Stephens, pleased to be joined here at the Stephens Conference with the team from MaxCyte, President and CEO Maher Masoud, CFO Doug Swirsky, and then Scott Feinberg from Investor Relations there in the audience for anybody who hasn't met him. Before we get started, just from a logistical perspective, this will be a fireside chat, so with that out of the way, Maher, I'll turn it over to you or Doug for any opening comments, and then we'll go into Q&A.
Yeah, no, I'll just say a few things. First of all, thank you for having us here, Jacob. It's been a great conference. Thank you for giving us an opportunity to also talk about what MaxCyte does, what also the cell therapy industry does as a whole. That's something that I've talked about in other settings. The cell therapy and cell gene therapy industry really is at its onset of growth. So thank you for giving us the opportunity to really talk about that in MaxCyte. Doug, anything else to add?
No, let's get going.
All right, we'll do this. Maybe Doug, you were here a year ago, but Maher, this is your first time being here. You were appointed CEO earlier this year, so you've been out and about plenty, but you have a new Chief Commercial Officer too, and I think a new board member in the last month. Can you just talk about kind of since you've taken over your strategic areas of focus and then any changes in kind of how MaxCyte operates with some of these new additions?
Yeah, absolutely. Great question, and then I'll let Doug add wherever he'd like. So, I joined MaxCyte about seven and a half years ago, roughly. We were a smaller company. I think I was the 26th or 27th employee. Over the last seven years, we've grown to about 140-150, depending on the time of day. This year really has been a focus on going back to the cell and gene therapy space. We've doubled down really on that focus. That has allowed us to become the industry leader where we have a highly differentiated non-viral cell genetic product platform that has made its way into what is known now as Casgevy, the first non-viral gene-edited approved therapy that's manufactured using our platform.
So this year was a year of really having the structure of the organization where we brought in a new head of engineering who joined us from Terumo to really ensure that we have that product development roadmap that we need for the future, as well as to build out that continuing improvements that's really differentiated us in the space. We also promoted Ali Soleymannezhad, who joined us from Tosoh Bioscience, to Chief Commercial Officer. It's allowed us to really bring the entire, what I call, customer touchpoints under one umbrella of commercial organization, where you have your sales and your marketing and your field application scientists.
That differentiates us from the rest of the industry under one helm. That vision that I have and that we have as a management team to have a disciplined organization that has multiple product offerings for our customers for a foreseeable future while continuing to grow what's made us great, which is, I'll get to it later into the discussion where we have the ability to participate in the economics of many therapies that are going to be approved over the next few years. Streamlining that commercial side of the company, having the engineering power that we believe we can build this organization, having multiple product offerings really has been the focus of mine starting this year. Doug, anything you'd like to add?
I think the only thing I'll add is we started the year, we set guidance, we said it wasn't based on any type of recovery in the end markets. And that said, there are some reasons to be optimistic there, but in a backdrop against what has continued to be not the most robust environment for us, we've been able to demonstrate some growth, and we've been taking this time to really focus on operational excellence. And under our new CEO, we're really focused on a lot of things to help improve the company in terms of from a cost structure point of view, in terms of how we're organized to execute on the opportunities that are in front of us.
Got it. Thanks for that, Maher and Doug. Maybe just one kind of high-level question for anybody who's maybe less familiar with MaxCyte. Can you just talk about your key electroporation offerings, the use cases for the cell and gene therapy market? Obviously, that's a focus, but maybe also the drug discovery market, and then along those same lines, kind of the key differentiators of your technology versus competitive solutions.
Yeah, absolutely, so before I talk about how we differentiate in the cell and gene therapy market, let me take a step above that and just talk about the cell therapy market, so for the longest time, if you look at life science medicines, what have they been? They've been small molecules and biologics, your protein, your monoclonal antibodies, and that's done a lot for medicine over the last century, last 100 years, where it allowed us to really treat what I call symptoms for diseases. Cell therapy, cell and gene therapies, it's a completely different way of paradigm of how we're going to treat diseases. It's where, in essence, you now have living cells that are the end therapy. You have cell and gene therapies where you're editing the cell, you're making edits to the genome in the cell, transfusing it back into the patient.
