Earnings Call: Q2 2021

Sep 13, 2021

Hello. Thank you for standing by, and welcome to the MaxCyte 2nd Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Sean Menarguez, Investor Relations. Please go ahead. Good afternoon, everyone. Thank you all for participating in today's conference call. On the call from MaxCyte, we have Doug Doerfler, Chief Executive Officer, and Amanda Murphy, Chief Financial Officer. Earlier today, MaxCyte released financial results for the second quarter ended June 30, 2021. A copy of the press release is available on the company's website. Before we begin, I need to read the following statement. Statements or comments made during this call may be forward-looking statements within the meaning of federal securities laws. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. Actual results may differ materially from these expressed or implied in the forward-looking statements due to a variety of factors which are discussed in detail in our SEC filings. The company undertakes no obligation to publicly update any forward-looking statements, whether because of new information, future events, or otherwise. With that, I will turn the call over to Doug. Well, thank you, Sean, and good afternoon, everyone, and thanks for joining MaxCyte 2nd quarter earnings call. I'll begin the call with a discussion of our business and operational highlights during the quarter. Follow that, Amanda will give a detailed financial review, and then we'll open up the call for questions. I'd like to start off by saying that we're very excited to be speaking with you for the first time following our IPO on NASDAQ on July 30th, after trading 5 years on the AIM London Stock Exchange, which we look forward to continuing. Through the U.S. offering, we raised approximately $200 million in gross proceeds, which followed a $55 million PIPE earlier in 2021. On behalf of the MaxCyte team, I would like to thank everyone who was involved with and supported us during the IPO process. We are thankful for the hard work of our MaxCyte dedicated team, our board of directors, our advisors, and for the support of our customers, partners, their patients, new stockholders, new shareholders, and the ongoing support of long-term shareholders both in the U.K. and the U.S. With the NASDAQ IPO now complete, we're raising over $200 million and $73 million in cash and short-term investments on the balance sheet as of June 30, 2021. We are better positioned than ever to become the premier cell engineering platform technology to support the development of advanced therapeutics. Amanda will provide more detail later in the call, but we realized very strong second quarter results as outlined in the press release published just a few minutes ago. This was driven by robust performance in our core enabling cell therapy engineering business in both cell therapy and drug discovery end markets. Total revenue was just over $7 million, representing growth close to 40% compared to the same period in 2020. Cell therapy and drug discovery revenues, including both instruments and disposables, each grew approximately 60% versus the second quarter of 2020. We also recognized half a million dollars in pre-commercial milestone revenues from our SPL strategic partnership license commercial partners. As many of you know, investment into and innovation in next generation of cell therapy has been explosive. The next generation cell therapy market has become quite an exciting opportunity for MaxCyte as it has become one of the fastest-growing and most promising treatment modalities to address a host of human diseases with high unmet medical needs. We're seeing incredible and ongoing success from our partners in their efforts to progress next generation cell therapies into and through the clinic, and this has translated into positive revenue momentum in our enabling cell engineering business and burgeoning strategic partnership pipeline. MaxCyte's proprietary Flow Electroporation platform provides both the scale-up and high performance needed to support the development and manufacture of complex next generation engineered cell therapies in a cGMP compliant manner. We believe MaxCyte's value has been validated by the ongoing success we have had in signing mutually beneficial long-term collaborative arrangements with growing number of leading cell therapy developers across a broad range of applications. With the addition of Myeloid Therapeutics in the first quarter, Celularity in the second quarter, Insyna Biotechnology in the third quarter, we now have 14 of those agreements, or we refer to as strategic platform licenses or SPLs. In addition, our electroporation system has been used to manufacture drug products now for over 35 clinical trials. As of January 20, 2021, we indicated that our SPLs had the potential to generate close to $1 billion in pre-commercial milestone revenues if all of our licensed programs were to achieve regulatory approvals. Given our commitment to providing confidentiality to our partners, we expect to update key metrics around the SPL agreements more formally at the end of the fiscal year, including