MaxCyte Inc Aktie

Good day, and thank you for standing by. Welcome to the MaxCyte First Quarter Earnings Conference Call. [Operator Instructions] Please note that today's conference is being recorded.

I will now hand the conference over to your speaker host, Eric Abdel of Investor Relations. Please go ahead.

Good afternoon, everyone. Thank you for participating in today's conference call. Joining me on the call from MaxCyte, we have Maher Masoud, President and Chief Executive Officer; Parmeet Ahuja, Chief Financial Officer; and Sean Menarguez, Senior Director of Business Development. Earlier today, MaxCyte released financial results for the first quarter ended March 31, 2026. 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 those expressed or implied in any forward-looking statements due to a variety of factors, which are discussed in detail in our SEC filings. Except as required by applicable law, the company has 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 Maher.

Thank you, Eric. Good afternoon, everyone, and thank you for joining MaxCyte's First Quarter 2026 Earnings Call. I'd like to start by providing a brief overview of our financial performance in the first quarter. MaxCyte reported $9.7 million of total revenue, including $6.2 million of core revenue and $3.4 million of SPL program-related revenue, which consists of milestones and royalties. These revenue results met our expectations.

As discussed on last quarter's call, the first half of 2026 is a difficult year-over-year comparison given 2 factors: discontinued SPL programs, which resulted in GTx clinical leases that did not renew and inventory management by our largest customer. Elevated SPL program turnover was generally a part of a broader rationalization in ex-vivo cell and gene therapy, which has largely normalized as we exited 2025, with SPL partners increasingly focused on their lead programs.

While the cell and gene therapy ecosystem remains challenged for earlier-stage clinical programs, the environment is not worsening from what was a challenging funding backdrop in 2025. Within the ex-vivo market, the number of companies financed remains stable, and we continue to see pockets of capital directed towards high-quality later-stage programs, including Lyell, Allogene and Vittoria building on activity from Beam, Adicet, Wugen and Anocca last year.

Against this backdrop, we are placing instruments across all stages of the development life cycle and increasing our pipeline of future SPL partners. Given our qualified instrument funnel, easier comps and contribution from our new DTx product, we expect core revenue growth in the second half of 2026.

MaxCyte reported $3.4 million from SPL milestones and royalties in the first quarter of 2026. This included $3 million of milestones driven by a clinical customer who began dosing patients in the registrational study in the first quarter. We are encouraged by the progress of this program as well as the 4 additional programs that are expected to enter registrational trials in the next 18 months. We also recognized $0.4 million in royalty revenue during the first quarter. Vertex reported approximately $43 million in Casgevy revenue for the first quarter of 2026.

On the earnings call, Vertex noted that more than 500 patients have initiated the Casgevy treatment journey with hundreds globally having completed cell collection, highlighting strong patient flow across the U.S., Europe and the Middle East. Patients continue to advance from referral to cell collection and ultimately infusion, reinforcing the therapy's multibillion-dollar commercial potential. Vertex also highlighted recent regulatory progress, including the submission of a supplemental BLA for Casgevy in patients aged 5 to 11 with sickle cell disease or beta thalassemia. This filing has been granted a Commissioner's National Priority Voucher by the FDA, underscoring the significance of expanding access to younger patient populations.

Overall, we remain encouraged by the continued growth in patient cell collections and infusions as Vertex scales Casgevy commercially with Vertex noting secured reimbursements, continued ATC network expansion and a growing number of patients progressing through each stage of the treatment journey. We remain confident in Casgevy's long-term trajectory and transformative potential for patients around the globe. Following these first quarter results, we are reiterating our core revenue and SPL milestone and royalty revenue guidance for the full year 2026, which Parmeet will elaborate on.

Turning to our SPL portfolio. We updated Slide 3 in the SPL deck on the IR website, which now reflects 29 SPL partners. We have not seen any changes in the number of SPL partners or the number of clinical programs supported since our last update in March. However, we did remove Catamaran Bio and Walking Fish Therapeutics from our list of SPL partners as both companies previously ceased operations. Among these 29 SPL partners, 30 programs are both in clinical and preclinical development, supporting diversified revenue streams across the medium and long term. Of these, there are 5 clinical programs with the potential for commercial launches in 2027 and 2028, including 4 that could begin registrational studies over the next 18 months and one that dosed patients in a registrational study in the first quarter. These 5 include zugo-cel from CRISPR Therapeutics for B-cell malignancies, WU-CAR-T 007 from Wugen for hematologic malignancies, azer-cel from Imugene for hematologic malignancies and 2 programs from undisclosed SPL partners.

Across our 12 SPL programs currently in the clinic, the total future pre-commercial milestone opportunity is approximately $100 million. While any individual program carries clinical commercial risk, the multiple shots on goal we have across the same indications and across many different indications gives us a high probability of generating meaningful core revenue, regulatory milestones and commercial royalties over time. Speaking of MaxCyte's leadership in the gene editing field, the first CRISPR/Cas9 approved therapy was on the MaxCyte platform, and we believe the first base editing and prime editing approved therapies would be on the MaxCyte platform as well.

On the product side, the commercial launch of ExPERT DTx is progressing well. Early traction is very encouraging with adoption in discovery and early optimization workflows across ex-vivo and in-vivo CGT as well as protein screening for biologics development. We are seeing initial pipeline build for leading academic centers, biotech and large pharma. The DTx is fully compatible with the rest of our ExPERT platform. So as customers adopt the instrument in discovery, they will have a seamless path to scale up on our STx and GTx instruments with cGMP manufacturing and ultimately into an SPL agreement. We expect DTx adoption to build through the balance of 2026 with increased adoption in the second half of the year and into next year.

Moving to SeQure. We are seeing steady progress as we build out the commercial engine of the business. We added new assay service agreements during the first quarter with customer engagement across both ex-vivo and in-vivo developers, including several programs approaching IND-enabling stages where off-target characterization is most critical. We continue to believe that secure assays will become part of the industry standard for off-target risk assessment in gene editing and early 2026 customer feedback has reinforced that.

In mid-April, the FDA Center for Biologics Evaluation and Research, or CBER, issued a draft guidance titled Safety Assessment of Genome Editing in Human Gene Therapy Products using next-generation sequencing. The guidance focused specifically on the use of next-generation sequencing-based methods to evaluate off-target editing risks and provides ex-vivo and in-vivo developers with recommendations on sequencing strategies, sample selection, analysis parameters and reporting, all of which are intended to support nonclinical data packages submitted with IND and BLA applications. We view this as a structural positive for SeQure as sponsors are now expected to quantify editing outcomes with high sensitivity and utilize multiple complementary approaches. The guidance makes it clear that understanding editing outcomes is foundational to development. Overall, we believe the investments we are making across the portfolio, such as the DTx and SeQure have substantial commercial potential over time and are diversifying MaxCyte's revenue streams.

To close, we entered 2026 with a fundamentally different spending profile than in prior years. The full benefit of the 2025 restructuring cost efficiency actions is now flowing through our P&L, and the year-over-year reduction in operating expenses is clearly visible in our results. We do not expect a meaningful growth operating expenses from here, and we see a clear path to reducing cash burn further as revenue growth returns.

Before wrapping up, today, we announced the Board's authorization of a $10 million share repurchase program. The decision to authorize the share repurchase underscores the Board and management's confidence in MaxCyte's long-term value, strategic investments and the business prospects as well as the strength of our balance sheet. I want to take a step back and highlight the reason for this repurchase program at this time.

Over the last 2 years, we have taken steps to dramatically strengthen our financial position, acquire and build new products and are now supporting multiple clinical programs that could be approved in the next 18 to 24 months. We have never been better positioned to grow with our end market. While we continue to invest in the execution of our business and expand our product portfolio, such execution will always be done with financial and commercial discipline. As such, we believe our shares represent a compelling investment opportunity, and we intend to execute the majority of our share repurchase program before the year-end.

I will now turn the call over to Parmeet, who joins us today for his first earnings call as MaxCyte's Chief Financial Officer. Parmeet?

Thank you, Maher. I'm pleased to be joining you today for my first earnings call as MaxCyte's Chief Financial Officer.

Total revenue in the first quarter of 2026 was $9.7 million compared to $10.4 million in the first quarter of 2025, representing a 7% decrease. The decrease in total revenue was driven by a decline in core revenue, partially offset by growth in SPL program-related revenue. We reported core revenue of $6.2 million compared to $8.2 million in the comparable prior year quarter, representing a 25% decrease. Within core revenue, instrument revenue was $1.3 million compared to $1.4 million in the first quarter of 2025. License revenue was $2.1 million compared to $2.5 million and processing assembly or PA revenue was $2.3 million compared to $3.9 million.

As we expected in our guidance, core revenue was adversely impacted by inventory management at our largest SPL customer as well as discontinued SPL programs. For the first quarter, 44% of core revenue was generated from SPL partners compared to 57% in the first quarter of 2025, which is reflective of the headwinds we experienced in the quarter related to SPL core revenue. As Maher discussed, we are positive on the momentum and continued growth we are seeing in SeQure with total revenue of $0.6 million in the first quarter, which includes both license and services revenue. SPL program-related revenue in the first quarter was $3.4 million, including a regulatory milestone tied to a clinical customer that began dosing patients in a registrational study during the quarter, which Maher referenced. This compares to $2.1 million of SPL program-related revenue in the first quarter of 2025.

Moving down the P&L. Gross margin was 84% in the first quarter of 2026 compared to 86% in the first quarter of 2025. Excluding inventory provisions and SPL program-related revenue, non-GAAP adjusted gross margin was 78% in the first quarter of 2026 compared to non-GAAP adjusted gross margin of 83% in the first quarter of 2025. Total operating expenses for the first quarter of 2026 were $14.3 million compared to $21.2 million in the first quarter of 2025, a decrease of approximately $7 million. This reduction reflects the restructuring and cost efficiency actions we took in 2025, which are now being realized across the P&L.

We're entering 2026 with a fundamentally different cost structure than in prior years, and we do not expect to meaningfully grow operating expenses from this level. We ended the first quarter with combined total cash, cash equivalents and investments of $147.7 million and no debt. Our strong balance sheet positions us well moving forward, providing flexibility to continue to invest strategically for our business, our customers and our shareholders. Today, we disclosed that MaxCyte's Board of Directors has authorized a share repurchase program of up to $10 million. Under the program, the company may repurchase shares through open market purchases, privately negotiated transactions, block trades or other means, subject to applicable securities laws.

Continuing to our 2026 guidance. We are reiterating our 2026 outlook and expect total revenue to be in the range of $30 million to $32 million, consisting of $25 million to $27 million of core revenue and $5 million of SPL milestones and royalties. As Maher highlighted on last quarter's call, we expect core revenue, which excludes milestones and royalties, to be weighted towards the second half of the year. For the second quarter, we expect core revenue to be approximately in line with the first quarter, reflecting the mix and timing of the business.

In our guidance related to SPL milestones and royalties, we indicated that we expect $3 million of revenue from milestones and $2 million of royalty revenues. Given $3 million milestone revenue in Q1, we are not forecasting any additional milestones in 2026, and the balance of the guidance is from commercial royalties. Lastly, we continue to anticipate to end 2026 with at least $136 million in cash, cash equivalents and investments, excluding capital deployed towards our repurchase program.

Now I'll turn the call back over to Maher.

Thank you, Parmeet. I'd like to thank everyone at MaxCyte for their dedication to our mission and execution in the first quarter. And I look forward to updating you all on our next quarter call.

With that, I will turn the call back over to the operator for the Q&A. Operator?

[Operator Instructions] First question coming from the line of Julie Simmonds with Panmure Liberum.

Congratulations on a much stronger quarter than expected. A couple of questions. I suppose firstly, on the SPL revenue guidance. Clearly, you're not looking for any more milestones or you're not guiding to any more milestones for the remainder of the year. Given the number of active programs that are ongoing, plus where your sort of later-stage programs are, it feels unlikely that you're going to get no milestones at all in Q2 to 4. Are you just being particularly cautious with this time frame and maybe changing your risking of how milestones come in?

Yes. Good question, Julie. So good to hear from you as always. On that question, let me take this one and then if Parmeet wants to add anything or Sean as well he's here with us as Head of Business Development. That's more an indication of the way the agreements are structured, the way milestones are contractually structured is that's based on dosing timing in pivotal trials, not necessarily on the initiation of pivotal trial. So while it's possible we could get another milestone here, the way these agreements are structured, there's a good chance it's more in the first part of next year. It all depends on the dosing regimen for the trial itself, not necessarily initiation of a pivotal or registrational trial.

Does that make sense, Julie?

That does indeed. Thank you. Yes. And then just on the license, the sort of cadence of that during the year. Because again, I think, obviously, down on where it was last year and -- but probably I'm trying to get a feel for whether you're expecting sort of license fees to remain fairly similar through the year or because of where your SPLs are and the potential of signing new SPLs, whether a fairly flat sort of look for the year is again being quite conservative here with your expectations because you're implying your pipeline is still quite strong for SPLs. So what we should be thinking about in terms of cadence of license fees?

Yes, absolutely. So this is in terms of cadence of new licensees, right, new partners, Julie, just to -- so obviously, as I mentioned last time, we feel comfortable guiding 3 to 5. Some years, we'll have maybe more than 5. Some years, it could be less than 5. I want to take a step back. In the past few years, we've signed 15 SPL partners. We still feel very good we'll sign at least 3 this year as well. Obviously, they haven't happened just yet, but that's just the nature of the negotiations and the work with these customers who then become partners, right? Oftentimes working with them 18 months, sometimes 24 months before they actually sign an agreement.

So we currently are working with those in the funnel and the pipeline, as you would call it. And we feel good that we're going to sign at least 3 this year. It's just the cadence of when the negotiations, when the work is happening, when the process work is happening with them, they still are not there yet where they haven't signed in the first half so far. But I feel good about at least 3 this year, Julie.

Our next question coming from the line of Brendan Smith with TD Cowen.