That itself becomes the living therapy. That's the medicine. Where I think that's going to take medicine over the foreseeable future is we're not going to be treating symptoms anymore. We're really going to be able to treat diseases where people can be cured of diseases or that can live disease-free. That's what cell therapy does, where you're actually engineering the cell and putting it back into the body. Where MaxCyte sits in that is we've built something truly highly differentiated in the cell therapy space. We have the ability to engineer a cell at a higher efficiency. What that means is at a higher level of editing than anybody else, ex vivo non-viral. We can do that also at a much higher cell viability.
The way we do that is we have an electroporation platform where when cells are collected from the body, long story short, they go through a few steps before they're used in our system, but the cells sit inside of a buffer. However you want to edit the cell, there's cargo that goes into that cell that edits the genome. That entire buffer cell cargo goes through our electroporation platform, and what that platform is, it emits pulses, electrical pulses through that buffer where the cells are sitting with the cargo. It allows for the cell membrane to temporarily open up. The cargo goes into the cell, goes into the nucleus, makes edits to the actual genome of the cell. That's all done in a matter of a few minutes on our platform.
It's a highly optimized platform where we do it on a per-cell basis, depending on what cell you're trying to edit, on what cargo you're putting into the cell. And then once we have that protocol set, once the editing is completed, we turn off the system, the cells are collected, and in essence, you have an engineered cell. That's what you have. So in the cell manufacturing workflow done outside the body, ex vivo, we have the premier electroporation platform that does that, where we edit the cell, as I mentioned, really at the highest efficiency with the highest cell viability afterwards. We've been doing this now for about 25 years. MaxCyte, this is the 25th year anniversary, but really since 2013, when CRISPR editing came about, is where we began to refine and perfect that process of the cell engineering step on our platform.
That's a high level of what we do. On the drug discovery side, what Jacob mentioned is there's another use case for our electroporation where you're no longer just engineering the cell to be the therapy. That's where I like to call the cell as the factory. You can transfect cell with DNA to produce proteins. You can transfect cells to produce other byproducts. That's where the cell is a factory. That's what if you look at, we have a drug discovery line of our revenue model. That's what that is. That's a small portion of what we do. Really, the major portion, the highly differentiated part of our electroporation platform is for that cell therapy, where we engineer the cell to be a therapy. We've done that in comparative competition at a level that we like to think no one has even come close to.
It has allowed us to enter into partnerships with companies like CRISPR and Vertex and Legend Biotech, where they're using our platform to engineer cells outside the body. And the approval of Casgevy is manufactured on our cell engineering platform. So highly differentiated, where we can give the scale of transfection that nobody else can provide. And over the course of these last 20 years, we've developed something that allows companies to take products into the clinic manufactured on our platform in a de-risk manner. We also have a drug master file that's been referenced by the FDA and outside the FDA by regulatory bodies in over 60 clinical trials. And each time, it's been referenced for these therapeutic indications with no issues from the FDA or any other regulatory bodies.
So we have an ability to really give a customer a commercial cell engineering platform process, even when they're in the research and process development side, that can take them all the way through the clinic and to commercial success, as we saw at the end of last year with the approval of Casgevy. Doug, anything else to add?
That's right.
Okay. So maybe pivoting to the macro, which I think, Doug, you said it's not the most robust macro backdrop right now, which is probably fair. But can you just comment on the state of the cell and gene therapy industry? On one hand, we're seeing a number of commercial approvals, including Casgevy, which we'll unpack that more of that specifically later. But you're seeing commercial approvals ramp, and a lot of those commercial revenues growing pretty nicely. On the other hand, there has been, and it seems like there's still some pipeline prioritization going on in the industry. So just curious kind of how cell and gene therapy demand trended from maybe the better days in 2020 to a more difficult environment the last couple of years, and where are we today?
Do you want to take that?
I think some of the answer there is embedded in your question. We can see some commercial success here. That's where you're going to get additional investment. At the end of the day, we very much are focused on the cell therapy market. And so we can't untether ourselves from that. I think our results are going to be very much somewhat dependent on that. I think we're executing well against the opportunity set that's in front of us. I think there's some reason to be optimistic, but I don't think we don't have a crystal ball. We're trying to make sure that we're running ourselves efficiently because we've got a runway that absolutely can take us to profitability. It's just a matter of how quickly we get there.
So I don't have a take, I don't think we've got an answer here about where the space is going in the short term, but we're focused on the long term. And we see some reasons to be optimistic. We do see some additional signs of life, some additional capital potentially lining up behind this space. And we'll see. I think we'll get a good idea as we get into the first quarter where things stand.
