Earnings Call: Q2 2021

Sep 13, 2021

Hello. Thank you for standing by, and welcome to the MaxSight Second 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. Please be advised that today's conference may be recorded. I would now like to hand the conference over to your speaker today, Sean Menarquez, Investor Relations, please go ahead. Good afternoon, everyone. Thank you all for participating in today's conference call. On the call from MaxSight, we have Doug Dorfler, Chief Executive Officer and Amanda Murphy, Chief Financial Officer. Earlier today, MaxEnt released financial results for the Q2 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. And with that, I will turn the call over to Doug. Well, thank you, Sean, and good afternoon, everyone, and thanks for joining MaxSight's 2nd quarter earnings call. I'll begin the call with a discussion of our business and operational highlights during 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 that back on July 30, After trading 5 years on the AIM-one Stock Exchange, which we look forward to continuing. Through the U. S. Offering, we raised $200,000,000 in gross proceeds, which follow a $55,000,000 pipe earlier in 2021. And on behalf of the MaxSight 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 MaxSight 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 UK and the U. S. With the NASDAQ IPO now complete, We're raising over $200,000,000 $73,000,000 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. Now Amanda will provide more details later in the call, but we realized very strong second quarter results as outlined in the press release published just a 2 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 $7,000,000 representing growth close to 40% compared to the same period in 2020. Self therapy and drug discovery revenues, including both instruments and disposables, each grew approximately 60% versus the Q2 of 2020. We also recognized $500,000 in pre commercial milestone revenues from our SPL Strategic Partnership licensed commercial partners. As many of you know, investment into an innovation in the next generation of cell therapy has been explosive. The next generation cell therapy market has become quite an exciting opportunity for MagSafe as it has become one of the fastest growing and most Promising treatment modalities to address, host of human diseases with high unmet medical need. We're seeing incredible and ongoing success from our partners and 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. MagSight's proprietary flow elect operation platform provides both the scale up and high performance needed to support the development and manufacturing of complex, Next generation engineered cell therapies in a cGMP compliant manner. We believe MaxSight's value has been validated by the ongoing success we have had in signing Usually beneficial long term collaborative arrangements with growing number of leading cell therapy developers across a broad range of Applications. With the addition of Myloid Therapeutics in the Q1, cellularity in the Q2, Incentive Biotechnology in the Q3, 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 Factor drug products now for over 35 clinical trials. As of January 20, 2021, we indicated that our SVLs had the potential to generate close to $1,000,000,000 in pre commercial milestone revenues If all of our license programs were achieved 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 on the SPLs and progression of those programs into the clinic. But with the 3 additional partners year to date, Nexite has potential to realize and 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're expanding our commercial efforts and investing in research and development. More specifically, we're investing in research and development initiatives for the export portfolio as well as developing new applications for our systems, including the commercialization of our larger scale PLx platform under the expert umbrella. We're on track to release the improved VLX large scale system by the end of 2021. And as a reminder, the VLX could process 10 times the capacity of the number of cells as our cGMP compliance system, the GTX, used by cell therapy developers. And while our long term initiatives, we're excited about the opportunities for the BLX 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 Doctor. Sarah Meek, the Senior Vice President of Business Development Doctor. Jim Brady, the Senior Vice President of Technical Application to Steve Nardi joined us recently for 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 Cutshall, Vice President of Strategy and Corporate Development, who recently joined us from Millipore Segment. Finally, we continue to add to our sales, marketing and field application with opportunities we see to move into new applications and new geographies. Finally, we expanded our Board of Directors with the addition of Nizrutka Mr. Marjani, current Chief Executive Officer and Director of Ajayya Acquisition Corp and Doctor. Yatsir Awakil, Current Chief Financial Officer and Head of Corporate Development for Cronos Bio, Nousshemarijani and Doctor. Albert Quirog Bring valuable insights and perspective to our Board and we look forward to their contributions in the future. So in closing, we have Had a very strong first half of the year, highlighted by our IPO in NASDAQ, the announcement of 3 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, and 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 and A, so as Doug mentioned, we had a strong second quarter, really driven by strength in our core business. We Put up total revenue of $7,100,000 which was up close to 30 sorry, close to 48% this quarter. Again, strength was really driven by our underlying cell therapy business and a resurgence of growth in drug discovery. So this is our Business excluding milestone payments associated with our partnerships. Cell therapy revenue Was $4,800,000 that was up 59% and over the Q2 of 2020. So just drug discovery revenue of $1,800,000 was up also 60% over Q2. So 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 drug, and in that case, we either sell the instrument or in some cases license the instrument. And then, 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. And 