance that these new products, even if successfully developed and introduced, will be accepted by customers. If customers do not
adopt our new products, services and technologies, our results of operations may suffer and, as a result, the market price of our
common stock may decline.
Many of our customers have limited resources and to the extent they limit development to a smaller number of product candidates
or discontinue development of product candidates using our platform, our product sales would be negatively impacted.
Many of our customers are early-stage biopharmaceutical and biotechnology with limited financial resources. These customers
necessarily are selective with respect to which product candidates they select for development and advance through clinical trials.
During 2023 we observed customers, particularly early-stage customers, reprioritize their spending and operations to focus on lead
product candidates rather than secondary or tertiary programs. To the extent that our customers limit development and clinical
advancement to a smaller group of product candidates, our opportunities to support them with our platform are reduced. As a result
of limited financial resources, our customers may also discontinue development of product candidates. To the extent that any of
these product candidates are supported by our platform, our product sales would be negatively impacted.
If we are unable to successfully develop new products, adapt to rapid and significant technological change, respond to
introductions of new products by competitors, make strategic and operational decisions to prioritize certain markets, technology
offerings or partnerships, and develop and capitalize on markets, technologies or partnerships, our business could suffer.
We currently sell and license our products primarily in the cell therapy market, which is characterized by significant enhancements
and evolving industry and regulatory standards and a high degree of regulatory scrutiny. As a result, our customers’ needs are rapidly
evolving. If we do not appropriately innovate and offer our customers comprehensive solutions and otherwise invest in new
technologies, our offerings may become less desirable in the markets we serve, and our customers could move to new technologies
offered by our competitors or make products themselves. Without the timely introduction of new instruments, single-use disposables
software, services, enhancements and new product integrations with electroporation, our offerings may become less competitive over
time, in which case our competitive position and operating results could suffer. Accordingly, we focus significant efforts and
resources on the development and identification of new products and applications to further drive adoption of our platform. To the
extent we fail to timely introduce new and innovative products, offer enhancements to our existing products, adequately predict our
customers’ needs or fail to obtain desired levels of market acceptance, our business may suffer and our operating results could be
adversely affected.
We believe our products have potential applications across a wide range of markets and we have targeted certain markets in
which we believe our technology has significant advantages, or for which we believe we have a higher
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probability of success or significant revenue opportunity. For example, we are committed to developing our platform’s applications
within the life sciences and biotechnology markets, including research, discovery, development, and manufacturing of next-generation
autologous and allogeneic cell-based therapeutics, as well as drug or biologic discovery, including protein production for biological
therapeutics, viral vectors, vaccines and for the discovery of small molecule drugs. We seek to maintain a process of prioritization
and resource allocation among our programs to maintain a balance between advancing near-term opportunities and exploring
additional markets and uses for our technology. However, due to the significant resources required for the development of applications
data for our products or services for new markets, we must make decisions on which markets to pursue and the amount of resources
to allocate to each. Our decisions concerning the allocation of research, development, collaboration, management and financial
resources toward particular markets, products or services may not lead to the development of any viable products or services and may
divert resources away from better opportunities. Similarly, our potential decisions to delay, terminate or collaborate with third parties
in respect of certain markets may subsequently also prove to be suboptimal and could cause us to miss valuable opportunities. In
particular, if we are unable to successfully achieve on-going adoption of our electroporation platform technology, it could slow or
stop our business growth and negatively impact our business, financial condition, results of operations and prospects.
New product development involves a lengthy and complex process and we may be unable to develop or commercialize products on
a timely basis, or at all.
Products from our research and development programs will take time and considerable resources to develop, and may include
improvements or changes to our current products, and we may not be able to complete development and commercialization of new or
enhanced products on a timely basis, or at all. There can be no assurance that our research and development efforts will produce
commercially viable products and solutions and before we can commercialize any new products, we will need to expend significant
funds in order to, for example:
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conduct substantial research and development;
in some cases, obtain necessary regulatory clearance or approval;
further develop and scale our laboratory, engineering and manufacturing processes to accommodate different products;
source and enter into agreements with new suppliers and manufacturers; and
further develop and scale our infrastructure.
Our product development processes involve a high degree of risk, and these efforts may be delayed or fail for many reasons,
including failure of the product to perform as expected and failure to reliably demonstrate the advantages of the product.
Even if we are successful in developing new products, it will require us to make significant additional investments in marketing
and selling resources to commercialize any such products. As a result, we may be unsuccessful in commercializing new products that
we develop, which could adversely affect our business, financial condition, results of operations and prospects.
Our systems are complex in design and may contain defects that are not detected until deployed by our customers, which could
harm our reputation, increase our costs and reduce our sales. If our products do not perform as expected or the reliability of the
technology on which our products are based is questioned, our operating results, reputation and business will suffer.
Our success depends on our ability to provide reliable, high-quality products that enable high performance cell engineering
through flexible, efficient and cost-effective solutions. Our systems are complex in design and involve a highly complex and precise
manufacturing process. As a result of the technological complexity of our systems, changes
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in our suppliers’ manufacturing processes or the inadvertent use of defective materials by us or our suppliers could result in a product
recall, or an adverse effect on our ability to achieve acceptable manufacturing quality and product reliability. To the extent that we do
not achieve and maintain our projected quality or product reliability, our reputation, business, operating results, financial condition
and customer relationships could be adversely affected.
Our customers may discover defects in our products after the products have been fully installed and operated. In addition, some
of our products include components from other vendors, which may contain defects. As a result, should problems occur, it may be
difficult to identify the source of the problem. If we are unable to identify and fix defects or other problems, we could experience,
among other things:
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product recalls and replacement costs;
loss of customers or orders;
damage to our brand reputation;
failure to attract new customers;
diversion of development, engineering and manufacturing resources;
regulatory actions by governmental authorities; and
legal actions by our customers.
We believe that customers in our target markets are likely to be particularly sensitive to product defects and errors. Our
reputation and the image of our products, services and technologies in our target markets may be impaired if our products or services
fail to perform as expected. If our products do not perform, or are perceived to not have performed, as expected or favorably in
comparison to competitive products, our operating results, reputation and business will suffer, and we may also be subject to legal
claims arising from product limitations, errors, or inaccuracies. Any of the foregoing could have an adverse effect on our business,
financial condition and results of operations.
Although our products are tested in accordance with industry standards prior to shipment, defects or errors could nonetheless
occur. For example, our instruments or PAs could fail or our partners could use our technology improperly and blame a failure on our
systems, resulting in customer complaints and significant resources dedicated to finding the cause of the failure and/or developing a
solution. Our operating results depend on our ability to execute and, when necessary, improve our quality management strategy and
systems and our ability to effectively train and maintain our employees with respect to quality management. A failure of our quality
control systems could result in problems with facility operations or preparation or provision of products. In each case, such problems
could arise for a variety of reasons, including equipment malfunction, failure to follow specific protocols and procedures, problems
with raw materials or environmental factors and damage to, or loss of, manufacturing operations.
We provide a standard one-year warranty on sold instruments. Existing and future warranties place us at the risk of incurring
future repair and/or replacement costs. Since a large portion of our revenue is derived from sales of our PAs, which can only be used
when our instruments are functioning, if our instruments fail to function and our customers choose to use alternative cell engineering
methods our financial condition and results of operations could suffer. In addition, even after any underlying concerns or problems are
resolved, any lingering concerns in our target markets regarding our technology or any manufacturing defects or performance errors,
either actual or simply perceived, in our products or services could continue to result in lost revenue, delayed market acceptance,
damage to our reputation and claims against us.
If we are unable to successfully expand our commercial operations, including hiring additional qualified sales representatives,
application scientists, engineers, scientific personnel and customer support staff, our business may be adversely affected.
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Our sales will depend, in large part, on our ability to develop and substantially expand our sales and applications scientist
infrastructure, particularly as we enter into new markets, rollout new products and platforms and manage inbound interest from new
customers. We sell our products through our direct sales force and field application scientists located in North America, the United
Kingdom and Europe, and have field application scientists located in the Asia-Pacific region where sales are currently managed by
distributors. Our sales and marketing efforts are targeted at pharmaceutical and biotechnology companies and academic institutions
focused on cell engineering and drug or biologic discovery. To continue driving adoption of our products and to support our global
brand, we will need to further expand our field sales and application scientist infrastructure by hiring additional, highly qualified
sales representatives, field application scientists, engineers and scientific personnel and customer support staff, in addition to
increasing our marketing efforts.
Identifying and recruiting qualified personnel globally with sufficient industry experience and training them requires significant
time, expense and attention. If we provide inadequate training, fail to increase our sales and marketing capabilities or fail to develop
broad brand awareness in our target markets in a cost-effective manner, our business may be harmed. In addition, if our efforts to
expand do not generate a corresponding increase in revenue or result in a decrease in our operating margin, our financial results will be
adversely impacted. If we are unable to hire, develop and retain talented sales personnel or if new sales personnel are unable to
achieve desired productivity levels in a reasonable period of time, we may not be able to realize the expected benefits of this
investment or increase our revenue.
Additionally, our highly specialized application scientists and scientific personnel work closely with researchers, clinicians and
current and prospective customers to optimize and implement cell engineering methods, processes and applications to meet their specific
needs. Hiring these highly skilled application scientists and scientific personnel is competitive due to the limited number of people
available with the necessary scientific and technical backgrounds and ability to understand our products at a technical level, and
training such individuals requires significant time, expense and attention. Furthermore, we face intense competition in the labor
market for such highly skilled specialists from competitors in our industry, our customers and companies in other industries,
particularly because of the recent rapid growth in the cell therapy field. To effectively support current and potential customers, we
will need to hire, maintain, train and grow globally the number of our applications scientists and add to our customer support staff. If
we are unable to maintain, attract, train or retain the number of qualified support personnel that our business needs, our business and
prospects may suffer.
If we are unable to expand or leverage the number of peer-reviewed articles published using data generated through the use
of our products or otherwise increase brand awareness in our target markets, the demand for our products and our business may
be adversely affected.
We rely on a significant base of peer-reviewed publications to showcase and validate the application of our technology in
academic and clinical research settings. To date, there have been multiple peer-reviewed articles published, including in prominent
journals, using data generated through the use of our technology across a wide range of key scientific research areas, including
research, discovery, development and manufacturing of next-generation, cell-based therapeutics, as well as drug and biologic
discovery including protein production for biological therapeutics, viral vectors, vaccines and small molecule discovery. We believe
that expanding the number and breadth of these publications, and otherwise developing and maintaining awareness of our brand in
our target markets in a cost-effective, manner is critical to achieving broad acceptance of our products and attracting new customers.
Such publications and other brand promotion activities may not generate customer awareness or increase revenue and, even if they
do, any increase in revenue may not offset the costs and expenses we incur in building our brand. If we fail to successfully promote,
maintain and protect our brand, we may fail to attract or retain the customers necessary to realize a sufficient return on our brand-
building efforts, or to achieve the reputation and widespread brand awareness that is critical for broad customer adoption of our
products.
Risks Related to Our Regulatory Environment and Our Industry
Our FDA Master File, and equivalent Master and Technical Files in foreign jurisdictions, are an important part of our strategic
offering which allows our partners to expedite their cellular therapies or other biologics into and
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through clinical development. Delays in filing or obtaining (as applicable in each jurisdiction), or our inability to obtain or
retain, acceptance of such filings in individual countries could negatively impact the progress of our partners if they intend to run
clinical trials in such countries, and as a result, could negatively affect our reputation and revenues or require disclosure of
confidential information to our partners. Further, changes that we are required to make from time to time, or changes to
regulations or negative data or adverse events for our partners, could impact references to our FDA Master File and Master and
Technical Files by our partners.
Providing our customers with an established regulatory path for use of our technology in the development of their therapeutics is
an important value we provide to our customers. We have established and maintained FDA Master Files and equivalent Master and
Technical Files in certain other countries to provide that regulatory path. We may be unable in a timely manner, or at all, to provide
similar filings in all countries where our customers desire to perform clinical trials, and regulators may refuse to accept such filings
or may change their approach to such filings in a manner that weakens our ability to support our customers. If regulators at any point
find that such filings have not been sufficiently maintained or are insufficient to support clinical trials or product approvals, as a
result we may need to disclose confidential information to our partners to allow them to include such information in their filings.
In addition, while we believe our FDA Master Files and equivalent Master and Technical Files have the potential to create
certain efficiencies and reduce certain regulatory development risks for our customers, there is no guarantee that referencing our FDA
Master File or Master and Technical Files, as applicable, will result in success in customers’ submissions seeking authorization for
clinical trials or marketing authorization. We cannot be certain that the FDA or foreign regulators will not require audits of and
information on our ExPERT systems used in clinical development as our partners advance their cellular therapies from preclinical
through clinical development toward marketing approval. Such additional information requests and audits of our facilities could
result in delays in the development and potential regulatory approval of our partners’ cellular therapy product candidates, affecting
timing of milestone payments and our future ability to enter into new SPL agreements. Failure to adequately respond to any such
regulatory requests could result in the regulator preventing our electroporation system from being utilized for a partner’s cellular
therapy. This could result in our partners not utilizing our ExPERT system for their other clinical programs and negatively impact our
ability to enter into partnership agreements with other cellular therapy developers.
Changes in tariffs or other government trade policies may materially adversely affect our business and results of operations,
including by reducing demand for our products.
The imposition of tariffs and trade restrictions as a result of international trade disputes or changes in trade policies may
adversely affect our sales and profitability. For example, in recent years, the U.S. government imposed and proposed, among other
actions, new or higher tariffs on specified imported products originating from China in response to what it characterized as unfair
trade practices, and China responded by imposing and proposing new or higher tariffs on specified U.S. products. There can be no
assurance that a broader trade agreement will be successfully negotiated between the United States and China to reduce or eliminate
these tariffs. These tariffs, and the related geopolitical uncertainty between the United States and China, may cause decreased
demand for our products or increase cost of components used in our products, which could have a material adverse effect on our
business and results of operations. For example, certain of our foreign customers may respond to the imposition of tariffs or threat of
tariffs on products we produce by delaying purchase orders or purchasing products from our competitors. Ongoing international trade
disputes and changes in trade policies could also impact economic activity and lead to a general contraction of customer demand. In
addition, tariffs on components that we may import from China or other nations will adversely affect our profitability unless we are
able to exclude such components from the tariffs or we raise prices for our products, which may result in our products becoming less
attractive relative to products offered by our competitors. Future actions or escalations by either the United States or China that affect
trade relations may also negatively affect our business, or that of our suppliers or customers, and we cannot provide any assurances as
to whether such actions will occur or the form that they may take. To the extent that our sales or profitability are negatively affected
by any such tariffs or other trade actions, our business and results of operations may be materially adversely affected.
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We are subject to governmental export controls that could impair our ability to compete in international markets due to licensing
requirements and subject us to liability if we are not in compliance with applicable laws.
Exports of our products are subject to export controls and sanctions laws and regulations imposed by the U.S. government and
administered by the U.S. Departments of State, Commerce and Treasury. U.S. export control laws may require a license or other
authorization to export products to certain destinations and end users. In addition, U.S. economic sanctions laws include restrictions or
prohibitions on the sale or supply of certain products to U.S. embargoed or sanctioned countries, governments, persons and entities.
Obtaining export licenses can be difficult, costly and time-consuming and we may not always be successful in obtaining necessary
export licenses, and our failure to obtain required export approval for our products or limitations on our ability to export or sell our
products imposed by export control or sanctions laws may harm our revenues and adversely affect our business, financial condition,
and results of operations. Noncompliance with these laws could have negative consequences, including government investigations,
penalties and reputational harm.
We are subject to stringent and changing U.S. and foreign laws, regulations, rules, contractual obligations, policies and other
obligations related to data privacy and security. Our actual or perceived failure to comply with such obligations could lead to
adverse business consequences.
In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect,
secure, dispose of, transmit, and share (collectively, process) personal information and other sensitive information, including
proprietary and confidential business data, trade secrets, intellectual property, data previously collected about clinical trial
participants, and sensitive third-party data collected under confidentiality agreements with our customers and potential customers,
including scientific plans (collectively, sensitive information). Our data processing activities subject us to numerous data privacy and
security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security
policies, contractual requirements, and other obligations that govern the processing of personal information in the jurisdictions in
which we operate.
In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data
breach notification laws, personal information privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade
Commission Act), and other similar laws (e.g., wiretapping laws). For example, the Health Insurance Portability and Accountability
Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”),
imposes specific requirements relating to the privacy, security, and transmission of individually identifiable health information. In
addition, the California Consumer Privacy Act (“CCPA”) applies to personal information of consumers, business representatives, and
employees, and requires businesses to provide specific disclosures in privacy notices and honor requests of California residents to
exercise certain rights related to their personal information. The CCPA allows for statutory fines for noncompliance (up to $7,500 per
violation) and allows private litigants affected by certain data breaches to recover significant statutory damages. Although the CCPA
exempts some data processed in the context of clinical trials, the CCPA increases compliance costs and potential liability with respect
to other personal information we maintain about California residents. In addition, the CPRA, expanded the CCPA’s requirements,
including by adding a new right for individuals to correct their personal information and establishing a new regulatory agency, the
California Privacy Protection Agency, to implement and enforce the law, which could increase the risk of enforcement. Other states,
such as Virginia, Colorado, Connecticut and Utah, have enacted comprehensive data privacy laws, and similar laws have been
proposed in several other states, as well as at the federal, state, and local levels — while some of these also exempt data processed in
the context of clinical trials, these data privacy laws could nonetheless further complicate compliance efforts.
Outside the United States, an increasing number of laws, regulations, and industry standards apply to data privacy and security.
For example, the EU General Data Protection Regulation (the “EU GDPR”), the UK GDPR (the “UK GDPR”), and China’s Personal
Information Protection Law (“PIPL”) impose strict requirements for processing personal information. Under the EU GDPR and UK
GDPR, government regulators may impose temporary or definitive bans on data processing and other corrective actions; fines of up
to €20 million (£17.5 million under the UK GDPR) or up to 4% of the total worldwide annual turnover of the preceding financial
year, whichever is higher; or private litigation related to the processing of personal information brought by classes of data subjects or
consumer protection organizations
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authorized at law to represent their incidents. Furthermore, the EU GDPR provides that EEA Member States may introduce specific
requirements related to the processing of “special categories of personal data,” including personal information related to health and
genetic information, which we may process in connection with clinical trials or otherwise. In the United Kingdom, the UK Data
Protection Act 2018 complements the UK GDPR in this regard. This fact may lead to greater divergence on the law that applies to
the processing of such personal information across the EEA and/or United Kingdom, which may increase our costs and overall
compliance risk. We also target customers in Asia and have operations, distributors, contractors or employees located or active in
Asian countries including, but not limited to China, Japan, Australia, and South Korea and are subject to new and emerging data
privacy regimes in Asia, including China’s Personal Information Protection Law, Japan’s Act on the Protection of Personal
Information, and Singapore’s Personal Data Protection Act.
In the ordinary course of business, we may transfer personal information from Europe and other jurisdictions to the United
States or other countries. Europe and other jurisdictions have enacted data localization laws and cross-border personal information
transfer laws. For example, the EEA and the United Kingdom have significantly restricted the transfers of personal information, to
the United States and other countries whose privacy laws they believe are inadequate. Although there are currently various
mechanisms that may be used to legally transfer personal information from the EEA and United Kingdom to the United States, such
as the EEA and United Kingdom’s standard contractual clauses, these mechanisms are subject to potential legal challenges and there
exists some uncertainty regarding whether the standard contractual clauses will remain a valid, reliable mechanism for lawfully
transferring personal information to the United States. If we are unable to implement a valid solution for cross-border data transfers,
or if the requirements for a legally-compliant transfer are too onerous, we may face significant adverse consequences, including
limitations on our ability to collaborate with partners as well as other service providers, contractors and other companies in Europe;
the need to increase our processing capabilities within Europe at significant expense or otherwise change the geographical location or
segregation of our relevant systems and operations, and increased exposure to regulatory actions, substantial fines and penalties, and
injunctions against our processing or transferring of personal information necessary to operate our business —any or all of which
could adversely affect our operations or financial results. Additionally, companies that transfer personal information out of the EEA
and United Kingdom to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators,
individual litigants, and activist groups. Some European regulators have ordered certain companies to suspend or permanently cease
certain transfers out of Europe for allegedly violating the EU and UK GDPR’s cross-border data transfer limitations. Furthermore,
other countries outside of Europe have enacted or are considering enacting similar cross-border data transfer restrictions and laws
requiring local data residency, which could increase the cost and complexity of delivering our services and operating our business.
In addition to data privacy and security laws, we are contractually subject to industry standards adopted by industry groups and
may become subject to such obligations in the future. We are also bound by contractual obligations related to data privacy and
security, and our efforts to comply with such obligations may not be successful. For example, certain privacy laws, such as the EU
and UK GDPR and the CCPA, require us to impose specific contractual restrictions on our service providers. We publish privacy
policies, marketing materials and other statements regarding data privacy and security. If these policies, materials or statements are
found to be deficient, lacking in transparency, deceptive, unfair, or misrepresentative of our practices, we may be subject to
investigation, enforcement actions by regulators or other adverse consequences.
Our obligations related to data privacy and security are quickly changing, becoming increasingly stringent, and creating
regulatory uncertainty. Additionally, these obligations may be subject to differing applications and interpretations, which may be
inconsistent or conflict among jurisdictions. Preparing for and complying with these obligations requires us to devote significant
resources (including, without limitation, financial and time-related resources), which could distract management or divert resources
from other initiatives and projects, interrupt or delay our development activities, or necessitate changes to our information
technologies, systems, and practices and to those of any third parties that process personal information on our behalf. In addition,
these obligations may require us to change our business model. Although we endeavor to comply with all applicable data privacy and
security obligations, we may at times fail (or be perceived to have failed) to do so. Moreover, despite our efforts, our personnel or
third parties upon whom we rely may fail to comply with such obligations, which could negatively impact our business operations
and compliance posture. If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with
applicable data privacy and security obligations, we could face significant consequences, including but not limited
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to: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar); litigation (including class-
related claims);additional reporting requirements and/or oversight; temporary or permanent bans on all or some processing of
personal information; orders to destroy or not use personal information; and imprisonment of company officials.
Further, individuals or other relevant stakeholders could bring a variety of claims against us for our actual or perceived failure to
comply with all applicable data privacy and security obligations. Any of these events could have a material adverse effect on our
reputation, business or financial condition, including but not limited to: loss of actual or prospective customers, collaborators or
partners; interruptions or stoppages in our business operations; inability to process personal information or to operate in certain
jurisdictions; limited ability to develop or commercialize our products; expenditure of time and resources to defend any claim or
inquiry; adverse publicity; or revision or restructuring of our business model or operations.
We are subject to U.S. and certain foreign anti-corruption and anti-money laundering laws and regulations. We can face criminal
liability and other serious consequences for violations, which can harm our business.
We are subject to anti-corruption and anti-money laundering laws and regulations, including the FCPA, the U.S. domestic bribery
statute contained in 18 U.S.C.§ 201, the U.S. Travel Act, the USA PATRIOT Act, and other state and national anti-bribery and anti-
money laundering laws in the countries in which we conduct or may in the future conduct activities. Anti-corruption laws are
interpreted broadly and prohibit companies and their employees, agents, contractors and other third-party collaborators from
authorizing, promising, offering, providing, soliciting or receiving, directly or indirectly, improper payments or anything else of value
to or from persons in the public or private sector. The FCPA also requires public companies to make and keep books and records that
accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate system of internal accounting
controls.
In addition to selling our products internationally directly through our sales teams, we currently engage third parties outside of
the United States and may engage additional third parties outside of the United States, to sell our products internationally and to
obtain necessary permits, licenses, patent registrations and other regulatory approvals. We have direct or indirect interactions with
officials and employees of government agencies or government-affiliated hospitals, universities and other organizations. We can be
held liable for the corrupt or other illegal activities of our employees, agents, contractors and other third-party collaborators, even if
we do not explicitly authorize or have actual knowledge of such activities. Any violations of the laws and regulations described
above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges,
debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other consequences.
Our customers who use our platform and may be exposed to broadly applicable U.S. federal and state healthcare laws and
regulations, including those relating to kickbacks and false claims, transparency, and health information privacy and security law.
Failure to comply with such laws and regulations may result in substantial penalties.
Our customers who use our platform and we, if we develop a product, may be subject to broadly applicable healthcare laws and
regulations that may constrain the business or financial arrangements and relationships through which we research, market, sell, and
distribute our products. Such laws include federal and state anti-kickback laws, false claims laws, transparency laws, and health
information privacy and security laws.
Violations of such laws may result in substantial criminal, civil and administrative penalties, including imprisonment, exclusion
from participation in federal healthcare programs, such as Medicare and Medicaid, and significant fines, monetary penalties,
forfeiture, disgorgement and damages, contractual damages, reputational harm, administrative burdens, diminished profits and future
earnings and the curtailment or restructuring of operations.
Additionally, in the United States and some foreign jurisdictions there have been, and continue to be, several legislative and
regulatory changes and proposed reforms of the healthcare system in an effort to contain costs, improve quality and expand access to
care, including the proposed modification to some of the aforementioned laws. In the United States, there have been and continue to
be a number of healthcare-related legislative initiatives that have
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significantly affected the healthcare industry. These reform initiatives may, among other things, result in modifications to the
aforementioned laws and/or the implementation of new laws affecting the healthcare industry. Similarly, a significant trend in the
healthcare industry is cost containment. Third-party payors have attempted to control costs by limiting coverage and the amount of
reimbursement for particular medications. Our customers and collaborators’ ability to commercialize their products successfully, will
depend in part on the extent to which coverage and adequate reimbursement for these products and will be available from third-party
payors. As such, cost containment reform efforts may result in an adverse effect on our operations.
Our business is subject to environmental regulation and regulations relating to the protection of health and safety matters that
could result in compliance costs. Any violation or liability under environmental laws or health and safety regulations could harm
our business.
We are subject to environmental and safety laws and regulations governing the use, storage and disposal of hazardous substances
or wastes and imposing liability for the cleanup of contamination from these substances. We handle hazardous substances in our
manufacturing processes, and we could be liable for any improper use, storage, or disposal of such substances. We cannot completely
eliminate the risk of contamination or injury from hazardous substances or waste, and, in the event of such an incident, we could be
held liable for any resulting damages. In addition, we may be required to incur significant additional costs to comply with
environmental laws and regulations in the future.
The Occupational Safety and Health Act of 1970 (“OSHA”), establishes certain employer responsibilities, including
maintenance of a workplace free of recognized hazards likely to cause death or serious injury, compliance with standards
promulgated by the Occupational Safety and Health Administration and various record keeping, disclosure and procedural
requirements. Various OSHA standards may apply to our operations. We have incurred, and will continue to incur, capital and operating
expenditures and other costs in the ordinary course of our business in complying with OSHA and other state and local laws and
regulations.
The failure to comply with these regulations could result in fines by government authorities and payment of damages to private
litigants, which could harm our business.
Risks Related to Our Financial Position and Capital Requirements
We may need additional funding and may be unable to raise capital when needed, which could force us to delay, reduce, eliminate
or abandon our commercialization efforts or product development programs.
We cannot be certain that our anticipated cash flow from operations will be sufficient to meet all of our cash requirements or our
growth plan. We intend to continue to make investments to support our business growth and may require additional funds to:
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expand the commercialization of our products and execute on our growth strategy;
fund our operations and product development;
finance the expansion into new international markets;
expand our manufacturing capabilities;
defend, in litigation or otherwise, any claims that we infringe, misappropriate or otherwise violate third-party patents or
other intellectual property rights;
commercialize our new products; and
acquire companies and in-license products or intellectual property.
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We believe our existing cash balances and cash receipts generated from sales of our products will be sufficient to meet our
anticipated cash requirements for the foreseeable future. However, we may need additional funding sooner than expected and our
business and future funding requirements can change unpredictably due to a variety of factors, including acquisitions, which could
affect our funding needs or cash flows from operations. We may be unable to raise additional funds in a timely manner or on terms
that are acceptable to us. If we do not have, or are not able to obtain, sufficient funds, we may have to delay the further development or
commercialization of our products. We also may have to reduce marketing, customer support or other resources devoted to our
products.
Our results of operations and liquidity needs could be materially and adversely affected by market fluctuations, an economic
downturn, inflation, increases in interest rates and other macroeconomic conditions.
Our results of operations and liquidity could be materially and adversely affected by economic conditions generally, both in the
United States and elsewhere around the world. Domestic and international equity and debt markets experienced in 2022 and 2023,
and may continue to experience, heightened volatility and turmoil, including, among other things, severely diminished liquidity and
credit availability, declines in consumer confidence, declines in economic growth, supply chain shortages, increases in inflation rates,
higher interest rates and uncertainty about economic stability. The Federal Reserve raised interest rates multiple times in response to
concerns about inflation and it may raise them again. Higher interest rates, coupled with reduced government spending and volatility
in financial markets may increase economic uncertainty and affect consumer or business spending. In the event the markets continue
to remain volatile, our results of operations and liquidity could be adversely affected by those factors in many ways, including
making it more difficult or costly for us to raise funds if necessary, and our stock price may decline. Increased inflation rates can
adversely affect us by increasing our costs, including labor and employee benefit costs. In addition, we maintain significant amounts
of cash and cash equivalents at one or more financial institutions, some of which may not be federally insured. If economic instability
were to occur, we cannot be certain that we would not experience losses on these cash and cash equivalents.
In addition, our available cash and cash equivalents are held in accounts managed by third party financial institutions and
consist of cash in our operating accounts and cash invested in money market funds. At any point in time, the funds in our operating
accounts may exceed the Federal Deposit Insurance Corporation insurance limits. While we monitor the cash balances in our
operating accounts and adjust the cash balances as appropriate, these cash balances could be impacted if the underlying financial
institutions fail. To date, we have experienced no material loss or material lack of access to cash in our operating accounts or our
invested cash or cash equivalents; however, we can provide no assurances that access to our operating cash or invested cash and cash
equivalents will not be impacted by adverse conditions in the financial markets.
Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause
our operating results to fall below expectations or any guidance we may provide.
Our quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our future
operating results. These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but
not limited to the:
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level of demand for any of our products, which may vary significantly;
timing and cost of, and level of investment in, research, development, manufacturing, regulatory approval and
commercialization activities for partners relating to our products, which may change from time to time;
size, seasonality and customer mix of the cell engineering market;
start, milestone attainment and completion of programs in which our platform is utilized;
sales and marketing efforts and expenses we incur;
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rate at which we grow our sales force and the speed at which newly-hired salespeople become effective; changes in the
productivity of our sales force;
positive or negative coverage in the media or publications of our products or competitive products;
cost of manufacturing our products, which may vary depending on the quantity of production and the terms of our
arrangements with our suppliers;
degree of competition in our industry and any change in the competitive landscape of our industry, including the
introduction of new products or enhancements or technologies by us or others in the cell engineering market and
competition-related pricing pressures;
changes in governmental regulations or in the status of regulatory approvals or applications;
future accounting pronouncements or changes in our accounting policies;
disruptions to our business and operations or to the business and operations of our suppliers, distributors, and other third
parties with whom we conduct business resulting from the COVID-19 public health emergency or other widespread public
health emergencies;
future global financial crises and economic downturns, including those caused by widespread public health emergencies or
geopolitical conflicts; and
general market conditions and other factors, including factors unrelated to our operating performance or the operating
performance of our competitors.