Okay. Thanks, Doug. I'll try not to answer questions with my questions and then the next ones. No, I think fair enough. Maybe kind of looking at cell and gene therapy and trying to look at it a different way. I think your technology works with a variety of cell types, but maybe trying to ask that question in a different way. Any particular cell types, indications, auto versus allo, where you're seeing activity and opportunities right now and maybe kind of the funnel?
Yeah, let me take that one. So like you mentioned, the beauty of our platform is it can be used in multiple cell types. We have over 100 protocols, 100 plus, depending on the cell type, whether it's T cell and NK cell, macrophages, TILs. But where we're seeing the industry really going is you're seeing a lot of investments on a lot of programs for T cells. In fact, the majority of funding are for T cell therapeutics. There are some also for NK cells, natural killer cells as well. But the majority of the funding is for T cells.
But where you're seeing the industry going and you're seeing our platform being used for, and really, it shows the breadth and the power of what cell and gene therapies can do is for the longest time, the main focus was really going after oncology indications and specifically blood cancers. You're now seeing that evolve. Where now many companies are either repurposing some programs or really engineering certain programs to go after autoimmune diseases. And you're seeing that with some of our customers where they're going after lupus and other autoimmune diseases. And really, it lends itself to the industry because, as I mentioned earlier, many therapies out there for autoimmune diseases now have just been treating symptoms. This is the first time to really start treating what is the underlying cause of the autoimmune disease.
As the space as a whole continues to grow, it will continue to also go after other indications, other rare diseases that we're also seeing as well. So to answer your question, it's mostly T cells, and then it's broadening out into not just oncology, it's also into autoimmune diseases, as well as solid tumors for cancer, something that's always been the toughest part to really go after. That's the majority of cancers really are solid tumors. That's where you're starting to see space start to go. And there's a reason for that. Many of these therapeutic developers are learning how to do multiple edits to the cell that allows them to have higher persistence of that therapy, less exhaustion of that T cell to go after solid tumors, which is the key.
And they're using that on our platform as well, and that engineered step to ensure that that cell is really programmed to have less exhaustion, higher persistence. So those are the areas we see the field growing, Jacob.
Okay. That's helpful. Thanks for letting me hear. So maybe kind of looking back on the third quarter, I think probably the highlight in the quarter was Processing Assembly sales, the consumable that's tied to your instrument. Can you just discuss what drove that? Was this commercial scale-up, or do you think this perhaps is a sign that the customer demand trends are starting to improve?
Yeah. PA sales or Processing Assembly sales have been good all year. We've been very happy with how that segment's performed. And I do think that there's a couple of reasons for that. First off, it is not just one customer. So just to be clear, it's across every customer base we have that Processing Assembly sales are strong. And I think that's one of the things that we would expect in the context of an improving market is that you have more work being done. And that hopefully will lead to, as an indicator, that instrument placements are going to follow, and we'll see more recovery there.
Got it. You stole the answer to my follow-up question, but that's fair. I'm giving you a hard time, Doug. I'm sorry. Okay. On the drug discovery side, it's a smaller piece of the business, but just kind of dynamics. What are you seeing in that market? How should we think about the growth in that business going forward?
Yep. So the drug discovery side actually has been a very stable business for us this year. In fact, when you strip out some of our bioprocessing revenue from, we had launched the past few years a system called the VLX for just bioprocessing. We launched it for a few early adopters. But when you strip out that VLX from our drug discovery line, you see that line actually beginning to come back to a modest growth. It's always been a slow and steady driver for us. It doesn't have the highest growth rate as cell and gene therapies had for us in the past. But it's very positive that it's come back and it's stabilized as well this year over last year. And we'll continue to ensure that that revenue line is something that has, I would say, consistency as we continue to grow our business.
Got it. Well, maybe I'll pause there and see if anybody has any questions. Okay. SPLs. Can you just talk about what an SPL is, the value proposition for you, value proposition for your customers?
Yeah, absolutely. I'll speak to this, and then Doug, feel free as well. So the acronym SPL are Strategic Platform Licenses. And it's part of our revenue model, it's part of our business model in the sense of when we're working with therapeutic developers on the research side, we sell our systems to them. So we have a line of electroporation systems from early research all the way to clinical commercialization. On the research side, we sell our systems, as I mentioned, when companies are doing early research work or process development work. When a company is ready to enter into the clinic, ready to file that IND, at that point, they enter into an SPL with us, Strategic Platform License, where we no longer sell our system. We actually lease our system, each system on an annual basis.
