Ricardo Pillai
3 min read
In This Article:
We came across a bullish thesis on MaxCyte, Inc. (MXCT) on Substack by OppCost. In this article, we will summarize the bulls’ thesis on MXCT. MaxCyte, Inc. (MXCT)'s share was trading at $2.355 as of May 9th.
A scientist in a lab conducting research on cell-based therapeutics and biotechnology.
MaxCyte, Inc. is a commercial-stage cell-engineering company with a strong strategic position in the rapidly growing cell and gene therapy (CGT) industry. The company's core offering, the ExPERT™ platform, leverages its Flow Electroporation® technology to enable the non-viral engineering of cells used in therapeutic development and manufacturing. MaxCyte operates a dual revenue model, combining consistent income from the sale and lease of instruments and single-use processing assemblies (PAs) with a high-potential, variable revenue stream from Strategic Platform Licenses (SPLs). These licenses are granted to therapeutic developers and offer milestones and royalties, representing a key growth avenue for the company.
Despite the promise of its technology, MaxCyte has faced challenges with revenue volatility, particularly due to the lumpiness of SPL-related revenue recognition. While core business revenue has demonstrated steady growth, primarily driven by recurring PA sales linked to an expanding instrument base, total revenue declined in 2023 and 2024. Despite this, MaxCyte maintains high gross margins of 85-90%. However, the company has incurred widening net losses over the past five years, largely driven by significant investments in research and development (R&D) and selling, general, and administrative (SG&A) expenses aimed at fueling growth and expanding its platform. Operationally, the company is still in a negative cash flow phase but benefits from a robust balance sheet with $174.7 million in cash and short-term investments as of March 31, 2025, and no outstanding debt, providing it with significant runway for future growth.
Strategically, MaxCyte has made key developments, such as the divestiture of its CARMA asset and the acquisition of SeQure Dx to expand into gene editing safety assessment. The company's SPL model gained significant validation with the first FDA approval of a partner therapy, Casgevy, in late 2023. However, near-term SPL revenue guidance for 2025 remains modest at around $5 million. Despite this, the company’s core business continues to grow, and the SPL strategy offers substantial long-term royalty potential as more developers adopt its technology.
MaxCyte’s valuation is highly sensitive to assumptions regarding long-term growth and profitability, particularly the timing and magnitude of SPL royalty streams. A Discounted Cash Flow (DCF) analysis suggests an intrinsic value of $4.15 per share, with a 5-year forward Internal Rate of Return (IRR) of approximately 18.9%. However, the company faces significant risks, including cash burn, unpredictability in SPL revenue, and the challenges of achieving profitability. Despite these hurdles, MaxCyte represents a high-risk, high-reward investment opportunity, suited for investors with a long-term horizon who believe in the transformative potential of the CGT market and MaxCyte's ability to execute its SPL strategy.