The cumulative effects of the factors discussed above could result in large fluctuations and unpredictability in our quarterly and
annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. Investors
should not rely on our past results as an indication of our future performance. This variability and unpredictability could also result in
our failing to meet the expectations of industry or financial analysts or investors for any period. If our revenue or operating results fall
below the expectations of analysts or investors or below any guidance we may provide, or if the guidance we provide is below the
expectations of analysts or investors, the price of our common stock could decline substantially. Such a stock price decline could
occur even when we have met any previously publicly stated guidance we may provide.
Our ability to use our net operating losses, business tax credits and similar tax attributes to offset future taxable income or taxes
may be subject to certain limitations.
As of December 31, 2023, we had U.S. federal and state net operating loss carryforwards of $88.9 million. Under current law,
U.S. federal net operating losses incurred in tax years beginning after December 31, 2017, may be carried forward indefinitely, but the
deductibility of such federal net operating losses in tax years beginning after December 31, 2020 is limited to 80% of taxable income.
It is uncertain if and to what extent various states will conform to federal tax laws. In addition, under Sections 382 and 383 of the
Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership
change,” which generally is defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the
corporation’s ability to use its pre-change net operating loss and tax credit carryforwards to offset its post-change income or taxes
may be limited. We previously experienced an ownership change and we may experience additional ownership changes in the future
as a result of subsequent shifts in our stock ownership, some of which may be outside of our control. If an ownership change occurs
and our ability to use our net operating loss carryforwards is materially limited, it could harm our future operating results by
effectively increasing our future tax obligations. Similar provisions of state law also may apply to limit the use of our state net
operating loss carryforwards. In addition, at the state level, there may be periods during which the use of net operating losses is
suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
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Risks Related to Our Operations
A pandemic, epidemic, outbreak of an infectious disease or other public health emergency in the United States or worldwide could
adversely affect our business and the businesses of our partners.
If a pandemic, epidemic, outbreak of an infectious disease, or other public health emergency occurs in the United States or
worldwide, our business may be adversely affected, by, among other things, disruptions to the research and development activities of
our customers, disruptions to the development of our collaboration partners’ product candidates, disruptions to our ability to enter
into new collaborations with potential partners in a timely manner, disruptions in the operations of our third-party manufacturing
organizations upon whom we rely for the production and supply of our products, and other disruptions to our operations. In response
to COVID-19 in 2020, we temporarily closed our headquarters and other offices, and our employees and contractors who were able
to perform their duties remotely continue to do so. We also implemented travel restrictions and other significant changes in how we
operate our business. The operations of our partners and customers were likewise altered. Potential implications of future public
health emergencies may include:
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our customer prospects and our existing customers may experience slowdowns in their businesses, and our academic
institution customers may experience decreases in government funding of research and development, which in turn may
result in reduced demand for our products, lengthening of sales cycles, loss of customers, difficulties in collections, and
inaccurate inventory forecasting;
limitations on our business operations by local, state, provincial and/or federal governments that could impact our ability to
sell products to customers, and visit customers for process optimization of their cellular therapies;
delays in negotiations with partners and potential partners;
interruption of or delays in receiving supplies from the third parties we rely on to manufacture components to our products,
which may impair our ability to sell our products;
interruption of or delays in installation of our products for our customers and partners;
interruption of or delays in the shipments of purchased products to customers or to our distribution partners;
decreased employee productivity and morale, with increased employee attrition and risk of a cyberattack resulting from our
employees working from home;
disruptions and significant costs to our growth planning, such as for facilities and international expansion;
costs in fully returning to work from our facilities around the world, including changes to the workplace, such as space
planning, food service and amenities;
legal liability for safe workplace claims;
loss of critical vendors or third-party partners, which may go out of business; and
continued cancellation of in-person marketing events, including industry conferences, and prolonged delays in our ability to
reschedule or conduct in-person marketing events and other sales and marketing activities.
The impact of any of the foregoing, individually or collectively, could adversely affect our business, financial condition, and
results of operations.
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If our information technology systems, or those of third parties upon which we rely, or our data, are or were compromised, we
could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or
actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss
of customers or sales; and other adverse consequences.
We rely to a large extent upon sophisticated information technology systems to operate our business. In the ordinary course of business, we
process personal information (such as health-related data), and other sensitive information, including proprietary and confidential business data,
trade secrets, intellectual property, data previously collected about clinical trial participants, and sensitive third-party data collected under
confidentiality agreements with our customers and potential customers, including scientific plans.
Cyber-attacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity,
and availability of our sensitive information and information technology systems, and those of the third parties upon which we rely. Such threats
are prevalent and continue to increase, are becoming increasingly difficult to detect, and come from a variety of sources, including traditional
computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated
nation-states, and nation-state-supported actors. Some actors now engage and are expected to continue to engage in cyber-attacks including
without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities. During times of
war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks, including
retaliatory cyberattacks that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our
goods. These risks, as well as the number and frequency of cybersecurity events globally, may also be heightened during times of geopolitical
tension or instability between countries, including, for example, the ongoing armed conflict between Russia and Ukraine, from which a number
of cybersecurity events have been alleged to have originated.
We and the third parties upon which we rely are subject to a variety of evolving threats, including but not limited to, malicious code (such
as viruses and worms), personnel misconduct or error, malware (including as a result of advanced persistent threat intrusions), ransomware
attacks, denial-of-service attacks (such as credential stuffing), credential harvesting, social-engineering attacks (including through phishing
attacks), ransomware attacks, supply-chain attacks, personnel misconduct or error, software bugs, server malfunctions, software or hardware
failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar
threats. In particular, severe ransomware attacks, including those perpetrated by organized criminal threat actors, nation-states, and nation-state-
supported actors, are becoming increasingly prevalent and can lead to significant interruptions in our operations, loss of sensitive information
and income, reputational harm, and diversion of funds. Extortion payments may alleviate the negative impact of a ransomware attack, but we
may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments. Remote
work has become more common and also poses increased risks to our information technology systems and data, as more of our employees
utilize network connections, computers and devices outside our premises or network, including working at home, while in transit and in public
locations. Future or past business transactions (such as acquisitions or integrations) could also expose us to additional cybersecurity risks and
vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and
technologies. Furthermore, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and
it may be difficult to integrate companies into our information technology environment and security program.
We have outsourced significant elements of our operations to third parties, including significant elements of our information technology
infrastructure and, as a result, we are managing many independent vendor relationships with third parties who may have access to our
information. The size and complexity of our information security systems, and those of our third-party vendors with whom we contract (and the
large amounts of information that is present on them), make such systems potentially vulnerable to service interruptions or to security breaches
from inadvertent or intentional actions by our employees, vendors or from malicious attacks by third parties. Our ability to monitor these third
parties’ cybersecurity practices is limited, and these third parties may not have adequate information security measures in place. We may share
or receive sensitive information with or from third parties. If our third-party service providers experience a security incident or other
interruption, we could experience adverse consequences. While we may be entitled to damages if our third-party service providers fail to satisfy
their privacy or security-related obligations to us, any award may be insufficient to cover our damages, or we may be unable to recover such
award. In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and
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infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised or that they do not contain exploitable
defects or bugs that could result in a breach of or disruption to our information technology systems (including our products) or the third-party
information technology systems that support us and our services.
Any of the previously identified or similar threats could cause a security incident or other interruption in our systems that could result in
unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our sensitive
information or our information technology systems, or those of the third parties upon whom we rely. A security incident or other interruption
could disrupt our ability (and that of third parties upon whom we rely) to provide our products. We may expend significant resources or modify
our business activities (including our clinical trial activities) in an effort to protect against security incidents. Certain data privacy and security
obligations may require us to implement and maintain specific security measures, or industry-standard or reasonable security measures to
protect our information technology systems and sensitive information.
While we have invested significantly in the implementation of security measures designed to protect against security incidents, there can
be no assurance that our efforts will prevent service interruptions or security incidents. We take steps to detect and remediate vulnerabilities, but
we may not be able to detect and remediate all vulnerabilities in our information technology systems because such threats and techniques used
to exploit the vulnerability change frequently, are often sophisticated in nature, and may not be detected until after a security incident has
occurred. Despite our efforts to identify and remediate vulnerabilities, if any, in our information technology systems, our efforts may not be
successful. These vulnerabilities pose material risks to our business. Further, we may experience delays in developing and deploying remedial
measures designed to address any such identified vulnerabilities.
Applicable data privacy and security obligations may require us to notify relevant stakeholders of security incidents. Such disclosures are
costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences. If we (or a third party upon
whom we rely) experience a cyberattack or security incident or are perceived to have experienced a security incident, we may experience
adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections; additional
reporting requirements and/or oversight; restrictions on processing sensitive information, including personal information; litigation, including
class claims; indemnification obligations; negative publicity; harm to our reputation; monetary fund diversions; interruptions in our operations
(including availability of data); financial loss; and other similar harms. Security incidents and attendant consequences may cause customers to
stop using our products, deter new customers from using our products, and negatively impact our ability to grow and operate our business. In
addition, we could be subject to regulatory actions and/or claims made by individuals and groups in private litigation related to data collection
and use practices and other data privacy laws and regulations, including claims for misuse or inappropriate disclosure of data as well as unfair or
deceptive practices.
Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our
contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations. We cannot be sure
that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy and security
practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future
claims. Although we have cyber-insurance coverage that may cover certain events described above, this insurance is subject to deductibles and
coverage limitations and we may not be able to maintain this insurance.
We outsource certain aspects of our cybersecurity risk management program to a third-party Managed Services Provider
(“MSP”) to monitor the security and privacy of our information assets, and any failure to provide such services could have a
material adverse effect on our business.
We utilize our MSP, which provides, as a service, a security operations center (“SOC”) that is operated 24/7/365, for certain aspects of our
cybersecurity risk management, including monitoring our devices and networks for malicious activity. In addition to antivirus endpoint
protection on Company devices, our IT managed services provider also, for example, monitors IT system metadata around suspicious events,
evidence of tactics, tools, or procedures used by attackers, and monitors remote privileged activity. While we regularly review the cybersecurity
tools and other security protection provided by this MSP and this MSP regularly runs intrusion and other security tests on services provided to
us, there can be no guarantee that this MSP will be able to
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detect or protect against all cybersecurity threats or incidents. Moreover, our failure to adequately monitor our MSP could result in the failure of
all or a portion of our information assets and materially or adversely impact our operations. In addition to the services currently provided, we
may utilize the MSP for additional aspects of our cybersecurity risk management in the future.
If our IT systems were to fail, including as a result of the threats of unauthorized intrusions and attackers, we may not be able to
sufficiently recover to avoid the loss of data or any adverse impact on our operations that are dependent on such IT systems. Our
MSP also could be subject to break-ins, cyber-attacks (including through the use of malware, software bugs, computer viruses,
ransomware, social engineering, and denial of service), sabotage, intentional acts of vandalism and other misconduct, from a
spectrum of actors ranging in sophistication from threats common to most industries to more advanced and persistent, highly
organized adversaries. Any security breach or incident, including personal data breaches, that we experience could result in
unauthorized access to, or misuse, modification, destruction or unauthorized acquisition of, our internal sensitive corporate data, such
as personal data, financial data, trade secrets, intellectual property, or other competitively sensitive or confidential data. Such
unauthorized access, misuse, acquisition, or modification of sensitive data may result in data loss, corruption or alteration,
interruptions in our operations or damage to our computer hardware or systems or those of our employees or customers.
In addition, if we were to lose the availability of the MSP’s services due to a dispute, termination of or inability to renew the
contract, or business continuity issues due to events beyond their control such as fires, floods, earthquakes, hurricanes, epidemics,
quarantines, wars, civil unrest, strikes or governmental action, such loss could have a material adverse effect on our operations.
Although multiple providers of such services exist, there can be no assurance that we could secure another source to handle these
transactions on acceptable terms or otherwise to our specifications in the event of a disruption of services.
We are highly dependent on our senior management team and key personnel and our business could be harmed if we are unable
to attract and retain personnel necessary for our success.
We are highly dependent on our senior management team and key personnel. Our success will depend on our ability to retain
senior management and to attract and retain qualified personnel in the future, including sales, marketing, scientific and technical
professionals, and to integrate current and additional personnel in all departments. The loss of members of our senior management,
sales, marketing, scientific and technical professionals could result in lower than expected sales and delays in product development.
If we are not successful in attracting and retaining highly qualified personnel, our business, financial condition and results of
operations, may be negatively impacted.
Competition for skilled personnel in our market is intense and may limit our ability to hire and retain highly qualified personnel
on acceptable terms, or at all. To induce valuable employees to remain at our company, in addition to salary and cash incentives, we
have issued, and will in the future issue, equity awards that vest over time. The value to employees of equity awards that vest over
time may be significantly affected by movements in our stock price that are beyond our control and may at any time be insufficient to
counteract more lucrative offers from other companies. Our employment arrangements with our employees provide for at-will
employment, which means that any of our employees could leave our employment at any time, with or without notice. Despite our
efforts to retain valuable employees, they may terminate their employment with us on short notice.
Many of the other cell engineering or therapeutic development companies that we compete against for qualified personnel have
greater financial and other resources, different risk profiles and a longer history in the industry than we do. They may also provide
more diverse opportunities, better chances for career advancement and higher compensation. Some of these characteristics are more
appealing to high-quality candidates than what we can offer. Further, if we hire employees from competitors or other companies, their
former employers may attempt to assert that these employees or we have breached legal obligations, resulting in a diversion of our
time and resources and, potentially, damages.
In addition, job candidates and existing employees often consider the value of the equity awards they receive in connection with
their employment. If the perceived benefits of our stock awards decline, either because we are a public company or for other reasons,
it may harm our ability to recruit and retain highly skilled employees. Many of our
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employees have become or will soon become vested in a substantial amount of their equity awards. Our employees may be more likely
to leave us if the equity they own have significantly appreciated in value relative to the original purchase prices of the shares, or if the
exercise prices of the options that they hold are significantly below the market price of our common stock.
Our future success also depends on our ability to continue to attract and retain additional executive officers and other key
employees as we expand our business and operations. If we fail to attract new personnel or fail to retain and motivate our current
personnel, it will negatively affect our business, financial condition and results of operations.
Recent changes to our leadership team and the resulting management transition might harm our future operating results.
On December 10, 2023, the Board appointed Maher Masoud as our Chief Executive Officer, replacing Doug Doerfler, who had
served in that role since 1999.
Although we believe this leadership transition is in the best interest of the Company and its stockholders, changes in executive
management inherently create uncertainty. Such transition involves the loss of personnel with deep institutional and technical
knowledge, could divert management’s attention from business concerns, or could impact our public or market perception, all of
which could have a negative impact on our business. The transition also could potentially disrupt our operations and relationships
with employees, suppliers, partners, and customers due to added costs, operational inefficiencies, decreased employee productivity
and increased turnover. We must successfully integrate our new leadership team within our organization to achieve our operating
objectives; as such, the leadership transition may temporarily affect our business performance and results of operations while the new
members of our leadership team engage in their new roles within our business. In addition, our competitors may seek to use this
transition and the related potential disruptions to gain a competitive advantage over us. Our future operating results depend
substantially upon the continued service of our key personnel and in significant part upon our ability to attract and retain qualified
management personnel. If we are unable to mitigate these or other similar risks, our business, results of operations and financial
condition may be materially and adversely affected.
We have increased the size of our organization and expect to further increase it in the future, and we may experience difficulties
in managing our growth. If we are unable to manage the anticipated growth of our business, our future revenue and operating
results may be harmed.
As of December 31, 2023, we had 143 full-time employees, which represents a notable increase from 125 employees at the end
of 2022. As our sales and marketing strategies develop, we expect to need additional managerial, operational, sales, marketing,
financial and other personnel. Future growth would impose significant added responsibilities on members of management, including:
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identifying, recruiting, integrating, maintaining and motivating additional employees;
managing our internal development efforts effectively, while complying with our contractual obligations to contractors and
other third parties; and
improving our operational, financial and management controls, reporting systems and procedures.
We have experienced significant growth in recent years and anticipate further growth in our business operations both inside and
outside the United States. This future growth could strain our organizational, administrative and operational infrastructure, including
quality control, operational, finance, customer service and sales organization management. We expect to continue to increase our
headcount and to hire more specialized personnel in the future as we grow our business. We will need to continue to hire, train and
manage additional qualified scientists, engineers, technical personnel, sales and marketing staff, and improve and maintain our
products to properly manage our growth. Rapid expansion in personnel could mean that less experienced people develop, market and
sell our products, which could
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result in inefficiencies and unanticipated costs, reduced quality and disruptions to our operations. If our new hires perform poorly, if
we are unsuccessful in hiring, training, managing and integrating these new employees or if we are not successful in retaining our
employees, our business may be harmed. We may not be able to maintain the quality or expected turnaround times of our products or
satisfy customer demand as it grows. Our ability to manage our growth properly will require us to continue to improve our operational,
financial and management controls as well as our reporting systems and procedures. The time and resources required to implement
these new systems and procedures is uncertain, and failure to complete this in a timely, efficient and effective manner could adversely
affect our operations.
Our officers, employees, independent contractors, consultants and commercial partners may engage in misconduct or activities
that are improper under other laws and regulations, or make significant errors, which could create liability for us.
We are exposed to the risk that our officers, employees, independent contractors, consultants, commercial partners, suppliers,
and third-party distributors may engage in fraudulent conduct or other illegal activity. Misconduct by these parties could include
intentional, reckless or negligent conduct or disclosure of unauthorized activities to us. Applicable laws and regulations may restrict
or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other
business arrangements. Misconduct by these parties could also involve the improper use of individually identifiable information,
which could result in regulatory sanctions and serious harm to our reputation. While we regularly monitor our activities to detect
misconduct, it is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity
may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or
other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted
against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our
business, including the imposition of significant civil, criminal, and administrative penalties, including without limitation, damages,
fines, imprisonment, exclusion from participation in government healthcare programs, and the curtailment or restructuring of our
operations.
If we were to be sued for product liability, we could face substantial liabilities that exceed our resources, limit sales of our existing
products and limit commercialization of any products that we may develop.
The marketing, sale and use of our products could lead to the filing of product liability claims where someone may allege that
our products identified inaccurate or incomplete information or otherwise failed to perform as designed. We may also be subject to
liability for errors, in a misunderstanding of or inappropriate reliance, upon the information we provide in the ordinary course of our
business activities. A product liability claim could result in substantial damages and be costly and time-consuming for us to defend. If
we cannot successfully defend ourselves against product liability claims, we will incur substantial liabilities and reputational harm. In
addition, regardless of merit or eventual outcome, product liability claims may result in:
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substantial litigation costs;
distraction of management’s attention from our primary business;
the inability to commercialize our products or new products;
decreased demand for our products;
damage to our business reputation;
product recalls or withdrawals from the market;
loss of sales; or
termination of existing agreements by our partners and potential partners failing to partner with us.
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We maintain product liability insurance, but this insurance is subject to deductibles and may not fully protect us from the
financial impact of defending against product liability claims. Any product liability claim brought against us, with or without merit,
could increase our insurance rates or prevent us from securing insurance coverage in the future.
While we may attempt to manage our product liability exposure by proactively recalling or withdrawing from the market any
defective products, any recall or market withdrawal of our products may delay the supply of those products to our customers and may
impact our reputation. We may not be successful in initiating appropriate market recall or market withdrawal efforts that may be
required in the future and these efforts may not have the intended effect of preventing product malfunctions and the accompanying
product liability that may result. Such recalls and withdrawals may also harm our reputation with customers, which could negatively
affect our business, financial condition and results of operations.
If our customers fail to safely and appropriately use our products, or if we are unable to train our customers on the safe and
appropriate use of our products, our reputation may be negatively impacted and we may be unable to achieve our expected sales,
growth or profitability.
An important part of our sales process includes training our customers on how to safely and appropriately use our products. If
our customers are not properly trained, they may misuse or ineffectively use our products. Any improper use of our products may result
in unsatisfactory outcomes, negative publicity or lawsuits against us, any of which could harm our reputation and affect future
product sales. Even if our products are used improperly by customers, we may face reputational damage if our products are
associated with negative outcomes or injuries. Damage to our reputation could make it more difficult for us to sell our products and
enter into new partnerships. Accordingly, if our customers fail to safely and appropriately use our products or if we are unable to train
our customers on the safe and appropriate use of our products, our reputation may be negatively impacted and we may be unable to
achieve our expected sales, growth or profitability.
Litigation and other legal proceedings may harm our business.
While we have never been involved in legal proceedings relating to patent and other intellectual property matters, product
liability claims, employee claims, tort or contract claims, federal or state regulatory investigations, securities class actions and other
legal proceedings or investigations, we may become involved in such legal proceedings which could have a negative impact on our
reputation, business and financial condition and divert the attention of our management from the operation of our business. Litigation
is inherently unpredictable and can result in excessive or unanticipated verdicts and/or injunctive relief that affect how we operate our
business. We could incur judgments or enter into settlements of claims for monetary damages or for agreements to change the way we
operate our business, or both. There may be an increase in the scope of these matters or there may be additional lawsuits, claims,
proceedings or investigations in the future, which could harm our business, financial condition and results of operations. Adverse
publicity about regulatory or legal action against us could damage our reputation and brand image, undermine our customers’
confidence and reduce long-term demand for our products, even if the regulatory or legal action is unfounded or not material to our
operations.
We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade
secrets of our employees’ former employers.
As we continue to expand our workforce, some employees may have previously been employed at universities or other life
sciences companies, including our competitors or potential competitors. Although no claims against us are currently pending, we or
our employees may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or
other proprietary information of their former employers. Litigation may be necessary to defend against these claims. If we fail in
defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights. A loss of key
research personnel’s work product could hamper or prevent our ability to commercialize certain potential products, which could
severely harm our business. Even if we are successful in defending against these claims, litigation could result in substantial costs
and be a distraction to management.
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Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.
Our operations, including our manufacturing operations, and the operations of our customers, partners, distributors and
collaborators could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes,
typhoons, fires, extreme weather conditions, medical epidemics and pandemics, including COVID-19, other natural or man-made
disasters or business interruptions, and geopolitical conflicts, for which we are predominantly self-insured. Our ability to obtain
components for our products could be disrupted if the operations of our suppliers were affected by a man-made or natural disaster or
other business interruption. The occurrence of any of these business disruptions could seriously harm our operations and financial
condition and increase our costs and expenses.
We manufacture our ExPERT instruments at our manufacturing facilities located in Maryland, and we rely on various suppliers
in the United States. Should our manufacturing facilities or the facilities of our suppliers be damaged or destroyed by natural or man-
made disasters, such as earthquakes, fires or other events, or should events such as political unrest unfold, it could take months to
relocate or rebuild, during which time our manufacturing and the operations of our suppliers could cease or be delayed and our
products may be unavailable. The inability to perform our manufacturing activities, combined with our limited inventory of materials
and components and manufactured products, or the inability of our suppliers to continue their operations, may cause us to be unable
to meet customer demand or harm our reputation, and we may be unable to reestablish relationships with such customers in the future.
Consequently, a catastrophic event or business interruption at our manufacturing facilities or at our suppliers’ facilities could harm our
business, financial condition and results of operations.
Our insurance policies are expensive and protect us only from some business risks, which leaves us exposed to significant
uninsured liabilities.
We do not carry insurance for all categories of risk that our business may encounter. Although we have general and product
liability insurance that we believe is appropriate, this insurance is subject to deductibles and coverage limitations. Our current
product liability insurance may not continue to be available to us on acceptable terms, if at all, and, if available, coverage may not be
adequate to protect us against any future product liability claims. If we are unable to obtain insurance at an acceptable cost or on
acceptable terms or otherwise protect against potential product liability claims, we could be exposed to significant liabilities. A
product liability claim, recall or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could
negatively affect our business, financial condition and results of operations. We do not carry specific hazardous waste insurance
coverage, and our property, casualty and general liability insurance policies specifically exclude coverage for damages and fines arising
from hazardous waste exposure or contamination. Accordingly, in the event of contamination or injury, we could be held liable for
damages or be penalized with fines in an amount exceeding our resources. Although we carry cyber insurance, the coverage may not
be sufficient to cover our losses in the event of a security incident that results in any data loss, deletion or destruction; unauthorized
access to, or acquisition, disclosure or exposure of information; or compromise related to the security, confidentiality, integrity or
availability of information technology, software, services, communications or data.
Operating as a public company in the United States has also made it more difficult and more expensive for us to obtain director
and officer liability insurance, and we may in the future be required to accept reduced policy limits and coverage or incur substantially
higher costs to obtain the same or similar coverage that we currently have. As a result, it may be more difficult for us to attract and
retain qualified people to serve on our board of directors, on our board committees or as executive officers. We do not know, however,
if we will be able to maintain existing insurance with adequate levels of coverage. Any significant uninsured liability may require us
to pay substantial amounts, which could negatively affect our business, financial condition and results of operations.
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The majority of our operations are currently conducted at a single location and any disruption at our facility could negatively
impact our operations and increase our expenses.
Our headquarters in Maryland contains most of our corporate and administrative functions, the majority of our research, and all
of our in-house manufacturing, inventory and distribution functions. A natural or other disaster, such as a fire or flood, could cause
substantial delays in our operations, damage or destroy our manufacturing equipment or inventory, and cause us to incur additional
expenses. The insurance we maintain against fires, floods and other natural disasters may not be adequate to cover our losses in any
particular case. With or without insurance, damage to our manufacturing facility or our other property, or to any of our suppliers, due
to fire, flood or other natural disaster or casualty event may have a material adverse effect on our business, financial condition and
results of operations.
We may face exposure to foreign currency exchange rate fluctuations.
Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates,
particularly changes in the Euro and the British pound. We expect our non-U.S. operations to continue to grow in the near term and
we are continually monitoring our foreign currency exposure to determine if we should consider a hedging program. Today, our non-
U.S. contracts are generally denominated in U.S. Dollars, while our non-U.S. operating expenses are often denominated in local
currencies. Additionally, as we expand our non-U.S. operations, a larger portion of our operating expenses may be denominated in
local currencies. Therefore, increases in the value of the U.S. Dollar and decreases in the value of foreign currencies could result in the
dollar equivalent of our revenue being lower, which could negatively affect our reported results of operations.
Risks Related to Our Intellectual Property
Our ability to compete and the success of our business could be jeopardized if we are unable to protect our intellectual property
adequately.
Our success depends to a degree upon the protection of our proprietary technology and obtaining, maintaining and enforcing our
intellectual property and other proprietary rights. We rely on a combination of trade secrets, patents, copyrights, trademarks and
contractual provisions with employees, contract manufacturers, consultants, customers and other third parties to establish and protect
our intellectual property rights, all of which offer only limited protection. Other parties may not comply with the terms of their
agreements with us, and we may not be able to enforce our rights adequately against these parties.
Although we enter into confidentiality, assignments of proprietary rights and license agreements, as appropriate, with our
employees and third parties, including our contract manufacturers, contract engineering firms and generally, control access to and
distribution of our technologies, documentation and other proprietary information, we cannot be certain that the steps we take to
prevent unauthorized use of our intellectual property rights are sufficient to prevent their misappropriation, particularly in foreign
countries where laws or law enforcement practices may not protect our intellectual property rights as fully as in the United States. In
addition, we rely on trade secrets and know-how to protect certain of our technologies, especially where we do not believe patent
protection is appropriate or obtainable. However, trade secrets and know-how are difficult to protect, as trade secrets do not protect
against independent development of a technology by third parties. Although we use reasonable efforts to protect our trade secrets and
know-how, our employees and third parties to whom our trade secrets and know-how are disclosed may unintentionally or willfully
disclose our information to competitors. Enforcing a claim that a third-party entity illegally obtained and is using any of our trade
secrets is expensive and time-consuming, and the outcome is unpredictable. In addition, courts outside the United States are
sometimes less willing to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge,
methods and know-how.
If competitors are able to use our technology, our ability to compete effectively could be harmed. For example, if a competitor
were to gain use of certain of our proprietary technology, they might be able to develop and manufacture similarly designed solutions
at a reduced cost, which could result in a decrease in demand for our products.
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Furthermore, we have adopted a strategy of seeking limited patent protection both in the United States and in foreign countries
with respect to the technologies used in or relating to our products. Although we generally apply for patents in those countries where
we expect to have material sales of our patented products, we may not accurately predict all of the countries where patent protection
will ultimately be desirable. If we fail to timely file a patent application in any such country, we may be precluded from doing so at a
later date. We do not know whether any of our pending patent applications will result in the issuance of patents or whether the
examination process will require us to narrow our claims, and even if patents are issued, they may be contested, circumvented,
modified, revoked, found to be unenforceable, or invalidated over the course of our business. Moreover, the rights granted under any
issued patents may not provide us with proprietary protection, barriers to entry or competitive advantages, and, as with any technology,
competitors may be able to develop and obtain patents for technologies that are similar or superior to our technologies. If that
happens, we may need to license these technologies and we may not be able to obtain licenses on reasonable terms, if at all, thereby
causing great harm to our business. Additionally, the determination that a patent application or patent claim meets all of the
requirements for patentability is a subjective determination based on the application of law in any given jurisdiction. The ultimate
determination by the United States Patent and Trademark Office (the “USPTO”), or by a court or other trier of fact in the United States,
or corresponding foreign national patent offices or courts, on whether a claim meets all requirements of patentability cannot be
assured. Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in our patents or patent applications, in
our licensed patents or patent applications or in third-party patents. Moreover, given that patents have a limited term, our patent
protection will expire over time.
We rely on our trademarks, trade names, and brand names to distinguish our products from the products of our competitors and
have registered or applied to register many of these trademarks. We cannot guarantee that our trademark applications will be
approved. Third parties may also oppose our trademark applications, or otherwise challenge our use of the trademarks. In the event
that our trademarks are successfully challenged, we could be forced to rebrand our products, which could result in loss of brand
recognition, and could require us to devote resources to the advertising and marketing of new brands.
Legal proceedings to assert our intellectual property rights could be costly and could impair our operations.
Even in those instances where we have determined that another party is breaching our intellectual property and other proprietary
rights, enforcing our legal rights with respect to such breach may be expensive and difficult. We may need to engage in litigation to
enforce or defend our intellectual property and other proprietary rights, which could result in substantial costs and diversion of
management resources. Further, many of our current and potential competitors are substantially larger than we are and have the
ability to dedicate substantially greater resources to defending any claims by us that they have breached our intellectual property
rights. If we are unsuccessful in enforcing our intellectual property rights, it could have a material adverse effect on our business,
results of operations and financial condition.
We may be sued by third parties for alleged infringement of their proprietary rights, which could be costly and time-consuming
and which could limit our ability to use certain technologies in the future or to develop future products.
We may be subject to claims that our technologies infringe upon the intellectual property or other proprietary rights of third
parties. Any claims, even those without merit, could be time-consuming and expensive, and could divert our management’s attention
away from the execution of our business plan. Moreover, any settlement or adverse judgment resulting from the claim could require
us to pay substantial amounts or obtain a license to continue to use the technology that is the subject of the claim, or otherwise
restrict or prohibit our use of the technology. There can be no assurance that we would be able to obtain a license from the third party
asserting the claim on commercially reasonable terms, if at all, that we would be able to develop alternative technology on a timely
basis, if at all, or that we would be able to obtain a license to use a suitable alternative technology to permit us to continue offering,
and our customers to continue using, our affected product.