I wanted to actually follow up a little bit more on any incremental color on SeQure DX as it stands. I guess, based on any initial feedback to date, how much contribution to that revenue growth over the next, say, kind of 12 to 24 months, are you expecting to come from that?

And then just sorry, as a follow-up, sorry if I missed it, but I know you mentioned that for the buybacks, most of it will kind of come through in calendar '26. But I guess anything to call out in the cadence between Q2 to Q4, fairly steady between those 3 quarters or just any considerations there for our model?

On the cadence of the buyback. Parmeet, did you want to take that one?

Yes, why don't I take that? Good to hear from you, Brendan, and really pleased with the authorization from the Board. We certainly believe and are aligned with the Board, there's a disconnect on value and believe buying our shares provides a very compelling investment opportunity. So as we said in the prepared remarks, we are looking to move fairly quickly on this, looking to execute a majority of the share repo program by year-end and working with an external adviser to put us in the best position to succeed here. It's going to include a mix of open market purchases and systematic. So pleased to get this authorization from the Board.

Yes. And then on the first question, I think you're talking about contributions to SeQure, if I remember your question correctly, Brendan?

Yes.

Let me give you a little clarity there. Yes, absolutely. So obviously, Parmeet alluded to it earlier, revenues for SeQure were $0.6 million in the first quarter, and we're very pleased with that. I mean you look at where we expect it to grow, it's substantial year-over-year growth compared to 2025. The $0.6 million sequentially was up about 11% from Q4 of '25. It's 3x what it was in Q1 of last year as well. We spent the first -- really the late part of last year and throughout the year and the first part of this year, building up the commercial pipeline, working with customers to grow the pipeline as well. And we're starting to see that now in the first quarter. We're hopeful that progresses throughout the year as well and just continues throughout the year.

The draft FDA guidance that came out very recently that I alluded to earlier is exactly why we acquired SeQure and why we believe it is -- it's that gold star for cell and gene therapy developers, whether you're doing ex-vivo or in-vivo development, you really need to characterize your off-target assays, your off-target gene editing with these assays. Even you have to characterize the on-target effects of your gene editing as well. So we feel good where it is. It took us some time to integrate them throughout last year, and we're seeing some of the traction now in this first quarter, and we're hopeful it continues throughout the year.

And our next question coming from the line of Dan Arias with Stifel.

Maher, can you just maybe talk about the backdrop at the industry level, but then also pair that with your own sales funnel. I think your comment was that you don't expect things to get worse this year, that's good. But do you think new business and new activity can accelerate for you guys just given what you're seeing out there?

Sure. Absolutely, Dan. Good to hear from you. I'll take that. So obviously, we saw elevated SPL program turn over last year from rationalization. It hurt us hard last year, especially in the first half. That turnover in 2025 we think has largely normalized. In fact, many SPL partners are increasingly prioritizing and concentrating on those lead clinical programs, and we're seeing that as well. While financing for earlier stage cell therapy is still challenging, that's seen across the industry, especially ex-vivo as well.

What we're seeing more, I would say, non-deterioration or stability in what we consider that late stage or later-stage clinical programs that we're seeing. And in fact, you look at right now, we have, I think, 11 SPL partners with 12 clinical programs. These are all the lead assets. And you see where it is from a finance perspective, you're seeing companies like Lyell, like Allogene and Vittoria and others, still garnering investor interest and investor demand and raising the funds they need for those later-stage assets.

So long story short, early-stage companies, I think it's still a tough backdrop there. But for later-stage clinical programs, the financing is there, and we're working with many more of those companies. In fact, we're working with more late-stage companies now than ever before. So it's a challenging backdrop, but at the same time, pockets of green shoots for later-stage programs.

Okay. Helpful. And then, Parmeet, I know you're still getting settled there, but it would be good to get your first blush perspective just on what you think exists as having the most room for increased forecasting clarity and then whatever you see as the priorities going forward when it comes to just sort of quarterly cadence and visibility on the business.

Yes, Dan, great to hear from you and been here just about 6 weeks, and I have to say the team has been super supportive as I've transitioned into the role. Clearly, MaxCyte is a market-leading product with great service leadership and field application scientists. So certainly, last few weeks, I've been reviewing the company's forecasting methodology, spending quite a bit of time with our commercial team, the leaders looking at the funnel and believe the company provided a prudent outlook for 2026.

To your point, of course, we will continue to evolve the financial analytics, forecasting of our business. For me, particularly for the team, the finance team, providing support for our commercial and product development initiatives is going to be a priority, while certainly maintaining the disciplined cost structure that I have to give credit to Maher and team that I have established with the tough changes that were made last year.

And our next question coming from the line of Matt Hewitt with Craig-Hallum Capital Group.

Maybe just to go back to the SeQure ramp. Obviously, Maher, you noted some nice growth, both sequentially and year-over-year. Should we anticipate that kind of growth continuing for the remainder of this year? Or do you anticipate maybe a little bit of a pause as you kind of digest the customers that you're working with already and then another step up maybe in the second half of this year into next year?

Yes. Good question, Matt. I mean I would say the growth that we're expecting is year-over-year, significant growth year-over-year. In terms of the cadence of that versus Q2 versus second half, I'd say I want to be a bit patient here and see how that transpires throughout the year. But overall, in terms of -- it's a services business, it's not a CapEx business. When we deliver these services is a bit different timing-wise than it is for the MaxCyte electroporation business. But I'd say as a whole, overall, we feel very good about significant growth year-over-year. The cadence of it, I think we want to see how it transpires throughout the year before we get ahead of ourselves, Matt.

Understood. And then as far as the gross margins are concerned, a little bit of a step back. Obviously, you've had some inventory adjustments happening. Do you expect that to kind of recover as the year progresses as well, especially given your anticipated ramp in revenues?

Yes. I mean I think one of the challenges certainly with gross margin this quarter was the challenges with our SPL customer that we had talked about certainly played a part here, had an impact. As we look through the year, Matt, we expect gross margins to kind of trend in the mid-70s from here on. Certainly, the first quarter was certainly benefited from that milestone payment, which flows right to the bottom line. But looking ahead, mid-70s is the way to think about it.

Our next question coming from the line of Matt Larew with William Blair.

I wanted to follow up, Maher, on your comments on DTx. When you announced that launch last quarter, you had some good early traction. I think some sales in the first quarter. You have nice comments on it today here as well. Just curious sort of what reasonable expectations are over the next 12 to 18 months? And what the mix of the funnel looks like, if it's getting you into new customers or there's a lot of existing customers. I think last call, you referenced interest sort of globally, both in the U.S. and in APAC. So just a little bit more color on how that launch is going would be great.

Yes. Great question, Matt. Let me take that one. So let me give you a bit on the color of where maybe the interest that we're getting and what we're seeing. So obviously, it's meeting our expectations to what we thought we could do, right? In the cell therapy space, we can get in there. We can work with customers of ex-vivo and in-vivo while they're doing their screening for cell therapy development. And we're seeing that, right? So the funnel itself is building very well. We still anticipate that the sales will begin to increase in the second half of the year. That's the norm for any launch. You have to build up the campaign behind it. You have to get into the customers and you begin to see the traction there. But the pipeline is becoming very healthy.

What we're also seeing is traction in areas, for example, in the academic accounts that we never really had before that we can get into with the DTx system. We're also seeing it in protein screening for biologics, and we're seeing that from big pharma as well. We're having a few of the funnel in the pipeline. We're seeing that we're gaining traction with big pharma that we never had before. So that's not necessarily a surprise for us. We realize that we're building it, we can allow it to really get into the protein screening market as well for biologics. But the pleasant surprise has been the early traction from having a customer interest from big pharma as well, which I think bodes well for the future of DTx. But again, tempered, let's see how the rest of the year plays out in terms of DTx sales and revenues from it, but we expect significant growth going into the second half and into '27 and beyond.

Okay. And then I guess just a bit of a higher level one. The the SPL portfolio has evolved quite a bit back that time as a public company in terms of cross disease categories. Solid tumors is now a big part of the preclinical pipeline. You referenced in the -- in your SPL deck, a few partners leading the ex-vivo space, but also referenced confidence in hitting 3 more this year. So there's sort of natural ebb and flow here. I guess we would just be curious for sort of your state of the union, both from what you're seeing from an SPL interest perspective, but also what your team is observing in terms of clinical development and sort of how that translates to continued confidence in the platform and in future growth for SPL partners.

Yes. No, great question. I mean -- so part of the reason why we have confidence in the current partners and the programs they have and then also the future SPL's that we're signing in. While we had rationalization last year that hurt us, what we're seeing now is these later-stage clinical programs progressing through the clinic, and we're seeing that. The one milestone we received this year from one of our partners was for a clinical program that has good results. It's confidential, we can't disclose it. But so far, we're seeing what they published were good results of their current clinical program. And we're seeing that with some of the other ones here.

I mean if you look at our deck, you have Wugen with the WU-CAR-T 007 progressing very nicely. You have CRISPR, you have Imugene. And you're seeing this. These are companies that are going to pivotal and registrational studies. And it speaks to what I was speaking to earlier, which is interest in later-stage programs is still there from a financing perspective because the science is there, and you're seeing the progress there. And these are -- some of which are autologous and allogeneic programs. We're also seeing interest still in allogeneic programs because it reduces the -- I'd say, the patient journey in terms of patient administration, and we're still seeing that.

So even across our SPL funnel and the pipeline that we're building for future SPLs, we're still seeing that research there for those lead assets still going about, still being funded. Obviously, is it what it was in 2021, '22? No, I'd say it's even healthier in the sense where even though you might have less of a pipeline build of these SPLs, but the ones that are going and becoming SPLs, they're looking -- they're working on the lead assets. And that's what we want to work with, and that's what we're seeing now. So that's why we still feel confident we can sign at least through this year. For the foreseeable future as well, we can keep signing 3 to 5. Nothing has really changed other than the fact we're seeing the science itself mature, so to speak. I hope that kind of answers your question though.

And our next question coming from the line of Mark Massaro with BTIG.

The first one is for Parmeet. It looks like the G&A expense came in $4 million down sequentially and over $2 million below our forecast, which looks like some pretty good cost discipline and management. Is that $6 million or so a reasonable run rate for G&A going forward? And can you just speak to any changes in headcount? Obviously, there's some impacts, cost containment matters that were done last year. But how are you thinking about spending this year and flowing throughout the rest of the year?

Yes. Good to hear from you, Mark. And certainly, I'd speak to sort of broadly OpEx, the reduction in OpEx, G&A being part of that is starting to materialize, right? You're seeing that in our P&L. The tough decisions that were made last year are now being reflected fully in our P&L.

Looking at where we ended up with OpEx in Q1, I think it's a fair run rate outside of, I would say, low single-digit sequential growth in the coming quarters that we expect for investments in things like commercial expansion in APAC that we're looking at, some additional DTx launch activities. So kind of that's how I would look at it. Keeping this in mind, I would say, for the year, we expect OpEx to be around $60 million. And back to your point, just for context, this is still a significant reduction over where we were last year. Last year, OpEx was around $79 million, $80 million. So it speaks to the body of work, the tough work that the team has done.

That's really helpful. Back to the DTx, Maher, you did make some positive comments about the beta launch. As we think about this rolling into like the second half of the year, should we expect to see some revenue pull-through in the form of capital purchases or leases of the system? Or what I'm really trying to get at is, are some of these just sort of placed just to see how things are going and then there may or may not be revenue in the back? I'm just trying to figure out how much we should expect in the back half of this year.

Yes. I mean it's a tough question there in the sense of -- so we're not guiding as to where it's going to be in the second half of the year for this one here. And just to be made clear, Mark, we don't license these. This is a pure sales, pure CapEx sale here. This really is -- we're seeing the help of the build-out in the funnel so far. We see meaningful contribution in the second half, even more meaningful going to 2027. And as we keep learning from the launch itself, it will give us even more of an initiative, what Parmeet alluded to us be able to even spend more -- a little bit more on the marketing of the DTx and on the commercial launch of DTx.

But where I stand right now, I feel very good what happened in Q1 in terms of initial sales there, what's happening here in Q2, I think can help us continue to see the future SPLs as well because we can get in earlier with customers. And then it can also get us into that bioprocessing protein screening market, that can really start to contribute to revenue in the '27, '28 and so forth time period. And it gives us a chance to also learn that market more and see what other products we can also launch into that other market in the bioprocessing market as well.

So that's kind of how I'm looking at DTx. I feel very good where it is, but there's still a lot of learnings and there's still a lot of commercial execution we have to focus on to make that second half have meaningful contribution.

Our next question in the queue coming from the line of Hannah Raiford with Stephens Inc.

Just following up one more on DTx. You mentioned that there's still kind of a learning curve here. How much visibility do you have into the 2H pickup? And is that included in guidance? Or anything there, would that be kind of upside?

Yes. Let me take that, and I can hand it over to Parmeet as well. That's included in the guidance, right? So this was what I said earlier on our previous call, this is part of our guidance where we see that second half pickup helping us in terms of where we guided for the year in terms of the core revenue. Again, it's -- I'm taking a careful look at this because when I say learning, we launched just knowing exactly what we're going to launch into, but now it's commercial execution. So ahead of ourselves. Let's just make sure that we can execute exactly what we launched where we knew we're going to get into the cell therapy space earlier in the research process, earlier in discovery and really begin to have those learnings even in the bioprocess space as well.

So it's part of the guidance that we gave for the year. And as we get further traction, we'll obviously update on future calls as well. But until that time, we're taking a wait-and-see approach.

Okay. That's helpful. And then after the recent portfolio pruning that you've seen, now that that's kind of played out, can you just talk about what the landscape looks like now? Do you think the customers you're serving are kind of more geared to certain modalities or cell types or indications? Is there just anything you'd call out there?

Yes. I'm going to turn this on to Sean, the SPL. Sean, have we seen any trends that you believe in terms of where we're going in terms of the clinical programs from the SPL funnel that we're looking at?