Then that license itself for each therapeutic program, those developers are paying us milestones throughout: early clinical milestones, mid-stage and later stage milestones, and then also approval milestones for once a product's approved. Upon commercialization, we also participate where we have revenue or sales-based payments for each product that's approved using our system. So really, that SPL provides us with having a combination of business of having a pure razor-blade model where we're selling our systems for research, where you're selling the system and the use of the processing assembly. And then in the clinic, we participate in the commercial success of each program through annual leases, processing assemblies as well, milestones, and then once a product's approved, the royalties with continued in addition to annual leases and processing assemblies as well. We have 29 of those currently.
We signed six this year with companies that we believe are on the next frontier of those next cell and gene therapies that, as I said earlier, are going to truly revolutionize how medicine is treating patients. And we've guided over the course of this year that we're comfortable signing three to five of those on an annual basis. So we signed six this year. That's great. It doesn't mean we're done. We're still talking with many companies to sign those next three to five over the course of next year and so forth.
Maybe just one follow-up there. 29 SPLs. Can you just remind people kind of what the cumulative kind of pre-commercial milestone count looks like right now?
Do you want to speak to that?
Yeah. I mean, this is on an unrisk-adjusted basis. There's $2 billion worth of milestones in there that, of course, assumes that multiple programs by each SPL customer and hitting on all cylinders. So obviously, we don't expect to bring that all in, but there's a significant economic opportunity there.
Got it. That doesn't include any commercial? That's just pre-commercial that you just referenced.
Yep.
Okay.
In terms of our participation on the downstream economic success of these programs, we're looking, we participate both in terms of sales-based payments or royalties, and of course, there's the leases that we talked about, the single-use disposables that are used in a commercial setting as well.
Question was in the audience.
Just to understand, are the milestone payments standard level, or is it a function of the size of the potential?
Just for anybody on webcast, the question is, are the milestones you get along the way, are those tied to the size of the indication or the opportunity of the drug, or is it kind of standardized across programs?
We do not have a sort of a standardized price list, right? We look at every opportunity. We try to get a certain NPV, if you will, out of each relationship. Obviously, there's differences in what that opportunity is at the end. There's differences in terms of the profile of the sponsor and whether or not they have preference for an ability to cover more fees earlier in the development. We're having interest in having a less encumbered product down the line. There's preferences that we try to accommodate and try to get to the right place with each SPL. It's not one-size-fits-all, for sure.
But we also have it's kind of a balloon, right? So how we negotiate, if you think about the net present value for us, is roughly the same regardless of the indication or what potentially how many systems will be used, what the royalty is, so to speak. Overall, it's the same if you think of it as a balloon. If we're negotiating on the front end, it also means potentially there's a higher backend and vice versa.
In fairness, though, if you look at our corporate presentation, we do talk about higher-value programs versus ones that might not have as much value. So certainly, some indications are going to be bigger. Some indications, we talk about autologous versus allogeneic. In an autologous setting, we've got significant processing assembly utilization in the commercial setting where you won't necessarily have that with an allogeneic product where you're manufacturing for multiple patients at once.
Any other questions, Oliver?
Is it a choice? Or when they file that IND, you convert that relationship over to the SPL?
The question is, is that a choice, or is it mandatory that they sign an SPL if they want to use your equipment in a clinical?
Yeah, exactly. Great question. In the clinic, it's not a choice. It is mandatory. It's part of our business model where once you're ready to file the IND, you enter into an SPL with us. So it's, yeah. That allows the sponsor to reference our master file. And that's certainly a de-risk path, given that we've got a commercial-stage customer at this point.
Right. And then you also have continuous support throughout your development timeline. So it's not just you sign the license. You should sign the SPL, and then you have the full support, the quality, regulatory, and field application support in the field throughout the clinical development timeline into commercialization.
Maybe one follow-up just on the SPLs and backend economics. I think it's something that it's obviously a conversation you have to have with a customer and something they have to get comfortable with. Have you seen any kind of change in desire or willingness to do that the last couple of years? Certainly, you're not the only tools company trying to get backend economics in this cell and gene therapy space.