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Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.
Depending on future actions by the U.S. Congress, the federal courts and the U.S. Patent and Trademark Office (“USPTO”), the
laws and regulations governing patents could change in unpredictable ways that could weaken our ability to obtain new patents or to
enforce our existing patents as well as patents that we might obtain in the future. Further, we cannot predict how this and future
decisions by these governing bodies may impact the value of our patents. Any similar adverse changes in the patent laws of other
jurisdictions could also harm our business, financial condition, results of operations and prospects.
We may be obligated to disclose our proprietary technology to our customers, which may limit our ability to protect our
intellectual property.
Certain customer agreements contain provisions permitting the customer to become a party to, or a beneficiary of, a technology
escrow agreement under which we place proprietary know-how and source code for our products in escrow with a third party. Under
these escrow agreements, the know-how and source code to the applicable product may be released to the customer, typically for its use
to further develop, maintain, modify and enhance the product, upon the occurrence of specified events, such as our filing for
bankruptcy and breaching our representations, warranties or covenants of our agreements with our customers. Disclosing this know-
how and source code may limit the intellectual property protection we can obtain or maintain for that know-how or source code or
the products embodying or containing that know-how or source code and may facilitate intellectual property infringement claims
against us. Each of these could harm our business, results of operations and financial condition.
General Risk Factors Associated with an Investment in Our Common Stock
Our common stock is traded on two separate stock markets and investors seeking to take advantage of price differences between
such markets may create unexpected volatility in our share price; in addition, investors may not be able to easily move shares for
trading between such markets.
Our shares of common stock are traded on both AIM, a market operated by the London Stock Exchange plc (the “London Stock
Exchange”), and the Nasdaq Global Select Market. Price levels for our common stock may fluctuate significantly on either market,
independent of our common stock price on the other market. Investors could seek to sell or buy our common stock to take advantage
of any price differences between the two markets through a practice referred to as arbitrage. Any arbitrage activity could create
unexpected volatility in both our common stock prices on either market and the volumes of shares of our common stock available for
trading on either market. In addition, holders of common stock on either market will not be immediately able to transfer such
common stock for trading on the other market without effecting necessary procedures with our transfer agent. This could result in
time delays and additional costs for our stockholders. Further, if we are unable to continue to meet the regulatory requirements for
admission to AIM or listing on the Nasdaq Global Select Market, we may lose our admission to AIM or listing on the Nasdaq Global
Select Market, which could impair the liquidity of shares of our common stock. Investors whose source of funds for the purchase of
shares of our common stock is denominated in a currency other than U.S. Dollars may also be adversely affected by fluctuations in the
exchange rate between such currency and the U.S. Dollar.
Securities traded on AIM may carry a higher risk than securities traded on other markets, which may impact the value of your
investment.
Our shares of common stock are currently traded on AIM. Investment in equities traded on AIM is sometimes perceived to carry
a higher risk than an investment in equities quoted on markets with more stringent listing requirements, such as the main market of
the London Stock Exchange, New York Stock Exchange or Nasdaq. This is because AIM is less heavily regulated and imposes less
stringent corporate governance and ongoing reporting requirements than those other markets. In addition, AIM requires only half-
yearly, rather than quarterly, financial reporting. You should be aware that the value of our shares of common stock may be influenced
by many factors, some of
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which may be specific to us and some of which may affect AIM companies generally, including the depth and liquidity of the market,
our performance, a large or small volume of trading in our shares of common stock, legislative changes and general economic,
political or regulatory conditions, and that the prices may be volatile and subject to extensive fluctuations. Therefore, the current
market price of our shares of common stock may not reflect the underlying value of our company.
The price of our common stock is likely to be volatile and may fluctuate due to factors beyond our control.
The market price of our common stock may be highly volatile and may fluctuate or decline substantially as a result of a variety
of factors, some of which are beyond our control, including:
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actual or anticipated fluctuations in our financial condition or results of operations;
variance in our financial performance from expectations of securities analysts;
changes in our projected operating and financial results;
announcements by us or our competitors of significant business developments, acquisitions, or new offerings;
announcements by our partners on clinical development delays for products being enabled by our technology;
announcements or concerns regarding real or perceived safety or efficacy issues with our products or similar products of
our competitors;
adoption of new regulations applicable to our industry or the expectations concerning future regulatory developments;
our involvement in litigation;
future sales of our common stock by us or our stockholders;
changes in senior management, the board of directors or key personnel;
the trading volume of our common stock;
changes in the anticipated future size and growth rate of our market; and
general economic, macroeconomic and market conditions.
Broad market and industry fluctuations, as well as general economic, political, regulatory and market conditions, may also
negatively impact the market price of our common stock.
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If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, the
price of our common stock and our trading volume could decline.
The trading market for our common stock will depend in part on the research and reports that securities or industry analysts
publish about us or our business. If no or too few securities or industry analysts commence coverage of us, the trading price for our
common stock could be negatively affected. In the event securities or industry analysts initiate coverage, if one or more of the analysts
who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, the price of our
common stock could decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand
for our common stock could decrease, which might cause the price of our common stock and trading volume to decline.
The requirements of being a public company in the United States may strain our resources, increase our operating costs, divert
management’s attention, and affect our ability to attract and retain qualified board members or executive officers.
We became a public company in the United States in July 2021. As a U.S. public company, we incur significant legal,
accounting, and other expenses, including costs associated with public company reporting requirements.
We also have incurred and will continue to incur costs associated with the Sarbanes-Oxley Act of 2002, as amended, the
Dodd-Frank Wall Street Reform and Consumer Protection Act and related rules implemented or to be implemented by the SEC and
the Nasdaq Global Select Market. The expenses incurred by public companies generally for reporting and corporate governance
purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to
make some activities more time-consuming and costly and divert management’s time and attention from revenue-generating
activities to compliance activities. It could also make it more difficult or costly for us to obtain certain types of insurance, including
director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially
higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and
retain qualified persons to serve on our board of directors, our board committees, or as our executive officers and may divert
management’s attention. Furthermore, if we are unable to satisfy our obligations as a U.S. public company, we could be subject to
delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation.
Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our
environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks.
Companies are facing increasing scrutiny from customers, regulators, investors and other stakeholders related to their
environmental, social and governance (“ESG”) practices and disclosure. Investor advocacy groups, investment funds and influential
investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity,
labor conditions and human rights. Increased ESG-related compliance costs could result in increases in our overall operational costs.
Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively
impact our reputation, ability to do business with certain partners, and our stock price. New government regulations could also result
in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence and disclosure.
Future sales of our common stock in the public market could cause our share price to fall.
Our stock price could decline as a result of sales of a large number of shares of our common stock or the perception that these
sales could occur, including by our officers, directors and their respective affiliates. These sales, or the possibility that these sales
may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem
appropriate.
We register the offer and sale of all shares of common stock that we may issue under our equity compensation plans. In addition,
in the future, we may issue additional shares of common stock or other equity or debt securities convertible
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into common stock in connection with a financing, acquisition, litigation settlement, employee arrangements or otherwise. Any such
future issuance could result in substantial dilution to our existing stockholders and could cause our stock price to decline.
Because we do not expect to pay dividends on our common stock in the foreseeable future, capital appreciation, if any, would be
your sole source of gain.
We have never declared or paid any dividends on our common stock. We currently anticipate that we will retain future earnings
for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the
foreseeable future. The decision to pay future dividends to stockholders will be at the discretion of our board of directors after taking
into account various factors including our business prospects, cash requirements, financial performance and new product
development. Accordingly, investors cannot rely on dividend income from our common stock and any returns on an investment in our
common stock will likely depend entirely upon any future appreciation in the price of our common stock.
Provisions in our governing documents will require disclosure of information about stockholders that would not otherwise be
required to be disclosed under applicable U.S. state or federal laws.
In accordance with the AIM Rules for Companies published by the London Stock Exchange (the “AIM Rules”), we are required
to disclose information regarding the legal and beneficial owners, whether directly or indirectly, of three percent or more of our
outstanding common stock. In order to allow us to comply with the AIM Rules, our certificate of incorporation contains a provision
requiring any legal or beneficial owner of three percent or more of the voting power attributable to our outstanding common stock to
notify us of his, her or its holdings, as well as of any change in his, her or its legal or beneficial ownership above three percent of our
outstanding common stock, which increases or decreases his, her or its holding through any single percentage. Comparatively, none
of the U.S. state or federal laws, or the rules of the SEC or the Nasdaq Global Select Market require stockholders to report this
beneficial ownership information to us or us to disclose this information to the public or a regulatory body. We are required to make
this information public in the United Kingdom under the AIM Rules, thereby revealing certain stockholders’ holdings in our
Company. In addition, we do not control the identity of our stockholders and the market price of our shares of common stock could
possibly be impacted by the disclosure of the identity of certain stockholders that legally or beneficially own three percent or more of
our outstanding common stock.
We are an “emerging growth company” and a “smaller reporting company,” and we cannot be certain if the reduced reporting
requirements applicable to “emerging growth companies” and “smaller reporting companies” will make our common stock less
attractive to investors.
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and
we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not “emerging growth companies,” including the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, or
Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and
exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any
golden parachute payments not previously approved. Pursuant to Section 107 of the JOBS Act, as an emerging growth company, we
have elected to use the extended transition period for complying with new or revised accounting standards until those standards
would otherwise apply to private companies. As a result, our financial statements may not be comparable to the financial statements
of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public
companies, which may make our common stock less attractive to investors. In addition, if we cease to be an emerging growth
company, we will no longer be able to use the extended transition period for complying with new or revised accounting standards.
We will remain an emerging growth company until the earliest of: (i) December 31, 2026, which is the last day of the fiscal year
following the fifth anniversary of our initial public offering in the United States; (ii) the last day of the
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first fiscal year in which our annual gross revenue is $1.235 billion or more; (iii) the date on which we have, during the previous
rolling three-year period, issued more than $1 billion in non-convertible debt securities; and (iv) the last day of the fiscal year in which
the market value of our common stock held by non-affiliates exceeded $700 million as of June 30 of such fiscal year.
We are also a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act. We may continue to be a smaller
reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled
disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as the
market value of our common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second
fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value
of our common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. For example,
if we do not adopt a new or revised accounting standard, our future results of operations may not be as comparable to the results of
operations of certain other companies in our industry that adopted such standards. If some investors find our common stock less
attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile.
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our
financial results or prevent fraud. As a result, stockholders could lose confidence in our financial and other public reporting, which
could harm our business and the trading price of our common stock.
Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with
adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved
controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In addition, any
testing by us conducted in connection with Section 404, or any subsequent testing by our independent registered public accounting
firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may
require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement.
Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a
negative effect on the trading price of our common stock.
We will be required to disclose changes made in our internal controls and procedures on a quarterly basis and our management is
required to assess the effectiveness of these controls annually. However, for as long as we are an “emerging growth company” under
the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal
controls over financial reporting pursuant to Section 404. An independent assessment of the effectiveness of our internal controls
could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal controls could lead
to financial statement restatements and require us to incur the expense of remediation.
Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more
difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our
common stock.
Provisions in our current certificate of incorporation and bylaws, and provisions of Delaware law applicable to us, may have the
effect of delaying or preventing a change of control or changes in our management. Our current certificate of incorporation and
bylaws include provisions that:
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authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock
with terms, rights, and preferences determined by our board of directors that may be senior to our common stock;
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require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by
written consent;
specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board
of directors, or our chief executive officer;
establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed
nominations of persons for election to our board of directors;
establish that our board of directors is divided into three classes, with each class serving three- year staggered terms;
prohibit cumulative voting in the election of directors;
provide that our directors may be removed (i) with or without cause, upon the vote of at least 50% of the outstanding shares
of voting stock or (ii) with cause, by the affirmative vote or consent of at least two-thirds of the other members of our board
of directors; and
provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less
than a quorum.
These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by
making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the
members of our management. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section
203 of the Delaware General Corporation Law, which generally, subject to certain exceptions, prohibits a Delaware corporation from
engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the
date on which the stockholder became an “interested” stockholder.
Our certificate of incorporation designates the Court of Chancery of the State of Delaware and, to the extent enforceable, the
federal district courts of the United States of America as the exclusive forums for substantially all disputes between us and our
stockholders, which will restrict our stockholders’ ability to choose the judicial forum for disputes with us or our directors,
officers or employees.
Our current certificate of incorporation provides that the Court of Chancery of the State of Delaware (or, if and only if the Court
of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and
only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) is the exclusive
forum for the following types of actions or proceedings under Delaware statutory or common law:
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any derivative action or proceeding brought on our behalf;
any action asserting a breach of a fiduciary duty;
any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our certificate of
incorporation, or our bylaws; or
any action asserting a claim against us that is governed by the internal affairs doctrine.
The provisions would not apply to suits brought to enforce a duty or liability created by the Securities Act or the Securities
Exchange Act of 1934, as amended. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and
state courts over all such Securities Act actions.
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Accordingly, both state and federal courts have jurisdiction to entertain such claims. To prevent having to litigate claims in
multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our certificate
of incorporation provides that the federal district courts of the United States of America will be the exclusive forum for resolving any
complaint asserting a cause of action arising under the Securities Act of 1933, as amended, and any rules and regulations promulgated
thereunder. While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may
nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions. In such instance, we
would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of our certificate of incorporation.
This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance
that the provisions will be enforced by a court in those other jurisdictions.
These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for
disputes with us or our directors, officers or other employees. If a court were to find either choice of forum provision contained in our
certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving
such action in other jurisdictions, which could seriously harm our business.
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity
As a company that provides enabling platform technologies to advance the discovery, development and commercialization
of next-generation cell therapeutics for customers, we are committed to protecting the confidentiality, integrity and availability of our
and our customers’ information assets. We recognize the importance of assessing, identifying, and managing material risks
associated with cybersecurity threats and cybersecurity incidents, as such terms are defined in Item 106(a) of Regulation S-K. Our
exposure to applicable cybersecurity risks is described more fully under the Risk Factors in Item 1A in this annual report on Form
10-K.
As described further below, we maintain a formal and comprehensive information security management framework
informed by the National Institute of Standards and Technology (“NIST”) cybersecurity framework and have implemented several
dozen policies governing our information security program, which we revise and update annually. Our Board, including the Audit
Committee of our Board, and our management team are actively involved in the oversight of our enterprise risk management
program, of which cybersecurity represents an important component.
Risk Management and Strategy
Monitoring and assessing cybersecurity risk is a critical part of our overall enterprise risk management (“ERM”). Our
Board regularly discusses significant areas of risk, including those that may be related to cybersecurity, as necessary. We have
designed and implemented an information security program tailored to our operations, the nature of our products and services, and
the sensitivity of the data that we process. We have implemented cybersecurity risk management processes that include, for example,
developing organizational understandings to manage cybersecurity risk, identifying asset vulnerabilities, threats to internal and
external organizational resources, and risk response activities, and developing a vendor risk management policy for assessing supply
chain and vendor-related risks. As part of these processes, we have implemented an Incident Response Plan, which provides
protocols for incident evaluation, including processes for notification and internal escalation of information to our senior
management and the appropriate Board committees. Our Incident Response Plan is updated annually and tested in tabletop exercises.
We utilize the cybersecurity services of our IT MSP, which is a SOC that is operated 24/7/365 and monitors our devices and
networks for malicious activity. In addition to antivirus endpoint protection on Company devices, our IT MSP
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also, for example, monitors IT system metadata around suspicious events, evidence of tactics, tools, or procedures used by attackers,
and monitors remote privileged activity.
We engaged a third party to perform a cybersecurity audit in the fourth quarter of 2021 and intend to undertake another
cybersecurity audit in the third quarter of 2024. To date, we have not identified any risks from cybersecurity threats, including as a
result of previous cybersecurity incidents, that have materially affected us, our business strategy, results of operation, or financial
condition. To date, we have not experienced a material cybersecurity attack, such as a cybersecurity threat, a ransomware attack,
computer viruses or other malicious codes, security breaches, unauthorized access, phishing attacks, or system failures. The
Company carries cybersecurity insurance and considers our coverage to be adequate.
Governance
Our Board, including the Audit Committee of the Board, and our management team are actively involved in the oversight of
risks from cybersecurity threats.
Our Audit Committee discusses risks related to cybersecurity quarterly, and reports to the Board quarterly on such risks and
events. Our Senior Director of Information Systems presents information to the Audit Committee regarding cybersecurity risks and
events quarterly. The full Board also discusses cybersecurity risks and events annually. If there are direct risks rising to the level of
potential materiality, the management team reports such risks and events to the Board.
Our Senior Director of Information Systems and our Director of Information Systems are responsible for day-to-day
oversight of cybersecurity risk. The individual currently holding the position of Senior Director of Information Systems has held the
role for two years, has sixteen years of experience in IT and software development (with eight of those years in management roles),
and holds certification from MIT Sloan School of Management in cybersecurity risk management. The individual currently holding
the position of Director of Information Systems—who reports directly to the Senior Director of Information Systems—was formerly
an IT Audit Senior Associate at PricewaterhouseCoopers, performed security assessments as a consultant at PricewaterhouseCoopers,
and passed his CISA exam (though certification is currently pending). These individuals are responsible for coordinating resources
internally and externally regarding cybersecurity risk management and incident response, and they report directly to our Chief
Administrative Officer.
Our management team has also established a Cybersecurity Incident Response Team (the “CSIRT”), which is comprised of
our Chief Executive Officer, the Chair of the Audit Committee of our Board, our General Counsel, our Chief Administrative Officer,
and our Senior Vice President of Human Resources. The CSIRT is also responsible for responding to cybersecurity incidents.
Item 2. Properties.
During 2022, we relocated our corporate headquarters, research and development facilities and manufacturing and distribution
centers to Rockville, Maryland, where we currently lease approximately 67,000 square feet of space under an operating lease.
The lease term for our facilities continues through August 31, 2035, subject to three five-year options that we may exercise to
extend the term of the lease.
We believe that our current facilities are adequate and suitable to meet our current requirements. We may need to obtain
additional facility space to meet future needs as our operations grow over time. We believe we will be able to obtain additional space
on acceptable and commercially reasonable terms if and as required.
Item 3. Legal Proceedings.
From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not
currently a party to any material legal proceedings, and we are not aware of any pending or threatened legal
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proceedings against us that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial
condition or results of operations.
Item 4. Mine Safety Disclosures.
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Certain Information Regarding the Trading of Our Common Stock
Our common stock trades under the symbol “MXCT” on the Nasdaq Global Select Market. Trading of our common stock
commenced on July 30, 2021 in connection with our initial public offering (“IPO”), in the United States. Prior to that time, there was
no established public market for our common stock in the United States. Since 2016, our common stock has traded on AIM, and
currently trades on AIM under the symbol “MXCT.”
Holders of Our Common Stock
As of March 5, 2024, there were approximately 35 holders of record of our common stock. The actual number of holders of our
common stock is greater than this number of record holders and includes stockholders who are beneficial owners, but whose shares
are held in “street name” by brokers or held by other nominees. The number of holders of record also does not include stockholders
whose shares may be held in trust by other entities.
Dividend Policy
We have never declared or paid any dividends on our common stock. We currently intend to retain all available funds and future
earnings, if any, to fund the development and expansion of our business, and we do not anticipate declaring or paying any cash
dividends in the foreseeable future.
Recent Sales of Unregistered Equity Securities
None.
Use of Proceeds from Registered Securities
Initial Public Offering
On August 3, 2021, we closed our IPO, in which we issued and sold 15,525,000 shares of common stock at a price to the public
of $13.00 per share, inclusive of 2,025,000 shares sold pursuant to the full exercise of the underwriters’ option to purchase additional
shares. The IPO generated gross proceeds to us of $201.8 million. We received net proceeds of $184.3 million after deducting
aggregate underwriting commissions and offering expenses of $17.6 million. All of the shares of common stock issued and sold in
the offering were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333 257810), which
was declared effective by the SEC on July 29, 2021. The joint book-running managers of the offering were Cowen and Company,
LLC, Stifel, Nicolaus & Company, Incorporated and William Blair & Company, L.L.C.
In connection with our IPO, no payments were made by us to directors, officers or persons owning ten percent or more of our
common stock or to their associates or to our affiliates.
Cash used since the IPO is described elsewhere in the “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” section of our periodic reports filed with the SEC. As of the date of this filing, there has been no material
change in the planned use of proceeds from the IPO as described in the final prospectus for our IPO.
Issuer Purchases of Equity Securities
None.
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Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with
our consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K, as well as
the other information provided from time to time in our other filings with the SEC. Some of the information contained in this
discussion and analysis or set forth elsewhere in this annual report, including information with respect to our plans and strategy for
our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, our actual results
could differ materially from those discussed in or implied by these forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed in the section of this Annual Report on Form 10-K titled
“Risk Factors.” Please also see the section titled “Special Note Regarding Forward-Looking Statements.”
Overview
We are a leading commercial cell engineering company focused on providing enabling platform technologies to advance the
discovery, development and commercialization of next-generation cell therapeutics and to support innovative cell-based research and
development. Over more than two decades, we have developed and commercialized our proprietary Flow Electroporation technology,
which facilitates complex engineering of a wide variety of cells. Electroporation is a method of transfection, or the process of
deliberately introducing molecules into cells, that involves applying an electric field in order to temporarily increase the permeability
of the cell membrane. This precisely controlled increase in permeability allows the intracellular delivery of molecules, such as
genetic material and proteins, that would not normally be able to cross the cell membrane as easily.
Our ExPERT platform, which is based on our Flow Electroporation technology, has been designed to address this rapidly
expanding cell therapy market and can be utilized across the continuum of the high-growth cell therapy sector, from discovery and
development through commercialization of next-generation, cell-based therapies. The ExPERT family of products includes four
instruments, which we call the ATx, STx, GTx and VLx, and related software protocols, as well as a portfolio of proprietary related
disposables and consumables. We launched the VLx instrument in September 2022.
Our disposables and consumables include PAs designed for use with our instruments, as well as accessories supporting PAs such
as electroporation buffer solution and software protocols. We have garnered meaningful expertise in cell engineering via our internal
research and development efforts as well as our customer-focused commercial approach, which includes a growing application
scientist team. The platform is also supported by a robust intellectual property portfolio with more than 150 granted U.S. and foreign
patents and more than 95 pending patent applications worldwide.
From leading commercial cell therapy drug and biologic developers and top biopharmaceutical companies to top academic and
government research institutions, including the NIH, our customers have extensively validated our technology. We believe the
features and performance of our platform have led to sustained customer engagement. Our existing customer base ranges from large
biopharmaceutical companies, including a majority of the top 25 pharmaceutical companies based on 2022 global revenue, to
hundreds of biotechnology companies and academic centers focused on translational research. As of December 31, 2023, we have
placed more than 680 of our electroporation instruments with customers worldwide.
Historically, we have financed our operations primarily from the issuance and sale of equity securities, previous debt borrowings
and cash flows from operations. On August 3, 2021, we issued and sold 15,525,000 shares of common stock in our U.S. IPO at a
price to the public of $13.00 per share, inclusive of 2,025,000 shares issued pursuant to the full exercise of the underwriters’ option to
purchase additional shares. The IPO generated gross proceeds to us of $201.8 million. We received aggregate net proceeds of $184.3
million after deducting aggregate underwriting commissions and offering costs of $17.6 million.
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We believe that our current cash, cash equivalents and short-term investments will enable us to fund our operating expenses and
capital expenditure requirements for at least the next 12 months from the date of the filing of this Annual Report. We have based this
estimate on assumptions that may prove to be wrong, however, and we could exhaust our available capital resources sooner than we
expect. See “Liquidity and Capital Resources” below for more information about our current capital resources.
Since our inception, we have incurred significant operating losses. Our ability to generate revenue sufficient to achieve
profitability will depend on the successful further development and commercialization of our products. We generated revenue of
$41.3 million and $44.3 million for the years ended December 31, 2023 and 2022, respectively, and incurred net losses of $37.9
million and $23.6 million for those same years. As of December 31, 2023, we had an accumulated deficit of $175.8 million. We
expect to continue to incur net losses as we focus on growing commercial sales of our products in both the United States and
international markets, including growing our sales teams, scaling our manufacturing operations, continuing research and
development efforts to develop new products and further enhance our existing products.
We believe we have a diversified revenue model with revenue generated from multiple sources including instrument leases with
recurring license fees, sales of instruments and related disposables and participation in the clinical and commercial success of some
of our customers through milestone and sales-based payments under SPL agreements.
Key Factors Affecting Our Performance
We believe that our financial performance has been, and in the foreseeable future will continue to be, primarily driven by the
following factors. While each of these factors presents significant opportunities for our business, they also pose challenges that we
must successfully address in order to sustain our growth and improve our results of operations. Our ability to successfully address the
factors below is subject to various risks and uncertainties, including those described in this Annual Report under the heading “Risk
Factors.”
Sales and Leases of Instruments
Our financial performance has largely been driven by, and in the future will continue to be impacted by, the rate of sales and
leases of our ExPERT family of proprietary Flow Electroporation instruments to existing and new customers. We currently market
four versions of our instruments, the ATx, the STx, the GTx and the VLx. The ATx is primarily sold across geographic markets in
which we currently sell our technology. The STx is primarily sold to end users for research and drug discovery purposes, and the
GTx is leased to customers for research, clinical or commercial use or sold for research use in certain circumstances or sold to
academic centers for research or clinical use. We launched the VLx in September 2022 to provide our customers with an easier to use
system that incorporates the benefits of the ExPERT platform. We view the demand for our instruments, whether in the form of sales
or leases, as an indicator of the health of our current business and as a predictor of future instrument sale and lease revenue. As
described below, we separately sell proprietary single-use disposables, which we call PAs, that are necessary for our customers to use
our electroporation instruments. Therefore, depending on the number of instruments that have been sold or are under active lease, we
have insight into the demand for PAs that will also translate to future revenue for us.
Our sales model varies based on the activity of the end customer, such as whether they are a translational research center, an
academic center, a company focused on drug or biologic discovery, or a company engaged in cell therapy development, and the
customer’s intended use of our platform. If our customer intends to use our platform for research or discovery only, we typically sell
the instrument outright. Each of the ATx, STx, GTx and VLx instruments have different prices based on the instrument’s features,
with the VLx being the most expensive. When we sell an instrument, we also provide a non-exclusive license to our intellectual
property for the customer to use the instrument broadly for research or discovery, as applicable. In the case of a sale, title to the
instrument conveys to the buyer, but we retain ownership of intellectual property rights and software and protocols loaded onto the
instruments.
The sales cycle for our cell engineering instruments varies widely and typically ranges from approximately six to approximately
12 months, with the actual period depending on project stage, budget process, equipment prioritization
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and the general financial status of the customer or the market in general. As a result of this lengthy and unpredictable sales cycle, we
expect that we may be prone to quarterly fluctuations in our instrument sales revenue.
For cell therapy customers who use our technology to develop engineered cells for human therapeutic use in clinical trials or, if
approved by regulatory authorities, for commercial sale, we license our platform on a non-exclusive basis in exchange for an annual
fee per instrument licensed. This license fee varies based on whether the instrument is being used for preclinical or clinical purposes.
Once we have leased an instrument to a customer, we generally have high visibility into future lease revenue from this customer. It is
possible, however, that our future lease revenue could be impacted by failure of the customer therapeutic candidates to progress
through clinical development for reasons unrelated to the successful use of our instruments, such as toxicity, lack of efficacy, funding
constraints, changes in development priorities, patient access limitations or regulatory challenges. For any of these reasons, a
customer could determine not to renew or to enter into additional instrument leases with us, which could result in our actual future
lease revenues differing from our estimates and projections.
Our installed base of electroporation instruments has grown to over 680 instruments as of December 31, 2023. This installed
base includes both instruments sold to customers and instruments licensed for research and clinical use. Because of the size of the
drug and biologic discovery market and our long history in that market, the installed base of instruments is currently weighted more
heavily towards instruments sold for discovery and research applications. However, since each licensed instrument provides us with
ongoing license revenues, the share of revenues from licensed instruments may grow as a share of our total revenue mix.
We plan to further grow our installed base of ExPERT instruments through additional sales and leases to our current customers
and through the sale or lease of instruments to new cell therapy, product discovery, academic and other customers. To achieve this
goal, we intend to further expand our commercial infrastructure, including through the expansion of our sales force and field
application scientists. We have expanded our sales force and field application scientist count over the past several years and now have
over 36 dedicated field sales and application scientist professionals globally. Our candidate identification and hiring process is
stringent, and there can be no assurance that we will be able to continue to recruit the high level of candidates that make up our
current team.
In addition, we have numerous collaborations in place with academic and commercial institutions to further expand our
capabilities and supporting data in new cell engineering applications. Recent sales efforts have also focused on expanding our
presence in translational academic centers, which we view as a potentially meaningful source of installed base expansion given the
increased industry focus on, and government funding allocated to, cell therapy. Academic translational centers have been a strong
source of cell therapy innovation and commercial spinouts in the cell therapy sector.
We expect revenue from instruments leased to cell therapy customers to continue to grow as those customers move their existing
drug or biologic development programs into later-stage clinical trials and advance their preclinical pipeline programs into clinical
development. In addition, we expect new customers to emerge and contribute to these revenues, particularly given the underlying
growth in the cell therapy pipeline among companies in this industry, availability of capital to support such companies, and in
particular the switch by some of these cell therapy companies away from viral approaches to non-viral approaches.
Sales of Processing Assemblies
In addition to instrument sales, our current and future revenue is dependent on sales of our proprietary PAs, as well as the sale of
our proprietary electroporation buffer solution, for use with our instruments. We sell PAs that are intended either to support research
use or use in cGMP clinical research applications. The PAs differ in terms of their volume capacities and the associated numbers of
cells that can be processed in each electroporation sequence with a particular PA, as well as the number of transfection experiments
that can be performed in a single electroporation process. Our PA pricing varies based on the volume of cells processed and the
number of transfections per PA.
We expect that as our installed instrument base grows, our sales of PAs and electroporation buffer solutions will grow
accordingly, especially as cell therapy programs continue to progress through clinical development and potentially
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become commercial-stage, thereby increasing the number of PAs needed by customers. We are also developing and intend to launch
new PAs that target previously unserved subsegments across the bioprocessing and cell therapy markets, which could further increase
our PA sales. However, both the number of PAs used per instrument, as well as the specific PA used, is highly variable across our
customer base and depends on several factors, including:
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the purpose for which the customer is using the platform;
the relative pricing of our PAs;
the progression of cell therapy products through preclinical and clinical development;
whether the cell therapy customer uses a centralized or decentralized manufacturing process;
the customer’s target indication, which can result in variations in patient numbers needed for clinical trials; and
whether the cells to be processed using our platform are patient-derived, donor-derived or cell line-derived.
With considerable variability of processes, even within the same indication, such as is the case for allogeneic genetically-
modified cell therapies, such as CAR-Ts, and the nascency of the cell therapy industry, we expect that it may take several years for us
to gain visibility into how these factors will impact our PA revenue over time.