No, thanks, Hannah. It's good to hear from you. From an autologous allogeneic standpoint, still remains around a 50-50 split across different variety of cell types. Obviously, the market is predominantly T-cells, which is reflected in the portfolio. We are seeing the advancement of allogeneic CAR-T. Wugen now is in a potential registrational trial and could be the first allogeneic CAR-T approved. We're also seeing different novel gene editing platforms continue to advance with the FDA support. So that's the overall kind of state of the union for the SPL portfolio.

And I will now turn the call back over to Mr. Maher Masoud for any closing comments.

Yes. Thank you, everyone, for joining us today. I want to thank all of our employees as well, our shareholders. Look forward to speaking everyone again on our next earnings call in a few months.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.

Good day, everyone, and welcome to MaxCyte's Fourth Quarter Earnings Conference Call.

[Operator Instructions]

Please note, this conference is being recorded. Now I'll turn the call over to Eric Abdel with Investor Relations. Please proceed.

Good afternoon, everyone. Thank you for participating in today's conference call.

Joining me on the call from MaxCyte, we have Maher Masoud, President and Chief Executive Officer; Doug Swirsky, Chief Financial Officer; and Sean Menarguez, Senior Director of Business Development.

Earlier today, MaxCyte released financial results for the Fourth Quarter and Full Year ended December 31, 2025. 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 those expressed or implied in any forward-looking statements due to a variety of factors, which are discussed in detail in our SEC filings.

Except as required by applicable law, the company has 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 Maher.

Thank you, Eric. Good afternoon, everyone, and thank you for joining MaxCyte's Fourth Quarter and Full Year 2025 Earnings Call. 2025 presented a challenging operating environment, that was also a year of meaningful progress for MaxCyte. We continue to sign new strategic platform licenses, SPL, as we call them, and support customers in advancing drugs with the clinic. We acquired SeQure DX and successfully integrated the business into MaxCyte. We made meaningful changes to rightsize spending and strategically improve our operations. And most recently, we launched a new product into ExPERT DTx that will allow us to work with developers earlier in research and filament discovery.

Let me start by reviewing our financial results. Consistent with the preliminary financials we announced in January, MaxCyte reported $33 million of total revenue for the full year, which included $29.6 million of core revenue and $3.4 million of strategic Platform License Program related revenue. We grew our instrument installed base to 857, up from 760 at the end of 2024. Doug will discuss fourth quarter and full year performance in greater detail. The MaxCyte's results were within the range of expectations that we'd update you with in August.

As previously discussed, the business was impacted by program consolidation and rationalization across some of our SPL customers, which included a 15% decline in purchases and leases from our largest customer, reorganized manufacturing and managing inventory. Now let me give you a little more detail on the launch of our new ExPERT DTx which I mentioned earlier, and I'm very excited to discuss. Even as we face headwinds in 2025, our focus remains on innovation and leading the market with groundbreaking platforms. In February, we announced the launch of ExPERT DTx, a modular 96-well electroporation platform designed for research and drug discovery applications.

We are very excited about what this product represents for MaxCyte. The DTx enables [indiscernible] to transfect primary cells and cell lines across, up to 96 samples in a single 3-minute run, with consistent well to well performance that effectively eliminates transfection as an experimental variable. It is one of the most cost-effective 96-well electroporation solutions on the market with detachable 8-well strips that can be processed with unique parameters giving researchers the flexibility to test different cell and cargo combinations in parallel while reducing waste. This software is also differentiated. The ETF designer allows users to design experiments remotely and upload workflows when the system is available, maximizing instrument pipeline. That is a real practical advantage for [indiscernible] running multiple back-to-back experiments.

What makes the DTx strategic important is its full compatibility with the rest of the ExPERT platform. A researcher can optimize the process on the DTx and discovery and transfer directly to MaxCyte's larger scale to electroporation instruments, the STx or GTx for scale [indiscernible] CGMP compliant manufacturing with our reoptimization that has a powerful value proposition, which allows us to engage with customers at the very early stage of the workflow and provide a seamless path from discovery through to the clinic and commercialization, all on a single platform, which is an epitome of a therapeutic platform.

We built this product around our customers' needs, and we believe it will be added to both instrument and processing assembly PA's revenue in 2026 and beyond as well as allow us to grow our SPL customers. We have built years with [indiscernible] know-how and expertise into DTx, and I am confident we launched a product that will allow researchers to seamlessly progress from discovery to the clinic on to our GMP ExPERT platform.

Turning to our guidance. As we enter 2026, the challenges that impacted growth in 2025 will have an impact on the first half of 2026. For our 2020 guidance, we expect total revenue to be in the range of $30 million to $32 million, consisting of $25 million to $27 million of core revenue and $5 million of SPL program-related revenue. Given the timing of purchases and leases, we expect Q1 to be our lightest quarter for core revenue with the back half weighted year. Included in our guidance is the impact of the recent notice received from an SPL customer terminating their license for reasons unrelated to our platform's performance, along with approximately $4 million in core revenue headwind from Select SPL customers, which began to impact our revenue in the second half of 2025, which I will provide further detail on.

We continue to believe that the headwinds facing our business are a result of the conservation of capital by buying [indiscernible] in the [indiscernible] cell type of space, rationalization of customer programs and ex-vivo cell therapy and inventory management at our largest customer, which we expect to stabilize in the second half of 2026 and growth from that new base. There has been no fundamental change in the demand for our technology and the differentiation of our technology competitively. While these short-term headwinds influenced our revenues last year and the first half of this year, we are more excited than ever of our SPL programs and the business model, which is seeing multiple programs progressing deep into the clinic and much closer potential commercialization.

As I mentioned, embedded within the core revenue guidance, we expect revenue from SPL customers, including our largest customer to be a $4 million headwind relative to 2025. This is about half from processing assemblies and half from leases and a result of 2 factors. First, our largest customer reorganized our supply chain in 2025, impacting inventory management of PAs. Additionally, in 2025, due to manufacturing site reorganization there was a reduction in leases midyear. So the full year lease revenue for this customer has a difficult comparison to last year.

Following in-depth compensations with this customer, we expect both PAs and leases will stabilize during the first half of 2026. Second, other SPL customers rationalize programs in 2025. On a net basis, we lost 6 SPL clinical programs during the year. The annualized revenue from the discontinued programs, including leases and PAs will not recur in 2026, reflecting the headwind mentioned earlier. The 12 clinical programs we currently support are across 11 SPL partners, highlighting continued investment on the lead asset. This rationalization is part of our business model as we expect a certain number of biotech programs to discontinue, but we are consistently signing new SPLs and supporting later-stage [indiscernible] programs, which will eventually be commercialized in [indiscernible] our platform. In the last 24 months, we signed 10 new SPLs and are now supporting more later-stage programs than ever. Also embedded within our core revenue guidance, we expect revenue growth from non-SPL customers, which is inclusive of growth from security apps. With regards to SPL-program revenue, as I shared, we have guided to $5 million in 2026.

Note, we received a 7-figure milestone payment from a clinical customer and began dosing patients in a pivotal study in the first quarter. The balance of the SPL program-related guidance includes approximately $2 million of expected royalty revenue from our commercial stage customer as the therapy ramps throughout the year. Despite these near-term headwinds, we are very encouraged by the medium-term opportunity for 5 [indiscernible] programs to enter pivotal studies over the next 18 months and potentially receive commercial approval in 2027 or 2028.

As I mentioned, one of these 5 programs began dosing patients in its pivotal study in the first quarter of 2026, triggering the milestone payment I referenced earlier. These programs include [indiscernible] from CRISPR therapeutics for B-cells malignancies WU-CAR-T 007 from Wugen for hematologic malignancies, [indiscernible] from Imugene for hematologic malignancies and 2 programs from undisclosed SPL partners. I believe up to 4 of these programs will be pivotal by the end of the year. Outside the Wave 2 programs I just covered, there are another 7 active [indiscernible] programs in earlier stages of development that continue to pursue FDA beyond 2028 and can represent meaningful core revenue and SPL program-related revenue for MaxCyte overtime.

Across these programs, the total lost on opportunity exceeds $110 million. Today, we have received over $30 million in total milestone payments from [indiscernible] customers, highlighting the strength of our portfolio-based program-driven business model. We have 31 SPL agreements, including 4 new SPLs in 2025. 11 SPL customers we work with have current clinical and commercial programs, while another 8 are active or on preclinical development, most of which we believe will become clinical SPL customers. However, 12 of the SPL agreements are with biotechs that are no longer active, having exited [indiscernible] XB ex-vivo or cease operations. The 12 that [indiscernible] as part of our business model, as we don't expect the [indiscernible] we signed to result in a commercial program.

There is a meaningful revenue opportunity for newer SPL customers advancing toward and entering the clinic. As I mentioned earlier, despite significant consolidation in 2025, SPL customers continue to advance assets on our platform, including after 6 programs in late-stage preclinical development expected to enter the clinic within the next 6 to 18 months. This reflects continued expansion of our SPL portfolio beyond our current later-stage programs.

Today, we support one commercial therapy Casgevy and we remain very encouraged by the opportunity for the drug to continue to scale with both Vertex and CRISPR recently reiterating Casgevy multibillion dollar potential. During Vertex's most recent earnings call, they reported $116 million in Casgevy revenue for 2025, including $54 million in the fourth quarter. Vertex noted their 147 patients with sickle cell disease or transfusion-dependent beta thalassemia, globally had their first cell collections in 2025 and 64 patients received Casgevy infusions with very those occurring in the fourth quarter. The momentum in patient collections is notable, and Vertex has indicated they expect a meaningful Casgevy ramp into 2026 versus 2025. Despite the possibility of short-term quarter-to-quarter variability as the drug scales, we are optimistic about where this therapy is headed and truly believe in this transforming potential for patients around the world. To wrap up on the SPL portfolio, while any individual program carries risk, the multiple shots on goal we have across the same indications and across many different indications, gives us a high probability of generating meaningful core revenue of regulatory milestones and commercial revenues over time.

We are now seeing the growth in commercial world to start to materialize in our revenue line. This reflects the strength of our innovative business model, and we expect this trend to continue in the coming years as additional therapies are commercialized by our SPL customers. That conviction is what drives the decisions we make about how to operate this business.

Moving to SeQure DX, I believe 2026 is the where the SeQure opportunity starts to become more visible. We spent 2025 integrating the business, building the commercial pipeline and working with early customers. The regulatory environment continues to evolve in our favor. Our target risk assessment is becoming an increasingly [indiscernible] FDA and other global regulatory agencies when reviewing gene edited therapies. Our 3 assays, screening, nomination and confirmation, serve both ex vivo and in vivo developers, which means secures addressable market extends well beyond our legacy electroporation customer base. We acquired relatively a new startup with an emerging and leading technology. Despite 2025 coming in lower than expectations, we expect year-over-year growth for SeQure assay services and licenses in 2026.

I remain very optimistic about SeQure's commercial potential and expect to be a growing contributor to revenue in the years ahead. I want to underscore that we are entering 2026 with a fundamentally different cost structure than in prior years. While we are still investing in [indiscernible] new products like ExPERT DTx, we have reduced annual cash burn by over $16 million and have put MaxCyte dramatically different spending trajectory that was planned in the prior operating model. This is the direct result of the restructuring and cost efficiencies actions we took in 2025. We do not expect [indiscernible] to meaningfully grow our operating expenses for the year, and we see a clear path of reducing cash burn further as revenue grows growth returns.

We have a strong and healthy balance sheet, which allows us flexibility in capital allocation and investment decisions. Finally, as previously announced, Parmeet Ahuja will be joining MaxCyte as Chief Financial Officer, succeeding Doug Swirsky effective March 30. Parmeet brings more than 2 decades of finance leadership experience at Agilent Technologies, a global life sciences tools company. [indiscernible] a number of senior roles spanning financial planning and analysis, operational finance, internal audit and enterprise financial services. In particular, he led [indiscernible] FP&A for Aligent's global operations and supply chain organization, and earlier headed internal audit in SOX working directly with the Board's Audit Committee on risk and controls. Parmeet also most recently led Agilent's Investor Relations function. Giving him direct experience [indiscernible] investment community, we are excited about that [indiscernible] operational finance and governance experience as we continue to scale the company and strengthen our financial infrastructure.

I want to thank Doug for his contributions to MaxCyte. And I will now turn the call over to Doug to discuss our financial results. Doug?

Thank you, Maher. Total revenue for the full year was $33 million compared to $38.6 million in 2024, representing a 15% decline. Total revenue in the fourth quarter of 2025 was $7.3 million compared to $8.7 million in the fourth quarter of 2024, representing a 16% decline. The decline in total revenue was driven by decreases in both core revenue and SPL program-related revenue. In the fourth quarter of 2025, we reported core revenue of $6.8 million compared to $8.6 million in the comparable prior year quarter, representing a decrease of 22%. Within core revenue, instrument revenue was $1.8 million compared to $1.6 million in the fourth quarter of 2024. License revenue was $2 million compared to $2.6 million in the fourth quarter of 2024, and PA revenue was $2.3 million compared to $4.2 million in the fourth quarter of 2024.

For the full year of 2025, we reported core revenue of $29.6 million compared to $32.5 million in 2024, representing a decrease of 9%. Within core revenue, instrument revenue was $6.8 million compared to $7.1 million in 2024. License revenue was $8.9 million compared to $10.3 million in 2024 and PA revenue was $11.9 million compared to $14 million in 2024. These declines were partially offset by $0.8 million of assay service revenue from the acquisition of SeQure DX and a modest increase in other service revenue. Total revenue for SeQure was $1.1 million in 2025, including assay services and licenses. Of note, 47% of our core business revenue was derived from SPL customers in 2025, which compares to 55% in 2024. The year-over-year decrease reflects the impact of program exits and reduced purchasing activity from our large commercial stage partner. SPL Program-related revenue was $0.5 million in the fourth quarter of 2025 compared to $0.1 million in the fourth quarter of 2024. For the full year, SPL program-related revenue was $3.4 million as compared to $6.1 million in 2024.