Yeah. So I would say the tenor of the conversations has changed over the last three or four years with the approval of Casgevy that has validated cell and gene therapies. It's also validated MaxCyte and that model that we have. It's something where seven years ago, there was a question as to why a license is needed. Now everyone understands why it's needed. They understand the cell engineering process is so critical to the success of the product. Working with a company that can truly give you that scientific partnership and support is critical to the success of that product. So I don't have to answer you this question, Jacob, but it's become an easier conversation just because the complexity of cell engineering has increased so much over the last few years. You want to have a partner for life throughout your clinical development timeline.
If I can elaborate a bit even more than this. So if you hear others speak, they'll let you know the way cell and gene therapies are going to really become even more successful is companies come together where there's your CDMO, your therapeutic developers, your enabling technologies like MaxCyte, all working together, locking in the process, ensuring you have as much as you can of an automated process to really de-risk the entire cell therapy workflow and manufacturing process. That's what companies are looking to us now for. This is not a case of why are we entering into a license. It's a case of companies wanting to make sure they're working with a company like ours long-term. We're going to be there for them from day one all the way through the life cycle of that therapeutic and then on the next program that they have as well.
So that's the conversation we're having now, just to ensure that how does that partnership continue to grow throughout for that program and other programs. So those are really the conversations that the field is having with us.
Maybe one more on just SPLs. So 29 right now, sixth added year to date, really good year on that front. Is there any way to frame up what the addressable market of opportunities of potential SPL partners looks like? And what does the funnel look like as you're heading into the next year?
I'll give you some color there. So the funnel this year is better than last year. I mean, obviously, last year was a very tough year for the entire cell and gene therapy industry as well as for us. The number of programs now in the clinic, the number of programs and research has also increased. We now have about roughly 150 companies or so pursuing programs that are our customer base. There are roughly about 2,100 programs as a whole. Those are research and clinical in the cell and gene therapy space. There's about, I want to say, 1,200 clinical programs as well that are being pursued. So the cell therapy space is starting to come back where we're seeing more research programs, more clinical programs. And then we're also seeing something that we didn't see last year.
Those programs that are close to the clinic, pre-clinical programs, companies that have those programs are more likely to get funded. And we have a few of our customers that have received funding for programs that are near the clinic or about to get into the clinic. That was not the case last year. That's what we're starting to see this year. So we're seeing the robustness of the pipeline come back as a whole. And then the sales funnel for SPL is also better this year than where it was 12 months ago. Doug, anything else?
No.
That's fine.
Okay. So you've alluded to Casgevy a couple of times. One of those SPL partners you have is Vertex. Doug, I think you were here with me a year ago when we woke up to some pretty pleasant news of the UK approval, which was great timing. I'm just curious, a year later, what have you learned from supporting a commercial launch?
Yep. Let me take that as well. So obviously, even preparation for that approval, we ensured that we brought everything in-house. What that means by that is we brought all manufacturing in-house of both the instrumentation and the consumables, the processing assemblies. We ensured that we were ready from a quality perspective and from a regulatory perspective in case we were audited by the FDA that we can support Casgevy, but really wasn't just for Casgevy. It was all the other programs that are using our system to manufacture that cell therapy that's on the heels of Casgevy. These are other companies that are also right now in the clinic about to enter phase III or are in phase III.
What we learned also from that is being ready for the SPL licensee for that partner, for that customer is critical for their success because as you begin to have cell therapies, you're going to have different areas of manufacturing. You're going to have some in the U.S., some in Europe, maybe other parts of the world as well. So ensuring that we have the ability to support that and manufacture our instruments, support them from processing assembly, support them from a regulatory perspective really de-risks the program, the therapy for that partner. So really what we learned is we need to make sure we do it again as successfully for the ones coming on the heels. And when I say that is there are about five programs from other therapy developers that could be approved as early as 2026 or 2027 utilizing our system.
We need to make sure we'll be as ready for them as we were for Casgevy. And that's kind of what excites me, right? That timeline is coming and us being ready like we were in the past and bringing everything in-house, controlling our manufacturing and our quality and our regulatory and our scientific support is critical for us to continue to support these customers.
I can speak to the operating leverage here that we have. We've made a number of investments in the facility, in the teams, and we can support multiple commercial-stage customers from our Rockville, Maryland facility. So I think there's tremendous leverage in the investments we've made. I would expect there'll be opportunities to scale revenue at a greater pace than operating expenses as a result.