We continuously re-evaluate our PA portfolio based on customer needs and have introduced, and intend to continue to introduce,
new PAs, improvements to existing PAs, and complementary products. Some new PAs may fail to be used in line with our
expectations when they are launched. While we also price PAs based on the value provided to the customer, introduction of new PAs
could cannibalize our existing PA portfolio more than we anticipated if customers find the new products to be a better solution for
their applications or workflows.
Strategic Platform Licenses (SPLs)
Typically, our cell therapy customers will either purchase our ATx instrument for research purposes or purchase or obtain a
research use license under lease of our GTx instrument technology in order to validate the use of our technology in their programs
and to progress their preclinical work towards clinic trials. However, once a cell therapy customer using one of our ExPERT
instruments advances their preclinical research to a stage where they are planning to enter clinical development, they need to enter
into a licensing arrangement with us for the rights to clinical and/or commercial use of our instrument. Our customers typically
negotiate the terms of those licenses during research and preclinical development.
We refer to these arrangements as SPL partnerships, the terms of which contain not only higher annual, non-exclusive fees for
the clinical use of the instrument, but also allow us to share in the economics of the customer’s programs. From 2017 through
February 2024, we have entered into 26 SPL partnerships with commercial cell therapy developers, and those licenses currently
allow for over 160 clinical development programs in the aggregate. On average, our current SPL partnerships allow for
approximately six product candidates per license, although this average may change over time. SPL partnerships typically include
potential payments to us upon the customer’s achievement of specified clinical development or regulatory milestones, as well as
potential sales-based payments to us, which could be payments based upon the achievement of specified sales levels and/or royalty
payments that are a percentage of the customer’s net sales. The amount of each milestone payment is typically correlated in size with
value-creating, precommercial clinical progress events or commercial sales levels.
Of the over 160 programs associated with our current SPLs, one is in commercial stage, and 16 of those programs are currently
active in clinical development, meaning they have at least an FDA-cleared IND application or foreign equivalent. Our 26 SPLs have
the potential to generate over $1.95 billion in precommercial milestone payments, if all product candidates allowed under those
agreements were to fully progress through clinical development and obtain regulatory approval. However, our actual milestone
revenue from these agreements will likely be considerably lower than this amount, as not all programs covered by each agreement
will become and remain active programs in a
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customer’s development pipeline or successfully complete the clinical development process. Further, each agreement typically
includes programs that have not been specifically identified, or for which a candidate may never be identified or developed by the
customer.
Our strategy is to capitalize on the growth in the number of cell therapy developers by entering into new SPL partnerships. We
entered into seven agreements in 2023 and have entered into three agreements thus far in 2024 as of March 1, 2024.
For the year ended December 31, 2023, two cell therapy companies with which we have entered into an SPL accounted for 39%
of our total revenue, and our five largest SPL partners accounted for an aggregate of approximately 52% of our total revenue for the
year through a combination of instrument license fees, milestones realized and processing assembly revenue.
Our future milestone revenue under our SPL partnerships will depend in large part on the clinical and regulatory achievements of
our customers. Generally, precommercial milestone payments become larger as programs move through clinical development. We
rely in part on our customers’ public disclosures around regulatory timelines to forecast our receipt of precommercial milestone
payments. While we expect our forecasting ability to improve over time as more of our customers’ programs advance through
clinical development and the number of clinical programs covered by our licenses expands, given the early nature of the cell therapy
clinical market, we expect our realization of precommercial milestones to be somewhat unpredictable.
In addition, the potential for sales-based payments once a customer’s product is approved and in commercial use is unknown and
variable based on a number of factors, including inherent clinical risk, potential changes in the customer’s strategy, the designated
indication and its impact on the potential number of patients to be served and the competitive products available to patients, product
pricing and reimbursement structures, our customer’s commercial manufacturing plans and the inherent unknowns in adoption of
next-generation cell therapies relative to other modalities.
Gross Margins
We have generated overall gross margins of nearly 90% for the last six years, although our margins vary depending on our
revenue mix from instruments, PAs and milestones under SPL partnerships and other factors. We price our instruments at a premium
given what we believe to be the broad benefits of our platform, and the limited availability of alternative, clinically validated non-
viral delivery approaches. However, the market for non-viral delivery is highly competitive, and introduction of a cGMP-grade
platform by a competitor that delivers similar performance across a similar diversity of cell types could negatively impact our
business and lead to increased price pressure that could negatively impact our gross margins. In addition, part of our growth strategy
is to expand into new regional markets, which could require the use of distributors and/or our participation in more competitive
environments, which could impact our ability to price our instruments at a premium and could negatively impact our ability to enter
into SPL partnerships on terms similar to those currently in effect.
We expect our gross margins to benefit from realization of the economics from our SPL partnership agreements described above,
to the extent that such milestones and/or sales-based payments grow to be a significant proportion of overall revenues, as there is no
cost of goods sold associated with such revenue. However, realization of these potential revenues is uncertain. Margins may also
experience downward pressure during the investment phase of our internal PA production ramp up, increases in labor and materials
costs, expansion of our PA portfolio, future design changes or the mix of PAs sold, or other factors, but may benefit in the mid-to-
long term as PA production becomes more automated.
Key Business Metrics
In addition to revenue, we regularly review several key business metrics to evaluate our business, measure our performance,
identify trends affecting our business, formulate financial projections and make strategic decisions. These key metrics include:
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the number of cumulative instruments that we have placed with our customers, either by sale or lease, which we refer to as
our installed base and consider to be an indication of our traction within the non-viral delivery market and other markets
and indicative of the potential future recurring revenue generated from those instruments, including disposables and annual
fees;
the number of active (customers with rights to develop one or more clinical programs) SPL partnerships that we have
entered into with cell therapy developers, as well as the total number of our customers’ clinical programs, whether active or
contemplated, that are covered by such active SPL partnerships and the percentage of those clinical programs that are under
an active IND application (or foreign equivalent), meaning that the customer is cleared to commence clinical trials;
the aggregate potential precommercial milestone payments under active SPL partnerships, representing the maximum
potential milestone payments to us if all programs covered by each SPL partnership were to achieve regulatory approval;
the aggregate number of potential programs licensed for clinical use, whether active or contemplated, that are covered by
our SPL partnerships; and
the aggregate number of programs licensed for clinical use and covered by our SPL partnerships that are currently in
clinical development.
With respect to the numbers of programs under license, in many cases we make estimates of such programs based on our
contract terms with our customers and our knowledge about our customers’ clinical progression of their programs. We rely, in part,
on our customers’ public disclosures around regulatory timelines to forecast our receipt of precommercial milestone payments.
However, it is possible that some programs may have become dormant or inactive without our knowledge, some new programs may
be identified and some programs may progress further in clinical development without our knowledge if the customer has not made a
public announcement. While we expect our forecasting ability to continue to improve over time as more of our customers’ programs
move through clinical development and the number of clinical programs covered by our licenses expands, given the early nature of
the cell therapy clinical market, we expect our realization of precommercial milestones to be somewhat unpredictable. This number
may fluctuate due to the success of our commercial partners. Additionally, the addition of a large SPL partnership in which one SPL
partner uses multiple instruments as part of their research, clinical or commercial program, may dilute the percentage of commercial
programs currently in the clinic.
As of the dates presented, our key metrics described above were as follows:
As of December 31,
2022
616
Installed base of instruments (sold or leased)
42%
Core revenue generated by SPL clients as a percentage of core revenue
18
Number of active SPLs
>125
Total number of licensed clinical programs (SPL clients only)
16
Total number of licensed clinical programs under SPLs currently in the clinic
-
Total number of licensed clinical programs under SPLs currently commercial
Total potential pre-commercial milestones under SPLs
>$1.55 billion
* Number of licensed clinical programs under SPL partnerships are by number of product candidates and not by indication.
2023
683
48%
23
>160
16
1
>$1.95 billion
2021
502
40%
15
>95
15
-
>$1.25 billion
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Components of Our Results of Operations
Revenue
We generate revenue principally from the sale of instruments, single-use PAs and buffers as well as from the lease of instruments
to our customers. Our SPL partnerships also include associated clinical progress milestones and sales-based payments to us, in
addition to annual lease payments. Sales of instruments and disposables under contracts with customers are classified as product sales
in our consolidated financial statements. Revenue from instrument leases, including payments that we may receive from our
customers based on their achievement of specified clinical development or commercialization milestones, are classified as leased
elements in our consolidated financial statements.
Our business and revenue growth strategy currently consists of the sale or lease of instruments and the sale of disposables. We
record revenue from the sale of instruments or PAs upon shipment to a customer. Instrument leases are typically invoiced annually at
the start of each instrument license period and are accounted for as monthly revenue over the lease term with the expectation of
continuing customer renewals of their instrument leases. As our customers achieve clinical progress milestones and/or sales-based
payment milestones, we recognize the full value of the milestone as revenue. In addition, as customers use instruments they have
either purchased or leased, they typically replenish their supplies of disposables through recurring purchases. Although customers are
not contractually obligated to renew their instrument leases or to purchase additional disposables and may decide not to do so solely
in their own discretion, leased instruments and disposables revenue streams have historically formed an important component of our
revenues, and we believe they provide insight into our future performance. We consider these sales and lease revenue streams to be
recurring revenues.
In order to evaluate how our sales are trending across key markets, as well as the contribution of program economics from our
SPL partnerships, we separately analyze revenue derived from our cell therapy customers and drug discovery customers, as well as
the performance-based milestone revenues we recognize under our SPL partnerships. Cell therapy includes revenue from instruments
sold, annual license fees for instruments under lease, and sales of our proprietary disposables. Drug discovery includes revenue from
instruments sold, sales of our proprietary disposables and, occasionally, instruments leased, in each case under contracts with drug
discovery customers. Core revenue includes sales and leases of instruments and disposables to cell therapy and drug discovery
customers, excluding SPL program-related revenue.
Program-related revenue includes precommercial milestones earned and recognized as revenue during the period. Once SPL
customers achieve regulatory approval for and commercialize their products, in nearly all cases we will also be entitled to receive
sales-based payments which may be milestone payments upon achievement of specified levels of net sales and/or royalties expressed
as a percentage of net sales. We have not received any commercial payments from our SPL customers to date. As our customers
progress their programs and achieve additional milestones, our SPL program revenue is expected to constitute a growing portion of
our total revenues in future periods.
We also offer our customers extended warranty and service plans. Our extended warranty and service plans are offered for
periods beyond the standard no-fee, one-year warranty that customers who purchase instruments receive. Leases of instruments
include warranty during the lease term without additional charge. Extended warranty and service plans generally have fixed fees and
terms ranging from one additional year to four additional years and include an annual calibration. We recognize revenue from the sale
of extended warranty and service plans over the respective coverage period, which approximates the service effort provided by us.
Warranties are typically not a material revenue stream for us.
Product Sales
Revenue from contracts with customers includes revenue from the sale of instruments, PAs and buffers. Customers purchase an
ATx, STx, GTx or VLx depending upon their intended use and all customers purchase PAs for use with our instruments. Commercial
customers may not use a purchased instrument for clinical or commercial processes.
We expect product sales revenue to increase in future periods as our market and customer base grow.
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Leased Elements
Revenue from leased elements consists of revenue from the leasing of instruments to customers (typically the GTx). Our leases
of instruments to customers consist of fixed license/lease payments and variable milestone payments that are dependent on our
customer's achievement of clinical milestones. Typically, instrument leases that provide for clinical or commercial use also include
sales-based milestone payments (and/or sales-based royalties in some cases) upon the commercialization of the customer's product.
Under our instrument lease arrangements, we lease our instruments to customers and provide associated software licenses to allow
customers non-exclusive use of our technology for research and/or specific clinical programs, typically along with rights for
commercial use upon regulatory approval of the customer's products. We also provide scientific and regulatory support to our clinical
use licensees to help them improve process optimization and facilitate their regulatory submission process.
We expect leased elements revenue to increase in future periods as our market and customer base grow.
Cost of Goods Sold
Cost of goods sold primarily consists of costs for raw material parts, contract manufacturer costs, salaries, overhead, other direct
costs related to sales recognized as revenue in the period, and leased equipment depreciation.
We expect that our cost of goods sold will increase or decrease primarily to the extent that our instrument and disposables
revenue increases and decreases.
Gross Profit and Gross Margin
Gross profit is calculated as revenue less cost of goods sold. Gross margin is gross profit expressed as a percentage of revenue.
Our gross profit in future periods will depend on a variety of factors, including sales mix among instruments, disposables and
milestones, the specific mix among types of instruments or disposables, the proportion of revenues associated with instrument leases
as opposed to sales, the share of revenues composed of milestones, changes in the costs to produce our various products, the launch
of new products or changes in existing products, our cost structure for manufacturing including changes in production volumes, the
proportion of sales made through third-party distributors, and the pricing of our products which may be impacted by market
conditions.
Operating Expenses
Research and Development
Research and development expenses consist primarily of costs incurred for our research activities related to advancing our
technology and development of applications for our technology, including research into specific applications and associated data
development, process development, product development (e.g., development of instruments and disposables, including hardware and
software engineering) and design and other costs not directly charged to inventory or cost of goods sold, such as supply chain
development and design and management of quality systems.
These expenses include employee-related costs, such as salaries, benefits, incentive compensation, stock-based compensation,
and travel, as well as consultant services, facilities, and other expenses, laboratory supplies and materials expenses for employees and
contractors engaged in research and development. These expenses are exclusive of depreciation and amortization. We expense
research and development costs as incurred in the period in which the underlying activity is undertaken.
We believe that our continued investment in research and development is essential to our long-term competitive position. We
expect to continue to incur substantial research and development expenses as we invest in research and development to support our
customers, develop new uses for our existing technology and develop improved and/or new offerings to our customers and partners.
As a result, we expect that our research and development expenses will continue to increase in absolute dollars in future periods and
vary from period to period as a percentage of revenue.
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Sales and Marketing
Our sales and marketing expenses consist primarily of salaries, commissions and other variable compensation, benefits, stock-
based compensation and travel costs for employees within our commercial sales and marketing functions, as well as third-party costs
associated with our marketing activities. These expenses are exclusive of depreciation and amortization.
We expect our sales and marketing expenses to increase in future periods as we expand our commercial sales, marketing and
business development teams, increase our presence globally, and increase marketing activities to drive awareness and adoption of our
products.
General and Administrative
General and administrative expenses primarily consist of salaries, benefits, stock-based compensation and travel costs for
employees in our executive, accounting and finance, legal, corporate development, human resources, and office administration
functions as well as professional services fees, such as consulting, audit, tax and legal fees, general corporate costs, facilities and
allocated overhead expenses and costs associated with being a Nasdaq and AIM listed public company such as director fees, U.K.
Nominated Advisor and broker fees, investor relations consultants and insurance costs. These expenses are exclusive of depreciation
and amortization.
We expect that our general and administrative expenses will continue to increase in absolute dollars in future periods, primarily
due to increased headcount to support anticipated growth in the business and due to incremental costs associated with operating as a
public company listed on a U.S. exchange, including insurance (particularly directors and officers insurance), costs to comply with
the rules and regulations applicable to companies listed on a U.S. securities exchange and costs related to compliance and reporting
obligations pursuant to the rules and regulations of the SEC and stock exchange listing standards, investor relations and professional
services. We expect these expenses to vary from period to period as a percentage of revenue.
Depreciation and Amortization
Depreciation expense consists of the depreciation of property and equipment used actively in the business, primarily by research
and development activities. Amortization expense includes the amortization of leasehold improvements over their respective lease
terms.
Other Income (Expense)
Interest income includes interest earned on cash balances in our cash accounts and interest earned on money market funds,
commercial paper and corporate bonds as well as miscellaneous income unrelated to our core operations. Other expense for the year
ended December 31, 2022 related to a write-off of leasehold improvements due to early termination of a prior facility lease.
Provision for Income Taxes
We did not recognize a benefit for the net operating losses we incurred for the years ended December 31, 2023 and 2022. As of
December 31, 2023, we had U.S. net operating loss carryforwards of $88.9 million, which may be available to offset future taxable
income and begin to expire in 2025, as well as net operating losses in the various states in which we file. We have recorded a full
valuation allowance against our net deferred tax assets at each balance sheet date since, due to our history of net losses, we have
determined that it is not currently more likely than not that our net deferred tax assets are recoverable.
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Results of Operations
Comparison of the Years Ended December 31, 2023 and 2022
The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and
notes included elsewhere in this Annual Report. The following tables set forth our results of operations for the periods presented:
Total revenue
Cost of goods sold
Gross profit
Operating expense
Research and development
Sales and marketing
General and administrative
Depreciation and amortization
Total operating expense
Operating loss
Other income (expense)
Other expense
Interest and other income
Total other income (expense)
Net loss
Year Ended
December 31,
2023
2022
(in thousands)
$ 41,288 $ 44,261
5,098
39,163
4,742
36,546
23,817
26,975
30,068
3,985
84,845
(48,299)
19,514
18,653
25,829
2,528
66,524
(27,361)
—
(127)
3,917
3,790
$ (37,923) $ (23,571)
10,376
10,376
Revenue
The following table provides details regarding the sources of revenue for the periods presented:
(in thousands, except percentages)
Core Revenue:
Cell therapy
Drug discovery
Total core revenue
Program-related
Total revenue
Year Ended
December 31,
Change
2023
2022
Amount
%
$
$
22,829
6,994
29,823
11,465
41,288
$
$
30,546
9,100
39,646
4,615
44,261
$
$
(7,717)
(2,106)
(9,823)
6,850
(2,973)
(25%)
(23%)
(25%)
148%
(7%)
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The following table provides details regarding our core business revenue for the periods presented:
(in thousands, except percentages)
Core revenue:
Instrument revenue
Disposables revenue
Lease revenue
Other revenue
Total core revenue
Year Ended
December 31,
Change
2023
2022
Amount
%
$
$
8,317
10,283
10,326
897
29,823
$
$
11,704
16,027
10,897
1,018
39,646
$
$
(3,387)
(5,744)
(571)
(121)
(9,823)
(29%)
(36%)
(5%)
(12%)
(25%)
Total revenue for the year ended December 31, 2023 was $41.3 million, a decrease of $3.0 million, or 7%, compared to revenue
of $44.3 million during the year ended December 31, 2022. The decrease was primarily driven by the decreases in total core revenue
described below.
Total core revenue for the year ended December 31, 2023 was $29.8 million, a decrease of $9.8 million, or 25%, compared to
core revenue of $39.6 million for the year ended December 31, 2022. Our overall decrease in core revenue was primarily driven by
revenue decreases in instrument sales and disposable sales in the cell therapy market and drug discovery markets. Revenue from
instrument sales and disposable sales decreased by $3.4 million and $5.7 million, respectively, in part due to the timing of purchases
by customers and partially attributable to challenges in the macro environment affecting the cell therapy and drug discovery markets.
Revenue from lease elements and other core revenue decreased $0.6 million and $0.1 million, respectively, for the year ended
December 31, 2023 compared to the year ended December 31, 2022.
The $6.9 million increase in program-related revenues resulted from achievement of contractually specified clinical and
regulatory milestones and reflects the expected variability from period to period in the level of program-related revenue given the
small number of individual triggering events which currently generate this portion of revenue. We expect program-related revenue to
continue to experience variability for some time, although we anticipate that variability may moderate as the volume of SPL
partnerships and associated milestones grows.
Cost of Goods Sold and Gross Profit
(in thousands, except percentages)
Cost of goods sold
Gross profit
Gross margin
Year Ended December 31,
Change
2023
2022
Amount
%
$
4,742
$ 36,546
89%
$
5,098
$ 39,163
88%
$
(356)
$ (2,617)
(7%)
(7%)
Cost of goods sold decreased by $0.4 million, or 7%, for the year ended December 31, 2023, compared to the year ended
December 31, 2022. The decrease was primarily driven by decreased revenue from instrument sales and disposable sales.
Gross profit decreased by $2.6 million, or 7%, for the year ended December 31, 2023, compared to the year ended December 31,
2022. The decrease was primarily driven by decreased revenue from instrument and disposable sales, offset by an increase in
inventory reserves of $0.7 million.
During the year ended December 31, 2023, gross margin was 89%, compared to 88% in the same period of 2022. The increase
was primarily driven by an increase in program related revenue, offset by an increase in cost of goods sold due to initial scale-up of
our in-house manufacturing and inventory reserves.
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Operating Expenses
Research and Development
(in thousands, except percentages)
Research and development
Year Ended December 31,
Change
2023
2022
Amount %
$ 23,817
$ 19,514
$4,303
22%
Research and development expenses increased by $4.3 million, or 22%, for the year ended December 31, 2023 compared to the
year ended December 31, 2022. The increase was primarily driven by a $1.2 million increase in compensation expenses as a result of
increases in headcount, a $1.1 million increase in lab expense and new product development, a $1.0 million increase in stock-based
compensation, a $0.5 million increase in travel expenses, $0.4 million increase in professional service fees relating to new product
and regulatory consultants and a $0.1 million increase in other expenses.
Sales and Marketing
(in thousands, except percentages)
Sales and marketing
Year Ended December 31,
Change
2023
2022
Amount %
$ 26,975
$ 18,653
$ 8,322 45%
Sales and marketing expenses increased by $8.3 million, or 45%, for the year ended December 31, 2023, compared to the year
ended December 31, 2022. The increase was primarily driven by a $4.3 million increase in compensation expenses as a result of
increases in headcount, a $1.2 million increase in occupancy expenses, a $0.8 million increase in travel expenses, a $0.7 million
increase in stock-based compensation, a $0.6 million increase in marketing expenses, a $0.4 million increase in professional fees, and
a $0.3 million increase in general office expenses.
General and Administrative
(in thousands, except percentages)
General and administrative
Year Ended December 31,
Change
2023
2022
Amount %
$ 30,068
$ 25,829
$ 4,239 16%
General and administrative expense increased by $4.2 million, or 16%, for the year ended December 31, 2023, compared to the
year ended December 31, 2022. The increase was primarily driven by a $1.9 million increase in compensation expenses, a $1.6
million increase in professional fees, a $0.7 million increase in general office expenses, a $0.5 million increase in stock-based
compensation, a $0.5 million increase in legal fees, a $0.2 million increase in memberships, and a $0.2 million increase in travel and
other expenses, partially offset by a $0.9 million reduction in public company fees, and a $0.5 million decrease in occupancy
expenses.
Depreciation and Amortization
(in thousands, except percentages)
Depreciation and amortization
Year Ended December 31,
Change
2023
2022
Amount %
$
3,985
$
2,528
$ 1,457 58%
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Depreciation and amortization expense increased by $1.5 million, or 58%, for the year ended December 31, 2023, compared to
the year ended December 31, 2022. The increase was primarily driven by increases in leasehold improvements and investments in
laboratory equipment and consignment instruments.
Interest and Other Income (Expense)
(in thousands, except percentages)
Other expense
Interest and other income
Year Ended December 31,
Change
2023
2022
Amount
%
$
$ 10,376
— $
$
(127) $
3,917
127
$ 6,459
100%
165%
Other expense for the year ended December 31, 2022 was primarily related to a write-off of leasehold improvements due to early
termination of a prior facility lease. We did not incur other expense for the year ended December 31, 2023. The increase in interest
and other income was driven by increases in interest rates and a higher weighted average balance of interest-bearing securities held
during the year ended December 31, 2023.
Liquidity and Capital Resources
Since our inception, we have experienced losses and negative cash flows from operations. For the years ended December 31,
2023 and 2022, we incurred net losses of $37.9 million and $23.6 million, respectively. As of December 31, 2023, we had an
accumulated deficit of $175.8 million. To date, we have funded our operations primarily with proceeds from sales of common stock,
borrowings under loan agreements and cash flows associated with sales and licenses of our products to customers. On August 3,
2021, we completed our U.S. IPO, generating gross proceeds of $201.8 million. We received net proceeds of $184.3 million after
deducting aggregate underwriting commissions and offering expenses of $17.6 million. As of December 31, 2023, we had cash and
cash equivalents and short-term investments of $168.3 million.
We expect to incur near-term operating losses as we continue to invest in expanding our business through growing our sales and
marketing efforts, continued research and development, product development and expanding our product offerings. Based on our
current business plan, we believe that our existing cash, cash equivalents, short-term investments and internally generated cash flows
will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months.
We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources
sooner than we expect. Our future funding requirements will depend on many factors, including:
•
transaction and capital expenditures necessitated by strategic activities;
• market acceptance of our products;
•
•
•
•
•
the cost and timing of establishing additional sales, marketing and distribution capabilities;
the cost of our research and development activities and successful development of data supporting use of our products for
new applications, and timely launch of new features and products;
sales to existing and new customers and the progress of our SPL partners in developing their pipelines of product
candidates;
our ability to enter into additional SPL partnerships and licenses for clinical use of our platform in the future;
changes in the amount of capital available to existing and emerging customers in our target markets;
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•
•
the effect of competing technological and market developments; and
the level of our selling, general and administrative expenses.
If we are unable to execute on our business plan and adequately fund operations, or if the business plan requires a level of
spending in excess of cash resources, we may have to seek additional equity or debt financing. If additional financings are required
from outside sources, we may not be able to raise such capital on terms acceptable to us or at all. To the extent that we raise
additional capital through the sale of equity or debt securities, the ownership interest of our stockholders will be diluted, and the
terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders.
Debt financing, if available, may involve agreements that include covenants restricting our ability to take specific actions, such as
incurring additional debt, selling or licensing our assets, making product acquisitions, making capital expenditures or declaring
dividends. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to
relinquish some rights to our technologies or our products, or grant licenses on terms that are not favorable to us. If we are unable to
raise additional capital when desired, we may have to delay development or commercialization of future products. We also may have
to reduce marketing, customer support or other resources devoted to our existing products.
Cash Flows
The following table summarizes our uses and sources of cash for the periods presented:
(in thousands)
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Net increase (decrease) in cash and cash equivalents
Operating Activities
Year Ended
December 31,
2023
2022
$ (21,686) $ (14,783)
(24,823)
2,888
$ (36,718)
54,984
2,143
$ 35,441
Net cash used in operating activities for the year ended December 31, 2023 was $21.7 million, and consisted primarily of our net
loss of $37.9 million, offset in part by net non-cash expenses of $12.4 million, including stock-based compensation of $14.0 million,
depreciation and amortization expenses of $4.2 million, an increase in our inventory reserve of $0.7 million, and other non-cash
expenses totaling $0.6 million, offset by the amortization of $7.1 million of discounts on investments. We also had net cash inflows
of $3.8 million due to net changes in our operating assets and liabilities. Net changes in our operating assets and liabilities consisted
primarily of a $5.2 million decrease in accounts receivable, a $1.9 million decrease in tenant improvement allowances receivable, a
$3.3 million increase in accounts payable, accrued expenses and other, and a $0.4 million decrease in other assets, offset by a $4.5
million increase in inventory, a $1.6 million decrease in deferred revenue, a $0.6 million decrease in prepaid expenses and other
current assets, and a $0.2 million decrease in operating lease and other liabilities.
Net cash used in operating activities for the year ended December 31, 2022 was $14.8 million, and consisted primarily of our net
loss of $23.6 million, offset in part by net non-cash expenses of $12.8 million, including stock-based compensation of $11.8 million,
depreciation and amortization expenses of $2.7 million, non-cash lease expense and other non-cash charges of $1.0 million, offset by
the amortization of $2.7 million of discounts on investments. We also had net cash outflows of $3.2 million due to net changes in our
operating assets and liabilities. Net changes in our operating assets and liabilities consisted primarily of an increase in lease liabilities
of $5.5 million, an increase in other liabilities of $0.9 million and a decrease in prepaid expenses and other current assets of $0.3
million, partially offset by a $4.6 million increase in accounts receivable, a $3.5 million increase in inventory, a $1.9 million increase
in tenant improvement allowances receivable and a $0.5 million increase in other assets.
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Investing Activities
Cash provided by investing activities during the year ended December 31, 2023 was $55.0 million, which was primarily
attributable to maturities of investments of $313.8 million, partially offset by purchases investments of $255.1 million, and purchases
of property and equipment of $3.7 million. Purchases of investments are made as part of ordinary course investing activities in
compliance with our investment policy which has as its primary objective preservation of principal.
Cash used in investing activities during the year ended December 31, 2022 was $24.8 million, which was primarily attributable
to maturities of investments of $284.6 million, partially offset by purchases of investments of $290.9 million, capitalized lease-
related construction expenses of $14.2 million, purchases of equipment and furniture of $3.9 million and capitalized internal-use
software of $1.0 million.
Financing Activities
Net cash provided by financing activities during the year ended December 31, 2023 was $2.1 million, which consisted of
proceeds from the exercise of stock options and employee purchases from our employee stock purchase plan.
Net cash provided by financing activities during the year ended December 31, 2022 was $2.9 million, which consisted
exclusively of proceeds from the exercise of stock options.
Contractual Obligations and Commitments
Our contractual obligations and commitments as of December 31, 2023 consisted exclusively of operating lease obligations. In
May 2021, we entered into an operating lease for new office, lab and warehouse/manufacturing space. The lease for the new facility
consists of three phases, with Phase 1 having commenced in December 2021, Phase 2 having commenced in the first quarter of 2022
and Phase 3 commenced in November 2023. The lease term for all phases expires on August 31, 2035. We designed and constructed
the leasehold improvements with the approval of the landlord. The lease provides that the landlord will reimburse us for costs of
property improvements up to amounts specified in the lease. The total incremental non-cancellable lease payments under the lease
agreement are $29.6 million through the lease term. We expect to be able to fund our obligations under the new lease, both in the
short term and in the long term, from cash on hand, short-term investments and operating cash flows. See Part I, Item 2, “Facilities”
in this Annual Report for additional information regarding the new office lease.
On June 8, 2021, we exercised our option to early terminate one of our office and lab space lease arrangements associated with
our former headquarters facility. That amended office lease expired on June 7, 2022. In June 2022, we exercised our option to early
terminate our remaining subleased office, laboratory, manufacturing and other spaces associated with our former headquarters
facility, which became effective in July and August 2022. These subleases previously had expiration dates in October 2023.
We had no debt obligations as of December 31, 2023 or 2022.
Purchase orders or contracts for the purchase of supplies and other goods and services are based on our current procurement or
development needs and are generally fulfilled by our vendors within short time horizons.
Critical Accounting Estimates
We have prepared our consolidated financial statements in accordance with generally accepted accounting principles in the
United States. Our preparation of these consolidated financial statements requires us to make estimates, assumptions and judgments
that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and
judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are
reasonable under the circumstances, the results of which form
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the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.
Actual results could therefore differ materially from these estimates under different assumptions or conditions.
While our significant accounting policies are described in more detail in Note 2 to our audited consolidated financial statements
included elsewhere in this Annual Report, we believe the following accounting policies to be critical to the judgments and estimates
used in the preparation of our consolidated financial statements.
Revenue Recognition
We derive revenue from two primary sources, product sales, which are comprised primarily of instrument and disposables
revenue, and leased elements, which are comprised of revenue associated with instrument leases.
For revenue generated pursuant to contracts with customers, we recognize revenue when our customer obtains control of
promised goods or services, in an amount that reflects the consideration that we expect to receive in exchange for those goods or
services. In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under our arrangements, we
perform the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the
promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii)
measurement of the transaction price, including the assessment of the constraint on variable consideration; (iv) allocation of the
transaction price to the performance obligations; and (v) recognition of revenue when, or as, we satisfy each performance obligation.
At contract inception, we assess the goods or services promised within each contract, determine which goods or services are
performance obligations and assess whether each promised good or service is distinct.