As it relates to SPL program-related revenue for 2025 and million was from milestone payments and $1.2 million was from royalties. Moving down the P&L. Gross margin was 78% in the fourth quarter of 2025 compared to 74% in the fourth quarter of 2024. Excluding inventory provisions and SPL program-related revenue, non-GAAP adjusted gross margin was 78% in the fourth quarter of 2025 compared to non-GAAP adjusted gross margin of 84% in the fourth quarter of 2024. Total operating expenses for the fourth quarter of 2025 were $16.9 million compared to $19.3 million in the fourth quarter of 2024, part of these savings is attributable to the cost initiatives we took in 2025, which began to materialize in Q4 of 2025.

Excluding a noncash goodwill impairment of $3.6 million in the fourth quarter operating expenses decreased more substantially from the prior year quarter. The overall decrease in operating expenses was primarily driven by the restructuring and cost efficiency actions we took in 2025. We ended 2025 with combined total cash and cash equivalents and investments of $155.6 million and no debt. Our very strong balance sheet positions us well moving forward, providing us with flexibility to continue to invest strategically for our business, customers and shareholders.

Finally, we anticipate at least $136 million in cash equivalents and investments at the end of 2026, this represents a significant reduction in cash burn from prior years as a result of the restructuring and cost efficiency actions we took in 2025. Let me close my remarks by saying it's been a privilege to serve as MaxCyte's CFO, and I know that the company is in good hands with Maher and the rest of the team, including Parmeet. Now I'll turn the call back over to Maher.

Thank you, Doug. It's per [indiscernible] as our CFO as well. I want to thank everyone at MaxCyte for their hard work and dedication in 2025. I look forward to executing on our plan in 2026.

With that, I will turn the call back over to the operator for Q&A. Operator?

[Operator Instructions]

It comes from the line of Dan Arias with Stifel.

Maher, I got to say I really don't understand the trajectory of the business right now. Pretty much all of the commentary coming out of life sciences companies points to biopharma getting better this year and not worse. Our data points and others seem to suggest the same. When you look at the industry data that's out there on the emerging modality space, cell therapy trial activity seems to be increasing pretty significantly, trial totals are way up. And so I appreciate the idea that there's some hangover from a tough '25, but why is the core business expected to decline more this year than it did last year?

Are you losing share somewhere? Because if not, then it really kind of suggests that there's something else going on that we don't really fully understand. And then ultimately, the question becomes, how do you grow this business again?

Yes. I mean thanks for that, Dan. Look, I appreciate the question and kind of the head scratcher from you. Really, the headwinds we're facing is $4 million. And it comes down to -- it's not a distribution of our business in any way. It's not a change in the fund in [indiscernible] any way. We have about $4 million headwind that we faced from the customers that were lost last year that's affecting our revenues this year and most of it in the first half of the year. So that comes, as I mentioned, it comes pretty much half-half. Half of the leases that we lost from those SPL customers that will not recur this year. And the other half really is from processing assemblies, a lot of it being from our largest customer that went through management -- and inventory management of their current PAs that they have on stock where they're drawing down from those PAs.

And the other half was just from -- midyear, we lost some licenses for that largest customer, where they -- we optimize our manufacturing footprint to go from a few manufacturing sites to a little bit less than that. And that's affected our revenues for 2026. This is not a case of capital spending in the market that's affecting us I think we saw that more so in early '25. That's not the case here. I really believe that this is just short-term headwinds. And in terms of where we see the rest of the year and going to '27, '28, look, if you take a step back, we believe -- I believe we're going to be supporting roughly 4 pivotal stage programs this year and then 5 in the next 12 months.

We have another one behind it as well coming in right now that potentially to come pitas a second wave there. That bodes extremely well for 2027 and 2028. We also have the launch of the expert DTx as I mentioned, we're seeing a lot of good traction. We launched it less than a month ago. We're seeing a lot of good traction with customers and potential customers. We believe will be a growth driver for us in the second half and in future years. In addition to that, we're seeing the ramp of cash JV. I mean, as I mentioned, we expect to ramp throughout the year. That that's the only commercial product we're supporting now, but we expect to support many others, especially because right now, as I mentioned, we are supporting more later-stage programs than ever before then.

So this bodes very well for us going to the end of the year and in 2017 and '28. We're continuing to sign new SPLs. We feel confident we continue to sign new SPLs. I feel very good about this Dan.

Does the industry -- does the outlook for core revenues assume that the industry demand dynamic improves over the course of the year? Or would that be upside to what you have baked in today? In other words, is your 4Q outlook at the industry level, similar to what you have today, axing out the individual customer dynamics that you referenced there.

No, I think the -- so that would be upside what we have right now. So this is not a case where we're waiting for Anita come back for us to meet our core revenue guidance -- that will all be outside from here, Dan. I mean I feel very good where we are to meet the current guidance with the current situation we're in right now. If there's further industry demand that's upside from where we're guiding to this year.

Our next question comes from the line of Matt Hewitt with Craig-Hallum Capital Group.

And Doug, it's been a pleasure working with you and best of luck in your future endeavors. Maybe first up, could you talk -- I realize that you just launched it last month, given that this was built, the DTx that it was built with the customer in mind, I assume that you had been working with them or at least they had maybe trial that or kicked the tires a little bit. What does that pipeline look like? And how quickly do you think you could see that start to trickle into the revenues?

Yes. I mean, so we see it tripping into revenues in the second half. Any time we launching new product, we need about a quarter or 2 quarters to really build up the pipeline for that product. That's any product we launch. But it's already in the hands of multiple data users and has been in the hands of multiple beta users when we launched this product, we did it the right way. We actually listened to our customer needs. We did -- we went through the typical NPI process where we're extending the user criteria the customer criteria and the application criteria and we built it with that in mind. So we see this trickling starting in the second half, but we all start seeing right now some DTSs being sold right now in the first quarter before it's even over -- so it's obviously starting to make traction there as well net, but we see significant traction happening in the second half and then in future years as well. I feel very good where it is. I mean, it really is a platform that allows us to go from -- no one has this. You can actually go from discovery all the way CGMP with the same protocols. That is a true therapeutic platform that none of our competition has.

Got it. And then maybe just a reminder, given that you've got 4 partners that could be going into pivotal studies this year. How do you account for or how do you factor that into your guidance? What kind of a haircut do you take on those -- the potential for those milestones?

Yes. Thanks, Matt. So obviously, we already received one milestone a side in Q1 this year. You can hear it city saying there might be at least one more, we anticipate 4 more one other customer is currently in pivotal about to those patients that were resulted in other most as well. So they're very at least looking at 2 of those 4. It's more of a timing issue, right? If the remaining 2 don't come in this year, that's just because those milestones happen in the first quarter or very early part of next year. But that's how you would hear cutting it. The very least will be 2 of those 4, but potential for 4 this year.

One moment for our next question. That comes from Matt Larew with William Blair.

This is Jacob on for Matt. I just wanted to touch on the SPL cadence. I don't know if you mentioned on the call or I didn't hear if you did, but typically guide 3 to 5 per year, and you typically have signed or at least announced one by the end of the first quarter. I think the last timing was in October of 2025 and biotech funding trends and kind of like the whole market environment has really been improving since then, been pretty good. So just curious on your visibility confidence into the cadence of SPL signings throughout 2026 and maybe what you're expecting for this year in perpetuity.

Yes. We guided 3 to 5 in the past. I mean that's a number where, on average, that's something we signed on any given year. we feel good about signing at least 3 this year as well in that 3 to 5, but some years, we're going to have more than that, so we just have less of that. we foresee that we'll sign the first one. I have Sean Menarguez here with me. I'm going to put pressure on him. Probably even in the very early second half of the year, possibly even before that. But I feel very good where we are. I mean we're still the only company that can sign these licenses and is a good reason for it. What we provide is differentiated, where we provide a really a platform that allows companies to go into clinical and commercial and scale and have a therapeutic that has the best chance of going through clinical development.

And we've done it with cash. We've signed one of these agreements we signed 4 last year. I feel very good this year, we'll continue to sign war and do the same in the foreseeable future. And the DTx also adds for that. As to as I mentioned earlier, the DTx begins to see that aspect of future partners and customers for us. So I feel very good where we are. I mean the timing of the Q1, we had a sign one. That's just a matter of time, we have one we're working with our customers and the research process, not in any way indicative of resort, we have a signed one, if that makes sense. I mean, I'm going to turn it over to Sean. Sean do you think you have anything that you have to add in terms of that, where you see the signing of per pressure on the year, but you feel coater going to so this year as well.

Thanks, Maher, and thanks for the question, Jacob. And I do strongly believe it becomes a timing aspect as well. So just for a frame of reference, these as that turns into our research customers turning to our SPL customers from there at least can take 12, 18 months depending on their development stage. So it really becomes a timing aspect as well. But we do have the last 24 months, have signed in scale partners Almost all of them are in the clinic or at least even approaching clinic from there. So we look to continue to add that a lease through this year.

Got it. And I just want to quickly go back to the launch of the DTx platform. You've covered it in pretty good detail so far. It sounds like feedback traction early contributions all didn't really little, but is there any way you could quantify what you're expecting in the back half? Or is it more just kind of a slow trickle and really expect material contributions in 2027.

Yes. I mean I'll say throughout the year. I don't think it's -- it's too early in the past been a month since we launched it. It will probably be more than a trickle in the second half. That's where you begin to see meaningful revenue in the second half and a lot more so -- but I'll update throughout the year. Again, we're seeing very good traction at the beta sites.

We're seeing good traction even outside the U.S. We've seen sales in Asia Pac as well from this. They really it's something that we truly believe differentiates us from any other platform. There are similar 96 well is here platforms out there, but None can optimize the CGMP system like this one can and none that can do it on a well-to-well basis with the same consistency and really none that can do it where it's -- where we've built into this our 20-plus years of electroporation know-how into this platform to make a streamline for customers. So I feel very, very good about this, very good.

Our next question comes from Mark Massaro with BTIG.

This is Vidyun on for Mark. I just had 2 cleanups on the '26 guide. Just what's baked in as far as secure contribution. And then I also think you've called out royalty contribution for the first time in the guide. So just could you speak to your level of visibility and confidence in that just given it's from a partner therapy.

Yes. So on secure, obviously, we don't break it up in terms of -- in the guidance other than the fact we see material growth year-over-year for secure in 2026 versus 2025, significant growth there from what we had last year. Obviously, last year's revenue for secure was a bit disappointing, but it was part of our integration secure. We bought an early startup. We're still integrating it in. We're still ensuring that we're building up the processes there, and we really don't have a platform there. So we see meaningful growth this year and that's part of our guide.

In terms of the -- we finally broke out the royalty revenue there, I mentioned earlier, we expect approximately $2 million of revenue from commercial royalty. -- and that will ramp up throughout the year as that product ramps itself. And we feel fairly good about that. I mean that's based on forecasts we're seeing with that product from a public forecast as well as what we're seeing so far early this quarter. but we expect that to be over the ramp of the year to happen. And we'll do that continuing from here on now. We'll continue to guide for our milestones and royalty on a separate line as well.

Okay. Perfect. Yes. And then I just had one follow-up kind of higher level. I think you've previously mentioned the dynamic that customers are opting for in vivo therapies over ex vivo. So could you discuss how you're seeing opportunity for more complex edits longer term? And maybe over what time frame would you expect that customer appetite to sort of transition to ex vivo edits?

I expect to expand a bit more. I mean, obviously, we're seeing, I mentioned, we've seen this for years now. We're seeing the complexity of adding increase over the years, right? This is one of the single base CAR-T therapy. We're not edits on 5, 6 seeing a therapies. So I guess, what are you alluding to, Vivian, I just want to make sure I answered your question correctly.

Yes. I guess mean that you've talked about it being a headwind in the past that customers are opting for in vivo therapy. So just how do you see the longer-term opportunity for customer appetite in actually..

I see what you're getting -- so actually, look, we are still a huge believer in the cell therapy space. In fact, we're seeing that start to return as well. in vivo obviously, as we've had some headwinds there. But what we're seeing is, if you look at our programs, we have allogenic programs and post programs, all progressing gestalt we're finding right now our cell-centric programs, some of which are even coming back where I won't point -- they were not in the clinic and now they're coming back to the clinic.

I am a huge believer in cell therapy space. I think as these therapies become far more complex as we're seeing it lends itself to cell therapy, especially cell therapy electroporation. And you can control the safety, you control the dose and the size is catching up on topic of our platforms are built for that. That's exactly what is. So we're seeing that come back. That's what makes me feel very good about going into the second half of the year, makes me feel better about 27% in 2028. That complexity lends itself to our business and lenses we've built over the last decade. And we're seeing that traction start to come back to sell there.

Our next question is from Mac Etoch from Stephens.

Maybe to follow up on Dan and Jacob's questions. We have seen funding pick up the space in general. So I just want to get your sense of what you're hearing from customers in terms of macro environment, what you're seeing in terms of demand? And how should we think about the recent funding backdrop flowing through potential demand throughout FY '26.

Yes, yes, yes. Great question. So obviously, as I mentioned, this is not so much any more a demand issue or a customer funding issue. This is about the headwinds we saw in that affect us -- this is more of a second half weighted guide that we're giving in that core revenue of $25 million to $27 million. I mean, look, we're sitting here right now, we're about one week away from quarter end. This is not official guidance, but we look where we are on the core I feel comfortable that $6 million of the core is appropriate for Q1. We see that upticking into Q2 and then being more second half weighted.

And none of that is contingent upon an upside in capital spending or customer demand. That's just what we say right now. So it's -- I feel extremely good where we are on the guide. I feel good where we are in -- this is a case of just building back a new base from what we [indiscernible] customers that we lost in '25. We found a new base here, largest customer, we're optimizing the prosti assemblies and they're drawing down from the inventory they have. We found a new base there. I feel very good about the year as it transpires.

[Operator Instructions]

We have a question from Chad Wiatrowski with TD Cowen.

Congrats, Doug. Look forward to seeing what your plans are going forward. Just one on the DTx. You've mentioned sort of a few orders already flowing through here in the first quarter. When you're thinking about those couple of orders, but also the bolus more in the second half. Are those mostly existing customers enjoying the convenience of that? Or is this something that enables more newer customers? And how do you expect that mix to play out through the year?

Great question. I mean obviously, the current customers are the ones that are going to be the easiest ones to convert over because they're going to enjoy the aspect of them. Those are the ones we're approaching. So that's a great question. But this is a mix of both. This is not just for new customers, it's also employed it's not just for current customers. It's also for new customers. Actually, even because this is a 96-well discovery platform that can allow you to transfect primary cells.

This can be used probably discovered for the in vivo space as well. So this is in essence a platform we've never had before, which we're targeting our current customers now, but we're prospecting for future customers as well. And we're seeing that there are the placements actually one of those placements is a new customer, it's not a current customer. So it's a mix of both, but we're being very smart about it and ensuring that we're working with our current customers because that's also what you learned about some of the things you may have to make improvements on any time you launch a product. So I've said it earlier, innovations are hard. We're going to continue to innovate this product. We're going to continue to launch new products in the coming years. So that this is one of them to come.

And this concludes our Q&A session, and I will pass it back to Maher Masoud for closing remarks.

Yes. Thank you, operator, and thank you, everyone, for joining us on today's call. I feel very good about 2026, just as good as if not better about the future years and what we're building here. And I look forward to talking to all of you in the next coming months on our next earnings call.

This concludes our conference. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to the MaxCyte Third Quarter Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, [ Eric Abdal ], Investor Relations. Please go ahead, sir.

Good afternoon, everyone. Thank you for participating in today's conference call. Joining me on the call from MaxCyte, we have Maher Masoud, President and Chief Executive Officer; and Douglas Swirsky, Chief Financial Officer. Earlier today, MaxCyte released financial results for the third quarter ended September 30, 2025. 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 meanings 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 those expressed or implied in any forward-looking statements due to a variety of factors, which are discussed in detail in our SEC filings. Except as required by applicable law, the company has 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 Maher.

Thank you, [ Eric ]. Good afternoon, everyone, and thank you for joining MaxCyte's Third Quarter 2025 Earnings Call. Today, I want to briefly highlight our financial performance before diving into the future we are building at MaxCyte. Consistent with our preliminary financials announced last week, MaxCyte reported $6.8 million of total revenue in the third quarter, which included $6.4 million of core revenue and $0.4 million of SPL program-related revenue.

While the third quarter was a bit light due to timing of instrument orders, revenue was in line with our expectations and previous guidance, with the second half of the year weighted more towards the fourth quarter. We recently signed a new strategic platform license with Moonlight Bio, bringing the total number of signed SPLs this year to 4, in line with our guidance for a number of new SPLs for the year. On the services side, SeQure DX is fully integrated, and we are excited by the market validation of the technology and long-term opportunity.

As covered in our previous earnings call, the operating environment remains challenging. We continue to believe in the curative potential of our customers' therapies and the long-term commercial viability of our SPLs, but we understand that the funding environment for ex vivo therapies has remained depressed longer than anticipated and the commercial adoption has been slower than expected despite our belief in their long-term potential.

While we will discuss the impact of these events, I'd like to first discuss the long-term value of our SPL partnerships, which we believe is increasing. Ensuring we capture the value of those agreements drives many of the decisions we make about our business. When thinking of our SPLs, 14 of our SPL customers have a total of 18 active programs in the clinic. Five of these current 18 clinical programs are anticipated to enter pivotal studies in the next 6 to 18 months, programs run by CRISPR, Wugen, Imugene, Caribou and one undisclosed SPL. We believe these programs have the potential to launch commercially in 2027 and 2028 and can help shape the future of cell and gene therapy.

This past Monday, Caribou announced positive Phase I data for the allogeneic CAR-T programs for lymphoma and multiple myeloma, on par with autologous CAR-T therapies and with a safety profile that supports outpatient administration. It is exciting to see our second wave of SPL programs, which are the next generation of cell and gene therapies, advance pivotal studies and potential BLA submissions.

Our balance of SPL clients continues to get stronger as we sign new licenses. As a reminder, in the third quarter, we signed 2 new SPLs, Adicet Bio, who is working to develop allogeneic gamma delta T cell therapies for cancer and autoimmune diseases; and Anocca AB, a T cell immunotherapy company developing a deep pipeline of T cell receptor engineered therapies. Recently, both completed financing rounds to fund the advancement of their therapies following Adicet's positive preliminary Phase I data and Anocca AB's preclinical data for their lead T-cell receptor therapy.

We are encouraged by this financing activity, which highlights investor interest in the space and allows for funding through key milestones for these important customers. We are also excited to highlight the most recent SPL we announced in October, Moonlight Bio, where MaxCyte will support the scalable development and manufacturing of its T cell therapy pipeline. Moonlight Bio was our fourth SPL signed this year, bringing our total number of signed SPLs to 32. Despite the continuation of a difficult operating environment, we see our consistent additions of new SPLs as a testament of the strength of the Expert platform.

We also continue to increase the programs we work with at the top of the funnel, now supporting 20 programs in preclinical development with a launch potential in 2032 and beyond. The opportunity from our current SPL base remains very large with MaxCyte well positioned to participate in the economics of successful and unsuccessful programs.

I also want to take a moment and highlight the breadth of indications we are supporting these SPLs and why our licensing model can provide significant growth in the years to come. Our business model has positioned us to build franchises across disease states. For example, we are supporting 4 programs for B-cell malignancies; 8 clinical programs for blood cancers; multiple programs for autoimmune diseases such as lupus, vasculitis and type 1 diabetes; as well as 5 late-stage programs for solid tumors.

While we know individual programs have clinical or commercial risk, we are confident that the multiple shots on goal that we have on the same indication and the multiple indications we have in our portfolio provide a high probability for material commercial revenues. Balancing a belief in the long-term potential of our SPLs and the short-term challenges in our end market, we made the difficult decision to engage in a restructuring initiative, which included a 34% global workforce reduction, bringing MaxCyte's total full-time employee headcount to 89 today compared to 133 as of January 31, 2025, after the SeQure DX acquisition.

I undertook this restructuring to maximize the cash available to deploy on organic and inorganic investment opportunities and ensure our operating spend is aligned with the current environment. As part of the cost reduction initiative, we reorganized the company and removed layers of management in certain areas to ensure a more efficient and entrepreneurial environment that will continue to enable growth.

To put in perspective the size of our organization and why our ability to grow has not been affected by the restructuring. Today, we have 89 employees compared to the 51 employees in January 2020 when we began to scale the organization for the future growth of our end market. We anticipate this initiative will result in $17 million to $19 million of annualized savings with $13.6 million of annualized savings previously disclosed from headcount reductions, which will begin to be realized in the fourth quarter of 2025, but will be more impactful to the 2026 P&L. These savings reflect a detailed review of non-headcount-related spending and have identified $4 million to $5 million of incremental cost reductions on an annualized basis, which we expect to realize in 2026.

In R&D, our reductions primarily relate to reducing layers of management and natural expense reduction that we expect as the new product we are developing moves out of R&D and into commercialization. We still expect to invest heavily in new technology, which we intend to do via both organic and inorganic means. We have optimized the function to reduce the spending in certain areas that we believe no longer aligns with the market. It is important to note that we have maintained the structure of our field application scientists team, which provides much of the innovation of the company via collaborations with our SPL customers.

In G&A, our headcount reductions related to consolidating management of functions and reducing layers. Non-headcount-related spending will decrease from a reduction of public company expenses that were associated with our AIM listing as well as a reduction of vendor spending driven by our detailed review of finding lower cost alternatives. It is important to note that these reductions are not inclusive of the $900,000 in transaction expenses related to SeQure DX, which we also expect not to recur.

Lastly, our sales and marketing reductions primarily related to marketing, where we will look to be more diligent in our spend. We will continue to build our brand in the field with our world-class FAS team and sales team and the superior results of our platform in the hands of our customers. My main priority of this restructuring was to position MaxCyte to remain nimble, operate with accountability and grow our offerings organically and inorganically even as we face short-term headwinds from some of our key customers who have rationalized programs this year, which will continue to create a drag on our growth through the first half of next year. This will allow the organization to invest for the future and operate efficiently for an SPL pipeline that remains strong and diversified.

Regarding our desire, capacity and willingness to invest, these cost savings will result in a cash burn of roughly $10 million to $15 million in 2026. We also expect our operating cash burn to improve further in the coming years as our customers progress through their clinical programs. As mentioned previously, we continue to see a large opportunity to grow our portfolio and consolidate the tool space in advanced therapies by means of organic and inorganic investment. We have already invested in a new product discussed during our second quarter earnings call. This product is a line extension to our leading Expert electroporation platforms, and we are working with beta users that will continue to validate the platform before a broader commercial launch in 2026 that will contribute to revenue.

While this product is moving from the investment to commercialization phase, we will continue to look for additional opportunities to expand our Expert franchise. To summarize, I firmly believe in the future of cell and gene therapy and the role that MaxCyte plays in it. We are transforming our company into an end-to-end platform with multiple products that can support cell and gene therapy customers at different stages in their development with an appropriate cost structure to reach profitability.

Before turning the call over to Doug to discuss our financial results, I want to thank Doug for his support over the years. As we announced today, Doug will transition from the role of CFO -- of MaxCyte's CFO in the first half of 2026, and we have initiated a search process to identify a successor. I would like to truly thank Doug for his hard work and contributions to MaxCyte. Doug and I have decided that now is the right time for both him and the company to undertake this transition. I appreciate his willingness to stay with the company through the transition period and act as an adviser to the company in the future. We do not anticipate any disruptions to operations or financial results during this period.

With that, I will now turn the call over to Doug to discuss our financial results. Doug?

Thank you, Maher. I greatly enjoyed being a part of MaxCyte, and I look forward to working together on a smooth transition during the first part of 2026. The company is in a better position financially than it was when I arrived, and I believe MaxCyte's future is very bright. I am confident in Maher's leadership, the broader team and MaxCyte's long-term potential, but have decided to take this opportunity to move on to a new phase in my career and personal life.

Turning to our financials. Total revenue in the third quarter of 2025 was $6.8 million compared to $8.2 million in the third quarter of 2024. We reported Core revenue of $6.4 million compared to $8.1 million in the comparable prior year quarter. Within Core revenue, Instrument revenue was $1.4 million compared to $1.8 million in the third quarter of 2024. License revenue was $1.8 million compared to $2.5 million in the third quarter of 2024 and Processing Assembly or PA revenue was $2.6 million compared to $3.4 million in the third quarter of 2024.

Instrument license and PA revenue were adversely impacted by a large customer and clinical customers consolidating programs driven by the continuation of a challenging operating environment. 53% of our Core revenue is derived from SPL customers in the third quarter of 2025, which compares to 53% in the comparable prior year quarter.

Turning to our SPLs. Program-related revenue in the third quarter was $0.4 million, including both clinical milestones and revenue -- sorry, clinical milestone revenue and CASGEVY commercial royalty revenue, we remain excited by the opportunity of CASGEVY and the life-altering impact it delivers to patients. During Vertex's third quarter earnings call, they highlighted that CASGEVY delivered approximately $17 million in revenue in the quarter. There are now 165 people globally who have completed cell collection, which included 50 people in the third quarter.

So far, a total of 39 patients have received their infusions of CASGEVY, which included 10 patients in the third quarter. We are excited by the momentum in patient cell collections as Vertex highlighted that the number of patients per day having cells collected has doubled in 2025 compared to 2024.

Turning to our cell and gene therapy services. We have seen progress in the business this year and continue to believe that SeQure assays will become part of the industry standard for off-target risk assessments for both in vivo and ex vivo gene editing. Total SeQure DX assay service revenue was roughly $248,000 during the quarter. We know that adoption of SeQure Services and Technology will take time, but we remain committed to the platform as we continue to receive feedback from customers and regulators regarding the value of the technology.

Moving down the P&L. Gross margin was 77% in the third quarter of 2025 compared to 76% in the third quarter of the prior year. Excluding inventory provisions and SPL program-related revenue, non-GAAP adjusted gross margin was 81% in the third quarter of 2025 compared to non-GAAP adjusted gross margin of 85% in the third quarter of 2024. Total operating expenses for the third quarter of 2025 were $19.4 million compared to $20.3 million in the third quarter of 2024. Total operating expenses included approximately $3.1 million of restructuring charges related to our reduction in force.

Let me provide further details on the impact our recent cost reductions will have on full year operating expenses. Of the $17 million to $19 million in total cash savings we expect on a full year basis, approximately $5.5 million is being reduced from G&A, $7 million from R&D and $5 million from sales and marketing and $0.5 million from capital expenditures. As Maher noted above, these estimates do not include onetime expenses related to the SeQure acquisition and onetime severance costs.

We finished the third quarter with combined total cash, equivalents and investments of $158 million and no debt. The decrease in cash, cash equivalents and investments since the beginning of the year included approximately $7 million of purchase transaction and onetime costs associated with the acquisition of SeQure DX.

Continuing to our 2025 guidance, we are reiterating our outlook and expect core revenue of flat to a 10% decline compared to 2024, inclusive of revenue from SeQure DX. Additionally, we continue to expect SPL program-related revenue to be approximately $5 million in 2025, which includes both expected revenue from pre-commercial and commercial milestones and sales-based royalties. We would like to note that our SPL program-related revenue outlook is a risk-adjusted forecast that is achievable under a variety of potential outcomes across our SPLs and the planned clinical progress and commercial success of our customers.

Lastly, as included in our preliminary announcement last week, we now expect to end 2025 with between $152 million and $155 million in cash equivalents and investments on our balance sheet. Our revised forecast here reflects near-term cash utilization from the restructuring, which will lead to lower costs and cash use in the future.

Now I'll turn the call back over to Maher.

Thank you, Doug. I want to end this by thanking every employee at MaxCyte for their dedication to driving our mission forward. I look forward to continuing to provide high-quality offerings to our customers and driving future growth.

With that, I will turn the call back over to the operator for the Q&A. Operator?

[Operator Instructions]

Our first question comes from the line of Matt Larew with William Blair.

First question on the environment that you and your customers are dealing with. Obviously, it's been, as you alluded to, Maher, kind of tougher for longer than many expected. But it does seem like maybe in the last few months here, both kind of biotech funding has improved. There's been some M&A in the space. A number of your peers have cited at least some stabilization perhaps from biotech. I would just be curious for your perspective on kind of the environment and obviously acknowledging that this isn't the first time in the last couple of years that we've had a day or a week or a month where maybe we felt better?

Yes, exactly, Matt. Great question. You're right. I mean, obviously, it's now been a couple of years where it's ourselves and many of our peers in our industries are saying that they're hoping this is the bottom. So you can't take 1 or 2 months as an indicator.

However, on our business, we do see stabilization. We have been impacted by a few key customers this year, which I mentioned, I believe will have an impact in the first half of next year. But we're starting to see that some of the concerns that we had in the past from some customers related to NIH funding related to some changes at the FDA having an impact on capital expenditure decisions. That seems to be stabilizing, Matt. We're hopeful that, that continues going into next year. And we're building the base of the company based on that hope. But again, I think let's see how this plays out over the next month and into next year.

Yes. We've seen some encouraging financings. I think overall sentiment and spend discipline across the biotech sector remain a bit cautious. So we're planning based on the assumption that the environment stays roughly where it is today, at least through the first half of next year. But obviously, we stand ready, willing and capable of taking advantage of an improvement in that environment.

Okay. Fair enough. And then I guess the second one is a bit of an environment question, too. You referenced some changes to FDA. And again, if I think kind of year-to-date, there's been some wins and maybe some non-wins for new modalities. What's your assessment, I guess, there were some leadership changes announced again last night of your customers, I guess, confidence in working with FDA and maybe how that combined with the funding environment affects willingness to initiate trials or move on to next phases?

Sure, absolutely. I mean the one thing that's been -- that we've noticed is we haven't seen any customer indicate because of the FDA changes or because of the funding environment that there's going to be a slowdown in the review process or that they have any programs in developing might be delayed. None of that has happened now. We haven't heard that from any customer. Even in speaking with other CEOs across the industry, nobody is seeing that, which is a good sign, and we don't anticipate that either. I think just some of the changes had more to do with the funding environment and really just have to do with purchases of equipment that had hesitation there. Nothing to do, and we haven't seen anything or heard anything that would affect time lines of development or approval -- or potential approval processes. We're not seeing that at all, Matt.

Okay. Fair enough. And then I guess just thinking about next year, again, it sounds like you have the key customer overhang, but SeQure will have been in the portfolio for about a year. You have a new platform coming. I guess, what's your expectation in terms of the SeQure ramp into next year? I think maybe it's been a little slower this year. And what kind of impact the new platform can have as well? And that would be it for me.

Sure. No, great question. Let me take both of them separately. So on the secure side, obviously, this year, we need to build them up for what I see as a great potential for them going to next year and the future years. The ramp has been -- so the funnel that is building up for them going to next year is much bigger than what we had when we acquired them and bigger than what it was going to be for this year. So we see a much bigger bookings and a bigger funnel for next year.

But we really have to take a step back and ensure that they have -- that they are positioned to continue to expand upon their best-in-class assays, and that's what we did this year. So -- but when we see how many customers they have, how many customers we're speaking with, the interest from customers, this is across the space, whether it's ex vivo, in vivo, it's broad and it's growing, and I feel great about that. I feel great about the decisions we made at SeQure this year to ensure they can grow into next year and really execute on the current customer projects that are coming in. So again, I feel great about what we're doing at SeQure and the potential for them over the years.

On the new product launch, we're hopeful that we can -- it's in the hands of beta users right now. It really gives us a mainstay to get into a broader base of users on the research side. And again, it plays into what we've done with SeQure DX, gives us a breadth of customers that we can speak to. We really have a mainstay in the clinical and commercial customers, and this allows us to work with them even a little bit earlier in the process to ensure that we have the ability to expand upon the Expert platform. Our launch is geared for next year -- early next year, the official commercial launch. And I'm really hopeful that can begin to provide us additional growth in addition to the growth that we're beginning to see right now from that -- from the customer base outside of those few customers this year that has had an effect on us that will have an effect going into the first half of next year, Matt.

Our next question will come from the line of Matt Hewitt with Craig-Hallum Capital Group.

Maybe to kind of get back to the FDA a little bit. I think one of the things -- with the changing of the administration with some of the leadership at the FDA, one of the things that they seem to be pounding on is that they want to see cures versus treatments. And I'm just curious how those comments and how the statements that they've put out over the past couple of quarters, whether or not you're seeing that impact some of the decisions with your SPL customers and whether that's helping drive some incremental decisions that maybe fall in your lap or any other color you can provide there?

Yes. Good question, Matt. I mean, obviously, that is one of the mainstays they've kind of the tabled from the beginning of the new FDA head and the CBER head. And now we have a CDER head, which is just ensuring that we're focusing on curative therapies. And that's really the space we're in, right? Cell and gene therapy is that. Unlike in the past, I've said it before, this is the future of medicine. I think it does go to the fact -- it probably does help that some of the funding some of our customers have been able to raise in the last few months goes to that as well. It shows a belief in these therapies. It shows a belief in the decisions that some of our customers are making to take therapies into the clinic, knowing that there's an FDA that support these therapies, knowing there's a CBER head that support these therapies.

I think it does come to that decision-making for them. And it goes to the decision-making as to why we're continuing to sign more SPLs. We're signing 3 to 5 every year. And when we see that for the foreseeable future. I think those kind of comments bode very well for our customers and their beliefs in the investments they can make, Matt.

That's great. And then maybe as far as the SPL pipeline is concerned, obviously, another strong year. This is a few in a row where you guys have met or exceeded your target for the year. And I'm just curious what that funnel looks like and whether that continues to build and sets the stage for another strong year in '26?

Yes. Thank you, Matt. Let me answer that. I mean I said it before, I see 3 to 5 SPLs next year and for the foreseeable future as very doable and something we can -- we don't officially guide here, but it's something I can stand by. The funnel is there. It is strong and getting stronger, obviously, even in a market that has rationalized programs. We still feel confident in what we do.

I want to take a step back for one second and just remind everyone, we work with these customers far earlier in the process, far before they signed an SPL with us. So it's because of our FAS team, because of our sales team, because of the internal team here where we develop applications for customers. We work with them and we're working with them now where they're 2 years away from signing an SPL. And because of that work and dedication that really our employees do here, our scientists do, I still feel confident we can continue to sign 3 to 5 next year and for the foreseeable future.

Our next question comes from the line of Mark Massaro with BTIG.

This is Vidyun, on for Mark. So I think in the prepared remarks, you alluded to reinvesting from the recent workforce reduction. Could you just remind us on your priorities around M&A? And just anything you can share about the stage or number of conversations ongoing here as it relates to M&A?

Absolutely. Thank you, Vidyun, and good to hear from you again. Part of the restructuring was obviously to get us into the profitability phase a lot faster than where we are now, where we were in the past. But what it also does for us, it gives us that breathing room to do what we've been doing for the past 2 years really since I took over as CEO, which is M&A is a focus of ours. But when we're looking at a broad breadth of companies in the cell and gene therapy space that we believe works into the end-to-end platform that we're building here.

And -- but we're doing it in a very disciplined way, Vidyun, right? I mean, obviously, we did SeQure DX, and it's a great acquisition that we acquired with assets that can grow into the future and really become a bedrock of how companies do off-target assessments when they're providing their funds to the FDA and EMA and other agencies. And we're continuing to look at these type of potential deals where we believe we can become that company that consolidates the space and provides an offering to our SPL customers and even non-SPL customers, where they can come to us for all the scientific expertise and the products in what I call one-stop shop.

But we're doing it in a very disciplined way, where we're ensuring that what we're looking at is best-in-class, does not impact our financial profile, does not impact our financial health that we're continuing to improve over this past year, as I indicated today earlier in the call.

Perfect. Just one quick one for text for me. So I understand that you can't comment on their business. I think they did mention during their call significant growth in '26 for CASGEVY. Just any more color you could share on how we should think about royalty contribution from CASGEVY or if you might start breaking out that revenue looking to '26?

Yes. So let me start, and then I'll have Doug also indicate the breakout in '26. Very excited about what Vertex said on the call last week. I mean, obviously, Doug mentioned it as well, 165 patient cells collected from now. They dosed 39. I mean you can do the math, that's 120-some left. But what's even more exciting is that they've done everything right for this product and for these patients. They have one of the same 5 FDC centers. They now are collecting cells from twice as many patients on a daily basis as they did last year. And in fact, that ramp has been steadily increasing on a quarter-by-quarter basis.

Standing here, the reason why it should decrease. So that bodes very well. They also reaffirmed that they see $100 million plus in sales of CASGEVY this year. That bodes very well for next year. It's what the patient community needs. They've done a great job. We're here to support them in any way we can to ensure that next year is as successful as it can be. we always remain excited by CASGEVY. Nothing has changed. I think they've done everything right. We're seeing what's happening now. And then I'll let Doug allude to how -- what we think about in terms of breaking out the revenues for next year.

Obviously, we're not going to guide for anything related to 2026 right now specifically. Obviously, CASGEVY remains an important long-term opportunity for us. We -- as we've said, we're encouraged by the recent acceleration in cell collection from patients and dosing. And we think that it's going to translate into additional treatments. We're going to see that corresponding royalty contribution grow. We really view CASGEVY as the beginning of a growing stream of commercial royalties as more SPL partners advance their programs into that next wave that we've talked about over and over again, where we've got multiple programs that could come online as commercial stage customers starting in 2027.

Our next question comes from the line of Hannah Raiford with Stephens Inc.

You mentioned that there was some revenue that got pushed from 3Q into 4Q during the quarter. And I was just wondering if you could elaborate on this. How big of an impact do you think you saw there? And was this just normal timing part of the business? Or was there any part of this that was customers kind of pushing out orders due to continued hesitancy around the macro?

Yes. So I mean, obviously, we don't guide quarter-to-quarter. We -- our outlook for the year has not changed in terms of where we think we're going to come out on Core revenue and SPL program-related revenue. There's -- it's always tough to call it revenue completed in from one quarter to the next. I think this is not just -- it doesn't take much when you're talking about the magnitude.

We said on the last call that we would have a slight weight towards Q4 for the remaining revenue to be required to hit the goals that we established here and the guidance that we left you with on the last call. So I think it's really just a small number of items that sort of moved in. And you take the revenue from SeQure, those are -- we recognize revenue when the final report is delivered to the customer. And so you be at various stages of generating that data and information to provide high-end and actionable piece of information for our customers, and that's where we're going to be able to recognize that revenue. It just may not -- certainly, we'd like to get it into the quarter, but it bleeds into next quarter.

So it's not just one item. It's a handful of items. I don't think we're particularly depressed versus what we expected because we always had assumed Q4 would be stronger. But admittedly, we would -- we had hoped more would have come in this quarter. So it's a slight disappointment for us, but we remain on track because it really is a timing difference. We don't view this as things that we thought would happen that are not happening. It's things that we thought would happen in September that happened in October, and we can say that because we're in November.

Okay. Great. That's helpful. And then I think you've kind of mentioned that there are other elements of growth or positives that you're seeing outside of some of these customers rationalizing their pipelines. Are there any specific like positive KPIs that you would want to point out that's kind of giving you confidence that things are recovering outside some of these customers?

Sure. Absolutely, Hannah. So good question. So a few things. Obviously, we had a few key customers this year that really affected us for the year and affected us into the third quarter, and we think it's going to affect us into first half of next year. But looking outside even the SPL customers, we are seeing stabilization with our non-SPL core, which is a testament to the number of instruments that we're selling, number of PAs that we're using. That gives me confidence that outside of a few key customers here and there, which is part of our business model. We've always known there was one customer here, one customer there and that happens at times.

But we're seeing a stabilization in our non-SPL business in terms of the instruments we're selling, the PAs that we're selling, the pull-through of the PAs on a daily basis. We're seeing that stabilization. We're also seeing good growth in Asia as well. I mean we've invested in Asia from a very smart way, a very, I would say, tactical way to grow into Asia. We're seeing that growth in Asia as well year-over-year, and it's continuing to grow.

Obviously, we all know where the cell and gene therapy space is and the investments in China and other parts of Asia have been growing year-over-year. And we took advantage of that, and we are expanding into that region as well, doing it in a very, I'd say, measured way. And that gives me confidence that we continue to do that going into next year as well. And the products that we're launching next year, right, gives us more breadth with the current customers and future customers. What we're seeing with SeQure DX, some of the customers that we're talking to, they're coming to us for really things that only SeQure DX can do and no one else can do for them. We're seeing the bookings. We're seeing the size of these potential contracts that they want to sign with SeQure DX gives me a lot of encouragement that we can begin to get back to that growth in the second half of next year.

Our next question will come from the line of Brendan Smith with TD Cowen.

I wanted to just piggyback a little bit on some of the earlier commentary here. I know there's a lot to kind of sift through as you're thinking about next year. I guess where you all stand now and kind of given the cadence of SPLs into this year, and I know you're still talking about fairly steady into next year. I guess how are you seeing like as the most important drivers of -- that are kind of giving you confidence in hitting that cadence into next year just relative to what all has kind of transpired this year?

And then maybe on kind of the more financial side of the conversation, if given everything that's kind of happened this year as SeQure is kind of getting integrated fully, if there's just any shift in how you all are thinking about kind of the longer-term gross margin profile with everything integrated?

Sure. Brendan, let me take the first one. And I'm assuming you mean by the cadence, you mean about the 3 to 5 a year that we're signing. I just want to clarify, is that your question?

Yes. Yes. And just what's kind of giving you -- what are the most important kind of supporting pillars of that, that's kind of giving you confidence coming out of this year into next year that -- that's still going to kind of continue to persist that way?

Absolutely. Great question. So this is why I say I feel confident. We're working with these customers already, where we feel confident in next year, they'll be signing these SPLs with us. Take a step back, these are not people that we go to and just out of the blue speak with them. We've been working with some of these customers now for at least 12 months, some of them 24 months. And we have a line of sight to see who we're working with right now that we feel we can sign in that 3 to 5 range next year. It's very clear we're working with. We're supporting them in their labs. Our sales reps are speaking with them. Our FASs are there on site working with them to optimize their processes.

That gives me the confidence that these customers that we're working with this year, and we've been working with even a little bit longer than that, become SPL customers next year. And Doug, I'll let you take the second one.

No. Look, in terms of the long-term trend for margins here, obviously, we still are very happy with our margins. They are not as lofty as they were during the peak. The things that are going to get them back to those higher percentages you've seen in the past will be increased sales of instruments, which will be able to spread those costs over more units.

And then also what's important here to look at is that product mix, right? So I think the higher end ticket, the more expensive instruments in our platform have been harder to sell in this operating environment. And so the product mix has shifted towards the less expensive instruments, although we still have good margins on those. But I think over time, we can get back towards those higher margins as the market gets stronger. We experience growth as that product mix shifts.

And so again, very comfortable with where the margins are now. I think they'll be stable as we look ahead in the short term. And I think in the medium and long term, we can return to even higher levels.

[Operator Instructions]

And our next question comes from the line of Dan Arias with Stifel.

This is Rohan, on for Dan. Sorry to keep on the SPL piece here, but maybe just a quick one, 4 SPLs under your belt. Could you guys, I guess, give a little bit more depth on how business development conversations advanced during the quarter, maybe how the funnel is shaping up? Just a little bit more on that, if possible, please. I know I'm kind of beating a dead horse here, but I just want to hear a little bit more detail. Appreciate it.

Absolutely. So just to clarify, what you mean is in terms of just the conversations with the current customers who could become SPL customers, is that what you mean?

Yes, sir.

Yes, exactly. So okay, let me give a bit more clarity there. We're working with these customers this year because we know where they are in the preclinical programs and where their anticipation to file their INDs. Obviously, that can always shift by a few months here and there, but we're working with them right now, knowing that where they are in the time line, they're hoping to file INDs in the coming 6 to 12 months. So that's how we know that our conversations with them give us that confidence that we're going to sign an SPL with them next year and that's what gives us that confidence in that 3 to 5. That's part of the funnel that we're building.

So it's not -- it's a case of we're not just helping them optimize their processes. We have conversations with them because we need to. We need to make sure that we're supporting them to be ready for their IND filing. They can reference our Master File and they file their IND as well. It's a Master File we referenced over 65 clinical trials, I think maybe even 70 now. So that conversation is far more intimate than just working the labs with them optimizing their process. It's also ensuring that we work with them hand-in-hand where they're ready for their IND filing. And by the time they sign their IND, they file the R&D, they've signed an SPL with us.

So that's what we're doing right now. That's what we've done throughout the year, and that gives me confidence and us confidence that we're going to sign SPLs next year in that 3 to 5 range. I hope that gives you clarity as to how...

And I'm showing no further questions at this time. And I would like to hand the conference back over to Maher Masoud for closing remarks.

Yes. Thank you, and thank you, everyone, for joining us on today's call. Obviously, third quarter is a bit light, but we remain very confident in the rest of the year and going into next year and the future that we're building here. I look forward to speaking to you again on the next quarter earnings call.

This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.

Good day, and thank you for standing by. Welcome to the MaxCyte Second Quarter Earnings Conference Call. [Operator Instructions] Today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, [ Eric Abdal ], Investor Relations. Please go ahead.

Good afternoon, everyone. Thank you for participating in today's conference call. Joining me on the call from MaxCyte, we have Maher Masoud, President and Chief Executive Officer; and Doug Swirsky, Chief Financial Officer.

Earlier today, MaxCyte released financial results for the second quarter ended June 30th, 2025. 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 those expressed or implied in any forward-looking statements due to a variety of factors, which are discussed in detail in our SEC filings. Except as required by applicable law, the company has 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 Maher.

Thank you, Eric. Good afternoon, everyone, and thank you for joining MaxCyte's Second Quarter 2025 Earnings Call. MaxCyte reported financial results that were in line with our expectations in the second quarter.

To cover the highlights, we sustained growth in a difficult end market. We also recently signed 2 new strategic platform licenses with Anocca AB and Adicet Bio, bringing the total number of new SPLs this year to 3. We continue to focus on investing in the business with discipline, while positioning the company to achieve profitability with our existing capital.

And lastly, we progressed well on the integration of SeQure Dx, which is a substantial long-term opportunity for MaxCyte. Despite what was a strong first half of the year, short-term external headwinds have begun to impact our expectations for growth in the second half. First, in recent months, we faced a decrease in spending at a large SPL partner customer related to PA inventory management and reorganization of manufacturing operations impacting leases.

Second, we have seen some customers rationalize programs and wind down operations internally, which has resulted in lower expectations for PA and licenses revenue. Last, we have seen continued capital equipment purchasing hesitancy from customers related to the uncertain funding and regulatory environment in cell therapy. Taking these factors into account, we are lowering our core revenue guidance range for 2025.

To walk you through our updated guidance, we now expect core business revenue, which does not include SPL program-related revenue to be flat to down 10% in 2025, representing approximately $29.5 million to $32.5 million in 2025 revenue compared to $32.5 million in 2024. This compares to our previous guidance range of 8% to 15% growth or approximately $35 million to $37 million. Both ranges include approximately $2 million in revenue from SeQure Dx, which we continue to expect.

The change in the guidance midpoint is $5 million relative to our previous plan. The first factor in the guidance reduction is about $1.5 million in PAs relative to our prior plan. Half of this is a result of inventory management at the previously mentioned customer and the other half is related to softness across other preclinical and clinical customers due to program consolidation.

Additionally, about $2 million of the guidance reduction is related to licenses relative to our prior plan. About 1/4 of licenses impact was from our largest customer reorganizing manufacturing operations and about 3/4 is related to other clinical customers consolidating programs or shutting down operations. The remaining $1.5 million of the guidance cut is related to softness in instruments, as customers remain hesitant with capital equipment purchases.

As we look forward, we have had detailed discussions with this customer and can confirm that this is not a movement away from our platform or changes in the outlook for their therapeutic. We are working with the customer to determine the timing of future purchases as they continue to optimize their manufacturing network.

While we are disappointed in the change in expectations for this year, we remain confident in the value proposition that MaxCyte offers to the cell and gene therapy industry. And based on the current opportunities in the pipeline, we expect to return back to growth in 2026, with such growth, including continued growth in Asia Pacific, an increasing number of clinical programs utilizing our platform and the launch of a new platform later this year that we believe will add to our top line growth.

To cover our second quarter financial results and developments in more detail, we reported $8.5 million in total revenue, which included core revenue of $8.2 million and SPL program-related revenue of $0.3 million, which was in line with our expectations.

Within the core business, instrument installed base grew to 814 as of June 30th, with instrument revenue of $2.1 million in the second quarter, which grew 22% year-over-year. While the capital equipment spending environment has not fully recovered, we are optimistic about the improved growth in instrument sales.

License revenue was $2.6 million, which was flat year-over-year. PA or processing assembly revenue increased 5% year-over-year, stepping down slightly from recent quarters. License and PA revenue were impacted by some customers consolidating programs.

Turning to the SPL program-related line, revenue was $0.3 million in the quarter, representing revenue primarily from CASGEVY commercial royalties as we had not recognized any milestones during the quarter.

During Vertex's second quarter earnings call, they highlighted the positive momentum they have seen with CASGEVY worldwide with an acceleration in patient initiations, cell collections and number of patients completing their treatment journey.

Vertex points to the progress they are making in 2025 as well as the growth CASGEVY positions them for in 2026, and they have met their goal of authorized treatment centers or ATCs with more than 75 ATCs activated globally.

We are encouraged by their continued investment in their ATC network to be able to support the launch of this critical product. There are now 115 patients who have completed cell collection, with 29 patients now having completed their patient journey, which includes 16 in the second quarter, equating to $30 million of revenue for the second quarter for Vertex. Additionally, 250 patients have now been referred by physicians to activate treatment centers to initiate treatment.

As patients initiations and cell collections continues to ramp, Vertex expects commensurate increases in infusions, but noted that because the timing of infusions is predicated on patient scheduling choices, there may be revenue variability from quarter-to-quarter. We continue to believe that CASGEVY interest and demand remains very high around the globe, and we are very excited by the truly transformative nature of the treatment.

Over the last week, we were excited to sign 2 new SPL agreements with Adicet Bio and Anocca AB, bringing our total number of SPL agreements to 31. Adicet Bio, who is working to develop allogeneic gamma delta T cell therapies for cancer and autoimmune diseases will utilize our ExPERT platform to expand their manufacturing capabilities to include nonviral gene editing delivery.

We are also excited to be supporting Anocca AB, a T cell immunotherapy company developing a deep pipeline of T cell receptor engineered therapies or TCRs. MaxCyte's platform will provide both companies with technical, scientific and regulatory support as they advance their pipelines and missions forward.

We view these new SPL signings and our continued ability to grow instrument placements in a difficult environment as a testament to the resilience of our platform as a critical manufacturing tool for advanced therapies.

To provide a better understanding of our SPL portfolio, we've added a new deck to our Investor Relations website, which we hope you will look through, highlighting the SPLs in our portfolio and their current clinical programs and progress.

Our business model remains strong as we're continuing to sign new SPLs that will provide value over the near, mid and long term, and our existing customer base continues to advance their respective research and clinical programs.

As it stands today, 14 of our SPL clients have active programs in the clinic, while others are working on earlier programs. We are supporting a total of 18 active clinical programs, which is consistent with the beginning of the year. Given the dynamic environment this year, 4 clinical programs shut down, but 4 new programs entered the clinic, which is a testament to our strong business model.

We expect that at times, some of our SPL customers will rationalize programs, but our highly differentiated platform and unparalleled scientific support allows us to sign new SPLs, thereby continually increasing the number of clinical programs we support.

Some of the 18 programs we support have also progressed further along in the clinic so far this year. To highlight the progress, 5 of the current 18 clinical programs are set to enter pivotal studies in the next 6 to 18 months.

As I mentioned, while programs can fail or be slowed and deprioritized, that is the nature of the industry and built into our business model. We continue to sign new SPLs and have seen recent SPL signs result in new programs moving into clinical development.

Since the IPO, the number of MaxCyte SPL agreements and active clinical programs supported has grown substantially, and we've continued to see diversification in our clinical revenue compared to just a few years ago, with trials across a vast number of our SPLs such as for blood cancer, solid tumor, genetic diseases, neurodegenerative diseases and autoimmune diseases. Our differentiated platform, leading support, engineering know-how and FDA master file have positioned MaxCyte to continue to sign 3 to 5 SPLs a year for the foreseeable future.

As we look beyond CASGEVY [ as the ] second wave of potential therapies coming to market, MaxCyte supports 5 clinical programs that are expected to enter pivotal studies in the next 6 to 18 months and could be approved and launched in 2027 and 2028. Such approvals all provide us participation in the economics in the form of royalties, annual license fees and significant expansion of processing assembly use.

Our ability to disclose and discuss these programs is limited by confidential agreements with our customers. However, on Slide 8 of the new deck, we've detailed the 5 programs across 5 SPLs, CRISPR Therapeutics, Wugen, Imugene, Caribou and 1 undisclosed SPL that we believe to enter pivotal studies within this time frame.

We also support 13 programs currently in Phase I, which we believe have potential approvals beyond 2028 and another 19 programs currently in preclinical development with launch potential in 2032 and beyond.

As you know, not every program will make it to FDA approval. However, we capture value from both successful programs and programs that do not achieve their endpoints. As we add SPLs and our existing SPLs bring more programs to the clinic, the opportunity set will continue to grow.

Turning to our cell and gene therapy services, formerly under a subsidiary SeQure Dx, which we have now merged into MaxCyte. We are pleased with the performance of the business so far this year, remaining on track to meet our annual revenue expectation, and we are seeing good traction in booking projects.

Since the acquisition earlier this year, we have been successfully integrating these services into MaxCyte. The 3 assays available through SeQure Dx, screening, nomination and confirmation are available to both ex vivo and in vivo therapy developers at different stages in development, starting in the discovery stage through preclinical development and IND-enabling studies.

SeQure Dx provides a robust and efficient on and off-target assessment and decreases time to clinic and improves likelihood of program success. In the evolving cell and gene therapy industry, safety has become increasingly important from a regulatory perspective and SeQure's gene editing risk assessment services align with regulatory guidance from the FDA and other agencies.

We've seen positive momentum in the adoption of SeQure's technology in clinical studies. For instance, ONE-seq, a technology invented by SeQure Dx and GUIDE-seq, a technology invented by Mass General Hospital and licensed exclusively to SeQure Dx were both used in the gene editing risk assessments performed by Children's Hospital of Philadelphia and Penn and the first of-its-kind personalized gene editing therapy approved by regulators and administered to the infant [ KJ ] for a rare genetic disease, which has received national coverage.

We believe that the opportunity for SeQure Dx is very large and not just in rare disease. SeQure Dx offers both off-target and off-target analysis to support gene knockouts and gene insertions in advanced therapies. The assays support early development to IND filings for both in vivo and ex vivo therapies, and we expect SeQure's addressable market to be the entire field of modified cell and gene therapies.

We are very optimistic about the commercial uptake for SeQure Dx and believe that it has significant growth potential over the coming years. The sales pipeline so far this year is more than twice as much as it was heading into 2025.

Despite what remains a challenging backdrop in cell and gene therapy, we see vast potential for these therapies to provide life-changing treatments to patients challenged with disease, a belief that is shared across the industry landscape of regulators, academics and drug developers.

We were encouraged by the cell and gene therapy roundtable hosted by the FDA in June and subsequent commentary from leaders at the Department of Health and Human Services.

In our view, the message was clear. It has become apparent that cell and gene therapy is a priority at the agency. They support increasing the focus on curative therapies, while moving away from managing costly chronic diseases. They have committed to cell and gene therapy research and desire for payment reform and regulatory flexibility, and they have emphasized the need to accelerate cell and gene therapy development time lines.