the potential pre-commercial milestone revenue, number of programs covered under the SPLs, and progression of those programs into the clinic. With the 3 additional partners year to date, MaxCyte has potential to realize their potential future downstream economics continue to grow. As we have indicated, as these partners move closer to commercialization, one of our major initiatives is to position ourselves to support our customers through the regulatory process and into approval, which includes investing in our own manufacturing capability and automation. Following our NASDAQ IPO, we are committed to investing in the business to accelerate growth. We are expanding our commercial efforts and investing in research and development. More specifically, we're investing in research and development initiatives for the ExPERT portfolio as well as developing new applications for our systems, including the commercialization of our larger scale VLx platform under the ExPERT umbrella. We're on track to release the improved VLx large scale system by the end of 2021. As a reminder, the VLx can process 10 times the capacity of the number of cells as our cGMP compliant system, the GTx used by cell therapy developers. While a long-term initiative, we're excited about the opportunities for the VLx to enable the company to expand into larger scale bioprocessing applications over time. We're also investing meaningfully in the people. This year, we have made key hires and announced important internal promotions, including the promotion of Dr. Sarah Meek to Senior Vice President of Business Development, Dr. Jim Brady to Senior Vice President of Technical Applications, and Steve Nardi, who joined us recently from Haemonetics, Senior Vice President of Manufacturing and Engineering Operations. We are also adding resources to our alliance management team as a reflection of our increased interest on the part of commercial cell therapy developers to work with us on a more strategic basis, and we're expanding our corporate development team, including the addition of Kevin Gutshall, Vice President of Strategy and Corporate Development, who recently joined us from MilliporeSigma. We continue to add to our sales, marketing, and field application team with opportunities we see to move into new applications and new geographies. We expanded our board of directors with the addition of Ms. Rekha Hemrajani, current Chief Executive Officer and Director of Jiya Acquisition Corp., and Dr. Yasir Al-Wakeel, current Chief Financial Officer and Head of Corporate Development for Kronos Bio. Ms. Hemrajani and Dr. Al-Wakeel bring valuable insights and perspective to our board, and we look forward to their contributions in the future. In closing, we have had a very strong first half of the year, highlighted by our IPO on NASDAQ, the announcement of three SPLs, and an important additions to our team and our board. We're very excited about our opportunity going forward, particularly in the cell therapy market, and believe we are making the right investments and executing on our plan to drive growth across all of our business. I will now turn the call over to Amanda to discuss our financial results. Amanda? Thanks, Doug, good afternoon, everyone. I think you should all have the press release at this point, but I'll just run through some high-level financials before we take Q&A. As Doug mentioned, we had a strong second quarter really driven by strength in our core business. We put up total revenue of $7.1 million, which was up close to 48% this quarter. Again, strength was really driven by our underlying cell therapy business and a resurgence of growth in drug discovery. This is our business excluding milestone payments associated with our partnerships. Cell therapy revenue was $4.8 million. That was up 59% over the second quarter of 2020. Drug discovery revenue of $1.8 million was up, also, 60% over Q2. Again, a pretty strong quarter for the underlying business. Just as a quick background, I don't want to go into too much detail, but in case people are new to the story on the call, the way we define the end market, so to speak, is cell therapy is where our instruments are used to actually make the drugs, and in that case, we either sell the instrument or in some cases license the instrument. Of course, we have our proprietary disposables that we sell as well, and those are used predominantly to make ex vivo cell-based therapies, preclinical or and in the clinic. We're seeing an expansion of use, as I'll talk about in a second, across many indications. Drug discovery, on the other hand, is where mostly large pharma uses our platform to make proteins, more for bio-manufacturing applications. Using cells as factories, so to speak, to make transient proteins, as I mentioned, or other proteins like monoclonal antibodies. In that market, we sell the instruments and then also recognize revenue from the proprietary disposables as well. I guess net, the strength from this quarter really came from that core underlying business. We did get half a million of milestones associated with our strategic partnerships, as Doug mentioned. I'll