We enter into instrument lease and licensing arrangements that are accounted for using lease accounting rather than accounted
for as pursuant to contracts with customers. Under these arrangements, we license to third parties the rights to use our products and
embedded software. The terms of these arrangements typically include payment to us of one or more of the following: instrument
lease fees, and clinical progress milestones and may, under the terms of existing agreements, include regulatory and/or sales
milestone payments and/or royalties. Revenue from instrument leases is recognized ratably over the determined contractual term of
the lease agreement and revenue from associated milestones is recognized when each specific milestone event is achieved by the
customer.
In some product sale arrangements, products and services have been sold together representing distinct performance obligations.
In such arrangements we allocate the sale price to the various performance obligations in the arrangement on a relative standalone
selling price basis. Under this basis, the Company determines the estimated selling price of each performance obligation in a manner
that is consistent with that used to determine the price to sell the deliverable on a standalone basis.
Taxes, such as sales, value-add and other taxes, collected from customers concurrent with revenue generating activities and
remitted to governmental authorities are not included in revenue. Shipping and handling costs associated with outbound freight are
primarily directly paid by customers as pass-through costs.
Amounts received under lease arrangements prior to revenue recognition are recorded as deferred revenue in our consolidated
balance sheets. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as
current portion of deferred revenue in our consolidated balance sheets. Amounts not expected to be recognized as revenue within the
12 months following the balance sheet date are classified as other liabilities in our consolidated balance sheets.
Stock-based Compensation
We maintain an incentive compensation plan under which stock options and restricted stock units are granted primarily to
employees, consultants and non-employee directors. We measure stock-based compensation expense on the
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date of grant and recognize the corresponding compensation expense of those awards over the requisite service period, which is
generally the vesting period of the respective award. We record forfeitures as they occur.
We estimate the fair value of stock options granted to our employees and directors based on the closing price of our common
stock on the grant date and the resulting stock-based compensation expense using the Black-Scholes option-pricing model. The fair
value is based on the value of our common stock on the Nasdaq Global Select Market on the grant date. The Black-Scholes option-
pricing model requires the use of assumptions regarding a number of variables that are complex, subjective and generally require
significant judgment to determine. The assumptions include expected volatility using either publicly traded peer group companies’
common stock (for grants before July 1, 2022) or the Company’s own common stock (for grants beginning on July 1, 2022), expected
dividend yield, risk-free rate of interest and the expected term using the simplified method.
Recent Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position, results of
operations or cash flows is disclosed in Note 2 to our consolidated financial statements in this Annual Report.
Emerging Growth Company Status
We are an “emerging growth company,” or EGC, under the JOBS Act. Section 107 of the JOBS Act provides that an EGC can
take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or
revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would
otherwise apply to private companies. We have elected to avail ourselves of the delayed adoption of new and revised accounting
standards and, therefore, we will be subject to the same requirements to adopt new or revised accounting standards as private entities.
We also intend to rely on other exemptions provided by the JOBS Act, including not being required to comply with the auditor
attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.
We will remain an EGC until the earliest of: (i) December 31, 2026, which is the last day of the fiscal year following the fifth
anniversary of our initial public offering in the United States; (ii) the last day of the first fiscal year in which our annual gross
revenue is $1.235 billion or more; (iii) the date on which we have, during the previous rolling three-year period, issued more than $1
billion in non-convertible debt securities; and (iv) the last day of the fiscal year in which the market value of our common stock held
by non-affiliates exceeded $700 million as of June 30 of such fiscal year.
We are also a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act. We may continue to be a smaller
reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million as of the last business day
of our second fiscal quarter or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the
market value of our stock held by non-affiliates is less than $700 million as of the last business day of our second fiscal quarter. If we
are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions
from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company
we have elected to present only the two most recent fiscal years of audited financial statements in this Annual Report. In addition,
similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive
compensation.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
We are exposed to market risk for changes in interest rates related primarily to balances of our financial instruments including
cash and cash equivalents and short-term investments. The primary objective of our investment approach is to preserve principal and
provide liquidity. As a result, a 10% change in the level of market interest rates would not be expected to have a material effect on
our business, financial condition or results of operations.
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Foreign Currency Risk
We are exposed to financial risks as a result of exchange rate fluctuations between the U.S. Dollar and certain foreign currencies
and the volatility of these rates. In the normal course of business, we earn revenue primarily denominated in U.S. Dollars as well as
in Euros and British Pounds. We incur expenses primarily in U.S. Dollars as well as in Euros, British Pounds and other currencies.
Our reporting currency is the U.S. Dollar. We hold our cash primarily in U.S. Dollars as well as in Euros and British Pounds. We do
not expect that foreign currency gains or losses will have a material effect on our financial position or results of operations in the
foreseeable future. We have not entered into any hedging arrangements with respect to foreign currency risk. As our international
operations grow, we will continue to reassess our approach to managing risks relating to fluctuations in currency exchange rates.
Inflation Risk
During the last two years, inflation and changing prices have not had a material effect on our business. We are unable to predict
whether inflation or changing prices will materially affect our business in the foreseeable future.
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Item 8. Financial Statements and Supplementary Data.
MaxCyte, Inc.
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (CohnReznick LLP; Tysons, Virginia; PCAOB ID:
596)
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Changes in Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Page No
93
94
95
96
97
98
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of MaxCyte, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of MaxCyte, Inc. (the “Company”) as of December 31, 2023 and
2022, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the years then ended,
and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023
and 2022, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement whether due to
error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we
express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating
the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ CohnReznick LLP
We have served as the Company’s auditor since 2018.
Tysons, Virginia
March 12, 2024
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MaxCyte, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
Assets
Current assets:
Cash and cash equivalents
Short-term investments, at amortized cost
Accounts receivable, net
Accounts receivable - TIA (Note 8)
Inventory
Prepaid expenses and other current assets
Total current assets
Investments, non-current, at amortized cost
Property and equipment, net
Right-of-use asset - operating leases
Other assets
Total assets
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
Accrued expenses and other
Operating lease liability, current
Deferred revenue, current portion
Total current liabilities
Operating lease liability, net of current portion
Other liabilities
Total liabilities
Commitments and contingencies (Note 8)
Stockholders’ equity
Preferred stock, $0.01 par value; 5,000,000 shares authorized and no shares issued and
outstanding at December 31, 2023 and December 31, 2022
Common stock, $0.01 par value; 400,000,000 shares authorized, 103,961,670 and 102,397,913
shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively
Additional paid-in capital
Accumulated deficit
Total stockholders’ equity
Total liabilities and stockholders’ equity
December 31,
2023
December 31,
2022
$
$
$
$
$
$
$
46,506
121,782
5,778
—
12,229
3,899
190,194
42,938
23,513
11,241
388
268,274
743
11,269
774
5,069
17,855
17,969
283
36,107
11,065
216,275
11,175
1,912
8,581
3,258
252,266
—
23,725
9,853
809
286,653
292
8,265
157
6,713
15,427
15,938
1,320
32,685
—
—
1,040
406,925
(175,798)
232,167
268,274
$
1,024
390,819
(137,875)
253,968
286,653
See accompanying notes to consolidated financial statements.
94
MaxCyte, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
Table of Contents
Revenue
Cost of goods sold
Gross profit
Operating expenses:
Research and development
Sales and marketing
General and administrative
Depreciation and amortization
Total operating expenses
Operating loss
Other income and expense:
Other expense
Interest income
Total other income
Provision for income taxes
Net loss
Basic and diluted net loss per share
Weighted average shares outstanding, basic and diluted
$
$
$
Year Ended December 31,
2022
2023
$
41,288
4,742
36,546
23,817
26,975
30,068
3,985
84,845
(48,299)
44,261
5,098
39,163
19,514
18,653
25,829
2,528
66,524
(27,361)
—
10,376
10,376
—
(37,923) $
(0.37) $
103,268,502
(127)
3,917
3,790
—
(23,571)
(0.23)
101,702,664
See accompanying notes to consolidated financial statements.
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MaxCyte, Inc.
Consolidated Statements of Changes in Stockholders’ Equity
(in thousands, except share amounts)
Balance at December 31, 2021
Stock-based compensation expense
Exercise of stock options
Net loss
Balance at December 31, 2022
Stock-based compensation expense
Vesting of restricted stock units
Issuance of common stock under employee stock purchase plan
Exercise of stock options
Net loss
Balance at December 31, 2023
Common Stock
Additional
Paid-in
Amount Capital
Shares
101,202,705
$ 1,012
—
1,195,208
—
—
12
—
$ 376,191
11,752
2,876
$ (114,304) $
—
—
—
Accumulated
Deficit
102,397,913
—
288,550
82,423
1,192,784
—
103,961,670
1,024
—
3
1
12
—
$ 1,040
390,819
13,979
(3)
268
1,862
—
$ 406,925
(23,571)
(137,875)
—
—
—
—
(37,923)
$ (175,798) $
Total
Stockholders’
Equity
262,899
11,752
2,888
(23,571)
253,968
13,979
—
269
1,874
(37,923)
232,167
See accompanying notes to consolidated financial statements.
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MaxCyte, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Cash flows from operating activities:
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Year Ended December 31,
2023
2022
$
(37,923)
$
(23,571)
Depreciation and amortization
Non-cash lease expense
Net book value of consigned equipment sold
Loss on disposal of fixed assets
Stock-based compensation
Bad debt expense
Change in excess/obsolete inventory reserve
Amortization of discounts on investments
Changes in operating assets and liabilities:
Accounts receivable
Accounts receivable - TIA
Inventory
Prepaid expense and other current assets
Other assets
Accounts payable, accrued expenses and other
Operating lease liability
Deferred revenue
Other liabilities
Net cash used in operating activities
Cash flows from investing activities:
Purchases of investments
Maturities of investments
Purchases of property and equipment
Proceeds from sale of equipment
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Proceeds from exercise of stock options
Proceeds from issuance of common stock under employee stock purchase plan
Net cash provided by financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental disclosure of non-cash investing and financing activities:
Property and equipment purchases included in accounts payable and accrued expenses
Lease liability reduction due to operating lease modification and early termination
Right-of-use assets obtained in exchange for lease liabilities
$
$
$
$
See accompanying notes to consolidated financial statements.
97
4,171
395
94
30
13,979
171
697
(7,120)
5,226
1,912
(4,534)
(641)
421
3,252
(133)
(1,644)
(39)
(21,686)
(255,095)
313,770
(3,700)
9
54,984
1,874
269
2,143
35,441
11,065
46,506
$
2,698
767
76
139
11,752
—
—
(2,667)
(4,569)
(1,912)
(3,493)
320
(492)
(150)
5,482
(34)
871
(14,783)
(290,942)
284,596
(18,477)
—
(24,823)
2,888
—
2,888
(36,718)
47,783
11,065
$
566
— $
$
1,782
363
540
5,476
Table of Contents
MaxCyte, Inc.
Notes to Consolidated Financial Statements
(in thousands, except par value, share and per share amounts)
1. Organization and Description of Business
MaxCyte, Inc. (the “Company” or “MaxCyte”) was incorporated as a majority owned subsidiary of EntreMed, Inc.
(“EntreMed”) on July 31, 1998, under the laws and provisions of the state of Delaware and commenced operations on July 1, 1999.
In November 2002, MaxCyte was recapitalized and EntreMed was no longer deemed to control the Company.
MaxCyte is a global life sciences company focused on advancing the discovery, development and commercialization of next-
generation cell therapies. MaxCyte leverages its proprietary cell engineering technology platform to enable the programs of its
biotechnology and pharmaceutical company customers who are engaged in cell therapy, including gene editing and immuno-
oncology, as well as in drug and biologic discovery and development and biomanufacturing. The Company licenses and sells its
instruments and technology and sells its consumables to developers of cell therapies and to pharmaceutical and biotechnology
companies for use in drug and biologic discovery and development and biomanufacturing.
The Company’s registration statement on Form S-1 related to its initial public offering of common stock in the United States (the
“IPO”) was declared effective on July 29, 2021, and the Company’s common stock began trading on the Nasdaq Global Select
Market on July 30, 2021. On August 3, 2021, the Company issued and sold 15,525,000 shares of common stock in the IPO at a price
to the public of $13.00 per share, inclusive of 2,025,000 shares issued pursuant to the full exercise of the underwriters’ option to
purchase additional shares. The IPO generated gross proceeds to the Company of $201,825. The Company received aggregate net
proceeds of $184,268 from the IPO after deducting aggregate underwriting commissions and offering costs of $17,557.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (“US GAAP”).
Use of Estimates
The preparation of consolidated financial statements in conformity with US 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 consolidated financial statements and the reported amount of revenues and expenses during the reporting period. In the
accompanying consolidated financial statements, estimates are used for, but not limited to, revenue recognition, stock-based
compensation, allowance for credit losses, allowance for inventory obsolescence, accruals for contingent liabilities, deferred taxes
and valuation allowance, and the depreciable lives of fixed assets. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant
intercompany balances have been eliminated in consolidation.
Reclassifications
Certain reclassifications have been made to prior years’ financial statements to conform to current year presentation. These
reclassifications had no effect on previously reported results of operations or accumulated deficit.
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Concentrations of Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash
equivalents, investments and trade receivables. The Company’s cash and cash equivalents balances may exceed federally insured
limits and cash may also be deposited in foreign bank accounts that are not covered by federal deposit insurance. The Company does
not believe that this results in any significant credit risk. The Company invests its excess cash in money market funds, commercial
paper and corporate debt. The Company has established guidelines relative to credit ratings, diversification and maturities that seek to
maintain safety and liquidity.
Significant customers are those that accounted for 10% or more of the Company’s total revenue for the period or accounts
receivable as the end of a reporting period. During the years ended December 31, 2023 and 2022, one customer represented 30% and
23% of revenue, respectively. As of December 31, 2023, three customers accounted for 38% of accounts receivable. As of
December 31, 2022, one customer accounted for 14% of accounts receivable.
Certain components included in the Company’s products are obtained from a single source or a limited group of suppliers. Of the
inventory on hand at December 31, 2023 and 2022, the Company purchased approximately 56% and 34%, respectively, from a single
supplier. At December 31, 2023, no supplier accounted for 10% or more of the Company’s total accounts payable. At December 31,
2022, amounts payable to two suppliers totaled 34% of total accounts payable.
Foreign Currency
The Company’s functional currency is the US Dollar. Transactions denominated in foreign currencies are transacted at the
exchange rate in effect at the date of each transaction. 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 consolidated statements of operations as general and administrative expense. For the years ended December 31, 2023 and 2022,
the Company recognized $84 and $79 in foreign currency transaction loss, 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. US 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 6 for additional information regarding fair value.
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Cash and Cash Equivalents and Investments
Cash and cash equivalents consist of financial instruments including money market funds and commercial paper with original
maturities of less than 90 days. Short-term investments consist of commercial paper, corporate bonds and U.S. Treasury securities
and government agency bonds with original maturities greater than 90 days and less than one year. Long-term investments consist of
U.S. Treasury securities and government agency bonds with maturities greater than one year. All money market funds and
investments are recorded at amortized cost unless they are deemed to be impaired on an other-than-temporary basis, at which time
they are recorded at fair value using Level 2 inputs and there were no changes from Level 2 for the years ended December 31, 2023
and 2022, respectively.
Inventory
The Company sells or licenses 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 is carried at the lower of cost or net realizable value. Inventory that is obsolete or in excess of forecasted usage
is written down to its estimated net realizable value based on assumptions about future demand and market conditions. Inventory
write-downs are charged to cost of goods sold and establish a new cost basis for the inventory.
Accounts Receivable
Accounts receivable are reduced by an allowance for expected credit losses if needed. The allowance for expected credit losses
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 expected credit losses. The Company recorded an allowance for expected credit losses of
$130 at December 31, 2023. The Company determined no allowance was necessary at December 31, 2022.
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 five to seven years. Leasehold improvements are
amortized over the shorter of the estimated lease term or useful life. 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 include capitalized costs to develop internal-use software. Applicable costs are capitalized during the
development stage of the project and include direct internal costs, third-party costs and allocated interest expenses as appropriate.
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. The Company recognized no impairment for the years ended December 31, 2023 or 2022.
Revenue Recognition
The Company analyzes contracts to determine the appropriate revenue recognition using the following steps: (i) identification of
contracts with customers; (ii) identification of distinct performance obligations in the contract; (iii) determination of contract
transaction price; (iv) allocation of contract transaction price to the performance obligations; and (v) determination of revenue
recognition based on timing of satisfaction of the performance obligations.
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In some arrangements, product and services have been sold together representing distinct performance obligations. In such
arrangements the Company allocates the sale price to the various performance obligations in the arrangement on a relative selling
price basis. Under this basis, the Company determines the estimated selling price of each performance obligation in a manner that is
consistent with that used to determine the price to sell the deliverable on a standalone basis.
The Company recognizes revenue upon the satisfaction of its performance obligation (generally upon transfer of control of
promised goods or services to its customers) in an amount that reflects the consideration to which it expects to be entitled in
exchange for those goods or services.
The Company defers incremental costs of obtaining a customer contract and amortizes the deferred costs over the period that the
goods and services are transferred to the customer. The Company had no material incremental costs to obtain customer contracts in
any period presented.
Deferred revenue results from amounts billed in advance to customers or cash received from customers in advance of services
being provided.
Cost of Goods Sold
Cost of goods sold primarily consists of costs for raw material parts, contract manufacturer costs, salaries, overhead, leased
equipment depreciation and other direct costs related to sales recognized as revenue in the 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. Research costs performed for
fees paid by customers are included in cost of goods sold.
Stock-Based Compensation Expense
Stock-based compensation expense is measured based on grant-date fair value. The Company grants stock-based awards in
exchange for employee, consultant 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 uses the market closing price of its common stock as reported on the Nasdaq Global Select Market for the fair
value of equity awards. The grant-date fair value of stock options is estimated using the Black-Scholes option pricing model for
estimating fair value of its stock options granted. Option valuation models, including the Black-Scholes option pricing 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 expected volatility, expected dividend yield, risk-free rate of interest and the expected life of
the award. Historically, the Company exclusively used identified comparable companies’ stock price volatility to calculate expected
volatility for the periods presented due to lack of history with its own common stock available to determine its volatility. Beginning
with the third quarter of 2022, the Company has observed sufficient historical information regarding its common stock to use the
Company’s common stock for the estimate of volatility in the Black-Scholes option pricing model. Management’s methodology for
developing other assumptions has not changed from prior periods. A discussion of management’s methodology for developing each
of the assumptions used in the Black-Scholes option pricing model is as follows:
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. For the first two quarters of 2022, the Company identified
several public entities of similar size, complexity and stage of development to calculate historical volatility using the volatility of
these companies. Beginning with the third quarter of 2022, the Company estimates its expected stock volatility based on
historical volatility of its own common stock.
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Expected Dividend Yield
The Company has never declared or paid common stock dividends and has no plans to do so in the foreseeable future.
Therefore, the Company used an expected dividend yield of zero.
Risk-Free Interest Rate
This approximates the US Treasury rate for the day of each option grant during the year, having a term that closely
resembles the expected term of the option. For the Employee Stock Purchase Plan (“ESPP”), the US Treasury rate on each
Offering Date is used for a term that approximates the Purchase Period.
Expected Term
This is the period that the options granted are expected to remain unexercised. Options granted have a maximum term of
ten years. The Company estimates the expected term of the options to be approximately six years for options, with a majority
vesting over a four-year 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. For the ESPP, the term of each
Offering Period is used.
Expected Forfeiture Rate
The Company records forfeitures as they occur.
The fair value of stock options was estimated using the Black-Scholes option-pricing model based on the following assumptions
during the years ended:
Expected volatility
Risk-free interest rate
Expected term (in years)
December 31,
2023
44-56%
3.3-4.6%
4-6
2022
44-58%
1.9-4.0%
6
The fair value of the shares under the ESPP was estimated using the Black-Scholes option-pricing model based on the following
assumptions during the year ended:
Expected volatility
Risk-free interest rate
Expected term (in years)
December 31
2023
57-60%
5.36-5.43%
0.5
See Note 4 for additional information regarding stock-based compensation.
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.
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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 on the consolidated 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 2020 and all subsequent periods. The Company has a federal Net Operating Loss (“NOL”) carryforward of
approximately $88.9 million as of December 31, 2023, of which approximately $32.7 million begins to expire in 2025. Certain of the
Company’s NOLs were initially limited on an annual basis pursuant to Section 382 of the Internal Revenue Code of 1986 (“Section
382”), as amended, as a result of a cumulative change in ownership that occurred in 2016; however, as of December 31, 2023, the
Company has determined that the cumulative limitation amount exceeds the NOLs subject to the limitation and, as a result, no annual
limitation remains.
Leases
Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities
represent its obligation to make lease payments arising from the lease. In transactions where the Company is the lessee, at the
inception of a contract, the Company determines if the arrangement is, or contains, a lease. Operating lease ROU assets and liabilities
are recognized at commencement date based on the present value of lease payments over the lease term. Lease expense is recognized
on a straight-line basis over the lease term.
The Company has made certain accounting policy elections for leases where it is the lessee whereby the Company (i) does not
recognize ROU assets or lease liabilities for short-term leases (those with original terms of 12-months or less) and (ii) combines lease
and non-lease elements of its operating leases. See Note 8 for additional details about leases where the Company is the lessee.
All transactions in which the Company is the lessor are short-term (one year or less) and have been classified as operating leases.
All leases require upfront payments covering the full period of the lease and thus, there are no future payments expected to be
received from existing leases. See Note 3 for details about revenue recognition related to lease agreements.
Comprehensive Loss
For the years ended December 31, 2023 and 2022, comprehensive loss equaled net loss; therefore, a separate statement of
comprehensive loss is not included in the accompanying financial statements.
Loss Per Share
Basic loss per share is computed by dividing net loss available to common stockholders 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 stockholders 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.
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 stock options and restricted stock units
excluded from the computation of diluted loss per share, was 16.7 million and 15.0 million for the years ended December 31, 2023
and 2022, respectively.
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Recent Accounting Pronouncements
New Accounting Pronouncements Recently Adopted
In June 2016, the Financial Accounting Standards Board (“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 recognizing 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 December 15, 2022, 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 adopted this new accounting pronouncement
effective January 1, 2023 and the adoption did not have a material impact on its consolidated 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. Revenue
Revenue is principally from the sale of instruments and processing assemblies, and extended warranties and the lease of
instruments, which lease agreements also include customer-specific milestone payments. In some arrangements, product and services
have been sold together representing distinct performance obligations. In these arrangements the Company allocates the sale price to
the various performance obligations in the arrangement on a relative selling price basis. Under this basis, the Company determines
the estimated selling price of each performance obligation in a manner that is consistent with that used to determine the price to sell
the deliverable on a standalone basis.
Revenue is recognized at the time control is transferred to the customer and the performance obligation is satisfied. Revenue
from the sale of instruments and processing assemblies is generally recognized at the time of shipment to the customer, provided no
significant vendor obligations remain and collectability is reasonably assured. Revenue from equipment leases is recognized ratably
over the contractual term of the lease agreement and when specific milestones are achieved by a customer. Licensing fee revenue is
recognized ratably over the license period. Revenue from fees for research services is recognized when services have been provided.
Disaggregated revenue for the year ended December 31, 2023 was as follows:
Product sales
Lease elements
Other
Total
$
$
104
Year ended December 31, 2023
Revenue from
Contracts with
Customers
Revenue
from Lease
Elements
18,600
$
—
897
19,497
$
— $
21,791
—
$
21,791
Total
Revenue
18,600
21,791
897
41,288
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Disaggregated revenue for the year ended December 31, 2022 was as follows:
Product sales
Lease elements
Other
Total
Year ended December 31, 2022
Revenue from
Contracts with
Customers
Revenue
from Lease
Elements
$
$
27,730
$
—
1,018
28,748
$
— $
15,513
—
$
15,513
Total
Revenue
27,730
15,513
1,018
44,261
Additional disclosures relating to Revenue from Contracts with Customers
Changes in deferred revenue for the years ended December 31, 2023 and 2022 were as follows:
Balance at January 1
Revenue recognized in the current period from amounts included in the beginning balance
Current period deferrals, net of amounts recognized in the current period
Balance at December 31
$
$
Year Ended December 31,
2023
2022
7,036 $
(6,507)
4,823
5,352 $
7,197
(6,738)
6,577
7,036
Remaining contract consideration for which revenue has not been recognized due to unsatisfied performance obligations with a
duration greater than one year was $368 at December 31, 2023, of which the Company expects to recognize $85 in 2024, $81 in
2025, $39 in 2026, $21 in 2027, and $142 thereafter.
In the years ended December 31, 2023 and 2022, the Company did not incur, and therefore did not defer, any material
incremental costs to obtain contracts or costs to fulfil contracts.
4. Stockholders’ Equity
Common Stock
During the year ended December 31, 2023, the Company issued 1,192,784 shares of common stock resulting from stock option
exercises, receiving gross proceeds of $1,874 and issued 288,550 shares from the vesting of restricted stock units, and issued 82,423
shares to employees pursuant to the Employee Stock Purchase Plan (“ESPP”), receiving gross proceeds of $269.
During the year ended December 31, 2022, the Company issued 1,195,208 shares of common stock as a result of stock option
exercises, receiving gross proceeds of $2,888.
Preferred Stock
The Company’s certificate of incorporation authorizes 5,000,000 shares of preferred stock, par value $0.01 per share. As of
December 31, 2023 and 2022, no shares of preferred stock were issued or outstanding.
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Stock Incentive Plans
The Company adopted the MaxCyte, Inc. Long-Term Incentive Plan (the “2016 Plan”) in January 2016 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.
In December 2021, the Company adopted the MaxCyte, Inc. 2021 Inducement Plan (the “Inducement Plan”) to provide for the
awarding of (i) non-qualified stock options; (ii) stock appreciation rights; (iii) restricted stock awards; (iv) restricted stock unit
awards; (v) performance awards; and (vi) other awards only to persons eligible to receive grants of awards who satisfy the standards
for inducement grants under Nasdaq Marketplace Rule 5635(c)(4) or 5635(c)(3), if applicable, and the related guidance under
Nasdaq IM 5635-1. The board of directors reserved 2,500,000 shares for issuance under the Inducement Plan. As of December 31,
2023, options to purchase 818,400 shares remain outstanding under the Inducement Plan.
In May 2022, the Company’s board of directors adopted, and in June 2022 the Company’s stockholders approved, the MaxCyte,
Inc. 2022 Equity Incentive Plan (the “2022 Plan”) to provide for the awarding of (i) incentive stock options, (ii) non-qualified stock
options, (iii) stock appreciation rights, (iv) restricted stock awards, (v) restricted stock unit awards, (vi) performance awards, and (vii)
other awards. Following the approval of the 2022 Plan, no additional awards can be granted under the 2016 Plan or the Inducement
Plan, but all outstanding awards will continue to remain subject to the terms of the applicable plan.
Upon the effectiveness of the 2022 Plan, a total of 3,692,397 shares were initially reserved for issuance pursuant to future awards
under the 2022 Plan, consisting of 1,928,000 new shares and 1,764,397 shares previously available under the 2016 Plan. If and to the
extent that outstanding options under the 2016 Plan or the Inducement Plan are forfeited, the shares underlying such forfeited options
will become available for issuance under the 2022 Plan. At the Company’s Annual Meeting of Stockholders held on June 22, 2023,
the Company’s stockholders voted to reserve an additional 6,069,000 shares of issuance pursuant to future awards under the 2022
Plan.
Stock Option Activity
A summary of stock option activity for the years ended December 31, 2023 and 2022 is as follows:
Outstanding at January 1, 2022
Granted
Exercised
Forfeited
Outstanding at December 31, 2022
Granted
Exercised
Forfeited
Expired
Outstanding at December 31, 2023
Exercisable at December 31, 2023
Weighted
Number of
Average
Options
Exercise Price
6.03
12,433,739
$
6.45
$
4,408,400
2.38
(1,195,208) $
7.31
(1,285,839) $
5.94
$
14,361,092
4.36
2,713,395
$
1.58
(1,192,784) $
9.18
(460,390) $
6.46
(3,327) $
5.90
$
5.42
$
15,417,986
9,638,499
Weighted-
Average
Remaining
Contractual Life
(in years)
Aggregate
Intrinsic Value
66,547
$
7.5
$
4,163
7.2
$
23,825
$
4,106
6.9
5.9
$
$
15,854
14,511
The weighted-average fair value of the options granted during the years ended December 31, 2023 and 2022 was estimated to be
$2.05 and $3.48, respectively.
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The value of a stock option is recognized as expense on a straight-line basis over the requisite service period. As of
December 31, 2023, total unrecognized compensation expense for outstanding stock options was $18,931, which will be recognized
over the next 2.0 years.
Restricted Stock Unit Activity
During the years ended December 31, 2023 and 2022, the Company issued restricted stock unit awards (“RSUs”) under the 2022
Plan. Each RSU represents the contingent right to receive one share of common stock.
A summary of RSU activity for the years ended December 31, 2023 and 2022 is as follows:
Outstanding at January 1, 2022
Granted
Forfeited
Outstanding at December 31, 2022
Granted
Vested and released
Forfeited
Outstanding at December 31, 2023
Number of
RSUs
— $
662,900
$
(19,300) $
$
643,600
1,043,150
$
(288,550) $
(102,020) $
$
1,296,180
Weighted
Average
Grant Date Fair Value
—
5.56
5.39
5.57
4.21
5.48
4.70
4.57
Weighted-
Average
Remaining
Contractual Life
(in years)
3.2
2.8
The value of an RSU is recognized as expense on a straight-line basis over the requisite service period. As of December 31,
2023, total unrecognized compensation expense for outstanding RSUs was $4,589, which will be recognized over the next 2.8 years.
Employee Stock Purchase Plan
The Company commenced the initial offering (the “Initial Offering”) under the MaxCyte, Inc. 2021 Employee Stock Purchase
Plan (the “ESPP”). The ESPP provides an offering period of 24 months, with four purchase periods that are generally six months
long (the “Purchase Period”).
The ESPP allows eligible employees to purchase a number of shares of the Company’s Common Stock up to a maximum of 15%
of the employee’s earnings during the Purchase Period subject to certain limitations. The purchase price will be the lesser of 85% of
the fair market value of shares on the beginning of each Purchase Period or on the Purchase Date (i.e., the last day of the Purchase
Period). Participants may decrease their contribution level or withdraw from the ESPP at any time during the Purchase Period subject
to certain conditions.
The first purchase period began on May 19, 2023 and ended on November 17, 2023. The second purchase period began on
November 20, 2023. For the year ended December 31, 2023, the Company recognized $127 in compensation cost related to the
ESPP. As of December 31, 2023, total unrecognized compensation expense related to the ESPP was $81, which will be recognized
over the next 0.4 years.
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Stock-based Compensation Expense
Stock-based compensation expense recognized in connection with stock options, RSUs and the ESPP for the years ended
December 31, 2023 and 2022 was classified as follows on the consolidated statements of operations:
General and administrative
Sales and marketing
Research and development
Total
5. Consolidated Balance Sheet Components
Inventory
The following tables show the components of inventory:
Raw materials inventory
Finished goods inventory
Work in progress
Total inventory
Year ended December 31,
2023
2022
$
$
6,114
3,252
4,613
13,979
$
$
5,621
2,517
3,614
11,752
December 31,
December 31,
2023
2022
$
$
5,694
5,977
558
12,229
$
$
5,651
2,930
—
8,581
The Company reserved $697 in an allowance at December 31, 2023. The Company determined no allowance was necessary as
of December 31, 2022.