Over the long term, we share in the belief that cell and gene therapies have the potential to cure disease and reduce associated cost and patient burden. MaxCyte remains extremely well positioned to benefit for the growth of this industry over time.

Given the long-term belief we have in the industry, we continue to make disciplined investments to position the company for the future. Our organic investments continue to be in new products and product enhancements, while our inorganic investment focus has been on solving critical pain points in the industry as seen with SeQure Dx.

We are able to invest in our business given the strength of the balance sheet as well as our focus on driving growth with efficient and lean operations. Our management team is committed to carefully managing MaxCyte's financial health and continually evaluating ways to run our business more efficiently without sacrificing growth investments. With our existing balance sheet, MaxCyte expects to achieve profitability without additional capital needs.

To wrap up, I will highlight that we officially delisted from the AIM markets on June 26, following our Annual Meeting of Stockholders and are now solely listed on NASDAQ. We believe this was in the best interest of MaxCyte and our stakeholders. We are thankful to our U.K. shareholders for their continued support.

In summary, while I'm disappointed with the operational headwinds at our customers that have resulted in a reduced financial outlook for 2025, we are working diligently to build a growing and profitable business and position MaxCyte for the future.

My focus of growing MaxCyte with multiple product offerings, while improving operational efficiencies to reduce our annual burn to put us on track towards profitability remains solidly on track.

We remain very optimistic and confident about MaxCyte's position in cell and gene therapy. And over time, we believe MaxCyte's platforms and SPL business model will benefit from the growth of the industry.

With that, I will now turn the call over to Doug to discuss our financial results. Doug?

Thank you, Maher. Total revenue in the second quarter of 2025 was $8.5 million compared to $10.4 million in the second quarter of 2024, representing an 18% decline. Our milestone revenue remains lumpy from quarter-to-quarter, which can impact year-over-year comparisons in total reported revenue.

We reported core revenue of $8.2 million compared to $7.6 million in the comparable prior year quarter, which represents growth of 8% year-over-year. Within core revenue, instrument revenue was $2.1 million compared to $1.8 million in the second quarter of 2024; license revenue was $2.6 million compared to $2.6 million in the second quarter of 2024; and processing assembly or PA revenue was $3.1 million compared to $3 million in the second quarter of 2024. PA revenue in the second quarter benefited from ordering patterns impacted by the uncertain tariff environment

Assay service revenue, which includes SeQure Dx, was $0.1 million in the second quarter. Other revenue was $0.3 million compared to $0.2 million in the second quarter of 2024. Total SeQure Dx revenue was roughly $300,000 as a portion of the revenue was in the licenses line during the quarter.

As discussed earlier, both license revenue and PA revenue were negatively impacted in the second quarter of 2025 by customers consolidating programs. We were encouraged by the trend in instrument revenue, which returned to growth year-over-year.

42% of our core revenue was derived from SPL customers in the second quarter of 2025, which compares to 51% in the comparable prior year quarter. We recognized $0.3 million of SPL program-related revenue in the second quarter of 2025 compared to $2.9 million in the second quarter of 2024. As Maher mentioned, SPL program-related revenue was almost entirely from CASGEVY commercial royalties as we did not recognize any milestones during the quarter.

Moving down the P&L. Gross margin was 82% in the second quarter of 2025 compared to 86% in the second quarter of the prior year. Including inventory provisions and SPL program-related revenue, non-GAAP adjusted gross margin was 83% in the second quarter of 2025 compared to non-GAAP adjusted gross margin of 82% in the second quarter of 2024.

Total operating expenses for the second quarter of 2025 were $21.2 million compared to $20.9 million in the second quarter of 2024. Operating efficiency continues to be a focus for us, and I want to highlight that operating expenses decreased for the first 6 months of 2025 compared to the first half of last year.

Although this decrease was modest, we were able to achieve this despite absorbing the cost structure of SeQure Dx, as well as expenses related to the acquisition of the business. Expenses also included investments in new product initiatives that we believe will begin paying dividends later this year and help drive revenue growth in 2026.

We finished the second quarter with combined total cash, equivalents and investments of $165.2 million and no debt. The decrease from the beginning of the year includes approximately $7 million of purchase transaction and onetime costs associated with the acquisition of SeQure Dx.

Continuing to our 2025 guidance. As Maher discussed in detail, we are updating our outlook and now expect core revenue of flat to a 10% decline compared to 2024, inclusive of revenue from SeQure Dx. We continue to expect at least $2 million in full year revenue from SeQure Dx.

We anticipate SeQure Dx revenue will be weighted towards the second half of 2025, and we are comfortable with the revenue outlook for this business, which is supported by executed customer contracts.

Additionally, we are reiterating SPL program-related revenue guidance, which is expected to be approximately $5 million in 2025 and which includes both expected revenue from pre-commercial and commercial milestones and sales-based royalties.

We would like to note that our SPL program-related revenue outlook is a risk-adjusted forecast that is achievable under a variety of potential outcomes across our SPLs and the planned clinical progress and commercial success of our customers.

Lastly, we now expect to end 2025 with approximately $155 million in cash equivalents and investments on our balance sheet. This updated guidance is a result of our lower revenue expectations.

MaxCyte continues to be in a healthy financial position, and we remain committed to being disciplined in our spend and investments to drive long-term growth for MaxCyte and its shareholders.

Now I'll turn the call back over to Maher.

Thank you, Doug. We firmly believe in MaxCyte's value proposition within the cell and gene therapy industry and look forward to continuing to support our customers as their programs progress.

With that, I will turn the call back over to the operator for the Q&A. Operator?

[Operator Instructions] And our first question comes from the line of Matt Larew of William Blair.

Maybe starting with the reorg of manufacturing operations for your largest customer. It sounds like that took you a little bit off guard. I think it would be helpful to know just exactly what your conversations with that customer have involved, how long, I guess, you expect this transition to occur? And how much certainty versus kind of opacity there is in terms of [ what the future ] is there?

Matt, thanks for the question. Let me take that. And Doug, feel free to add on. So without giving too much details to that customer, it is our largest customer. We do have certainty as to where they are looking forward from here. This was just a short-term consolidation of manufacturing. It will have no impact to our future licensing revenue from that customer. This is a short-term pocket that we saw with them that we -- and we have visibility and we're always in constant dialogue with this customer. So we know what to expect going into the second half as well as into next year from this customer.

We don't see and we have no reason to believe that there will be any more major changes to the manufacturing operations at this point. Yes. Let me add -- we feel very confident there won't be any more major changes for manufacturing from this customer.

Okay. [indiscernible] of being perhaps less instruments needed to less license revenue and less PA ordering because they're going to work through inventory?

Precisely on the short term. That's exactly right, Matt.

Okay. Okay. Great. And then just kind of ending with Doug's comments around OpEx down modestly quarter-over-quarter and flattish year-over-year. If you just kind of think back the last several years here, core revenue is roughly flattish over the last several years, but obviously, there's been a big pickup in spend. And just wondering relative to where the cash balance is today, and also again, thinking about investing for the future, just given the challenges you're facing, there might be an opportunity to find additional efficiencies within the organization.

Yes. Great question, Matt. I mean, as I mentioned, obviously, within our current capital stock, we're going to be -- our goal is to be profitable within the foreseeable future. And I still feel confident we're on track towards that. There's always efficiencies we're going to look towards across the organization and really how we go about with our growth projections.

If you look at what Doug said, we're kind of proud of this. We actually absorbed the expenses of SeQure Dx, and we're still slightly modestly less in terms of the OpEx than we were last year before we acquired SeQure Dx. So you can tell that the eye of diligence that we have towards how we're operating the company, we will continue to have the same eye of diligence and ensuring that we're always looking at ways to get us to that path to profitability and at the same time, have growth over the years.

Doug, do you want to add anything to that?

I think that's good.

[Operator Instructions] And our next question comes from the line of Dan Arias of Stifel.

This is Rohan on for Dan. Considering the updated guidance and your statements made today on the current business environment, customer sentiment, how should we contemplate quarterly cadence from 3Q to 4Q, as we head into the back half of 2025? Anything additional that you could call out?

Sure. In terms of the variability between Q3 and Q4, we do expect to be slightly weighted towards Q4, but not materially. So a slight weight to Q4 in terms of the midpoint of the revised range. I think when we start looking at sort of up cases or down cases from that midpoint, I think it's going to be Q4 dependent.

And one more follow-up. On instruments, that seems to be a bright spot in the business, up 22% year-over-year. Can you shed some light on like what you guys are hearing from your cell and gene therapy customers and how those conversations are going? And also, what you're expecting performance-wise for the rest of the year from instrumentation sales?

Sure. Let me take that, and then Doug, feel free to add as well. As we mentioned in previous calls, obviously, we've seen some CapEx constraints from customers. However, we are seeing the market more. We're seeing more of our lower-priced systems that we're able to sell into our customer base.

And as we speak with customers as well, we're starting to see those short-term headwinds dissipate. Obviously, we had early in the year some concerns from customers on the NIH funding or I should say, [ fee ] funding, but we're starting to see that kind of baseline from here.

And what we saw on the instrument side for the first half, obviously, is a testament to our execution as well in this tough environment. But it's part of our strategy of ensuring that we can get in earlier with customers that allow us to sell a few more of our lower-priced systems than our high-end systems.

I mean, Doug, anything else to add?

Yes, we're really focused on making sure we've got a global platform here and revenue outside ex U.S. has been an increasing part of things as there's definitely some variability in terms of where folks are in the cycle, if you will. And so, I think ex U.S., particularly Asia Pacific has been strong for us.

[Operator Instructions] Our next question comes from the line of Brendan Smith of TD Cowen.

Maybe kind of just a follow-up to a couple of things that have been discussed already here. But I guess just within your SPLs and the partnerships there, I guess, and maybe more specifically the assets that are still advancing through the clinic, can you maybe give us a little bit of a sense like are some of those programs skewed towards some more traditional use cases for cell therapies like maybe CAR-T? Or I guess, I'm really just wondering like where you're seeing some of your partners kind of drawing the line within their own pipelines as they're thinking about prioritizing their respective programs?

Yes. Great question. Actually, if you look at the ones on the corporate deck that we updated there, Brendan, and I hope everyone looks at this. If you look at, we're seeing a lot more customers now go allogeneic as well. So off the shelf is what we're seeing.

If you look at the ones that we can't publicly disclose, that's CRISPR/CTX112 that we hope to get data on later on in the second half of the year. You have Wugen with CART7; Imugene with azer-cel, Caribou, CD10. These are all allogeneic B-cell, human hematologic malignancies. We have one undisclosed program that we can't speak to whether it's autologous or allogeneic, but we are seeing more towards that shift of allogeneic therapies, which bodes very well, Brendan, for our system.

If you look at the scale we provide, we are highly differentiated from any system out there, that's really the beauty of our model. You can work with us early in research. And as you can scale up into those larger platforms, where we're using a system that can transfect up to 20 billion cells, you're using a MaxCyte system with the support that we provide as well.

[Operator Instructions] And our next question comes from the line of Hannah Hefley of Stephens.

It sounds like PA revenue benefited from maybe a pull forward ahead of tariffs during the quarter. Could you frame up how large this benefit was? And does that mean you're expecting PA revenue to step down further next quarter?

So yes, it was a single order from a distributor, and we don't actually think that, that's had a tremendous influence. We get -- you think of it as a pull-through, but we're seeing good order flow from those customers. And I don't think that it's something that's already built into the guide, and we're not tipping our hat to any particular breakdown of the core revenue that's been guided to with respect to either to what the breakdown is between instruments and PAs. But I don't think that's going to have a material impact.

Where it did impact, if you do -- if you look at the slide of historical core business disclosures in the deck that we just posted the update of core revenue generated by SPL clients dipped and really, that's 2 things. One is this reasonable order that was sort of tariff motivated to get ahead of those. And then another was just a decline in expectations from a large customer. And I think if you take those out, that 42% starts to creep back up into sort of the low 50s and consistent with where we expect to be in the business.

Great. And then -- it seems like SPL customers were a little bit more insulated from some of these macro headwinds, at least like what we talked about last quarter. And now that seems to have changed a little bit. Is this more like focused on a few customers? Or are you seeing any impact to the SPL pipeline given these headwinds?

Great question, Hannah. No, we're not seeing impacts to the pipeline. In fact, as you can tell, obviously, we signed 3 so far this year. I feel confident we can continue to sign 3 to 5 each year for the foreseeable future. If anything, some of those impacts were really short term. We saw one customer just go completely in vivo. We saw one customer shift focus from cell therapy to another modality. But overall, we have a very keen eye as to all of our SPL customers.

On occasion, we're going to have 1 or 2 customers here and there shift focus, but that's built into our model. That's why we signed 3 to 5 per year. It builds for us. I mean there's a reason why 4 programs went off, but yet we added 4 more. So we still have 18 clinical programs using our system in the clinic. We have 5 going into pivotal in the next 6 to 18 months that all bode well for us in 2027, '28 with potential approvals.

So really, I see this as -- these are just short term, the nature and it's built into our business model. That's why we signed 3 to 5. We're going to have some drop off. but we're going to have more come in and then drop off, and that's what we built it into it.

The revised guide contemplates some decrease in license revenue associated with a couple of decisions. But the goal here, and I think it's proved out is that we're going to have more SPL customers coming into the fold, while you will see a smaller number of customers that are rationalizing their programs or in some cases, trying to out-license those programs and some of those have come back as a result.

That's right. And let me add a little bit more on this one. So we signed 6 SPLs last year. We signed 3 so far this year. Many of those will have programs going to the clinic. A lot of these customers that we signed were preclinical. We anticipate many of them going to the clinic in the near future.

I'm showing no further questions at this time. I'll now turn it back to Maher for closing remarks.

Yes. Thank you, operator. Thank you, everyone, for joining us today, and I look forward and we all look forward to speaking to you again on our next earnings call in a few months.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.