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 fry mice uses our platform to make proteins more for biomanufacturing applications. So Using cells as factories, so to speak, to make transient proteins, as I mentioned, or other proteins like monoclonal And in that market, we sell the drugs sorry, we sell the instruments and then also Recognize revenue from the proprietary disposables as well. So I guess net net, the strength from this quarter really came from That core underlying business, we did get $500,000 of milestones associated with our strategic partnerships, as Doug mentioned, And 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 visavis this quarter, so the difference really was driven by the difference in milestones. And so underlying the gross margin was pretty flat quarter over quarter. In terms of operating Expenses, we reported total operating expenses of $10,700,000 which was up from 7,500,000 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. And we did have some and we are going to have Some increased public company expenses, as you can imagine with the NASDAQ listing, excuse me, particularly in the back half of this year, most of which will be recurring. We are planning to make investments in OpEx spend, so including R and D, that was up quite a bit over last year, 60%. That's excluding Karma. Again, we're adding quite a bit of headcount there, as you can imagine, with Working on the VLX and some new products. Also, our sales and marketing expense was up about 60%. Again, This is really driven by our views that we 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 Karma. So just to give you an idea, our Karma stem is pretty minimal this quarter, about $426,000 with minimal stock option expense. So just so that you can, From a modeling perspective, compare apples to apples. And we expect the Karma related spend from a clinical perspective to be Pretty immaterial going forward. The wind down of the Karma clinical expenses has been pretty has retract along with our expectations and coming to a close in the first half of twenty twenty one. So just as Doug mentioned, we're coming into the end of 21 and into 2022 with a very healthy balance sheet. We've got total cash of just 75,000,000 Cash and cash equivalents and that does not include the just over $200,000,000 that we raised as part of our recent NASDAQ offering. We wanted to give some guidance for 2021. Historically, we've talked about total revenue growth. We have tried to give The market is sense of our core business and how that's trending both in cell therapy and drug discovery as well as the milestones. We are seeing quite a bit of strength in the core business, as I mentioned in the first half, and that's sort of that's continuing into the Q3, of course, with the caveat that COVID and I'm sure many companies are making this caveat, That you never know how that's going to go. So this is guidance sort of assuming standard state of affairs as it relates to COVID. But essentially, if you look at the growth we saw in the core business year to date, it would imply sort of consensus Remains the same for the back half, growth of just shy of our historical 25% 5 year CAGR. Based on the trajectory we're seeing, we think that that ultimately we could see growth a touch higher than that. And again, we mentioned we had $500,000 of program related revenue or milestone revenue in this quarter. We're pretty confident we could see another $500,000 in the second half. So if you kind of aggregate all that up, that would imply about $30,000,000 approximately of total revenue For the year, and 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, strongest again despite the fact that we have won 3 No SPL agreements, including most recently Sauna, in the Q3, very strong pipeline, very We're seeing a lot of depth in terms of applications, new applications. So 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. So we are We're confident that 2022, it looks like 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, but in any means, I'll turn it over to Doug, just to wrap up before we move into Q and A. Well, thanks, Amanda. And 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. We're really pleased to announce the 2nd quarter results and provide these preliminary full year guidance Objections. And we believe we remain very well positioned and we're excited about the opportunities ahead. So let me stop here and turn it over to the moderator for any Questions that you may have that Aemet and I can contribute to. Thank you. Please limit yourself to one question and one follow-up. Please stand by, we'll compile the Q and A roster. Our first question comes from Julie Simons 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. So 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 what we'll update those. We have to be careful about 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 because that helps in terms of the modeling going forward. Well, we announced in the S-one that we had 15%. This was at the S-one, 15% of 75 programs We're currently in the clinic. That was yes, but hopefully that will help. Thank you. I think One of the things really to add, we're obviously having we're obviously cognizant of confidentiality as it relates to Good morning. But we did also talk about the LOA. I think at the last time, we said that we had 30 trials that had Reference our LOA that that's actually increased to 35. We are seeing progression. And obviously adding I think the last time we updated numbers, we've added 2 SPLs since then. So all of those numbers are likely to be higher. But just out of respect for our customers, we're going to keep formally updating those numbers on an annual basis. Lovely. Thank you. Thank you. Our next question comes from Max Massucci 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 $30,000,000 plus revenue guide, any swing factors on both the core razor razorblade business, whether it's The manufacturing shortages we've seen for certain bioprocessing applications, just in terms of your visibility into the timing Yes. So I'll take that and maybe Doug wants to add in. So essentially, 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 Just plug in the actuals that we reported this quarter, it'll get you closer to 25 percent to shy of 25%. I think what we're seeing Just with the trajectory so far, as we expect to be a bit above that. So Again, our 5 year CAGR revenue rate, which doesn't really include milestones, It has been around 25, so I would say we're a little bit ahead of that, which is great. And I think part of that is, We have, like I said, a couple of partners that are coming into pivotal trials. And so we're seeing some obviously Less seasonality there in terms of preparing for the trials and we might normally see And some recovery or resurgence of growth, so to speak, in drug discovery. We've launched a couple of new PAs and we actually just launched another one Recently that, allowed multiple experiments at the same time to sort of lowering the transaction costs. And so I think that's been, Again, a driver of the resurgence in growth. So we have pretty good visibility So for the remainder of the year in some respects, because we do have, a number of platforms, as you know, that are leased. And we know that revenue is, we have pretty good visibility there into the license or leased Piece of the instrumentation, disposables, we have pretty good visibility there. The pull through rates are Pretty consistent in terms of what we have given recently as well. And so really it comes down to COVID Being something that could affect the business like every other business, the team has done a great job of Switching to virtual demos. But the reality is conferences are important in terms of lead generation. We're seeing some conferences switch to More in person, so that's encouraging. But, we're being fairly cautious, I would say, in terms of the guidance based on What we're seeing in the strength in the business, but that's one variable that is hard to pin down. And then on the milestones, it's really out of our control. We obviously have some visibility Near term that may be proprietary to us based on our customers And some of it we depend on public commentary, particularly the longer term piece. But it's really hard to when you're depending on A partner and then the FDA to exactly pin down when those things might fall. So 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 the pivotal trials That are again hard to know if it's 2021 or 2022, but those would be Net net higher dollars, in theory. So 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, nice to see the RUO, multiwall processing assembly. I guess more broadly, can you just give us a sense for how the several recent consumables, PA launches have played into any competitive dynamics So you face from other electroporation based instruments in drug discovery? Yes. So the purpose of those Multi well plates, multi well cuvettes are to put more transfections into a single Disposables. So the result of that is the customer can do more at a lower per transfection cost. And we don't have to cannibalize kind of our pricing in order to do that, just put extra wells into the disposable. And that's allowed us to go down into the lower cost per transfecting, again without kind of playing In the more commodity market of both cell therapy and drug discovery. And this was it's an ongoing process of I think we're quite good at voice of customer really understanding what the uses are. And if we can come in with 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 in the 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? Is it 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 going to translate into a commercial impact? Dan, I don't know the answer to your question, frankly. I mean, I think, we don't lead with that. We don't go in. We're trying to compete against For all vectors, I mean, I think that we've been talking about why companies are or why developers are migrating more toward non borrower. And Safety is one issue, but it's also complexity and speed and cost. So we're still seeing combinations with non viral and viral approach as well. So I think that there can continue to be applications that make sense for viral vectors, but I also think we're seeing a rather Large shift toward using non viral methods like CRISPR and other gene editing tools, which allow people to Gain the benefits of a nonvial system, but at the same time, perhaps be able to move into more complex Applications where safety is a bigger concern. Hopefully that answers your question. Yes, it does. It is early there too. So I guess we'll just have to see. And then Amanda on the VLX system, you mentioned wrapping up by the end of this year. What should we expect when it comes to contributions from Is that something that could be material this year sorry, in 2022? Or is the rollout going to be phased in a way where we should really start dropping Revenues into 2023. Yes. So I'll start with my CFO answer to that and then, I'll let Doug weigh in More of the application potential that we see there. So essentially what The VLX is available now. Commercially, what we're doing is pulling it into the export umbrella, which We expect to have them by the end of the year and that's really improving the industrial design, the user interface, that type of thing. Then we'll work on GMP compliance and building out what we think are interesting Large scale bioprocessing applications and we have interest from customers now to do that and we have. I would say it's early days there in terms of contribution to revenue in these are newer markets. Some of the customers use our lower scale platforms for similar applications, but this is large scale, as Segment mentioned, 10 times the volume. So this is really building out a whole new market, working with partners upstream and downstream. So I would really think about this As a 2 to 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. So we're definitely looking forward to it and excited about it and But definitely a 2 to 3 year time horizon. Doug, do you have anything to add there in terms of market opportunity? Yes, I think, 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 would be on our website for quite some time, but some customers knew we had it and wanted to use it for a specific application. Frankly, Dan, we didn't feel comfortable marketing in the way that we market our other products with the full applications development and support. And we wanted to nail that all down. We wanted to make sure that the system was cloud capable and had all the right software and the right user interface before we really Push it out as we end up marketing it as an expert product. And so now that we've got that, and we have a number of customers Currently using it with some pretty interesting applications, but it's going to take some time. Hopefully, it won't take as long as Amanda thinks, but we're going to be pushing it pretty hard. But I I get a point. We have to be thoughtful about this. And I think you see MagSight as being a relatively conservative and kind of a plotting company when it comes to product introduction. We're doing the same with the VLX, but it will be released at the end of the year. And we've got a handful of customers who are really looking forward to To get their hands on it. Yes, I got you. Okay. Thanks very much. 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 coming from the recent raise, you talked about, I think you need some of that cash to expand sales and marketing, business development. You talked, Doug, about some of the higher level leadership team you've added. But could you just maybe give us a sense for You're planning to direct that investment, whether it's number of sales force ads, field application scientists, and Where that's going to be targeted in terms of product development? I think, Amanda, you or Doug alluded to some interesting maybe product development going on as well. Just curious where So where you're targeting the proceeds? Yes. So we really as a company don't believe You put up 50 salespeople and it's going to result in a major increase in revenue. We just don't see that in this marketplace. I mean, I think we're highly attuned to what's going on in the marketplace. We're identifying new applications and KOLs, new geographies that open up. We have Excellent salespeople to stick with us because we treat them right. And we want to 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. So there's a structured way we think about this when we add in people, we add in marketing people. And so I think you're going See that team grow a step or 2 ahead of the revenue, but I think it's going to be 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 and D side that we're working in. I mean, once you have the platform established and you've invested in, you have a system out there that works Now the next step is, okay, what else can this do for new applications? And 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. And we're seeing all those and that to get out there and solve those problems. So that when those companies are looking to move a product even into the IND phase, we can help them do that. And so that's another major part of what we're trying to achieve. And obviously, the DLX is going to take some additional investment as well The need to do more in house manufacturing automation to support the success of our partners. So it's a pretty Broadly, Mitt, in terms of where we see opportunities, it models what we said in the S-one. We have no reason To suggest that, that isn't the right direction, continues to be working on by the team and we'll be executing against that in the next several years. Okay. That's great. And then just I wanted to clarify The 500,000 of SP program related revenue in the back half of the year, that's not CTX001 milestone, I guess, I just wanted to confirm that. And then second part was just you alluded to 2 pivotal trials I mean, what other sort of tracking your progress, what other milestones or items are we should be looking for on the program side over the next year plus? Yes. So we're not speaking to specific Milestones from specific programs, we're just confident that we recorded 500,000 Quarter, we're confident in the $500,000 in the back half. 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, but we did add additional partners. So a lot of the Earlier stage partners that we add, typically as we talked about, come in at close somewhere around IND enabling So those milestones are potentially ones that may come through in the next year or so. It Totally depends. It can be arranged. We do have the actually, we have a few programs that could move to pivotal in the next 12 to 18 months. TTX-one is 1 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, We do see a pretty strong year next year. The pivotal milestones are typically larger And 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 going to be less Back end loaded as this year was, but again, that can move around. So I think from at least from a magnitude So we see a fairly strong year this year, perhaps one of the strongest that we've reported, and I think those numbers are available. But it can move around. And so I hope that's helpful. We're just not going to speak to specific programs or partners at this point. We have 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. My first question is really on Drug Discovery. So you essentially beat our estimates on cell therapy, drug discovery and SPLs, but Wanted to drill down in drug discovery. The growth rate of 60% sort of surprised to the upside. I would have thought that that business would not be growing as quickly, in part because cell therapy Dramatically outperformed drug discovery last year. So can you just talk about that 60% growth rate? To what extent Do you see better growth than you expected 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 that business can trend later this year? Let me take a little piece of that first. The Q2 of 2020 was a tough quarter for a lot of companies, right? And the drug discovery business is typically, you're talking about big biotech and big pharma. And many of these companies pretty much We'll reduce their operations rather considerably in the Q2 of 2020. What we're seeing in the field is people People want to get back to work and they're coming back to work. And so I think a lot of it is, the companies are feeling much more comfortable about They allow to work in and the facilities are being redesigned so people can work in the lab. So we're just seeing people coming back Into the office and back into the laboratory, I think that, that general dynamic, I think It has helped us in terms of kind of rebounding from a difficult Q2 2020. So I think that's at the high level, that's the headline. Got it. And I also my second question, we had an opportunity to speak with a number of your users. And what I found, which was unique to MaxSight, it's just your high transaction efficiency relative to competitors, The gentle nature of your platform and not damaging cells and a 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, the 4 items I cited, you guys seem to have an advantage relative To competition, though some of your competitors actually have higher access to capital. So how should we think about the competitive environment now And how that might change over the next year? Yes. I don't think anything's changed since we last spoke or where we did the IPO. I think We just actually checked, nothing's changed. If you went through the list, it's the high efficiency, it's the computer control, it's the IP, it's The master file, it's a large scale and we do we're top of class in all those and no one can do any of them as well as we can. So they're going to have to go through a lot in order to be successful. Yes, I'm not sure it's purely a capital Deployment question. There's a lot of intellectual property. There's a lot of understanding. If you and you said it when you asked the question, if you look at the number of applications, The nuances between one application using one cast versus another cast, using a knockout versus a knock in, using a stem cell that's July from end of their precursor cell or bone marrow stem cell, all those cells are different and we understand that. And so when we go into a customer, we can design experiments to get them to where they need to be. So I think that the other thing that It isn't all that appreciative as focus. And I think that the company is really focused on this one thing, which is engineering these cells for therapeutic purposes. And I just don't think that there's anyone in the planet that has that kind of singular focus and understanding We've been able to gain over the last 20 years. So yes, we're looking. We obviously, we keep our ear on the rail. I think the thing that We allow us to sleep at night is when we do these SPLs and we're again, we're a premium price supplier. If there's somebody out there that's Coming up against us, we're going to hear about it first from our customers in addition to the work we do competitively. So we keep we're ready. And we feel very confident in our position in the marketplace right now given all Thank you. Our next question comes from Jacob Johnson with Stephens. You may proceed with your question. Hey, thanks. And 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 and D side, if we take the $3,000,000 in change of R and D expenses and I think back out 400 something odd of Karma expenses this quarter. Is that a good baseline to assume R and D expenses grow off of? And then also just to clarify on the G and 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? Yes. So if you I guess, yes, if you take if you back out Karma from the R and 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 and D from a growth perspective, if you were to just look at the pure R and D, so to speak, that that would continue to grow faster than revenue. In terms of the public company costs, we had some in the first half, but yes, clearly, those are definitely going to fall more in the back half. There's some non recurring, but the majority is recurring, and things like insurance and legal fees that will continue and things like that. So That is going to be a step up, as it relates to G and A spend in the back half. But over time, we haven't Given long term guidance, but what we've said, as I mentioned, is think about R and D growing faster than revenue, Sales and marketing kind of in line to slightly above revenue. And G and A, eventually, we'll see some leverage there, obviously, Without not including that step up from public company expense. And then from a stock option perspective, we did see increases because of the stock price. So presumably that well, I'm not going to make any comments there, But that didn't have that was a factor as well on the growth. Got it. That's helpful. And then Doug, maybe one question for you. As some of your customers move towards pivotals and I probably begin thinking about commercial approval, do you have a sense for what their manufacturing for those therapies Look like in terms of are those customers 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? Yes, it's definitely either way. We're fine with it, Scaling out the process and just remind, we have over 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 going to be incredibly important. That's one thing we didn't talk about in terms of what competition have to do, Not to make systems that actually perform the same way in Tokyo as they perform in London, right? So that's another big part of what we're doing. And It really depends on the application. I think in some instances, you're going to need Close to patient, because you need to turn these cells around rather quickly. Some are going to be more That are manufactured in a kind of a more traditional biologic sense. We're prepared for either with our GTX or now our At the LX, which is large scale. So, we're just going to follow what the customers want and enable them to do what they think is the best manufacturing strategy and No. We'll adapt with them and give them all the give them the flexibility they need to be successfully launching their product, Which I think is a great place to begin and one that we're going to work really hard to ensure that we understand and we can stay a step ahead or step with our partners. Got it. Thanks for taking the questions. Thank you. Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Doug Dorfler for any further remarks. Welcome. 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 it, Thank you, Mr. Company, and it's good to do it on such a positive note. And we look forward to updating you on our Q3 progress On our next earnings call and thank you for your support. And everybody stay safe and thank you again for your support at MacSight. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.