Property and Equipment, Net
Property and equipment, net comprised the following:
Leasehold improvements
Furniture and equipment
Internal-use software
Instruments
Construction in process
Accumulated depreciation and amortization
Property and equipment, net
December 31,
December 31,
2023
2022
$
$
14,654
12,288
4,106
2,441
310
(10,286)
23,513
$
$
14,196
9,516
3,221
2,440
627
(6,275)
23,725
For the years ended December 31, 2023 and 2022, the Company transferred $189 and $265, respectively, of instruments
previously classified as inventory to property and equipment leased to customers.
For the years ended December 31, 2023 and 2022, the Company incurred depreciation and amortization expense of $4,171 and
$2,698, respectively.
Maintenance and repairs are charged to expense as incurred.
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6. Fair Value
The Company’s consolidated balance sheets include various financial instruments (primarily cash and cash equivalents, short-
term investments, accounts receivable and accounts payable) that are carried at cost, which approximates fair value due to the short-
term nature of the instruments.
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
The Company had no financial assets or liabilities measured at fair value on a recurring basis as of December 31, 2023 or 2022.
Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
Money market funds, commercial paper and corporate debt instruments classified as held-to-maturity are measured at fair value
on a non-recurring basis when they are deemed to be impaired on an other-than-temporary basis. No such fair value impairment was
recognized during the years ended December 31, 2023 or 2022.
The following table summarizes the Company’s financial instruments that were measured at fair value on a non-recurring basis
at December 31, 2023:
Description
Money market funds and cash equivalents
US Treasury securities and government agency
bonds
Commercial paper
US Treasury securities and government agency
bonds
US Treasury securities and government agency
bonds
Total cash equivalents and short-term
investments
Classification
Cash equivalents
Amortized
cost
22,693
$
Cash equivalents
Short-term investments
20,986
107,131
Short-term investments
14,651
Long-term investments
42,938
Gross
unrecognized
Gross
unrecognized
holding gains holding losses
— $
— $
$
3
100
28
282
—
(1)
(6)
(2)
Aggregate
fair value
22,693
20,989
107,230
14,673
43,218
$ 208,399
$
413
$
(9) $ 208,803
The following table summarizes the Company’s financial instruments that were measured at fair value on a non-recurring basis
at December 31, 2022:
Description
Money market funds and cash equivalents
Commercial paper
Corporate debt
US Treasury securities and government agency
bonds
Total cash equivalents and short-term
investments
Classification
Cash equivalents
Short-term investments
Short-term investments
Amortized
cost
$
5,742
172,741
5,792
Gross
unrecognized
Gross
unrecognized
$
holding gains holding losses
— $
156
—
(236)
(43)
— $
Aggregate
fair value
5,742
172,661
5,749
Short‑term investments
37,742
5
(196)
37,551
$ 222,017
$
161
$
(475) $ 221,703
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.
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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 during
the years ended December 31, 2023 or 2022.
7.
Income Taxes
The Company’s provision (benefit) for income taxes in 2023 and 2022 consisted of the following:
Current provision (benefit):
Federal
State
Total current provision
Deferred tax provision (benefit):
Federal
State
Change in valuation allowance
Total deferred provision
Total provision (benefit) for income taxes
December 31,
2023
2022
$
$
— $
—
—
(8,752)
(3,542)
12,294
—
— $
—
—
—
(2,581)
(659)
3,240
—
—
The Company is required to establish a valuation allowance for deferred tax assets if, based on the weight of available evidence,
it is more likely than not that some or all the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.
The Company considers projected future taxable income and tax planning strategies in making this assessment. As of December 31,
2023 and 2022, the Company established a full valuation allowance against its net deferred tax assets.
Net deferred tax assets as of December 31, 2023 and 2022 are presented in the table below:
Deferred tax assets:
Net operating loss carryforwards
Research and development credits
Stock-based compensation
Deferred revenue
Lease liability
Tenant incentive
Accruals and other
Deferred tax liabilities:
ROU asset
Depreciation
Valuation allowance
Net deferred tax assets
110
December 31,
2023
2022
$
$
22,472
8,144
9,158
1,517
5,313
1,528
2,092
(3,187)
(1,396)
45,641
(45,641)
$
— $
22,298
3,733
5,649
1,808
4,135
1,330
1,250
(2,532)
(4,605)
33,066
(33,066)
—
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The difference between the expected income tax provision (benefit) from applying the U.S. Federal statutory rate to pre-tax
income (loss) and the actual income tax provision (benefit) for the years ended December 31, 2023 and 2022 relates primarily to the
effect of the following:
Federal income taxes (benefit) at statutory rates
State income taxes (benefit), net of Federal benefit
Excess tax benefits
Permanent differences, rate changes and other
Change in valuation allowance
Total Income Tax Expense
Year Ended December 31,
2022
2023
$
$
$
(7,964)
(2,901)
(610)
(819)
12,294
— $
(4,950)
(968)
(562)
3,240
3,240
—
On August 16, 2022, the U.S. Inflation Reduction Act of 2022 (the “Inflation Reduction Act”) was signed into law. The Inflation
Reduction Act includes, among other provisions, (i) a new corporate alternative minimum tax of 15 percent on the adjusted financial
statement income (AFSI) of corporations with average AFSI exceeding $1.0 billion over a three-year period, and (ii) a new excise tax
of 1 percent on the fair market value of net corporate stock repurchases. The provisions of the Inflation Reduction Act are effective
for tax years beginning after December 31, 2022. The Company does not expect the Inflation Reduction Act to have a material
impact on its provision for income taxes.
The Tax Cuts and Jobs Act of 2017 (TCJA) amended IRC Section 174 to require capitalization of all research and developmental
(“R&D”) costs incurred in tax years beginning after December 31, 2021. These costs are required to be amortized over five years if
the R&D activities are performed in the United States or over 15 years if the activities were performed outside the United States. The
Company capitalized approximately $19,204 and $15,433 of R&D expenses incurred during the years ended December 31, 2023 and
2022, respectively.
8. Commitments and Contingencies
Leases
Operating Leases
The Company was a party to various leases for office and laboratory and other space that were terminated in 2022. One portion
of leased space was an operating lease (the “Original Headquarters Lease”), which was originally scheduled to expire in October
2023. The Original Headquarters Lease was early terminated as allowed for under the lease on June 9, 2022. The Company was also
a sublessee of certain additional office, laboratory, and other space under several subleases (the “Original Headquarters Subleases”)
that were originally scheduled to expire in October 2023, all of which were terminated as allowed for under the subleases on various
dates between June and August 2022.
A member of the Company’s board of directors is the Chief Executive Officer and a member of the board of directors of the
sublandlord under the Original Headquarters Subleases, and the Company’s Chairman is also a member of the sublandlord’s board of
directors. The Company’s rent payments to the sublandlord totaled $296 for the year ended December 31, 2022.
In May 2021, the Company entered into a lease for its new headquarters (the “New Headquarters Lease”), consisting of an
operating lease agreement, as amended, for new office, laboratory, manufacturing and other space. The New Headquarters Lease
consists of three phases, with Phase 1 having commenced in December 2021 and Phase 2 having commenced in the first quarter of
2022, and Phase 3 having commenced in November 2023. The current lease term for all phases will expire on August 31, 2035. The
New Headquarters Lease agreement includes a landlord-provided tenant improvement allowance (“TIA”) of $6.3 million to offset the
cost of construction of leasehold improvements. As of December 31, 2023, the Company had received all reimbursements from the
TIA. Under the New
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Headquarters Lease, the Company has three five-year options to extend the term of the lease. However, the Company is not
reasonably certain to exercise any of these options.
The initial monthly base rents for Phases 1, 2 and 3 are $66, $72 and $32 respectively, with such base rent increasing during the
initial term by 3% annually on the anniversary of each Phase commencement date. The Company is obligated to pay its portion of
real estate taxes and costs related to the lease premises, including costs of operations, maintenance, repair, replacement and
management of the new leased premises. The total incremental non-cancellable lease payments under the New Headquarters Lease
are approximately $29.6 million over the lease term. During the years ended December 31, 2023 and 2022, the Company paid
$1,293 and $622 included in the measurement of lease liabilities, respectively.
The components of lease cost and balance sheet information for the Company’s lease portfolio were as follows:
Operating lease cost
Short-term lease cost
Variable lease cost
Total lease cost
Operating leases
Assets:
Operating lease right-of-use assets
Liabilities
Current portion of operating lease liabilities
Operating lease liabilities, net of current portion
Total operating lease liabilities
Other information
Weighted-average remaining lease term (in years)
Weighted-average incremental borrowing rate
As of December 31, 2023, maturities of lease liabilities were as follows:
2024
2025
2026
2027
2028
2029 and thereafter
Total undiscounted lease payments
Discount factor
Present value of lease liabilities
401(k) Retirement Plan
Year ended December 31,
2022
2023
$
$
1,620
39
983
2,642
$
$
1,624
47
530
2,201
As of December 31,
As of December 31,
2023
2022
$
$
$
11,241
774
17,969
18,743
11.7
7.0%
$
$
$
$
$
9,853
157
15,938
16,095
12.7
6.5%
Operating Leases
1,927
2,171
2,225
2,281
2,338
17,156
28,098
(9,355)
18,743
The Company sponsors a defined-contribution 401(k) retirement plan covering eligible employees. Participating employees may
voluntarily contribute up to limits provided by the Internal Revenue Code of 1986, as amended. The Company matches employee
contributions equal to 50% of the salary deferral contributions, with a maximum Company
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contribution of 5% of the employees’ eligible compensation. In the years ended December 31, 2023 and 2022, Company matching
contributions amounted to $867 and $723 respectively.
Board Member Consulting Agreement
Effective January 1, 2024 the Company entered into a consulting agreement with a member of the Board of Directors to provide
consulting services to the Company for a 12-month period for an amount not to exceed $150.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive
Officer and Chief Financial Officer, of the effectiveness of our “disclosure controls and procedures” as defined in Rules 13a-
15(e) and 15d-15(e) of the Exchange Act as of December 31, 2023, the end of the period covered by this Annual Report. The term
“disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other
procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s
rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and
communicated to the company’s management, including its principal executive and principal financial officers, or persons
performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. Based on our evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that the design and operation of these disclosure controls and procedures were effective as of December 31, 2023, at a
reasonable assurance level.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in
Rule 13a-15(f) under the Exchange Act). Under the supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an assessment of the effectiveness of our internal control
over financial reporting as of December 31, 2023 based on the criteria set forth in Internal Control – Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (2013). Based on this assessment, management has
concluded that our internal control over financial reporting was effective as of December 31, 2023 to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP.
This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm
on internal control over financial reporting due to the deferral allowed under the JOBS Act for emerging growth companies.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act)
during the fourth quarter of 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.
Item 9B. Other Information.
113
Table of Contents
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
None.
114
Table of Contents
PART III
We will file a definitive Proxy Statement for our 2024 Annual Meeting of Stockholders (the “2024 Proxy Statement”) with the
SEC, pursuant to Regulation 14A, not later than 120 days after the end of our fiscal year. Accordingly, certain information required
by Part III has been omitted under General Instruction G(3) to Form 10-K. Only those sections of the 2024 Proxy Statement that
specifically address the items set forth herein are incorporated by reference.
Item 10. Directors, Executive Officers and Corporate Governance.
The information required by this item is hereby incorporated by reference to the sections of the 2024 Proxy Statement under the
captions "Information Regarding the Board of Directors and Corporate Governance,” “Election of Directors,” and “Executive
Officers.”
Item 11. Executive Compensation.
The information required by this item is hereby incorporated by reference to the sections of the 2024 Proxy Statement under the
captions "Executive Compensation" and "Director Compensation."
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this item is hereby incorporated by reference to the sections of the 2024 Proxy Statement under the
captions "Security Ownership of Certain Beneficial Owners and Management" and "Securities Authorized for Issuance under Equity
Compensation Plans."
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this item is hereby incorporated by reference to the sections of the 2024 Proxy Statement under the
captions "Transactions with Related Persons" and "Independence of the Board of Directors."
Item 14. Principal Accountant Fees and Services.
The information required by this item is hereby incorporated by reference to the sections of the 2024 Proxy Statement under the
caption "Ratification of Selection of Independent Auditors."
115
Table of Contents
PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a) The following documents are filed as part of this Annual Report on Form 10-K:
(1) Financial Statements
The financial statements filed as part of this Annual Report are included in Part II, Item 8 of this Annual Report.
(2) Financial Statement Schedules
Financial statement schedules have been omitted in this Annual Report because they are not applicable, not required under the
instructions or the information requested is set forth in the financial statements or related notes thereto.
(3) List of Exhibits required by Item 601 of Regulation S-K
See the Exhibit Index in Item 15(b) below.
(b) Exhibit Index.
Exhibit
Number
3.1
3.2
4.1
10.1#
10.2#
10.3#
10.4#
10.5#
10.6#
10.7#
10.8#
10.9#
Amended and Restated Bylaws of the Registrant.
Description
Fifteenth Amended and Restated Certificate of
Incorporation.
Description of Certain of Registrant's Securities.
MaxCyte, Inc. Long-Term Incentive Plan.
Form of New Hire Stock Option Agreements under the
MaxCyte, Inc. Long-Term Incentive Plan.
Form of Performance Stock Option Agreements under
the MaxCyte, Inc. Long-Term Incentive Plan.
Form of Director Stock Option Agreements under the
MaxCyte, Inc. Long-Term Incentive Plan.
MaxCyte, Inc. Inducement Plan.
MaxCyte, Inc. Form of Stock Option Grant Notice
(2021 Inducement Plan), dated as of January 1, 2022.
Form of 2022 Employee Stock Purchase Plan.
Form of Indemnification Agreement by and between
the Registrant and each director and executive officer.
MaxCyte, Inc. 2022 Equity Incentive Plan.
10.10#
MaxCyte, Inc. Form of RSU Award Grant Notice (2022
Equity Incentive Plan), dated as of July 19, 2022.
116
Incorporated by Reference
Form
8-K
S-1
10-K
S-1/A
S-1/A
S-1/A
S-1/A
10-K
10-Q
S-8
File No.
001-40674
333-257810
001-40674
333-257810
333-257810
333-257810
333-257810
001-40674
001-40674
333-266133
S-1/A
333-257810
8-K
10-Q
001-40674
001-40674
Exhibit
3.1
3.1
4.1
10.1
10.2
10.3
10.4
10.5
10.4
99.2
10.8
10.1
10.5
Filing
Date
August 4,
2021
July 26,
2021
March 22,
2022
July 26,
2021
July 26,
2021
July 26,
2021
July 26,
2021
March 22,
2022
August
10, 2022
July 14,
2022
July 26,
2021
June 30,
2022
August
10, 2022
August
10,
2022
July 26,
2021
August
10,
2022
August
10,
2022
March
15,
2023
March
15,
2023
March
15,
2023
March
28.
2023
June 23,
2023
Table of Contents
10.11#
10.12#
10.13#
10.14#
10.15#
10.16
10.17
10.18#
10.19#
10.20#*
10.21#*
21.1*
23.1*
24.1*
31.1*
31.2*
32.1@
32.2@
MaxCyte, Inc. Form of Stock Option Grant Notice
(2022 Equity Incentive Plan), dated as of July 19, 2022.
10-Q
001-40674
10.6
Severance Agreement, dated July 20, 2021, between
the Registrant and Doug Doerfler.
Separation Agreement, by and between the Company
and Amanda Murphy, dated as of May 6, 2022.
S-1/A
333-257810
10.13
10-Q
001-40674
10.2
Consulting Agreement, by and between the Company
and Amanda Murphy, effective as of April 15, 2022.
10-Q
001-40674
10.3
Severance Agreement, dated March 8, 2017, between
the Registrant and Ron Holtz.
10-K
001-40674
10.5
Deed of Lease, dated as of May 27, 2021, between Key
West MD Owner LLC and Registrant.
10-K
001-40674
10.6
10-K
001-40674
10.7
8-K
001-40674
10.1
8-K
001-40674
10.1
Amendment to Deed of Lease, dated as of November
16, 2021, between Key West MD Owner LLC and
Registrant.
Severance Agreement, dated as of March 27,
2023, by and between the Registrant and Douglas
J. Swirsky
Amendment and Restatement of the MaxCyte
2022 Equity Incentive Plan
Separation and Consulting Agreement, dated as of
December 11, 2023 by and between the
Registrant and Douglas Doerfler.
Promotion Letter, dated as of December 11, 2023,
by and between the Registrant and Maher Masoud
Subsidiaries of the Registrant.
Consent of Independent Registered Public
Accounting Firm
Power of Attorney (contained on the signature
page to this Form 10-K).
Certification of Principal Executive Officer Pursuant to
Rules 13a-14(a) and 15d-14(a) under the Securities
Exchange Act of 1934, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Financial Officer Pursuant to
Rules 13a-14(a) and 15d-14(a) under the Securities
Exchange Act of 1934, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Executive Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Financial Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
117
Table of Contents
97*
101.INS*
Amended and Restated Incentive Compensation
Recoupment Policy of the Registrant
Inline XBRL Instance Document.
101.SCH*
XBRL Taxonomy Extension Schema Document
101.CAL*
101.DEF*
101.LAB*
101.PRE*
104*
XBRL Taxonomy Extension Calculation Linkbase
Document
XBRL Taxonomy Extension Definition Linkbase
Document
XBRL Taxonomy Extension Label Linkbase
Document
XBRL Taxonomy Extension Presentation Linkbase
Document
Cover Page Interactive Data File (formatted as inline
XBRL with applicable taxonomy extension
information contained in Exhibits 101.SCH,
101.CAL, 101.DEF, 101.LAB and 101.PRE).
* Filed herewith.
# Indicates management contract or compensatory plan.
@ This exhibit shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities
of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act of
1934, whether made before or after the date hereof and irrespective of any general incorporation language in such filings.
Item 16. Form 10-K Summary
None.
118
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.
SIGNATURES
Date: March 12, 2024
MaxCyte Inc.
/s/ Douglas Swirsky
By:
Name: Douglas Swirsky
Title: Chief Financial Officer
(On Behalf of the Registrant)
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints
Maher Masoud and Douglas Swirsky, jointly and severally, as his or her true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this Annual
Report on Form 10-K of MaxCyte, Inc., and any or all amendments thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents
full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises
hereby ratifying and confirming all that said attorneys-in-fact and agents, or his, her or their substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
119
Table of Contents
Signature
/s/ Maher Masoud
Maher Masoud
/s/ Douglas Swirsky
Douglas Swirsky
/s/ Richard Douglas
Richard Douglas, PhD
/s/ Yasir Al-Wakeel
Yasir Al-Wakeel, BM BCh
/s/ Patrick J. Balthrop, Sr.
Patrick J. Balthrop, Sr.
/s/ Will Brooke
Will Brooke
/s/ Stanley C. Erck
Stanley C. Erck
/s/ Rekha Hemrajani
Rekha Hemrajani
/s/ John Johnston
John Johnston
/s/ Art Mandell
Art Mandell
Title
President, Chief Executive Officer and Director
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
Date
March 12, 2024
March 12, 2024
Chairman of the Board of Directors
March 12, 2024
Director
Director
Director
Director
Director
Director
Director
120
March 12, 2024
March 12, 2024
March 12, 2024
March 12, 2024
March 12, 2024
March 12, 2024
March 12, 2024
9713 Key West Avenue Suite 400
Rockville, MD 20850 301.944.1700
Phone 301.944.1620 Direct
301.944.1703 Fax
www.maxcyte.com December 11,
2023 Douglas Doerfler Via Email
Re: Transition Agreement Dear
Doug: This letter memorializes the
transition agreement (the
“Agreement”) which MaxCyte, Inc.
(the “Company”) is offering to you to
aid in your retirement and
employment transition. 1.
Retirement Date and Resignation
from All Capacities. As discussed,
you will be retiring from the
Company on December 31, 2023
(“Retirement Date”). Between the
date of this Agreement and the
Retirement Date, you will continue to
perform your regular job’s duties and
such other transition duties as may
be reasonably requested by the
Company’s Board of Directors (the
“Board”). You will continue to receive
your current salary and benefits
through the Retirement Date, and
will be entitled to a 2023 bonus,
which bonus will be calculated
based on the corporate funding rate
and will be paid at the same time as
bonuses are paid to other
executives and no later than March
15, 2024. On the Retirement Date,
you will be deemed to have resigned
from your position as Chief
Executive Officer, as an officer of the
Company and any subsidiary or
affiliate of the Company, and from
any role or position in which you are
acting as a representative or agent
of the Company, including but not
limited to your role as a director of
the Board and any role as a director
of the board of directors of any
subsidiary or affiliate of the
Company. You also agree to submit
such documentation as the Board
may reasonably require confirming
your retirement as of the Retirement
Date. 2. Accrued Salary. On the
Company’s next regular payroll date
following the Retirement Date, the
Company will pay you all accrued
salary and all accrued and unused
vacation earned through the
Retirement Date, subject to standard
payroll deductions and withholdings.
You will receive these payments
regardless of whether or not you
sign this Agreement. 3. Separation
Benefits. Upon your timely execution
of this Agreement and your
executing the Updated Release of
Claims attached to this Agreement
as Exhibit A (the “Updated
Douglas Doerfler December 11,
2023 Page 2 of 10 2 Release”) on or
within three (3) days after the
Retirement Date and allowing it to
become effective, the Company will
provide you with the following
separation benefits (the “Separation
Benefits”): (a) Cash Separation
Benefits. The Company will pay you
the equivalent of eighteen (18)
months of your base salary in effect
as of the Retirement Date (the
“Cash Separation Benefits”). The
Cash Separation Benefits will be
paid subject to standard payroll
deductions and withholdings in
eighteen (18) roughly equal monthly
installments, beginning with the first
installment on February 1, 2024 and
continuing with subsequent
installments on the first day of each
month thereafter until fully paid. (b)
COBRA Separation Benefit. If you
timely elect continued coverage
under the Consolidated Omnibus
Budget Reconciliation Act of 1985
(“COBRA”) or applicable state law,
for you and your covered
dependents, the Company will pay,
as and when due to the insurance
carrier or COBRA administrator (as
applicable), the COBRA health
insurance premiums for you and
your eligible dependents, if any, until
the earlier of: (A) eighteen (18)
months following the Retirement
Date, (B) the expiration of your
eligibility for the continuation
coverage under COBRA, or (C) such
time as you become eligible for
substantially equivalent health
insurance coverage in connection
with new employment or self-
employment (thereafter, you will be
responsible for all COBRA premium
payments, if any) (such time, the
“COBRA Payment Period”).
Notwithstanding the foregoing, if at
any time the Company determines,
in its sole discretion, that the
payment of the COBRA premiums
would result in a violation of the
nondiscrimination rules of Section
105(h)(2) of the Internal Revenue
Code of 1986 or any statute or
regulation of similar effect (including
but not limited to the 2010 Patient
Protection and Affordable Care Act,
as amended by the 2010 Health
Care and Education Reconciliation
Act), then provided you remain
eligible for reimbursement in
accordance with this Section, in lieu
of providing the COBRA premiums,
the Company will instead pay you on
the last day of each remaining
month of the COBRA Payment
Period, a fully taxable cash payment
equal to the COBRA premiums for
that month, subject to applicable tax
withholdings for the remainder of the
COBRA Payment Period. You may,
but are not obligated to, use this
payment to pay for medical
expenses. If you become eligible for
coverage under another employer's
group health plan through self-
employment or otherwise cease to
be eligible for COBRA during the
period provided in this clause, you
must promptly notify the Company of
such event, and all payments and
obligations under this Section will
cease. (c) Consulting Agreement.
The Company will offer you, as an
additional Separation Benefit, the
Consulting Agreement attached as
Exhibit B (the “Consulting
Agreement”), pursuant to which you
will be eligible to provide certain
consulting services to the Company
until June 30, 2025 (the “Consulting
Period”) in exchange for the
compensation specified therein. The
parties acknowledge and agree that
the Consulting Agreement will be
effective on the Retirement Date,
such that you do not have a break in
“Continuous Service” (as defined
below); provided, however, if you do
not execute this Agreement or the
Updated Release within the
timeframe provided herein, or
execute but then revoke your
acceptance of the Updated Release,
then the Consulting Agreement will
automatically terminate, as
described therein, and your
consulting arrangement with the
Company will likewise terminate,
and you will no longer be eligible for
the benefits described in Section 5
of this Agreement.
Douglas Doerfler December 11,
2023 Page 3 of 10 3 4. Benefit
Plans. If you are currently
participating in the Company’s group
health insurance plans, your
participation as an employee will
end on December 31, 2023.
Thereafter, to the extent provided by
the federal COBRA law or, if
applicable, state insurance laws,
and by the Company’s current group
health insurance policies, you will be
eligible to continue your group
health insurance benefits at your
own expense, with the potential for
certain payments to be made by the
Company pursuant to Section 3(b)
above. Later, you may be able to
convert to an individual policy
through the provider of the
Company’s health insurance, if you
wish. 5. Equity Awards. You were
previously granted certain equity
awards (the “Options”), as
summarized on Exhibit C, pursuant
to the Company’s 2022 Equity
Incentive Plan and Long-Term
Incentive Plan (the “Plans”) and
related grant agreements (together
with the Plans, the “Option
Documents”). If you timely execute
and return this Agreement, timely
execute and do not revoke the
Updated Release, and execute the
Consulting Agreement attached
hereto no later than three (3) days
after the Retirement Date, then
notwithstanding anything to the
contrary set forth in the Option
Documents, (i) the unvested Options
will remain outstanding and continue
to be eligible to vest following the
Retirement Date in accordance with
the vesting schedules and terms and
conditions of the applicable Option
Documents provided you remain in
“Continuous Service” or “Service”
(as defined in the respective Plan
and Option Documents) to the
Company as a consultant pursuant
to the terms of the Consulting
Agreement, and (ii) any unvested
Options will be deemed immediately
vested and exercisable on the
earlier of: (A) a “Change in Control”
or “Change of Control” (as defined in
the respective Plan and Option
Documents) of the Company, (B) the
termination of your Consulting
Agreement by the Company prior to
the expiration of the Term pursuant
to Section 14.2(c) of the Consulting
Agreement, and (C) the expiration of
the Term, provided you have
performed services under the
Consulting Agreement for the full
Term. The Options and your right to
exercise the Options will otherwise
remain subject to the terms of the
Option Documents. You are advised
to consult with your own tax advisors
regarding the impact of this
Agreement on your Options.
Furthermore, if you timely execute
and return this Agreement, timely
execute and do not revoke the
Updated Release, and execute the
Consulting Agreement attached
hereto no later than three (3) days
after the Retirement Date, then the
Company will extend the period of
time in which you may exercise any
vested, outstanding and unexercised
Options as of the date of termination
of the Consulting Agreement through
the earlier of: (i) 24 months following
the date the Consulting Agreement
is terminated (and, if the Consulting
Agreement is terminated by the
Company prior to the expiration of
the Term pursuant to Section 14.2(c)
of the Consulting Agreement, such
period will be 24 months following
the expiration of the Term (as
defined in the Consulting
Agreement), without regard for any
early termination thereof); and (ii)
the applicable expiration date of the
Option (the “Option Exercise
Extension”). You agree and
acknowledge that as a result of the
Option Exercise Extension, any of
the shares subject to the Option
which were granted as incentive
stock options (“ISOs”) will no longer
qualify as ISOs and will instead be
treated for tax purposes as
nonqualified stock options. As a
result, you must satisfy all applicable
tax withholding obligations upon any
future exercise of the shares subject
to the Option. You should consult
with your tax advisor regarding the
impact of the Option Exercise
Extension. 6. Other Compensation
or Benefits. You acknowledge that,
except as expressly provided in this
Agreement, you will not receive any
additional compensation,
commission, separation, severance
or other payments or benefits after
the Retirement Date; provided, that
you will
Douglas Doerfler December 11,
2023 Page 4 of 10 4 continue to be
entitled to any existing right of
indemnification you may have for
any liabilities arising from your
actions within the course and scope
of your employment with the
Company or within the course and
scope of your role as a member of
the Board and/or officer of the
Company, including but not limited
to any rights you may have under
any indemnification agreement you
signed with the Company, the
Company’s directors and officers
liability insurance (D&O) policy as
may be in effect from time to time,
and any applicable employment
practices liability insurance (EPLI)
policy. 7. Expense Reimbursements.
You agree that, within ten (10) days
of the Retirement Date, you will
submit your final documented
expense reimbursement statement
reflecting all business expenses you
incurred through the Retirement
Date, if any, for which you seek
reimbursement. The Company will
reimburse you for reasonable
business expenses pursuant to its
regular business practice. In
addition, upon presentation of
documentation, the Company shall
promptly pay (but in no event later
than December 31, 2023) the
amounts necessary to pay for or
reimburse you for all attorney’s fees
and expenses up to a total of
$15,000 relating to the negotiation,
preparation, review and execution of
this Agreement and any other
agreements related to your
retirement and employment
transition. 8. Return of Company
Property. You agree, within ten (10)
days of the Retirement Date, to
return to the Company all Company
documents (and all copies thereof)
and other Company property that
you have had in your possession at
any time, including, but not limited
to, Company files, notes, drawings,
records, business plans and
forecasts, financial information,
specifications, computer-recorded
information, tangible property
(including, but not limited to,
computers), credit cards, entry
cards, identification badges and
keys; and, any materials of any kind
that contain or embody any
proprietary or confidential
information of the Company (and all
reproductions thereof). Please
coordinate return of Company
property with Maher Masoud.
Notwithstanding the foregoing, this
duty to timely return Company
property by the Retirement Date
does not apply to any property that
the Company specifically authorizes
you to retain in connection with the
Consulting Agreement (which
property you must return to the
Company, without retaining any
reproductions, upon termination of
the Consulting Agreement or earlier
if requested by the Company), or to
retain your personal compensation-
related agreements and benefit
arrangements and your personal
correspondence. Furthermore, the
Company agrees during the term of
the Consulting Agreement to provide
you with continued access to your
MaxCyte email account as well as to
certain outside publications and
databases that may be necessary
for your performance of services
under the Consulting Agreement,
including but not limited to
BioCentury and FactSet. Receipt of
the Separation Benefits described in
Section 3 of this Agreement is
expressly conditioned upon return of
all Company Property. 9. Proprietary
Information and Post-Employment
Obligations. Both during and after
your employment you acknowledge
your continuing obligations under
your Invention, Non-Disclosure and
Non-Compete Agreement not to use
or disclose any confidential or
proprietary information of the
Company and to refrain from certain
solicitation and competitive
activities. A copy of your Invention,
Non-Disclosure and Non-Compete
Agreement is attached hereto as
Exhibit D. If you have any doubts as
to the scope of the restrictions in
your agreement, you should contact
Maher Masoud immediately to
assess your compliance. As you
know, the Company will enforce its
contract rights. Please familiarize
yourself with the enclosed
agreement which you signed.
