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| | Page No |
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| PART I | 8 | |
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| Item 1. | Business | 8 |
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| Item 1A. | Risk Factors | 29 |
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| Item 1B. | Unresolved Staff Comments | 72 |
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| Item 1C. | Cybersecurity | 72 |
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| Item 2. | Properties | 74 |
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| Item 3. | Legal Proceedings | 74 |
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| Item 4. | Mine Safety Disclosures | 74 |
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| PART II | 75 | |
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| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 75 |
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| Item 6. | [Reserved] | 75 |
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| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 76 |
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| Item 7A | Quantitative and Qualitative Disclosures about Market Risk | 92 |
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| Item 8. | Financial Statements and Supplementary Data | 93 |
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| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 119 |
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| Item 9A. | Controls and Procedures | 119 |
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| Item 9B. | Other Information | 120 |
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| Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 120 |
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| PART III | 121 | |
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| Item 10. | Directors, Executive Officers and Corporate Governance | 121 |
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| Item 11. | Executive Compensation | 121 |
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| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 121 |
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| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 121 |
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| Item 14. | Principal Accountant Fees and Services | 121 |
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| PART IV | 122 | |
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| Item 15. | Exhibits and Financial Statement Schedules | 122 |
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| Signatures | 125 | |
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Risk Factors Summary
Our business is subject to numerous risks that you should carefully consider. These risks are more fully described in the section titled “Risk Factors” included in Item 1A of this Annual Report on Form 10-K. These risks, which could materially and adversely affect our business, financial condition, operating results and prospects include, but are not limited to, the following:
| ● | We are a cell engineering and life sciences company and have incurred significant losses since our inception, and we expect to incur losses for the foreseeable future. We have limited product offerings approved for commercial sale and may never achieve or maintain profitability. |
| ● | We are highly dependent on a limited number of product offerings. Our revenue has been primarily generated from the sale and licensing of our instruments, as well as sales of single-use disposable processing assemblies (“PAs”), which require a substantial sales cycle and are prone to quarterly fluctuations in revenue, as well as revenues earned based upon customer clinical development progress events which are outside of our control and highly variable from period to period. We may never generate a level of revenue that is sufficient to support our operations or achieve profitability. |
| ● | Our business is dependent on adoption of our products by organizations such as biopharmaceutical companies and academic institutions for their research and development activities focused on cell-based therapeutics. If organizations such as biopharmaceutical companies and academic institutions are unwilling to change current practices to adopt our products, it may negatively affect our business, financial condition, prospects and results of operations. |
| ● | We may be unable to compete successfully against our existing or future competitors. |
| ● | If we cannot maintain and expand current strategic platform licenses (“SPL”) agreements and enter into new SPL agreements, that generate marketed licensed products, our business could be adversely affected. |
| ● | The failure of our customers to meet their contractual obligations to us could adversely affect our business. |
| ● | Our customers may not achieve projected development, regulatory milestones or other anticipated key events in the expected timelines or at all, or may discontinue some or all of their programs, which could have an adverse impact on our business and could negatively impact our value. |
| ● | In recent periods, we have depended on a limited number of customers for our revenue, the loss of any of which could have an adverse impact on our business. |
| ● | We may engage in future acquisitions that could disrupt our business, cause dilution to our stockholders or harm our financial condition and operating results. |
| ● | We depend on continued supply of high-quality components and raw materials for our ExPERT™ instruments and PAs from third-party suppliers, and if shortages of these components or raw materials arise, we may be required to pay higher prices for these components or may not be able to secure enough components to build new products to meet customer demand at all. |
| ● | We have limited experience manufacturing our PAs and may be unable to successfully and consistently manufacture our PAs in high-quality commercial quantities to meet demand, which could limit our growth. |
| ● | Our results of operations may be harmed if we are unable to accurately forecast customer demand for our products and manage our inventory. |
| ● | If we are unable to successfully develop new products, adapt to rapid and significant technological change, respond to introductions of new products by competitors, make strategic and operational decisions to prioritize certain markets, technology offerings or partnerships or develop and capitalize on markets, technologies or partnerships, our business could suffer. |
| ● | New product development involves a lengthy and complex process, and we may be unable to develop or commercialize products on a timely basis or at all. |
| ● | Our systems are complex in design and may contain defects that are not detected until deployed by our customers, which could harm our reputation, increase our costs or reduce our sales. If our products do not perform as expected or the reliability of the technology on which our products are based is questioned, our operating results, reputation and business may suffer. |
| ● | Failure or perceived failure to comply with existing or future laws, regulations, contracts, self-regulatory schemes, standards, and other obligations related to data privacy and security (including security incidents) could harm our business. Compliance or the actual or perceived failure to comply with such obligations could increase the costs of our products, limit their use or adoption, and otherwise negatively affect our operating results and business. |
| ● | Our FDA Master File and equivalent Master and Technical Files in foreign jurisdictions are an important part of our strategic offerings which allow our SPL customers to expedite their cellular therapies into and through clinical development. Delays in filing or obtaining, or our inability to obtain or retain (as applicable in a given jurisdiction), acceptance of such filings in individual countries could negatively impact the progress of our SPL customers if they intend to run clinical trials in such countries, and as a result, could negatively affect our reputation and revenues or require disclosure of confidential information to our partners. Further, changes that we are required to make from time to time, or changes to regulations or negative data or adverse events for our partners, could impact access to our FDA Master File and Master and Technical Files by our partners. |
| ● | We may need additional funding and may be unable to raise capital when needed, which could require us to delay, reduce, eliminate or abandon our commercialization efforts or product development programs. If we do raise additional capital through public or private equity or convertible debt offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing (including refinancing our existing debt), we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. |
| ● | Our customers may not achieve projected development and regulatory milestones and other anticipated key events in the expected timelines or at all, or may discontinue some or all of their programs, which could have an adverse impact on our business and could cause the price of our common stock to decline. |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements about us and our industry involve substantial known and unknown risks, uncertainties, and assumptions, including those described in Item 1A under the heading “Risk Factors” and elsewhere in this report, that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements include, but are not limited to, statements about the Company’s preliminary results of operations, and possible or future results of operations or financial position. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:
•our expected future growth and the success of our business model;
•the potential payments we may receive pursuant to our Strategic Platform Licenses (“SPLs”);
| • | the size and growth potential of the markets for our products, and our ability to serve those markets, increase our market share and achieve and maintain industry leadership; |
| • | the market acceptance and demand for our technology and products, including in the cell therapeutics and bioprocessing application markets; |
•the expected future growth of our manufacturing capabilities and sales, support and marketing capabilities;
•our ability to expand our customer base and enter into additional SPL licenses;
| • | our ability to accurately forecast and manufacture appropriate quantities of our products to meet clinical or commercial demand; |
| • | our expectations regarding development of the cell therapy market, including projected growth in adoption of non-viral delivery approaches and gene editing manipulation technologies; |
| • | our expectation that our customers will have access to capital markets to develop and commercialize their cell therapy programs; |
| • | our ability to maintain our FDA Master File and Master and Technical Files in other countries and expand Master and Technical Files into additional countries; |
| • | our research and development for any future products, including our intention to introduce new instruments and processing assemblies and move into new applications; |
| • | the development, regulatory approval and commercialization of competing products and our ability to compete with the companies that develop and sell such products; |
| • | risks associated with our management transition and our ability to retain and hire senior management and key personnel; |
| • | regulatory developments in the United States and foreign countries; |
| • | our expectations regarding the period during which we qualify as an emerging growth company under the JOBS Act (as defined below); |
| • | our ability to develop and maintain our corporate infrastructure, including our internal controls; |
| • | our financial performance and capital requirements; |
| • | the adequacy of our cash resources and availability of financing on commercially reasonable terms; |
| • | our expectations regarding our ability to obtain and maintain intellectual property protection for our products, as well as our ability to operate our business without infringing the intellectual property rights of others; |
| • | general market and economic conditions that may impact investor confidence in the biopharmaceutical industry and affect the amount of capital such investors provide to our current and potential partners; and |
•our use of available capital resources.
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Annual Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in Item 1A (“Risk Factors”) and elsewhere in this Annual Report. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this report. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Annual Report on Form 10-K. And while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Annual Report on Form 10-K relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Annual Report to reflect events or circumstances after the date of this Annual Report or to reflect new information or the occurrence of unanticipated events, except as required by law. Given these uncertainties, you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, or joint ventures.
You should read this Annual Report on Form 10-K and the documents that we file from time to time with the Securities and Exchange Commission (the “SEC”) with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.
In this Annual Report on Form 10-K, unless the context requires otherwise, all references to “we,” “our,” “us,” “MaxCyte” and the “Company” refer to MaxCyte, Inc.
Trademarks
We have applied for various trademarks that we use in connection with the operation of our business. This Annual Report on Form 10-K includes trademarks, service marks, and trade names owned by us or other companies. All trademarks, service marks, and trade names included in this Annual Report on Form 10-K are the property of their respective owners. Solely for convenience, the trademarks and trade names in this report may be referred to without the ® or TMsymbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.