Got it. Thanks for that. Let me hear it, Doug. Maybe one or two follow-ups. Maybe just first kind of bigger picture. Casgevy is obviously important for you because it's your first commercial approval you're supporting. Also kind of important for the field because it's the first gene-edited approval. So I'm curious kind of what you've seen there. And then let me hear you talked about kind of increasing complexity and how you're well-positioned for that. Maybe just touch on why that is.
Sure. Absolutely. So your first question on Casgevy, you mean what they're seeing or what we're seeing?
I'm saying kind of like broader activity. You get this proof point that, hey, a gene-edited drug can be approved and the FDA signs off on it and kind of has that created knock-on effects for others.
It has. What it's done is it's validated the industry, right, for the longest time. If you think about it for a second, take a step back. CRISPR was, in essence, invented 10 years ago, 2013, that time period. In 10 years, we went from an invention to an approved product. That's almost unheard of in the life sciences space, even outside of cell and gene therapies. It provided that validity that, in essence, these therapies are real. It's not just science fiction, and then what we've been doing for the last 10, 12, 13 years, there's a reason why we invested in the science in this company. There's a reason why we're a science company with an electroporation platform, not the other way around.
So that's lent itself to others now working with other companies that also are going after these, and this is to your second question, very complex therapies as well where you really have to do multiple edits to the cell. Sometimes you're using our system with even other transfection modalities where you're doing certain knockouts and certain knock-ins with our systems and whether you're using LNPs or you're using AAVs or you're using complementary aspects of the whole transfection and transduction process. So that complexity is needed as we begin to go after solid tumors, as we begin to go after, as I mentioned earlier, certain autoimmune diseases. You can't just have your traditional one edit CAR-T that we had seven years ago, eight years ago. You really need to make. We have some customers making up to 10 edits to the cell.
That cannot happen unless you really have the ability to understand, one, what exactly the technology is that you're using, how does it affect the patient, how does it affect the illness itself. But when we're seeing that, we're seeing the space grow there. We're seeing therapeutic partners really begin to have a much more complex understanding of how do you actually engineer a cell, how do you actually engineer it in a safe manner as well. And that's where our system comes into play. Electroporation truly is, compared to viral transduction, a safer way of making edits to the cell. When you're making multiple edits to the cell, you're doing it through electroporation. That allows us to have an avenue to treat autoimmune diseases that you probably otherwise may not want to do with a viral-based transduction to create the edits. Does that answer your question?
Yeah. Yeah. That's helpful. Maybe I'll pause there for any other questions on this subject. Nope. Okay. Let me turn to the third quarter call. You took some time to mention the opportunity, and I think you mentioned a bit earlier, to expand MaxCyte's portfolio of offerings and leverage your existing infrastructure. I think this is an organic effort, but should we think of it that way? What could this mean for R&D expenses? Maybe that one's for Doug. And then how should we think about the timing of potential product launches and areas of interest?
Yeah. Yeah. Great question. So I'll let Doug talk about the R&D expenses and what it means for that. But in terms of what I mentioned, we have built a true understanding of where the cell therapy field is going. We've built a true understanding as to what our customers need in that cell therapy manufacturing workflow. We also, as I mentioned before, have a head of engineering now to really allow us to understand what does the customer truly need and what solution can we provide to them, right? And now is the time to really build a company that has the ability to have multiple product offerings where we can begin to increase our sales funnel. And that's really what we're working on. And we're doing it in a very smart and disciplined manner.
We've put in processes throughout the year to understand our customer workflow, to understand the customer need, and work on initiatives that we believe will have a meaningful impact on our revenue over the foreseeable future and in the near term. So we've done that through, obviously, organic efforts, as you mentioned. And also, there are always inorganic opportunities that we're looking at. But really, everything we do is with an eye towards what is the customer really looking for, what need do they have that's currently not filled by the market? How can we increase that sales funnel when we understand there's a need there and then ensure that we have the ability to have offerings for that customer need that's done in a way that increases the market opportunity for us? Doug, on the cost basis, do you want to mention anything?
If what you heard on the call was some signaling that there'd be an increase in expenditures related to this, let me reassure you that what we've done is we've really reprioritized the spending, and I think the theme here, whether it's in R&D or in other areas of the company, we are getting more done with less, right, so now we've set our expectations for end-of-year cash. Now we've modified it from the beginning of the year. Now twice, we expect end-of-year with $185 million in cash and equivalents. We are just really reprioritizing all the spending we're doing to make sure it's in the most impactful areas.
Got it. That's helpful. Maybe just one kind of near or topical question on the current environment, given what's gone on in the last week, maybe if there's just any way to kind of frame up any exposure to kind of NIH funding, academic, government, and markets, just because obviously that's been a focus area for investors. And I'm guessing you probably got some questions on that today.
Yeah, we did. I mean, I can summarize that we almost have no exposure to NIH funding. Obviously, we work with customers who are in the academic setting, but it's oftentimes not coming from NIH funding per se or any government programs. We work with institutions that really are at the forefront of medicine, whether it's UCSF, Stanford, Penn, Mayo, and those kind of institutions is what we like to target. So long story short, very little, if no NIH exposure there.
Got it. Thanks for that, Maher. All right. Maybe, Doug, I want to go back to something you mentioned earlier that I think maybe it's worth touching on. Just over the last couple of years, you built out internal Processing Assembly manufacturing. You're on capacity. Can you just talk about the thinking behind that from a strategic point of view? And then from a margin perspective, gross margins are down a bit this year, to which you'll tell me they're still 80% plus. And yes, that is very good. So I'm not complaining, but they are down. Just how should we think about gross margins as PA revenues grow from here too?
We brought the bulk of manufacturing in-house really to control our own destiny on supply chain issues and make sure we could support our customers, right? We have a tremendous sense of responsibility to support these clinical and now commercial stage programs. In terms of how it's impacted us from a cost point of view, look, we have very healthy margins. We've introduced a non-GAAP measure for adjusted gross margins that we released in the last quarter. We wanted to make sure people understood what the margins were on the core business when you're not looking at milestone payments, when you're not looking at charges related to some inventory write-up that we had to do. I think that in terms of going forward, we'd love to be in the mid-80s% and even in a scenario where we could fully utilize the facility, get into those high 80% margins again.
That's going to depend on how much we're turning the crank, if you will.
Got it. Just to reiterate, I think you said we're at mid-80s, so I think it's pretty good. Pretty good.
Yes, that is an enviable gross margin for sure. Maybe kind of putting this all together, kind of big picture. Doug, to your point, you set guidance to not assume much improvement in the macro earlier this year. You had been guiding, well, you're now guiding to 5% plus core revenue growth this year, which was an improvement from the prior guide in not the most robust environment. So as investors think about the long-term growth outlook for MaxCyte, how should they think about that, especially as the macro maybe hopefully improves?
We were growing significantly prior to this downturn, right? So it remains to be seen whether we'll achieve those levels again. But that's our goal. That's our goal through the business as it currently sits, through the initiatives that we talked about on the call and today. So I think we see every opportunity to move to a healthier environment for us. We're very well positioned. And so the previous growth rates, I think, are within reach under the right circumstances.
Any other questions from the audience?
What market share do you have in the cell therapy space?
Just for the audience questions, what market share do you have in the cell therapy space?
So we've never disclosed what the market share of all the programs there. We have a significant portion of those clinical programs that we talked about for non-viral. This is ex vivo non-viral cell therapy. Again, just if you think of the overall cell therapy market, cell gene therapy market, anywhere from, let's say, 55-60% are still viral-based. Non-viral is about 40-some %. And then of that non-viral, ex vivo is about 57% of that 40%. So that's where we play in that 57%. And we have a significant portion of the programs that are in the clinic or near the clinic. So we're not as much in the early, early research side of it, but a significant portion of that preclinical and clinical, the ex vivo non-viral space.
Any other?
I think that for the most part.
I like the number, but.
Yeah.
To be fair, it's probably a pretty hard number to define.
It is.
Exactly.
It is.
Where people play.
Don't companies have to file a chemistry, manufacturing, and controls process?
When you're in the clinic, you do. Before that, you don't. So that's why there are a lot of preclinical programs. There aren't disclosures there. Yeah.
Anything else? Maher, Doug, any last words you want to share with anybody?
Doug, you want to have closing?
Yes.
No, closing.
Yeah. Sure. Obviously, great to see you, Jacob. We really appreciate being here at Stephens. We're excited about where the company is right now. I think the operating environment we see is slowly improving. I think we're executing really well. I just want to emphasize we are getting more done with less. We are clearly the industry leader at what we do, and we're excited about the long-term potential within the cell therapy field, and we're going to have a big part of that.
Awesome.
Thanks, Doug.
Maher, Doug, thank you for joining us.
Thank you, Jacob.