Confidential information that is also
a “trade secret,” as defined by law,
may be disclosed (A) if it is
Douglas Doerfler December 11,
2023 Page 5 of 10 5 made (i) in
confidence to a federal, state, or
local government official, either
directly or indirectly, or to an
attorney and (ii) solely for the
purpose of reporting or investigating
a suspected violation of law; or (B) is
made in a complaint or other
document filed in a lawsuit or other
proceeding, if such filing is made
under seal. In addition, in the event
that you file a lawsuit for retaliation
by the Company for reporting a
suspected violation of law, you may
disclose the trade secret to your
attorney and use the trade secret
information in the court proceeding,
if you: (A) file any document
containing the trade secret under
seal; and (B) do not disclose the
trade secret, except pursuant to
court order. 10. Mutual Non-
Disparagement. Both you and the
Company agree not to disparage the
other party, and the other party’s
officers, directors, employees,
shareholders and agents, in any
manner reasonably likely to be
harmful to them or their business,
business reputation or personal
reputation. The Company’s
obligations under this Section are
limited to Company representatives
with knowledge of this provision,
including but not limited to the
management team and members of
the Board. Notwithstanding the
foregoing, nothing in this Agreement
shall limit your right to voluntarily
communicate with the Equal
Employment Opportunity
Commission, United States
Department of Labor, the National
Labor Relations Board, the
Securities and Exchange
Commission, other federal
government agency or similar state
or local agency or to discuss the
terms and conditions of your
employment with others to the
extent expressly permitted by
Section 7 of the National Labor
Relations Act. In addition, nothing in
this Section or this Agreement is
intended to prohibit or restrain you in
any manner from making
disclosures protected under the
whistleblower provisions of federal
or state law or regulation or other
applicable law or regulation. The
Company also agrees to work with
you on mutually agreeable internal
and external messaging regarding
your retirement and employment
transition from the Company. The
foregoing provisions of this Section
10 will not be violated by truthful
statements in response to legal
process (including, without limitation,
any process to enforce this
Agreement or any other agreement
with you or the Company), required
governmental testimony or filings, or
administrative or arbitral
proceedings (including, without
limitation, depositions in connection
with such proceedings). 11.
Cooperation after Retirement. After
the Consulting Period, you agree to
reasonably cooperate with the
Company in all matters relating to
the transition of your work and
responsibilities on behalf of the
Company, including, but not limited
to, any present, prior or subsequent
relationships and the orderly transfer
of any such work and institutional
knowledge to such other persons as
may be designated by the Company,
by making yourself reasonably
available during regular business
hours. The Company shall pay or
reimburse you for all reasonable out-
of-pocket expenses incurred by you
in complying with this Section 11,
provided you submit appropriate
documentation and receipts
substantiating any such out-of-
pocket expenses. 12. Release. In
exchange for the payments and
other consideration under this
Agreement, to which you would not
otherwise be entitled, and except as
otherwise set forth in this
Agreement, you, on behalf of
yourself and, to the extent permitted
by law, on behalf of your spouse,
heirs, executors, administrators,
assigns, insurers, attorneys and
other persons or entities, acting or
purporting to act on your behalf
(collectively, the “Employee
Parties”), hereby generally and
completely release, acquit and
forever discharge the Company, its
parents and subsidiaries, and its and
their officers, directors, managers,
partners, agents, representatives,
employees, attorneys, shareholders,
predecessors, successors, assigns,
insurers and affiliates (the
“Company Parties”) of and from any
and all claims, liabilities, demands,
contentions, actions, causes of
action, suits, costs,
Douglas Doerfler December 11,
2023 Page 6 of 10 6 expenses,
attorneys’ fees, damages,
indemnities, debts, judgments,
levies, executions and obligations of
every kind and nature, in law, equity,
or otherwise, both known and
unknown, suspected and
unsuspected, disclosed and
undisclosed, arising out of or in any
way related to agreements, events,
acts or conduct at any time prior to
and including the execution date of
this Agreement, including but not
limited to: all such claims and
demands directly or indirectly arising
out of or in any way connected with
your employment with the Company
or the termination of that
employment; claims or demands
related to salary, bonuses,
commissions, stock, stock options,
or any other ownership interests in
the Company, vacation pay, fringe
benefits, expense reimbursements,
separation pay, severance pay, or
any other form of compensation;
claims pursuant to any federal, state
or local law, statute, or cause of
action; tort law; or contract law
(individually a “Claim” and
collectively “Claims”). The Claims
you are releasing and waiving in this
Agreement include, but are not
limited to: • Any and all Claims
relating to or arising from your
employment by the Company and
the termination of such employment,
including allegations that any of the
Company Parties has violated its
personnel policies, handbooks,
contracts of employment, or
covenants of good faith and fair
dealing; • Any and all Claims under
any agreement or understanding
governing the service relationship
between you and the Company; •
Any and all Claims against any of
the Company Parties for wrongful
discharge, termination in violation of
good policy, discrimination, breach
of contract, both expressed or
implied, covenants of good faith or
fair dealing, both expressed or
implied, promissory estoppel,
negligent or intentional infliction of
emotional distress, negligent or
intentional misrepresentation,
negligent or intentional interference
with contract or prospective
economic advantage, unfair
business practice, defamation, libel,
slander, negligence, personal injury,
assault, battery, invasion of privacy,
false imprisonment, or conversion; •
Any and all Claims against any of
the Company Parties that any of the
Company Parties has discriminated
against you on the basis of age,
race, color, sex (including sexual
harassment), national origin,
ancestry, disability, religion, sexual
orientation, marital status, parental
status, source of income, entitlement
to benefits, any union activities or
other protected category or has
otherwise violated any federal, state
or municipal statute, including,
without limitation, Title VII of the Civil
Rights Act of 1964, the Civil Rights
Act of 1991, the Americans with
Disabilities Act of 1990, the Fair
Labor Standards Act, the Employee
Retirement Income Security Act of
1974, the Worker Adjustment and
Retraining Notification Act, the Equal
Pay Act, the Genetic Information
Nondiscrimination Act, the Family
and Medical Leave Act, the Fair
Employment Practice Act of
Maryland, Md. Code Ann., State
Government, tit. 20, the Older
Workers Benefit Protection Act, the
anti-retaliation provisions of the
Sarbanes-Oxley Act, or any other
federal or state law regarding
whistleblower retaliation, the Lilly
Ledbetter Fair Pay Act, the
Uniformed Services Employment
and Reemployment Rights Act, the
Fair Credit Reporting Act, the
National Labor Relations Act; and all
amendments to each such Acts as
well as the regulations issued there
under; • Any and all Claims based
on the violation of the federal or any
state constitution;
Douglas Doerfler December 11,
2023 Page 7 of 10 7 • Any and all
claims for attorneys’ fees and costs;
and • Any and all Claims against any
of the Company Parties that any of
the Company Parties has violated
any statute, public policy or common
law (including but not limited to
Claims for retaliatory discharge;
negligent hiring, retention or
supervision; defamation; intentional
or negligent infliction of emotional
distress and/or mental anguish;
intentional interference with contract;
negligence; detrimental reliance;
loss of consortium to you or any
member of your family and/or
promissory estoppel).
Notwithstanding the foregoing, other
than events expressly contemplated
by this Agreement, you do not waive
or release rights or Claims that may
arise from events that occur after the
date this waiver is executed and you
are not releasing any right of
indemnification you may have for
any liabilities arising from your
actions within the course and scope
of your employment with the
Company or within the course and
scope of your role as a member of
the Board and/or officer of the
Company, including but not limited
to any rights you may have under
any indemnification agreement you
signed with the Company, the
Company’s directors and officers
liability insurance (D&O) policy as
may be in effect from time to time,
and any applicable employment
practices liability insurance (EPLI)
policy. Also excluded from this
Agreement are any Claims which
cannot be waived by law, including,
without limitation, any rights you
may have under applicable workers’
compensation laws and your right, if
applicable, to file or participate in an
investigative proceeding of any
federal, state or local governmental
agency. Nothing in this Agreement
shall prevent you from filing,
cooperating with, or participating in
any proceeding or investigation
before the Equal Employment
Opportunity Commission, United
States Department of Labor, the
National Labor Relations Board, the
Occupational Safety and Health
Administration, the Securities and
Exchange Commission or any other
federal government agency, or
similar state or local agency
(“Government Agencies”), or
exercising any rights pursuant to
Section 7 of the National Labor
Relations Act. You further
understand this Agreement does not
limit your ability to voluntarily
communicate with any Government
Agencies or otherwise participate in
any investigation or proceeding that
may be conducted by any
Government Agency, including
providing documents or other
information, without notice to the
Company. While this Agreement
does not limit your right to receive
an award for information provided to
the Securities and Exchange
Commission, you understand and
agree that you are otherwise
waiving, to the fullest extent
permitted by law, any and all rights
you may have to individual relief
based on any Claims that you have
released and any rights you have
waived by signing this Agreement. If
any Claim is not subject to release,
to the extent permitted by law, you
waive any right or ability to be a
class or collective action
representative or to otherwise
participate in any putative or certified
class, collective or multi-party action
or proceeding based on such a
Claim in which any of the Company
Parties is a party. This Agreement
does not abrogate your existing
rights under any Company benefit
plan or any plan or agreement
related to equity ownership in the
Company; however, it does waive,
release and forever discharge
Claims existing as of the date you
execute this Agreement pursuant to
any such plan or agreement. 13.
Your Acknowledgments and
Affirmations. You acknowledge and
agree that (i) the consideration given
to you in exchange for the waiver
and release in this Agreement is in
addition to anything of value to
which you were already entitled; (ii)
that you have been paid for all time
worked, have received all the leave,
leaves of absence and leave
benefits and protections for which
you are eligible, and have not
suffered any on-the-job injury for
which you have not already filed a
Claim;
Douglas Doerfler December 11,
2023 Page 8 of 10 8 (iii) you have
been given sufficient time to
consider this Agreement and to
consult an attorney or advisor of
your choosing; and (iv) you are
knowingly and voluntarily executing
this Agreement waiving and
releasing any Claims you may have
as of the date you execute it. You
hereby represent that you have
been paid all compensation owed
and for all hours worked, you have
received all the leave and leave
benefits and protections for which
you are eligible, pursuant to the
Company’s policies, applicable law
or otherwise, and you have not
suffered any on-the-job injury or
illness for which you have not
already filed a workers’
compensation claim. You further
represent that, as of the date of this
Agreement, you have not filed any
lawsuits, charges, complaints,
petitions, claims or other accusatory
pleadings against any of the
Company Parties in any court,
arbitral forum or with any
governmental agency. 14. No
Admission. This Agreement does
not constitute an admission by the
Company of any wrongful action or
violation of any federal, state, or
local statute, or common law rights,
including those relating to the
provisions of any law or statute
concerning employment actions, or
of any other possible or claimed
violation of law or rights. 15. Breach.
You agree that upon any material
breach of this Agreement you will
forfeit all amounts paid or owing to
you under this Agreement and your
right to further engagement under
the Consulting Agreement. Further,
you acknowledge that it may be
impossible to assess the damages
caused by your violation of the terms
of Sections 8, 9 and 10 of this
Agreement and further agree that
any threatened or actual violation or
breach of those Sections of this
Agreement will constitute immediate
and irreparable injury to the
Company. You therefore agree that
any such breach of such sections of
this Agreement is a material breach
of this Agreement, and, in addition to
any and all other damages and
remedies available to the Company
upon your material breach of this
Agreement, the Company shall be
entitled to seek an injunction to
prevent you from violating or
breaching this Agreement. The
parties agree that if either party is
successful in whole or part in any
legal or equitable action to enforce
this Agreement, then the enforcing
party is entitled to recover from the
other party all of the costs, including
reasonable attorneys’ fees, incurred
in enforcing the terms of this
Agreement. 16. Section 409A. It is
intended that all of the separation
payments and benefits payable
under Section 3 of this Agreement
satisfy, to the greatest extent
possible, the exemptions from the
application of Section 409A of the
Code and the regulations and other
guidance thereunder and any state
law of similar effect (collectively,
“Section 409A”) provided under
Treasury Regulations Sections
1.409A-1(b)(4) and 1.409A-1(b)(9),
and will be construed as such. If not
so exempt, this Agreement (and any
definitions hereunder) will be
construed in a manner that complies
with Section 409A, and incorporates
by reference all required definitions
and payment terms. For purposes of
Section 409A (including, without
limitation, for purposes of Treasury
Regulations Section 1.409A-2(b)(2)
(iii)), your right to receive any
installment payments under this
Agreement (whether separation
payments or otherwise) shall be
treated as a right to receive a series
of separate payments and,
accordingly, each installment
payment hereunder shall at all times
be considered a separate and
distinct payment. To the extent that
any separation payments are
deferred compensation under
Section 409A, and are not otherwise
exempt from the application of
Section 409A, then, if the period
during which you may consider and
sign the Updated Release spans two
calendar years, the separation
payments will not begin until the
second calendar year. If the
Company determines that the
separation payments or benefits
provided under this Agreement
constitute “deferred compensation”
under
Douglas Doerfler December 11,
2023 Page 9 of 10 9 Section 409A
and if you are a “specified
employee” of the Company, as such
term is defined in Section 409A(a)(2)
(B)(i) of the Code, then the timing of
the separation payments and
benefits will be delayed as follows if
necessary to avoid taxation under
Section 409A: on the earlier to occur
of (a) the date that is six months and
one day after your Separation from
Service, and (b) the date of your
death (such earlier date, the
“Delayed Initial Payment Date”), the
Company will (i) pay you a lump
sum amount equal to the sum of the
separation benefits that you would
otherwise have received through the
Delayed Initial Payment Date if the
commencement of the payment of
the separation benefits had not been
delayed pursuant to this Section and
(ii) commence paying the balance of
the separation benefits in
accordance with the applicable
payment schedule set forth in this
Agreement. No interest shall be due
on any amounts deferred pursuant
to this Section. 17. Miscellaneous.
This Agreement, including Exhibits
A, B, C and D, constitutes the
complete, final and exclusive
embodiment of the entire agreement
between you and the Company with
regard to this subject matter. It is
entered into without reliance on any
promise or representation, written or
oral, other than those expressly
contained herein, and it supersedes
any other such promises, warranties
or representations. This Agreement
may not be modified or amended
except in a writing signed by both
you and a duly authorized officer of
the Company. This Agreement will
bind the heirs, personal
representatives, successors and
assigns of both you and the
Company, and inure to the benefit of
both you and the Company, their
heirs, successors and assigns. If
any provision of this Agreement is
determined to be invalid or
unenforceable, in whole or in part,
this determination will not affect any
other provision of this Agreement
and the provision in question will be
modified by the court so as to be
rendered enforceable. This
Agreement will be deemed to have
been entered into and will be
construed and enforced in
accordance with the laws of the
State of Maryland as applied to
contracts made and to be performed
entirely within Maryland. If this
Agreement is acceptable to you,
please sign below and return it to
me on or before the date that is
seven (7) days after you receive this
Agreement. The Company’s offer of
Separation Benefits contained
herein will automatically expire if you
do not sign and return the fully
signed Agreement within this
timeframe. I wish you good luck in
your future endeavors.
Douglas Doerfler December 11, 2023 Page 10 of
10 10 Sincerely, MAXCYTE, INC. By:
____________________________________
Richard Douglas Chair, Board of Directors
AGREED TO AND ACCEPTED:
________________________________________
Douglas Doerfler
________________________________________
Date Exhibit A – Updated Release of Claims
Exhibit B – Consulting Agreement Exhibit C –
Equity Award Summary Exhibit D – Invention,
Non-Disclosure and Non-Compete Agreement
December 11, 2023
EXHIBIT A UPDATED RELEASE OF
CLAIMS (To be signed and returned
to the Company on or within three (3)
days after the Retirement Date and in
no event before the Retirement Date)
MaxCyte, Inc. (the “Company”) and
Douglas Doerfler (the “Employee”)
entered into a Transition Agreement
dated December 11, 2023 (the
“Transition Agreement”). The parties
to that Agreement hereby further
agree as follows: 1. A blank copy of
this Updated Release of Claims
(“Updated Release”) was attached to
the Agreement as Exhibit A and the
parties agree that it is part of the
Agreement. 2. In consideration of the
Separation Benefits, Employee
hereby extends the release of claims
in Section 12 of the Agreement to any
claims that arose through the date he
signs this Updated Release and
extends the representations he has
made in Section 13 of the Agreement
through the date he signs this
Updated Release. 3. Employee also
hereby extends the release of claims
in Section 12 of the Agreement to any
and all Claims under the federal Age
Discrimination in Employment Act, as
amended (“ADEA”). Employee
acknowledges that he is knowingly
and voluntarily waiving and releasing
any rights he may have under the
ADEA, and that the consideration
given for this Updated Release is in
addition to anything of value to which
he was already entitled. Employee
further acknowledges that he has
been advised by this writing, as
required by the ADEA, that: (1) this
Updated Release does not apply to
any rights or claims that arise after the
date he signs this Updated Release;
(2) Employee should consult with an
attorney prior to signing this Updated
Release; (3) Employee has been
given more than twenty-one (21)
calendar days to consider this
Updated Release (although he may
choose to voluntarily execute this
Updated Release earlier, though not
earlier than the Retirement Date); (4)
Employee has seven (7) calendar
days following the date he signs this
Updated Release to revoke it; and (5)
this Updated Release will not be
effective until the date upon which the
revocation period has expired
unexercised (the “Effective Date of
Updated Release”), which will be the
eighth (8th) calendar day after
Employee signs it. 4. The parties
agree that this Updated Release is a
part of the Agreement.
UNDERSTOOD, ACCEPTED AND
AGREED: MaxCyte, Inc. Employee
By:
______________________________
______________________________
Name: Richard Douglas Douglas
Doerfler Title: Chair, Board of
Directors Dated:
___________________________
Dated: ________________________
January 5, 2024 January 5, 2024
EXHIBIT B CONSULTING
AGREEMENT THIS CONSULTING
AGREEMENT (the “Agreement”) by
and between MaxCyte, Inc. (“Client”)
and Douglas Doerfler, an individual
(“Consultant”), is effective as of
December 31, 2023 (the “Effective
Date”). RECITALS WHEREAS the
parties desire for the Client to
engage Consultant to perform the
services described herein and for
Consultant to provide such services
on the terms and conditions
described herein; and WHEREAS,
the parties desire to use
Consultant’s independent skill and
expertise pursuant to this
Agreement as an independent
contractor; NOW THEREFORE, in
consideration of the promises and
mutual agreements contained
herein, the parties hereto, intending
to be legally bound, agree as
follows: 1. Engagement of Services.
Consultant agrees to provide
general executive consulting and
transition services to the Client at
the request of the Client’s Chief
Executive Officer or Board of
Directors (the “Board”) or its
designee (“Executive(s)”) (the
“Services”). Consultant agrees to
exercise the highest degree of
professionalism and utilize his
expertise and talents in performing
these Services. Client agrees not to
request more than twenty (20) hours
of Services a month. Consultant
agrees to make himself reasonably
available to perform such consulting
services throughout the Consulting
Period (as defined below), and to be
reasonably available to meet with
the Client at its offices or otherwise.
2. Compensation. 2.1 Consulting
Fee. For services rendered during
the Term (as defined below) up to a
maximum of fifteen (15) hours per
month, the Client will pay Consultant
a monthly consulting fee of $10,000
per month. For additional services
performed by Consultant under this
Agreement in excess of fifteen (15)
hours per month but up to a
maximum of twenty (20) hours per
month, Client will pay Consultant an
hourly consulting fee of $600 per
hour. All fees under this Section 2.1
will be invoiced by Consultant
following the end of each calendar
month during the Consulting Period
and are due and payable by the
Client within thirty (30) days after
receipt of Consultant’s monthly
invoice. 2.2 Option Vesting. All
matters of vesting and exercisability
of Consultant’s Options shall be as
governed by Section 5 of the
Transition Agreement between the
parties dated December 11, 2023
(the “Transition Agreement”) and the
terms of the applicable Option
Documents (as defined in the
Transition Agreement). 3. Ownership
of Work Product. Consultant hereby
irrevocably assigns, grants and
conveys to Client all right, title and
interest now existing or that may
exist in the future in and to any
document, development, work
product, know-how, design,
processes, invention, technique,
trade secret, or idea, and all
intellectual property rights related
thereto, that is created by
Consultant, to which Consultant
contributes, or which relates to
Consultant’s services provided
pursuant to this Agreement (the
“Work Product”), including all
copyrights, trademarks and other
intellectual property rights (including
but not limited to patent rights)
relating thereto. Consultant agrees
that any and all Work Product shall
be and remain the property of Client.
Consultant will immediately disclose
to the Client all Work Product.
Consultant agrees to execute, at
Client’s request and expense, all
documents and other instruments
necessary or desirable to confirm
such assignment. In the event that
Consultant does not, for any reason,
execute such documents within a
reasonable time of Client’s request,
Consultant hereby irrevocably
appoints Client as Consultant’s
attorney-in-fact for the purpose of
executing such documents on
Consultant’s behalf, which
appointment is coupled with an
interest. Consultant shall not attempt
to register any works created by
Consultant pursuant to this
Agreement at the U.S. Copyright
Office, the U.S. Patent & Trademark
Office, or any foreign copyright,
patent, or trademark registry.
Consultant retains no rights in the
Work Product and agrees not to
challenge Client’s ownership of the
rights embodied in the Work
Product. Consultant further agrees
to assist Client in every proper way
to enforce Client’s rights relating to
the Work Product in any and all
countries, including, but not limited
to, executing, verifying and
delivering such documents and
performing such other acts
(including appearing as a witness)
as Client may reasonably request for
use in obtaining, perfecting,
evidencing, sustaining and enforcing
Client’s rights relating to the Work
Product. 4. Artist’s, Moral, and Other
Rights. If Consultant has any rights,
including without limitation “artist’s
rights” or “moral rights,” in the Work
Product which cannot be assigned
(the “Non-Assignable Rights”),
Consultant agrees to waive
enforcement worldwide of such
rights against Client. In the event
that Consultant has any such rights
that cannot be assigned or waived
Consultant hereby grants to Client a
royalty-free, paid-up, exclusive,
worldwide, irrevocable, perpetual
license under the Non-Assignable
Rights to (i) use, make, sell, offer to
sell, have made, and further
sublicense the Work Product, and
(ii) reproduce, distribute, create
derivative works of, publicly perform
and publicly display the Work
Product in any medium or format,
whether now known or later
developed. 5. Representations and
Warranties. Consultant represents
and warrants that: (a) Consultant
has the full right and authority to
enter into this Agreement and
perform his obligations hereunder;
(b) Consultant has the right and
unrestricted ability to assign the
Work Product to Client as set forth in
Sections 3 and 4 (including without
limitation the right to assign any
Work Product created by
Consultant’s employees or
contractors); (c) the Work Product
has not heretofore been published in
its entirety; and (d) the Work Product
will not infringe upon any copyright,
patent, trademark, right of publicity
or privacy, or any other proprietary
right of any person, whether
contractual, statutory or common
law. 6. Independent Contractor
Relationship. Consultant is an
independent contractor and not an
employee of the Client. Nothing in
this Agreement is intended to, or
should be construed to, create a
partnership, agency, joint venture or
employment relationship. The
manner and means by which
Consultant chooses to complete the
consulting services are in
Consultant’s sole discretion and
control. In completing the consulting
services, Consultant agrees to
provide his own equipment, tools
and other materials at his own
expense. Consultant is not
authorized to represent that he is an
agent, employee, or legal
representative of the Client.
Consultant is not authorized to make
any representation, contract, or
commitment on behalf of Client or
incur any
liabilities or obligations of any kind in
the name of or on behalf of the
Client. Consultant shall be free at all
times to arrange the time and
manner of performance of the
consulting services. Consultant is
not required to maintain any
schedule of duties or assignments.
Consultant is also not required to
provide reports to the Client. In
addition to all other obligations
contained herein, Consultant
agrees: (a) to proceed with diligence
and promptness and hereby
warrants that such services shall be
performed in accordance with the
highest professional standards in the
field to the satisfaction of the Client;
and (b) to comply, at Consultant’s
own expense, with the provisions of
all state, local, and federal laws,
regulations, ordinances,
requirements and codes which are
applicable to the performance of the
services hereunder. 7. Consultant’s
Responsibilities. As an independent
contractor, the mode, manner,
method and means used by
Consultant in the performance of
services shall be of Consultant’s
selection and under the sole control
and direction of Consultant.
Consultant shall be responsible for
all risks incurred in the operation of
Consultant’s business and shall
enjoy all the benefits thereof. Any
persons employed by or
subcontracting with Consultant to
perform any part of Consultant’s
obligations hereunder shall be under
the sole control and direction of
Consultant and Consultant shall be
solely responsible for all liabilities
and expenses thereof. The Client
shall have no right or authority with
respect to the selection, control,
direction, or compensation of such
persons. 8. Tax Treatment.
Consultant and the Client agree that
the Client will treat Consultant as an
independent contractor for purposes
of all tax laws (local, state and
federal) and file forms consistent
with that status. Consultant agrees,
as an independent contractor, that
neither he nor his employees are
entitled to unemployment benefits in
the event this Agreement
terminates, or workers’
compensation benefits in the event
that Consultant, or any employee of
Consultant, is injured in any manner
while performing obligations under
this Agreement. Consultant will be
solely responsible to pay any and all
local, state, and/or federal income,
social security and unemployment
taxes for Consultant and his
employees. The Client will not
withhold any taxes or prepare W-2
Forms for Consultant, but will
provide Consultant with a Form
1099, if required by law. Consultant
is solely responsible for, and will
timely file all tax returns and
payments required to be filed with,
or made to, any federal, state or
local tax authority with respect to the
performance of services and receipt
of fees under this Agreement.
Consultant is solely responsible for,
and must maintain adequate records
of, expenses incurred in the course
of performing services under this
Agreement, except as provided
herein. No part of Consultant’s
compensation will be subject to
withholding by Client for the
payment of any social security,
federal, state or any other employee
payroll taxes. Client will regularly
report amounts paid to Consultant
with the appropriate taxing
authorities, as required by law. 9. No
Employee Benefits. Except as
described in Sections 3(b) and 4 of
the Transition Agreement,
Consultant acknowledges and
agrees that neither he nor anyone
acting on his behalf shall receive
any employee benefits of any kind
from the Client. Consultant (and
Consultant’s agents, employees,
and subcontractors) is excluded
from participating in any fringe
benefit plans or programs as a result
of the performance of services under
this Agreement, without regard to
Consultant’s independent contractor
status. In addition, Consultant (on
behalf of himself and on behalf of
Consultant’s agents, employees,
and contractors) waives any and all
rights, if any, to participation in any
of the Client’s fringe benefit plans or
programs including, but not limited
to, health, sickness, accident or
dental coverage, life insurance,
disability benefits, severance,
accidental death and
dismemberment coverage,
unemployment insurance coverage,
workers’ compensation coverage,
and pension or 401(k) benefit(s)
provided by the Client to its
employees. Notwithstanding the
above, this Agreement does not
amend or abrogate in any manner
any benefits owed to Consultant
under any qualified retirement plan
or health and welfare benefit plan in
which Consultant was a participant
during his previous employment
relationship with the Client. 10.
Expenses and Liabilities. Consultant
agrees that as an independent
contractor, he is solely responsible
for all expenses (and profits/losses)
he incurs in connection with the
performance of services, other than
as set forth herein. Consultant
understands that he will not be
reimbursed for any supplies,
equipment, or operating costs, nor
will these costs of doing business be
defrayed in any way by the Client;
provided, however, that Client
agrees to reimburse Consultant for
all reasonable travel expenses (e.g.
air fare, train, car rentals, taxi and
share ride services) incurred in
performance of the Services that are
approved in writing by the Client
(email shall suffice) prior to such
expenses being incurred. In
addition, the Client does not
guarantee to Consultant that fees
derived from Consultant’s business
will exceed Consultant’s costs. The
Client hereby agrees to indemnify
Consultant and hold Consultant
harmless to the greatest extent
provided under applicable law, the
Client’s Certificate of Incorporation,
and the by-laws of the Client against
and in respect of any and all actions,
suits, proceedings, claims,
demands, judgments, and dispute or
litigation-related costs, expenses
(including reasonable attorney’s
fees), losses, and damages resulting
from Consultant’s performance of
the Consultant’s duties and
obligations to the Client under this
Agreement (but excluding (i)
disputes between the Client and
Consultant; and/or (ii) third party
claims involving willful misconduct
by Consultant or Consultant’s
material breach of any material
provision of this Agreement). 11.
Non-Exclusivity. The Client reserves
the right to engage other consultants
to perform services, without giving
Consultant a right of first refusal or
any other exclusive rights.
Consultant reserves the right to
perform services for other persons,
provided that the performance of
such services does not conflict or
interfere with services provided
pursuant to or obligations under this
Agreement. 12. No Conflict of
Interest. During the Consulting
Period, unless written permission is
given by the Executive, Consultant
will not accept work, enter into a
contract, or provide services to any
third party that provides products or
services which Compete (as defined
below) with the products or services
provided by the Client nor may
Consultant enter into any agreement
or perform any services which would
conflict or interfere with the services
provided pursuant to or the
obligations under this Agreement.
Consultant warrants that there is no
other contract or duty on his part
that prevents or impedes
Consultant’s performance under this
Agreement. For purposes of this
Section 12, “Compete” shall mean
all products or services, or the
research or development thereof,
which are directly or indirectly
involved in enabling therapeutic
developers to transfect cells for
development of cellular and gene
therapies. 13. Confidential
Information. Consultant agrees to
hold Client’s Confidential Information
(as defined below) in strict
confidence and not to disclose such
Confidential Information to any third
parties. Consultant also agrees not
to use any of Client’s Confidential
Information for any purpose other
than performance of Consultant’s
services hereunder. “Confidential
Information” as used in this
Agreement shall mean all
information disclosed by Client to
Consultant, or otherwise, regarding
Client or its business obtained by
Consultant pursuant
to services provided under this
Agreement that is not generally
known in the Client’s trade or
industry and shall include, without
limitation, (a) concepts and ideas
relating to the development and
distribution of content in any medium
or to the current, future and
proposed products or services of
Client or its subsidiaries or affiliates;
(b) trade secrets, drawings,
inventions, know-how, software
programs, and software source
documents; (c) information
regarding plans for research,
development, new service offerings
or products, marketing and selling,
business plans, business forecasts,
budgets and unpublished financial
statements, licenses and distribution
arrangements, prices and costs,
suppliers and customers; and (d)
any information regarding the skills
and compensation of employees,
contractors or other agents of the
Client or its subsidiaries or affiliates.
Confidential Information also
includes proprietary or confidential
information of any third party who
may disclose such information to
Client or Consultant in the course of
Client’s business. In addition,
Consultant may disclose Client’s
Confidential Information in response
to a valid order by a court or other
governmental body, as otherwise
required by law. All Confidential
Information furnished to Consultant
by Client is the sole and exclusive
property of Client or its suppliers or
customers. Upon request by Client,
Consultant agrees to promptly
deliver to Client the original and any
copies of such Confidential
Information. Consultant’s duty of
confidentiality under this Agreement
does not amend or abrogate in any
manner Consultant’s continuing
duties under any prior agreement
between Consultant and Client.