talk about that in a second as it relates to guidance for the year. In terms of the gross margin, we were at 89% this quarter versus 91% the quarter prior. We did receive a little more of milestone revenues last year vis-a-vis this quarter, so the difference really was driven by the difference in milestones. Underlying the gross margin was pretty flat, quarter-over-quarter. In terms of operating expenses, we reported total operating expenses of $10.7 million, which was up from $7.5 million. Most of that increase was really driven by headcount increases. As Doug mentioned, we are hiring quite a few people. Increase in stock-based comp with the stock price increase that we've seen over the past year or so. We did have some. We are going to have some increased public company expenses, as you can imagine with the Nasdaq listing, particularly in the back half of this year, most of which will be recurring. We are planning to make investments in OpEx spends, so including R&D, that was up quite a bit over last year, 60%. That's excluding CARMA. Again, we're adding quite a bit of headcount there, as you can imagine, with working on the VLX and some new products. Our sales and marketing expense was up about 60%. Again, this is really driven by our views that we are, see opportunities to accelerate organic growth. In part, some of that was also driven by stock-based comp increases. I also wanted to just give you a sense, I know we've talked about in the past adjusted EBITDA excluding CARMA. Just to give you an idea, our CARMA sum is pretty minimal this quarter, about $426,000 with minimal stock option expense. Just so that you can from a modeling perspective, compare apples to apples. We expect the CARMA-related spend from a clinical perspective to be pretty immaterial going forward. The wind down of the CARMA clinical expenses have been pretty sort of tracked along with our expectations and coming to a close in the first half of 2021. Just as Doug mentioned, we're coming into the end of 2021 and into 2022 with a very healthy balance sheet. We've got total cash of just shy of $75 million, cash and cash equivalents, and that does not include the just over $200 million that we raised as part of our recent Nasdaq offering. We wanted to give some guidance for 2021. You know, historically, we've talked about total revenue growth. We have tried to give the market a sense of our core business and how that's trending both in cell therapy and drug discovery as well as, you know, the milestones. We are seeing quite a bit of strength in the core business as I mentioned in the first half, and that's continuing into the third quarter. Of course, you know, with the caveat that COVID, and I'm sure many companies are making this caveat, that, you know, you never know how that's going to go. This is, this is a guidance, I think, sort of assuming standard state of affairs as it relates to COVID. But essentially, if you, if you look at the growth we saw in the core business, year to date, it would imply if sort of consensus remains the same for the back half, growth of just shy of our historical 25% five-year CAGR. Based on the trajectory we're seeing, we think that ultimately we could see growth a touch higher than that. Again, we mentioned we had half a million of program-related revenue or milestone revenue in this quarter. We're pretty confident we could see another half a million in the second half. If you kind of aggregate all that up, that would imply about $30 million approximately of total revenue for the year. Again, that would be kind of just ahead of our historical 25% CAGR run rate that we've been seeing in the past. In terms of the SPLs and the milestones, I know that a lot of folks have questions around that. It's very hard to pinpoint the timing, as you can imagine, given a lot of this is out of our control. We have a very strong SPL pipeline. Showing this again, despite the fact that we have won 3 additional SPL agreements, including most recently Sana, in the third quarter. Very strong pipeline. We're seeing a lot of depth in terms of applications, new applications. We're confident that the next 12 to 18 months we could see meaningful revenue contribution from our partners in terms of program economics. As we said before, this year is fairly back-end loaded. We have 2 customers that are moving into pivotal trials, potentially really hard to determine exactly when those might fall, whether it be this year or that year, next year. We are more confident that 2022, it looks like, you know, it's shaping up to be one of the better years in terms of program economics, particularly with the pivotal trials. I think that's pretty much it from a guidance perspective, and I'll address questions later. I mean, I'll turn it over to Doug just to wrap up before we move into Q&A. Well, thanks, Amanda. Obviously, we remain very excited about the place in the industry with our technology and supporting the development of these really novel and exciting advanced cell-based therapeutics. Successfully completed our NASDAQ IPO. You know, we're really pleased to announce the second quarter results and provide these, this preliminary full-year guidance, projections. You know, we believe we remain very well-positioned, and we're excited about the opportunities ahead. Why don't we stop here and turn it over to the moderator for any questions that you may have that, Amanda and I can contribute to. Thank you. As a reminder, to ask a question, you'll need to press star one on your telephone. To withdraw your question, press the pound key. Please limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from Julie Simmonds with Panmure Gordon. You may proceed with your question. Hi. Congratulations on an excellent quarter. I was just wondering, as far as historically, you've talked about the number of programs you've got ongoing and the number of clinical programs you've got ongoing. I was wondering if you could give us some idea about how those numbers are progressing. Julie, I mentioned in my part that we're going to be reporting against the SPLs in terms of the pre-promotion milestones, the numbers of programs, and we'll do that at the end of the fiscal year. That's when we'll update those. We have to be careful about, you know, confidentiality in each of the deals that we do, as you can well imagine. Could you give us an idea of sort of the proportion that are in the clinic then? Just sort of getting a feel for where that or the proportion you have clinical relationships with, just 'cause that helps in terms of the modeling going forward. Well, we announced in the S-1 that we had 15%. This was at the S-1, 15% of the 75 programs were currently in the clinic. Okay. Yeah. Hopefully that'll help. Excellent. Thank you. Yeah. One of the things really to add, you know, we're obviously cognizant of confidentiality as it relates to reporting. We did also talk about the LOAs. I think at the S1 we said that we had 30 trials that had reference our LOA. That's actually increased to 35. We are seeing progression. Obviously adding, you know, two SPLs since then. All of those numbers are likely to be higher. Just out of respect for our customers, we're gonna keep formally updating those numbers on an annual basis. Lovely. Thank you. Thank you. Our next question comes from Max Masucci with Cowen. You may proceed with your question. Hi. Congrats on a strong first print as a NASDAQ-listed company. To start, can we just walk through some of the assumptions in the $30 million plus revenue guide? Any swing factors on, you know, both the core razor-razor blade business, whether it's, you know, the manufacturing shortages we've seen for certain bioprocessing applications, just in terms of your visibility into the timing of some milestone triggering events? Yeah. I'll take that and maybe, you know, if Doug wants to add in. I would say, I think if you look at the consensus numbers for the core business for 2021, folks were assuming around 20% growth. If you were to, you know, plug in the actuals that we reported this quarter, it'll get you closer to 25, just shy of 25%. I think what we're seeing, just with the, you know, trajectory so far is we expect to be, you know, a bit above that. Again, our five-year CAGR revenue rate, which doesn't really include milestones, you know, has been around 25. I would say we're a little bit ahead of that, which is great. I think part of that is, we have, like I said, a couple partners that are coming into pivotal trials. You know, we're seeing some obviously the less seasonality there in terms of preparing for the trials than we might normally see. Some recovery or resurgence of growth, so to speak, in drug discovery. We've launched a couple new PAs, and we actually just launched another one recently that allow multiple experiments at the same time, sort of lowering the transaction costs. I think that's been, you know, again, a driver of the resurgence in growth. We have pretty good visibility for the remainder of the year in some respects because we do have a number of platforms, as you know, that are leased. We know that revenue is, you know, we have pretty good visibility there into the licensed or leased piece of the instrumentation. Disposables, we have pretty good visibility there. The pull-through rates are pretty consistent and in terms of what we've given recently as well. Really it comes down to, you know, COVID being something that could affect the business like every other business. The team has done a great job of switching to virtual demos. You know, the reality is conferences are important in terms of lead generation. We're seeing some conferences switch to more in person. That's encouraging. We're being fairly cautious, I would say, in terms of the guidance based on the, you know, what we're seeing in the strength in the business. That's one variable that is hard to pin down. On the milestones, it's really out of our control. We obviously have some visibility near term that may be, you know, proprietary to us based on our customers. Some of it we depend on public commentary, particularly the longer term piece. It's really hard to when you're depending on a partner and then the FDA to exactly pin down, you know, when those things might fall. As I was saying, we think 2022 looks pretty strong. It's not quite as back-end loaded as this year was. We do have those pivotal trials that we, you know, that are, again, hard to know if it's 2021 or 2022, but those would be net-net higher dollars in theory. I don't know if that's helpful in terms of framing out potential areas of upside. That's great. One more just sticking on PAs. You know, nice to see the RUO multi-well processing assembly. I guess more broadly, can you just give us a sense for, you know, how the several recent consumables PA launches have played into, you know, any competitive dynamics that you face from other electroporation-based instruments in drug discovery? Yeah. You know, the purpose of those multi-well cuvettes are to put more transfections into a single disposables. The result of that is the customer can do more at a lower per transfection cost. We don't have to cannibalize kind of our pricing in order to do that, just put extra wells into the disposable. That's allowed us to go, you know, down into the lower cost per transfecting, but again, without, you know, kind of playing in the more commodity market of both cell therapy and drug discovery. This was, you know, it's an ongoing process of I think we're quite good at voice of customer, really understanding what the uses are. You know, if we can come in with a very, very high performance product provided at a cost that is reasonable, we're seeing quite a bit of adoption in the platform now and across drug discovery and early, you know, earlier, cell therapy, research. Great. Thanks for taking the questions. Of course. Thank you. Our next question comes from Dan Arias with Stifel. You may proceed with your question. Afternoon, guys. Thanks. Doug, wanted to just start with a sort of a topical industry question. The FDA panel that was held to discuss toxicity concerns related to viral delivery, is that figuring into conversations at all that you're having with customers? If it's too early to say, is it, do you expect it to? I guess I'm just trying to understand whether safety is sort of something that's positioning your approach more favorably or whether that's just more industry debate that really isn't gonna translate into a commercial impact. Yeah. Dan, I don't know the answer to your question, frankly. I mean, I think, you know, we don't lead with that. We don't go in, you know, trying to compete against viral vectors. I mean, I think that we've been talking about why companies are, or why developers are migrating more toward non-viral, and it, safety is one issue, but it's also complexity and speed and cost. You know, we're still seeing combinations with non-viral and viral approach as well. You know, I think that there can continue to be applications that make sense for, you know, viral vectors, but I also think we're seeing a rather large shift toward, you know, using non-viral methods like CRISPR and other gene editing tools which allow people to gain the benefits of a non-viral system, but at the same time, you know, perhaps be able to move into more complex applications where safety is a bigger concern. Hopefully that answered your question. Yep, it does. It is early there too. I guess we'll just have to see. Amanda, on the VLx system, you know, you mentioned wrapping up by the end of this year. What should we expect when it comes to contributions from a commercialized product there? Is that something that could be material this year? Sorry, in 2022 or, you know, is the rollout gonna be phased in a way where we should really start dropping revenues into 2023? I'll start with my CFO answer to that, and then I'll let Doug weigh in on, you know, more of the application potential that we see there. Essentially the VLx is available now commercially. What we're doing is pulling it into the ExPERT umbrella, which we expect to have done by the end of the year, and that's really improving the, you know, industrial design, the user interface, that type of thing. We'll work on cGMP compliance and building out what we think are interesting large scale bioprocessing applications. We have, you know, interest from customers now to do that and we have. I would say it's early days there in terms of contributions to revenue. These are newer markets. Some of the customers use our lower scale platforms for similar applications, but this is large scale, as Doug mentioned, 10 times the volume. This is really building out a whole new market, working with partners upstream and downstream. I would really think about this as a 2-3 year revenue contribution opportunity, but also expanding or enabling us to expand beyond the cell therapy market, so to speak, in terms of at least making the therapeutics. We're definitely looking forward to it and excited about it and investing in it. But definitely a 2-3 year time horizon. Doug, do you have anything to add there in terms of market opportunity? Yeah, I think, you know, we as Amanda said, we've been receiving orders for it over the last several years. We don't actively market it. I don't think it was even on our website for quite some time. You know, some customers knew we had it and wanted to use it for a specific application. Frankly, Dan, we didn't feel comfortable, you know, marketing it in the way that we market our other products with the full application development and support. We wanted to nail that all down. We wanted to make sure that, you know, the system was cloud capable and had all the right software and the right user interface. You know, push it out as we intend to market it as an ExPERT product. That now that we've got that, and we have a number of customers who are currently using it with some pretty interesting applications. It's gonna take some time. Hopefully, it won't take as long as Amanda thinks, but, we're gonna be pushing it pretty hard. I get her point. We have to be thoughtful about this. You know, I think you can see MaxCyte as being a relatively conservative and, you know, kind of a plodding company when it comes to product introductions, and we're doing the same with the VLx. It will be released at the end of the year. You know, we've got a handful of customers who are really looking forward to getting their hands on it. Yep, I gotcha. Okay. Thanks very much. Yep. Thank you. Thank you. Our next question comes from Matt Larew with William Blair. You may proceed with your question. Hi, good afternoon. Just thinking about some of the investment, you know, coming from the recent raise, you talked about, you know, I think using some of that cash to expand sales and marketing, business development. You know, you talked, Doug, about some of the higher level, leadership team you've added, but can you just maybe give us a sense for where you're planning to direct that investment, whether it's number of, you know, sales force adds, field, you know, application scientists, and then, you know, where that's gonna be targeted in terms of product development? I think, Amanda, you or Doug alluded to, you know, some interesting maybe product development going on as well. Just curious where, sort of where you're targeting the proceeds. We really as a company don't believe that, you know, that you put up 50 salespeople that's gonna result in a, in a, in a major increase in revenue. We just don't see that in this marketplace. I mean, we're I think we're highly attuned to what's going on in the marketplace. We're identifying new applications, new KOLs, new geographies that open up. We have excellent salespeople. They stick with us because we treat them right. We wanna make sure that we're building out a sales team in the right way. Same with our FAS. They work hand in glove with our sales team. You know, there's a structured way we think about this when we add in people, we add in marketing people. You know, I think you're gonna see that team grow, you know, a step or two ahead of the revenue, but I think it's gonna be a good, you know, a good way to really build out a sustainable business in the sales and marketing side. There's some very interesting applications on the R&D side that we're working in. I mean, once you have the platform established and you know, have invested and you have, you know, a system out there that works as well as ours does, now the next step is, okay, what else can this do? What new applications? We're finding, as you, I'm sure you guys see, pretty much almost like every month there's a new cell type or a new approach or there's a new indication that's being developed. We're seeing all those, and that requires us to get out there and solve those problems, so that when those companies are looking to move a product even into the IND phase, you know, we can help them do that. That's another major part of what we're trying to achieve. Obviously, the VLx is gonna take some additional investment, as will the need to do more in-house manufacturing and automation to support the success of our partners. It's a pretty broad remit in terms of where we see opportunities. It models what we said in the S-1. We have no reason to suggest that isn't the right direction. Continues to be working on by the team and, you know, we'll be executing against that, in the next several years. Okay, that's great. Just I wanted to clarify the $500,000 of SP program-related revenue in the back half of the year. That's not the CTX001 milestone. I guess I just wanted to confirm that. Second part was just you alluded to two pivotal trials upcoming. You know, what other, sort of tracking your progress, what other, milestones or items are should we be looking for on the program side over the next one year plus? Yeah. We're not speaking to specific milestones from specific programs. We're just confident that we, you know, we recorded half a million this quarter. We're confident in the half a million in the back half. You know, we have, as you know, 14 partners now. The last number we've given was more than 75 programs, 15% in the clinic. We're not updating that, like we said, we did add additional partners. You know, a lot of the earlier stage partners that we add, typically, as we talked about, come in at close, somewhere around IND-enabling studies. Those milestones are, you know, potentially ones that may come through in the next year or so. It totally depends. It can be a range. Actually, we have a few programs that could move to pivotal in the next 12-18 months. CTX001 is one we've called out, but in terms of a program we're supporting, but there's many that we haven't. I would just say that as we were trying to articulate in the call, you know, we do see a pretty strong year next year. The pivotal milestones are typically larger and, you know, we are continuing to sign partners, and so that builds the stack of milestones each period. A little hard to pinpoint exactly which quarter they may or may not fall, and I think next year is looking like it's gonna be less back-ended loaded as this year was. But again, that can move around. I think from a, at least from a magnitude perspective, we see a fairly strong year this year, perhaps one of the strongest that we've reported. I think those numbers are available. It can move around. I hope that's helpful. We're just not gonna speak to specific programs or partners at this point. We have, you know, confidentiality requirements and things like that. Okay. Thanks, Amanda. Congrats on the quarter. Thank you. Our next question comes from Mark Massaro with BTIG. You may proceed with your question. Hey, guys. congrats on a good quarter and on a successful NASDAQ IPO. you know, my first question is really on drug discovery. you know, you essentially beat our estimates on cell therapy, drug discovery, and SPLs. wanted to drill down in drug discovery. You know, the growth rate of 60%, sort of surprised to the upside. you know, I would have thought that that business would not be growing as quickly, you know, in part because cell therapy dramatically outperformed drug discovery last year. Can you just talk about that, you know, 60% growth rate? You know, to what extent do you see better growth than you expected, you know, as we look into the back half? You're almost done with Q3. Can you just talk about trends that maybe occurred after June and how you think, you know, that business can trend later this year? Let me take a little of a piece, a little piece of that first. you know, the second quarter of 2020 was a tough quarter for a lot of companies, right? you know, the drug discovery business is typically, you're talking about big biotech and big pharma. Many of these companies pretty much, you know, reduced their operations rather considerably in the second quarter of 2020. What we're seeing in the field is people are wanting to get back to work, and they're coming back to work. I think a lot of it is, you know, the companies are feeling much more comfortable about who they allow to work in, and the facilities are being redesigned so people can work in a lab. We're just seeing people coming back into the office and back into the laboratory, I think that general dynamic, I think, has helped us in terms of kind of rebounding from, you know, a difficult second quarter 2020. I think that's at the high level, that's the headline. Got it. I also, my second question, you know, we had an opportunity to speak with a number of your users. You know, what I found, which was unique to MaxCyte, is just, you know, your high transfection efficiency relative to competitors, you know, the gentle nature of your platform, and not damaging cells and variety of cell types that your platform works on. I guess the last differentiator is just your FDA master file. I guess when we piece all of these together, can you just maybe give us a sense for competitive dynamics? Because in many respects, you know, the four items I cited, you guys seem to have an advantage relative to competition, though some of your competitors actually have higher access to capital. How should we think about the competitive environment now and how that might change over the next year? Yeah. I don't think anything's changed since we last spoke or when we did the IPO. I would think, we just actually checked. Nothing's changed. You know, if you went through the list, it's the high efficiency, it's the, you know, computer control, it's the IP, it's the master file, it's the large scale. We're top of class in all of those, no one can do any of them as well as we can. They're gonna have to go through a lot in order to be successful. Yeah, I'm not sure, you know, it's purely a capital deployment question. There's a lot of intellectual property. There's a lot of understanding. You know, if you said it when you asked the question. If you look at the number of applications, the nuances between one application using one Cas versus another Cas, you know, using a knockout versus a knockin, using a stem cell that's derived from, you know, you know, endothelial precursor cell or a bone marrow stem cell, all those cells are different, and we understand that. When we go into a customer, we can, we can design experiments to get them to where they need to be. I think that the other thing that isn't all that appreciative is focus. I think that the company is really focused on this one thing, which is engineering these cells for therapeutic purposes. I just don't think that there's anyone in the, you know, anyone on the planet that has that kind of singular focus and understanding that we've been able to gain over the last 20 years. Yeah, we're looking. We obviously, we keep our ear on the rail. You know, I think the thing that we allow us to sleep at night is when we do these SPLs and we're, you know, again, we're a premium price supplier. If there's somebody out there that's, you know, coming up against us, we're gonna hear about it first from our customers in addition to the work we do competitively. We keep. We're ready. We feel very confident in our position in the marketplace right now, given all the things we've invested and all the things that we can do that no one else can do. Sounds good. Thanks very much. Thank you. Thank you. As a reminder, to ask a question, you'll need to press star one on your telephone. Our next question comes from Jacob Johnson with Stephens. You may proceed with your question. Hey, thanks. I'll add my congratulations on a nice quarter. Maybe just, Amanda first, just a quick modeling question. As we think about OpEx on the R&D side, if we take the $3 million and change of R&D expenses, and I think back out 400 something odd of CARMA expenses this quarter, is that a good baseline to assume R&D expenses grow off of? Also just to clarify, on the G&A side, public company costs are something that didn't really flow through this quarter, but should flow through the back half of this year? Yeah. If you I guess, yeah, if you back out CARMA from the R&D line, that would give you a good base with the caveat that obviously we're, as we've talked about, investing, and I think we've given some commentary around R&D from a growth perspective. If you were to just look at the pure R&D, so to speak, that would continue to grow faster than revenue. In terms of the public company costs, we had some in the first half, but yeah, clearly those are definitely gonna fall more in the back half. There's some non-recurring, but the majority is recurring, in things like insurance and legal fees that will continue and things like that. That is gonna be a step up as it relates to G&A spend in the back half. You know, over time, we haven't given long-term guidance, but what we've said, as I mentioned, is think about R&D growing faster than revenue, sales and marketing kind of in line to slightly above revenue. G&A, you know, eventually we'll see some leverage there, obviously without, you know, not including that step up from public company expense. Then, you know, from a stock option perspective, we did see increases because of the stock price, so, you know, presumably that Well, yeah, I'm not gonna make any comments there, but that did have, you know, that was a factor as well in the growth. Got it. That's helpful. Then Doug, maybe one question for you is, as some of your customers move towards pivotals and probably begin thinking about commercial approval, do you have a sense for what their manufacturing for those therapies will look like in terms of are those customers or in general looking to have centralized manufacturing at a single site? Or do you think your instruments would allow for manufacturing kind of at the point of care in a decentralized fashion? Yeah, it's definitely, either way, we're fine with it. You know, scaling out the process and just remind, you know, we've announced over 400 systems in the field, so we know how to build these instruments, so they operate consistently across locations, which is gonna be incredibly important. That's one thing we didn't talk about in terms of what competition have to do. We have to make systems that actually perform the same way in Tokyo as they perform in London, right? That's another big part of what we're doing. It really depends on the application. You know, I think in some, in some instances you're gonna need, close to patient, because you need to turn these cells around rather quickly. Some are gonna be more, you know, better manufactured in a, you know, kind of a more traditional biologic sense. You know, we're prepared for either with our GTx or now our VLx, which is large scale. You know, we're just gonna follow what the customers want and enable them to do what they think is their best manufacturing strategy. We'll, you know, we'll adapt with them and give them all the, you know, give them the flexibility they need to be successfully launching their product, which I think is a great place to be in, and one that we're gonna work really hard to ensure that we understand and we can stay, you know, a step ahead or step with our partners. Got it. Thanks for taking the question. Thank you. Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Doug Doerfler for any further remarks. Well, thanks again for this call. This was an exciting time for Amanda and Sean and myself and the whole team as our first earnings call at the MaxCyte listed company, and it's good to do it on such a positive note. We look forward to updating you on our Q3 progress on our next earnings call. Thank you for support. Everybody stay safe. Thank you again for your support of MaxCyte. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.