Notwithstanding the foregoing or
anything to the contrary in this
Agreement or any other agreement
between Client and Consultant,
nothing in this Agreement shall limit
Consultant’s right to discuss
Consultant’s engagement with the
Client or report possible violations of
law or regulation with the Equal
Employment Opportunity
Commission, United States
Department of Labor, the National
Labor Relations Board, the
Securities and Exchange
Commission, or other federal
government agency or similar state
or local agency or to discuss the
terms and conditions of Consultant’s
engagement with others to the
extent expressly permitted by
applicable provisions of law or
regulation, including but not limited
to “whistleblower” statutes or other
similar provisions that protect such
disclosure. Further, notwithstanding
the foregoing, pursuant to 18 U.S.C.
Section 1833(b), Consultant shall
not be held criminally or civilly liable
under any Federal or State trade
secret law for the disclosure of a
trade secret that: (1) is made in
confidence to a Federal, State, or
local government official, either
directly or indirectly, or to an
attorney, and solely for the purpose
of reporting or investigating a
suspected violation of law; or (2) is
made in a complaint or other
document filed in a lawsuit or other
proceeding, if such filing is made
under seal. 14. Term and
Termination. 14.1 Term. The term of
this Agreement and the “Consulting
Period” begins on the Effective Date
and ends on the date that is
eighteen (18) months following the
Effective Date (the “Term”), unless
earlier terminated as provided in
Section 14.2. 14.2 Termination. (a)
Automatic Termination. If Consultant
fails to execute the Updated
Release of Claims attached as
Exhibit A to the Transition
Agreement (the “Updated Release”)
on or within three (3) days after the
“Retirement Date” (as defined in the
Transition Agreement) or Consultant
executes but then later revokes the
Updated Release, then this
Agreement will automatically
terminate effective as of: (i) the end
of the third day following the
Retirement Date,
if Consultant does not execute the
Updated Release, or (ii) the day that
Consultant revokes the Updated
Release, if Consultant executed but
later revokes the Updated Release.
(b) Termination upon Breach. Upon
agreement by the majority of the
Board, the Client may terminate this
Agreement at any time immediately
due to a material breach by
Consultant if the Board has
determined that Consultant has
committed a “material breach”. The
parties agree that a “Material
Breach” by Consultant shall occur if
he: (i) breaches any material
obligations of this Agreement, the
Transition Agreement or his
Invention, Non-Disclosure and Non-
Compete Agreement; or (ii) violates
local, state, or federal laws, which
results in harm to the Client or its
business reputation. (c) Voluntary
Termination. Either party may
terminate this Agreement at any time
upon thirty (30) days’ prior written
notice to the other party. 14.3 Effect
of Termination. Upon any
termination or expiration of this
Agreement, Consultant (i) shall
immediately discontinue all use of
Client’s Confidential Information
delivered under this Agreement; (ii)
shall delete any such Client
Confidential Information from
Consultant’s computer storage or
any other media, including, but not
limited to, online and off-line
libraries; and (iii) shall return to
Client, or, at Client’s option, destroy,
all copies of such Confidential
Information then in Consultant’s
possession. In the event the Client
terminates this Agreement, or if
Consultant terminates this
Agreement, Consultant will not
receive any additional consulting
fees or other compensation for
services performed after the date of
termination, other than as set forth
herein. Additionally, notwithstanding
anything to the contrary herein or in
the Plans or Option Documents, in
the event this Agreement is
terminated by either party for any
reason, Consultant shall no longer
be deemed in Continuous Service
(as defined in the Transition
Agreement) as of such termination
date for purposes of vesting of the
Options, except as provided in the
Transition Agreement. 14.4 Survival.
The rights and obligations contained
in Sections 3-6, 8-9, 12, 14.3 and
15-21 will survive any termination or
expiration of this Agreement. 15.
Successors and Assigns. Consultant
may not subcontract or otherwise
delegate his obligations under this
Agreement without Client’s prior
written consent. Client may assign
this Agreement. Subject to the
foregoing, this Agreement will be for
the benefit of Client’s successors
and assigns, and will be binding on
Consultant’s subcontractors or
delegatees. 16. Notices. Any notice
required or permitted by this
Agreement shall be in writing and
shall be delivered as follows with
notice deemed given as indicated: (i)
by overnight courier upon written
verification of receipt; or (ii) by
telecopy, email, or facsimile
transmission upon acknowledgment
of receipt of electronic transmission.
Notice shall be sent to the
addresses set forth below or such
other address as either party may
specify in writing. 17. Governing
Law. This Agreement shall be
governed in all respects by the laws
of the State of Maryland, as such
laws are applied to agreements
entered into and to be performed
entirely within Maryland between
Maryland residents. Any suit
involving this Agreement shall be
brought in a court sitting in
Maryland. The parties agree that
venue shall be proper in such
courts, and that such courts will
have personal jurisdiction over them.
18. Severability. Should any
provisions of this Agreement be held
by a court of law to be illegal, invalid
or unenforceable, the legality,
validity and enforceability of the
remaining provisions of this
Agreement shall not be affected or
impaired thereby. 19. Waiver. The
waiver by Client of a breach of any
provision of this Agreement by
Consultant shall not operate or be
construed as a waiver of any other
or subsequent breach by
Consultant. 20. Injunctive Relief for
Breach. Consultant’s obligations
under this Agreement are of a
unique character that gives them
particular value; breach of any of
such obligations will result in
irreparable and continuing damage
to Client for which there will be no
adequate remedy at law; and, in the
event of such breach, Client will be
entitled to injunctive relief and/or a
decree for specific performance, and
such other and further relief as may
be proper (including monetary
damages if appropriate and
attorneys’ fees). 21. Entire
Agreement. This Agreement is being
entered into as part of the Transition
Agreement between the Client and
Consultant, and, per Section 14.2(a)
of this Agreement, will only remain in
effect if Consultant timely executes
this Agreement, the Transition
Agreement and the Updated
Release (and does not subsequently
revoke the Updated Release). This
Agreement and the Transition
Agreement constitute the entire
understanding of the parties relating
to the subject matter and
supersedes any previous oral or
written communications,
representations, understanding, or
agreement between the parties
concerning such subject matter. This
Agreement shall not be changed,
modified, supplemented or amended
except by express written
agreement signed by Consultant
and the Client. The parties have
entered into separate agreements
related to Consultant’s previous
employment relationship with Client.
These separate agreements govern
the previous employment
relationship between Consultant and
Client, have or may have provisions
that survive termination of
Consultant’s relationship with Client
(including under this Agreement),
may be amended or superseded
without regard to this Agreement,
and are enforceable according to
their terms without regard to the
enforcement provision of this
Agreement. With respect to the
Consultant’s Option, to the extent of
any inconsistency or conflict
between the terms of this Agreement
(including the Transition Agreement)
and the terms of the Plans or Option
Documents, the terms of this
Agreement (including the Transition
Agreement) shall govern.
[SIGNATURES TO FOLLOW ON
NEXT PAGE]
“CLIENT” “CONSULTANT” MAXCYTE,INC.
DOUGLAS DOERFLER By:
____________________________________
Date Date January 5, 2024 January 5, 2024
EXHIBIT C Equity Award Summary
Grant Date Exercise Price Issued
Options Exercised Options Vested
and Unexercised. at 11/1/23
Unvested at 11/1/23 Vesting 11/1/23
to 12/31/23 Vesting 1/1/24 to
12/31/24 Unvested at 1/1/25 11-
Nov-2014 $0.04 1,945,080
1,710,000 235,080 - 09-Aug-2021
$16.63 10,000 - 5,417 4,583 416
2,500 1,667 13-Jun-2016 $0.983
296,000 - 296,000 - 14-Jul-2017
$2.926 296,000 - 296,000 - 18-Jul-
2018 $2.932 296,000 - 296,000 - 04-
Mar-2019 $2.142 390,200 - 390,200
- 20-Jan-2020 $1.641 390,200 -
365,813 24,387 16,258 8,129 - 16-
Feb-2021 $12.549 390,200 -
260,133 130,067 16,259 97,550
16,258 25-Mar-2022 $7.12 500,000
- 197,917 302,083 20,833 125,000
156,250 20-Mar-2023 $4.19 400,000
- - 400,000 - 175,000 225,000
EXHIBIT D Invention, Non-
Disclosure and Non-Compete
Agreement
9713 Key West Avenue Suite 400
Rockville, MD 20850 301.944.1700
Phone 301.944.1620 Direct
301.944.1703 Fax
www.maxcyte.com December 11,
2023 Maher Masoud Re:
Appointment to Chief Executive
Officer and Amendment to the
Severance Agreement Dear Maher:
Congratulations on your
appointment to the role of President
and Chief Executive Officer (“CEO”)
of MaxCyte, Inc. (“Company”)! This
letter (the “Agreement”) confirms the
agreed upon changes to your
employment in light of your
appointment to this position,
effective as of January 1, 2024 (the
“Effective Date”). Beginning on the
Effective Date, as CEO, you will
report directly to the Company’s
Board of Directors (the “Board”). The
Board also intends to appoint you as
a director, which position you will
hold for the duration of your role as
CEO. You agree that upon the
termination of your employment for
any reason you will be deemed to
have resigned from the Board, and
from your role as an officer of the
Company and from any position you
hold on any committee of the Board
or on any Company affiliate. You
agree to promptly execute such
documentation that the Board may
reasonably require to confirm your
resignation from those capacities.
On the Effective Date, your
annualized base salary will increase
to $590,000, subject to applicable
withholdings and deductions. Your
target bonus opportunity for an
annual discretionary incentive cash
bonus will also increase to sixty
percent (60%) of your base salary
as of the Effective Date. The amount
of this bonus will be determined in
the sole discretion of the Board and
based, in part, on your performance
and the performance of the
Company during the calendar year.
The bonus is not earned unless you
remain employed with the Company
through December 31 of the
applicable year, and no pro-rated
amount will be paid if your
employment terminates for any
reason prior to December 31 of the
applicable year, except as set forth
in Section 3(a)(i)(1) of the
Severance Agreement between you
and the Company dated as of
January 11, 2021 (the “Severance
Agreement”), as modified and
amended by this Agreement. Any
annual bonus will be paid on or
before March 15 of the calendar
year following the year to which the
bonus relates.
Subject to approval of the Board,
which is expected to be on or
around January 2, 2024, you will be
issued an option to purchase
400,000 shares (the “Promotion
Option”) of the Company’s common
stock pursuant and subject to the
Company’s 2022 Equity Incentive
Plan (the “Plan”) and related grant
agreements (together with the Plan,
the “Option Documents”). The
Promotion Option shall be an
incentive stock option to the extent
permissible under Section 422 of the
Internal Revenue Code and will
have an exercise price per share
determined based upon the fair
market value of the common stock
as of the date of grant. The
Promotion Option shall vest
according to the following schedule:
25% will vest as of one year from
the date of issuance, and the
remaining 75% of the shares will
then vest in equal 2.0833%
installments each month thereafter
over the following 36 months,
subject to your continuous
employment with the Company on
such dates. You remain eligible to
receive annual equity awards
following the Effective Date,
including annual equity awards
granted in 2024, commensurate with
your role as CEO. You will remain
eligible to participate on the same
basis as similarly-situated
employees in the Company’s benefit
plans in effect from time to time
during your employment. All matters
of eligibility for coverage or benefits
under any benefit plan shall be
determined in accordance with the
provisions of such plan or policy.
The Company reserves the right to
change, alter, or terminate any
benefit plan or policy in its sole
discretion. Your employment will
remain subject to the Company’s
personnel policies and procedures
as they may be interpreted, adopted,
revised or deleted from time to time
in the Company’s sole discretion.
You are expected to continue to
abide by Company rules and
policies and the Invention, Non-
Disclosure and Non-Compete
Agreement you previously signed on
May 15, 2017. Your employment
with the Company will remain “at-
will” at all times and you remain
eligible for severance benefits in
accordance with the terms of the
Severance Agreement except as
modified below: • The Change of
Control Period set forth in Section
3(a)(i) is hereby amended and
replaced in its entirety as follows: o
“If the Triggering Event occurs on or
within three (3) months prior to, or
twenty-four (24) months following a
Change of Control, in lieu of any
further salary payments to the
Executive for periods subsequent to
the Date of Termination, the
Company shall provide the
Executive with the following:” • The
severance provision set forth in
Section 3(a)(i)(1) is hereby amended
and replaced in its entirety as
follows: o “The Company will pay to
the Executive in equal monthly
installments over an eighteen (18)
month period (the “CIC Severance
Period”) a severance amount, in
cash, equal to (1) eighteen (18)
months of Executive’s Annual Base
Salary, subject to standard payroll
deductions and withholdings, plus
(2) 1.5 times Executive’s Target
Bonus, subject to standard payroll
deductions and withholdings. These
payments will begin on the first
regularly scheduled payroll date that
is at least five (5) business days
after the Release Effective Date, as
defined below.”
• The severance provisions set forth
in Section 3(a)(ii)(1) is amended and
replaced in its entirety as follows: o
“The Company will pay to the
Executive in equal monthly
installments over a twelve (12)
month period (the “Non-CIC
Severance Period”) a severance
amount, in cash, equal to twelve
(12) months of Executive’s Annual
Base Salary, subject to standard
payroll deductions and withholdings.
These payments will begin on the
first regularly scheduled payroll date
that is at least five (5) business days
after the Release Effective Date, as
defined below.” • The COBRA
provision set forth in Section 3(b) is
hereby amended and replaced in its
entirety as follow: o “COBRA
Payments. Upon the occurrence of a
Triggering Event, if the Executive
timely elects continued coverage
under COBRA for himself/herself
and his/her covered dependents
under the Company’s group health
plans following the date of
termination, then the Company will
pay, as and when due to the
insurance carrier or COBRA
administrator (as applicable), the
Executive’s COBRA premiums until
the earliest of (A) the end of the
applicable CIC Severance Period or
Non-CIC Severance Period, (B) the
expiration of the Executive’s
eligibility for the continuation
coverage under COBRA, or (C) the
date when the Executive becomes
eligible for substantially equivalent
health insurance coverage in
connection with new employment or
self-employment (such period from
the termination date through the
earliest of (A) through (C), the
“COBRA Payment Period”).
Notwithstanding the foregoing, if at
any time the Company determines,
in its sole discretion, that the
payment of the COBRA premiums
would result in a violation of the
nondiscrimination rules of Section
105(h)(2) of the Code or any statute
or regulation of similar effect
(including but not limited to the 2010
Patient Protection and Affordable
Care Act, as amended by the 2010
Health Care and Education
Reconciliation Act), then provided
the Executive remains eligible for
reimbursement in accordance with
this Section, in lieu of providing the
COBRA premiums, the Company
will instead pay the Executive on the
last day of each remaining month of
the COBRA Payment Period, a fully-
taxable cash payment equal to the
COBRA premiums for that month,
subject to applicable tax
withholdings for the remainder of the
COBRA Payment Period. If the
Executive becomes eligible for
coverage under another employer’s
group health plan through self-
employment or otherwise ceases to
be eligible for COBRA during the
period provided in this clause, the
Executive must immediately notify
the Company of such event, and all
payments and obligations under this
clause will cease.” • The definition of
the “Severance Period” set forth in
Section 8(n) is hereby deleted in its
entirety. • The definition of the
“Triggering Event” set forth in
Section 8(p) is hereby amended and
replaced in its entirety as follows:
o “‘Triggering Event’ means (i) the
termination of the Executive’s
employment by the Company, other
than a termination for Cause, or (ii) a
termination of the Executive’s
employment by the Executive for
Good Reason.” • The Term provision
set forth in Section 2 is hereby
amended and replaced in its entirety
as follows: o “Term of Agreement.
This Agreement shall become
effective on the date hereof and
shall remain in effect indefinitely
thereafter. Notwithstanding the
foregoing, this Agreement shall
terminate upon the earlier of (i) the
Date of Termination, in the event the
Executive’s employment is
terminated by the Company for
Cause or is terminated by the
Executive without Good Reason, or
(ii) the expiration of any applicable
CIC Severance Period or Non-CIC
Severance Period.” This Agreement,
together with the Severance
Agreement, and Invention, Non-
Disclosure and Non-Compete
Agreement, sets forth the entire
understanding between the parties
with regard to the subject matter
hereof and supersedes any prior
oral discussions or written
communications and agreements
regarding this subject matter. This
Agreement cannot be modified or
amended except in writing signed by
you and an authorized officer of the
Company. We look forward to
working with you in your new
capacity! [signatures to follow on
next page]
MAXCYTE, INC.
___________________________
Richard Douglas Chair, Board of
Directors Accepted and Agreed to:
___________________________
Maher Masoud
___________________________
Date December 11, 2023
List of Subsidiaries of MaxCyte, Inc.
Exhibit 21.1
Name
CCTI, Inc.
Jurisdiction of Incorporation or Organization
United States
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-266133 and No. 333-258524)
of our report dated March 12, 2024, with respect to the consolidated financial statements of MaxCyte, Inc. included in this
Annual Report on Form 10-K of MaxCyte, Inc. for the year ended December 31, 2023.
Exhibit 23.1
/s/ CohnReznick LLP
Tysons, Virginia
March 12, 2024
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 31.1
I, Maher Masoud, certify that:
1.
I have reviewed this Annual Report on Form 10-K of MaxCyte, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered
by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: March 12, 2024
By:
Name:
Title:
/s/ Maher Masoud
Maher Masoud
President and Chief Executive Officer
(Principal Executive Officer)
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 31.2
I, Douglas Swirsky, certify that:
1.
I have reviewed this Annual Report on Form 10-K of MaxCyte, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered
by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal
control over financial reporting.
Date: March 12, 2024
By:
Name:
Title:
/s/ Douglas Swirsky
Douglas Swirsky
Chief Financial Officer (Principal Financial Officer)
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.1
In connection with the Annual Report of MaxCyte Inc. (the “Company”) on Form 10-K for the year ended December 31, 2023 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the
Company.
Date: March 12, 2024
By:
Name:
Title:
/s/ Maher Masoud
Maher Masoud
President and Chief Executive Officer
(Principal Executive Officer)
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.2
In connection with the Annual Report of MaxCyte Inc. (the “Company”) on Form 10-K for the year ended December 31, 2023 as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the
Company.
Date: March 12, 2024
By:
Name:
Title:
/s/ Douglas Swirsky
Douglas Swirsky
Chief Financial Officer (Principal Financial Officer)
MAXCYTE, INC.
AMENDED AND RESTATED
INCENTIVE COMPENSATION RECOUPMENT POLICY
EXHIBIT 97
1.
INTRODUCTION
The Board of Directors (the “Board”) of MaxCyte, Inc., a Delaware corporation (the “Company”), has
determined that it is in the best interests of the Company and its stockholders to adopt this Amended and Restated
Incentive Compensation Recoupment Policy (this “Policy”) providing for the Company’s recoupment of
Recoverable Incentive Compensation that is received by Covered Officers of the Company under certain
circumstances. Certain capitalized terms used in this Policy have the meanings given to such terms in Section 3
below.
This Policy is designed to comply with, and shall be interpreted to be consistent with, Section 10D of the
Exchange Act, Rule 10D-1 promulgated thereunder (“Rule 10D-1”) and Nasdaq Listing Rule 5608 (the “Listing
Standards”). This Policy replaces and supersedes that certain Incentive Compensation Recoupment Policy dated
May 25, 2022 (the “Initial Policy”).
2.
EFFECTIVE DATE
This Policy shall apply to all Incentive Compensation that is received by a Covered Officer on or after
October 2, 2023 (the “Effective Date”). The Initial Policy shall continue to apply to all Incentive Compensation (as
defined in the Initial Policy) received by a Covered Officer (as defined in the Initial Policy) prior to the Effective
Date of this Policy in accordance with the terms of the Initial Policy. Incentive Compensation is deemed “received”
in the Company’s fiscal period in which the Financial Reporting Measure specified in the Incentive Compensation
award is attained, even if the payment or grant of such Incentive Compensation occurs after the end of that period.
3.
DEFINITIONS
“Accounting Restatement” means an accounting restatement that the Company is required to prepare due
to the material noncompliance of the Company with any financial reporting requirement under the securities laws,
including any required accounting restatement to correct an error in previously issued financial statements that is
material to the previously issued financial statements, or that would result in a material misstatement if the error
were corrected in the current period or left uncorrected in the current period.
“Accounting Restatement Date” means the earlier to occur of (a) the date that the Board, a committee of the
Board authorized to take such action, or the officer or officers of the Company authorized to take such action if
Board action is not required, concludes, or reasonably should have concluded, that the Company is required to
prepare an Accounting Restatement, or (b) the date that a court, regulator or other legally authorized body directs the
Company to prepare an Accounting Restatement.
“Administrator” means the Compensation Committee or, in the absence of such committee, the Board.
“Code” means the U.S. Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder.
“Compensation Committee” means the Compensation Committee of the Board.
“Covered Officer” means each current and former Executive Officer.
“Exchange” means the Nasdaq Stock Market.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Executive Officer” means the Company’s president, principal financial officer, principal accounting officer
(or if there is no such accounting officer, the controller), any vice-president of the Company in charge of a principal
business unit, division, or function (such as sales, administration, or finance), any other officer who performs a
policy-making function, or any other person who performs similar policy-making functions for the Company.
Executive officers of the Company’s parent(s) or subsidiaries are deemed executive officers of the Company if they
perform such policy-making functions for the Company. Policy-making function is not intended to include policy-
making functions that are not significant. Identification of an executive officer for purposes of this Policy would
include at a minimum executive officers identified pursuant to Item 401(b) of Regulation S-K promulgated under the
Exchange Act.
“Financial Reporting Measures” means measures that are determined and presented in accordance with the
accounting principles used in preparing the Company’s financial statements, and any measures derived wholly or in
part from such measures, including Company stock price and total stockholder return (“TSR”). A measure need not
be presented in the Company’s financial statements or included in a filing with the SEC in order to be a Financial
Reporting Measure.
“Incentive Compensation” means any compensation that is granted, earned or vested based wholly or in part
upon the attainment of a Financial Reporting Measure.
“Lookback Period” means the three completed fiscal years immediately preceding the Accounting
Restatement Date, as well as any transition period (resulting from a change in the Company’s fiscal year) within or
immediately following those three completed fiscal years (except that a transition period of at least nine months shall
count as a completed fiscal year). Notwithstanding the foregoing, the Lookback Period shall not include fiscal years
completed prior to the Effective Date, except for as provided in Section 2 of this Policy.
“Recoverable Incentive Compensation” means Incentive Compensation received by a Covered Officer
during the Lookback Period that exceeds the amount of Incentive Compensation that would have been received had
such amount been determined based on the Accounting Restatement, computed without regard to any taxes paid (i.e.,
on a gross basis without regard to tax withholdings and other deductions). For any compensation plans or programs
that take into account Incentive Compensation, the amount of Recoverable Incentive Compensation for purposes of
this Policy shall include, without limitation, the amount contributed to any notional account based on Recoverable
Incentive Compensation and any earnings to date on that notional amount. For any Incentive Compensation that is
based on stock price or TSR, where the Recoverable Incentive Compensation is not subject to mathematical
recalculation directly from the information in an Accounting Restatement, the Administrator will determine the
amount of Recoverable Incentive Compensation based on a reasonable estimate of the effect of the Accounting
Restatement on the stock price or TSR upon which the Incentive Compensation was received. The Company shall
maintain documentation of the determination of that reasonable estimate and provide such documentation to the
Exchange in accordance with the Listing Standards.
“SEC” means the U.S. Securities and Exchange Commission.
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4.
RECOUPMENT
(a)
Applicability of Policy. This Policy applies to Incentive Compensation received by a Covered
Officer (i) after beginning services as an Executive Officer, (ii) who served as an Executive Officer at any time
during the performance period for such Incentive Compensation, (iii) while the Company had a class of securities
listed on a national securities exchange or a national securities association, and (iv) during the Lookback Period.
(b)
Recoupment Generally. Pursuant to the provisions of this Policy, if there is an Accounting
Restatement, the Company must reasonably promptly recoup the full amount of the Recoverable Incentive
Compensation, unless the conditions of one or more subsections of Section 4(c) of this Policy are met and the
Compensation Committee, or, if such committee does not consist solely of independent directors, a majority of the
independent directors serving on the Board, has made a determination that recoupment would be impracticable.
Recoupment is required regardless of whether the Covered Officer engaged in any misconduct and regardless of
fault, and the Company’s obligation to recoup Recoverable Incentive Compensation is not dependent on whether or
when any restated financial statements are filed.
(c)
Impracticability of Recovery. Recoupment may be determined to be impracticable if, and only if:
(i)
the direct expense paid to a third party to assist in enforcing this Policy would exceed the
amount of the applicable Recoverable Incentive Compensation; provided that, before concluding that it
would be impracticable to recover any amount of Recoverable Incentive Compensation based on expense of
enforcement, the Company shall make a reasonable attempt to recover such Recoverable Incentive
Compensation, document such reasonable attempt(s) to recover, and provide that documentation to the
Exchange in accordance with the Listing Standards; or
(ii)
recoupment of the applicable Recoverable Incentive Compensation would likely cause an
otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the
Company, to fail to meet the requirements of Code Section 401(a)(13) or Code Section 411(a) and
regulations thereunder.
(d)
Sources of Recoupment. To the extent permitted by applicable law, the Administrator shall, in its
sole discretion, determine the timing and method for recouping Recoverable Incentive Compensation hereunder,
provided that such recoupment is undertaken reasonably promptly. The Administrator may, in its discretion, seek
recoupment from a Covered Officer from any of the following sources or a combination thereof, whether the
applicable compensation was approved, awarded, granted, payable or paid to the Covered Officer prior to, on or after
the Effective Date: (i) direct repayment of Recoverable Incentive Compensation previously paid to the Covered
Officer; (ii) cancelling prior cash or equity-based awards (whether vested or unvested and whether paid or unpaid);
(iii) cancelling or offsetting against any planned future cash or equity-based awards; (iv) forfeiture of deferred
compensation, subject to compliance with Code Section 409A; and (v) any other method authorized by applicable
law or contract. Subject to compliance with any applicable law, the Administrator may effectuate recoupment under
this Policy from any amount otherwise payable to the Covered Officer, including amounts payable to such individual
under any otherwise applicable Company plan or program, e.g., base salary, bonuses or commissions and
compensation previously deferred by the Covered Officer. The Administrator need not utilize the same method of
recovery for all Covered Officers or with respect to all types of Recoverable Incentive Compensation.
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(e)
No Indemnification of Covered Officers. Notwithstanding any indemnification agreement,
applicable insurance policy or any other agreement or provision of the Company’s certificate of incorporation or
bylaws to the contrary, no Covered Officer shall be entitled to indemnification or advancement of expenses in
connection with any enforcement of this Policy by the Company, including paying or reimbursing such Covered
Officer for insurance premiums to cover potential obligations to the Company under this Policy.
(f)
Indemnification of Administrator. Any members of the Administrator, and any other members of
the Board who assist in the administration of this Policy, shall not be personally liable for any action, determination
or interpretation made with respect to this Policy and shall be indemnified by the Company to the fullest extent under
applicable law and Company policy with respect to any such action, determination or interpretation. The foregoing
sentence shall not limit any other rights to indemnification of the members of the Board under applicable law or
Company policy.
(g)
No “Good Reason” for Covered Officers. Any action by the Company to recoup or any
recoupment of Recoverable Incentive Compensation under this Policy from a Covered Officer shall not be deemed
(i) “good reason” for resignation or to serve as a basis for a claim of constructive termination under any benefits or
compensation arrangement applicable to such Covered Officer, or (ii) to constitute a breach of a contract or other
arrangement to which such Covered Officer is party.
5.
ADMINISTRATION
Except as specifically set forth herein, this Policy shall be administered by the Administrator. The
Administrator shall have full and final authority to make any and all determinations required under this Policy. Any
determination by the Administrator with respect to this Policy shall be final, conclusive and binding on all interested
parties and need not be uniform with respect to each individual covered by this Policy. In carrying out the
administration of this Policy, the Administrator is authorized and directed to consult with the full Board or such other
committees of the Board as may be necessary or appropriate as to matters within the scope of such other committee’s
responsibility and authority. Subject to applicable law, the Administrator may authorize and empower any officer or
employee of the Company to take any and all actions that the Administrator, in its sole discretion, deems necessary
or appropriate to carry out the purpose and intent of this Policy (other than with respect to any recovery under this
Policy involving such officer or employee).
6.
SEVERABILITY
If any provision of this Policy or the application of any such provision to a Covered Officer shall be
adjudicated to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall
not affect any other provisions of this Policy, and the invalid, illegal or unenforceable provisions shall be deemed
amended to the minimum extent necessary to render any such provision or application enforceable.
7.
NO IMPAIRMENT OF OTHER REMEDIES
Nothing contained in this Policy, and no recoupment or recovery as contemplated herein, shall limit any
claims, damages or other legal remedies the Company or any of its affiliates may have against a Covered Officer
arising out of or resulting from any actions or omissions by the Covered Officer. This Policy does not preclude the
Company from taking any other action to enforce a Covered Officer’s obligations to the Company, including,
without limitation, termination of employment and/or institution of civil proceedings. This Policy is in addition to
the requirements of Section 304 of the Sarbanes-Oxley Act of 2002 (“SOX 304”) that are applicable to the
Company’s Chief Executive Officer and Chief Financial Officer and to any other compensation recoupment policy
and/or similar provisions in any employment,
4
equity plan, equity award, or other individual agreement, to which the Company is a party or which the Company
has adopted or may adopt and maintain from time to time; provided, however, that compensation recouped pursuant
to this Policy shall not be duplicative of compensation recouped pursuant to SOX 304 or any such compensation
recoupment policy and/or similar provisions in any such employment, equity plan, equity award, or other individual
agreement except as may be required by law.
8.
AMENDMENT; TERMINATION
The Administrator may amend, terminate or replace this Policy or any portion of this Policy at any time and
from time to time in its sole discretion. The Administrator shall amend this Policy as it deems necessary to comply
with applicable law or any Listing Standard.
9.
SUCCESSORS
This Policy shall be binding and enforceable against all Covered Officers and, to the extent required by Rule
10D-1 and/or the applicable Listing Standards, their beneficiaries, heirs, executors, administrators or other legal
representatives.
10.
REQUIRED FILINGS
The Company shall make any disclosures and filings with respect to this Policy that are required by law,
including as required by the SEC.
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*
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MAXCYTE, INC.
AMENDED AND RESTATED
INCENTIVE COMPENSATION RECOUPMENT POLICY
FORM OF EXECUTIVE ACKNOWLEDGMENT
I, the undersigned, agree and acknowledge that I am bound by, and subject to, the MaxCyte, Inc. Amended and
Restated Incentive Compensation Recoupment Policy, as may be amended, restated, supplemented or otherwise
modified from time to time (the “Policy”). In the event of any inconsistency between the Policy and the terms of any
employment agreement, offer letter or other individual agreement with MaxCyte, Inc. (the “Company”) to which I
am a party, or the terms of any compensation plan, program or agreement, whether or not written, under which any
compensation has been granted, awarded, earned or paid to me, the terms of the Policy shall govern.
In the event that the Administrator (as defined in the Policy) determines that any compensation granted, awarded,
earned or paid to me must be forfeited or reimbursed to the Company pursuant to the Policy, I will promptly take any
action necessary to effectuate such forfeiture and/or reimbursement. I further agree and acknowledge that I am not
entitled to indemnification, and hereby waive any right to advancement of expenses, in connection with any
enforcement of the Policy by the Company.
Agreed and Acknowledged:
Name:
Title:
Date: