MAXCYTE INC

Previous wording

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited**condensed consolidated financial statements and related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our audited consolidated financial statements and related notes for the year ended December 31, 2023 included in our Annual Report on Form 10-K filed with the SEC on March 12, 2024, as well as the information contained under Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, "Risk Factors" contained in the Annual Report on Form 10-K and other information provided from time to time in our other filings with the SEC.

Current wording

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited**condensed consolidated financial statements and related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our audited consolidated financial statements and related notes for the year ended December 31, 2023 included in the 2023 Form 10-K, as well as the information contained under Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, “Risk Factors” contained in the 2023 Form 10-K and other information provided from time to time in our other filings with the SEC.

Previous wording

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q 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 under the caption “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2023. 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.

Current wording

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q 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 under the caption “Risk Factors” and elsewhere in the 2023 Form 10-K. 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.

Previous wording

Our ExPERT platform, which is based on our Flow Electroporation technology, has been designed to address this rapidly expanding cell therapy market and can be utilized across the continuum of the high-growth cell therapy sector, from discovery and development through commercialization of next-generation, cell-based medicines. The ExPERT™ family of products includes four instruments, which we call the ATx™, STx™, GTx™ and VLx™, as well as a portfolio of proprietary related disposables and consumables. Our disposables and consumables include processing assemblies (“PAs”) designed for use with our instruments, as well as accessories supporting PAs such as electroporation buffer solution and software protocols. We have garnered meaningful expertise in cell engineering via our internal research and development efforts as well as our customer-focused commercial approach, which includes a growing application scientist team. The platform is also supported by a robust intellectual property portfolio with more than 150 granted U.S. and foreign patents and more than 95 pending patent applications worldwide.

Current wording

Our ExPERT platform, which is based on our Flow Electroporation technology, has been designed to address this rapidly expanding cell therapy market and can be utilized across the continuum of the high-growth cell therapy sector, from discovery and development through commercialization of next-generation, cell-based medicines. The ExPERT™ family of products includes four instruments, which we call the ATx™, STx™, GTx™ and VLx™, as well as a portfolio of proprietary related disposables and consumables. Our disposables and consumables include processing assemblies (“PAs”) designed for use with our instruments, as well as accessories supporting PAs such as electroporation buffer solution and software protocols. We have garnered meaningful expertise in cell engineering via our internal research and development efforts as well as our customer-focused commercial approach, which includes a growing application scientist team. Our platform is also supported by a robust intellectual property portfolio with more than 150 granted U.S. and foreign patents and more than 95 pending patent applications worldwide.

Previous wording

From leading commercial cell therapy drug and biologic developers and top biopharmaceutical companies to top academic and government research institutions, including the U.S. National Institutes of Health, our customers have extensively validated our technology. We believe the features and performance of our platform have led to sustained customer engagement. Our existing customer base, which includes but is not limited to our 27 SPL partners, ranges from large biopharmaceutical companies, including a majority of the top 25 pharmaceutical companies based on 2022 global revenue, to hundreds of biotechnology companies and academic centers focused on translational research. Our Flow Electroporation technology is used by one of our SPL partners to engineer the first ex-vivo cell therapy approved by the FDA in December 2023.

Current wording

From leading commercial cell therapy drug and biologic developers and top biopharmaceutical companies to top academic and government research institutions, including the U.S. National Institutes of Health, our customers have extensively validated our technology. We believe the features and performance of our platform have led to sustained customer engagement. Our existing customer base, which includes but is not limited to our 28 SPL partners, ranges from large biopharmaceutical companies, including a majority of the top 25 pharmaceutical companies based on 2023 global revenue, to hundreds of biotechnology companies and academic centers focused on translational research. Our Flow Electroporation technology is used by one of our SPL partners to engineer the first ex-vivo cell therapy approved by the FDA in December 2023.

Previous wording

Since our inception, we have incurred significant operating losses. Our ability to generate revenue sufficient to achieve profitability will depend on the successful further development, commercialization adoption and market acceptance of our products. We generated revenue of $11.3 million and incurred a net loss of $9.5 million for the three months ended March 31, 2024. As of March 31, 2024, we had an accumulated deficit of $185.3 million. We expect to continue to incur net losses as we focus on growing commercial sales of our products in both the United States and international markets, including growing our sales force, scaling our manufacturing operations, continuing research and development efforts to develop new products and further enhance our existing products.

Current wording

Since our inception, we have incurred significant operating losses. Our ability to generate revenue sufficient to achieve profitability will depend on the successful further development, commercialization adoption, and market acceptance of our products. We generated revenue of $21.8 million and incurred a net loss of $18.9 million for the six months ended June 30, 2024. As of June 30, 2024, we had an accumulated deficit of $194.7 million. We expect to continue to incur net losses as we focus on growing commercial sales of our products in both the U.S. and international markets, including growing our sales force, scaling our manufacturing operations, and continuing research and development efforts to develop new products and further enhance our existing products.

Previous wording

Throughout the first quarter of 2024, we have continued to enter into SPL agreements with our cell therapy customers. These agreements, which are discussed in more detail in “Results of Operations” below, provide us with revenue from instrument sales and leases and disposables sales as well as pre-commercial milestones based on progress of our partners’ programs through the clinic and sales-based payments upon commercialization of our partners’ programs. In the first quarter of 2024, we signed SPL agreements with three new partners: Lion TCR, Imugene, Wugen, and we announced that we had signed a fourth agreement with Be Biopharma on April 2, 2024. We continue to grow our SPL pipeline and, while the specific timing of any agreement is uncertain, we look forward to continuing to build on our existing SPL partnerships and develop additional SPL partnerships in the future.

Current wording

Throughout the first half of 2024, we have continued to enter into SPL agreements with our cell therapy customers. These agreements, which are discussed in more detail under the caption “Results of Operations” below, provide us with revenue from instrument sales and leases and disposables sales as well as pre-commercial milestones based on progress of our partners’ programs through the clinic and sales-based payments upon commercialization of our partners’ programs. In the

Previous wording

The following table provides details regarding our core business revenue for the periods presented:

Current wording

The following table provides details regarding our core revenue for the periods presented:

Previous wording

The $2.4 million increase in program-related revenues resulted from achievement of contractually specified clinical and regulatory milestones and reflects the expected variability from period to period in the level of program-related revenue given the small number of individual triggering events which currently generate this portion of revenue. We expect program-related revenue to continue to experience variability for some time, although we anticipate that variability may moderate as the volume of SPL partnerships and associated milestones grows.

Current wording

The $2.1 million increase in program-related revenues for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 resulted from achievement of contractually specified clinical and regulatory milestones and reflects the expected variability from period to period in the level of program-related revenue given the small number of individual triggering events which currently generate this portion of revenue. We expect program-related revenue to continue to experience variability for some time, although we anticipate that variability may moderate as the volume of SPL partnerships and associated milestones grows.

Previous wording

We expect total revenue to increase over time as our customers’ programs advance and our markets grow, resulting in additional instrument sales and leases and disposable sales and as the percentage of our installed base that are under cell therapy license agreements increases. We expect revenue from disposable and instrument sales and instrument licenses to cell therapy customers will continue to grow as those customers advance their preclinical pipeline programs into clinical development and move their existing drug development programs into later-stage clinical trials and, potentially, into commercialization. In addition, we believe we are well positioned to attract new customers who may contribute to these revenues, based on the underlying growth in the cell therapy pipeline among companies in this market, the extent to which capital is available to support such companies, and in particular the switch by some cell therapy companies away from viral to non-viral approaches. We expect, however, that our revenue may fluctuate from period to period due to the timing of securing product sales and licenses, the inherently uncertain nature of the timing of our partners’ achievements of clinical progress and our dependence on the program decisions of our partners.

Current wording

We expect total revenue to increase over time as our customers’ programs advance and our markets grow, resulting in additional instrument sales and leases and disposable sales and also as the percentage of our installed base that are under cell therapy license agreements increases. We expect revenue from disposable and instrument sales and instrument licenses to cell therapy customers will continue to grow as those customers advance their preclinical pipeline programs into clinical development and move their existing drug development programs into later-stage clinical trials and, potentially, into commercialization. In addition, we believe we are well positioned to attract new customers who may contribute to these revenues, based on the underlying growth in the cell therapy pipeline among companies in this market, the extent to which capital is available to support such companies, and in particular the switch by some cell therapy companies away from viral to non-viral approaches. We expect, however, that our revenue may fluctuate from period to period due to the timing of securing product sales and licenses, the inherently uncertain nature of the timing of our partners’ achievements of clinical progress and our dependence on the program decisions of our partners.

Previous wording

During the three months ended March 31, 2024 and 2023, gross margin remained flat at 88%. We price our instruments at a premium given what we believe to be the broad benefits of our platform, and the limited availability of alternative, clinically validated non-viral delivery approaches. Instrument pricing also depends upon the customer’s specific market. However, the market for non-viral delivery is highly competitive, and introduction of a GMP-grade platform by a competitor that delivers similar performance across a similar diversity of cell types could negatively impact our business and lead to increased price pressure that negatively impacts our gross margins.

Current wording

During the three months ended June 30, 2024, gross margin was 86% compared to 85% for the three months ended June 30, 2023. The increase in gross margin was due to an increase in program-related revenue, offset by an increase in cost of goods sold described below. We price our instruments at a premium given what we believe to be the broad benefits of our platform, and the limited availability of alternative clinically-validated non-viral delivery approaches. Instrument pricing also depends upon the customer’s specific market. However, the market for non-viral delivery is highly competitive, and introduction of a Good Manufacturing Practices (“GMP”) grade platform by a competitor that delivers similar performance across a similar diversity of cell types could negatively impact our business and lead to increased price pressure that negatively impacts our gross margins.

Previous wording

Gross profit increased by $2.4 million, or 31%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase was primarily driven by an increase in program-related revenue for the three months ended March 31, 2024.

Current wording

Gross profit increased by $1.3 million, or 17%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase was primarily driven by an increase in program-related revenue for the three months ended June 30, 2024 offset by an increase in cost of goods sold described above.

Previous wording

Research and development expenses consist primarily of costs incurred for our research activities related to advancing our technology and development of applications for our technology, including research into specific applications and associated data development, process development, product development (e.g. development of instruments and disposables, including hardware and software engineering) and design and other costs not directly charged to inventory or cost of goods sold.

Current wording

Research and development expenses consist primarily of costs incurred for our research activities related to advancing our technology and development of applications for our technology, including research into specific applications and associated data development, process development, product development (e.g., development of instruments and

Previous wording

General and administrative expenses decreased by $0.4 million, or 5%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease was primarily driven by a $0.5 million decrease in

Current wording

Research and development expenses decreased by $45,000, or 1%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease was primarily driven by a $0.3 million decrease in stock-based compensation, offset by an increase of $0.3 million increase in occupancy expense.

Previous wording

Depreciation and amortization expense increased by $0.2 million, or 17%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase was primarily driven by increases in leasehold improvements and purchases in laboratory equipment.

Current wording

Depreciation and amortization expense increased by $0.1 million, or 6%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase was primarily driven by increases in leasehold improvements and purchases in laboratory equipment.

Previous wording

Total revenue for the three months ended March 31, 2024 was $11.3 million, an increase of $2.8 million, or 32%, compared to revenue of $8.6 million during the three months ended March 31, 2023. The increase was primarily driven by an increase in program-related revenue and total core revenue described below.

Current wording

Total revenue for the six months ended June 30, 2024 was $21.8 million, an increase of $4.2 million, or 24%, compared to revenue of $17.6 million during the six months ended June 30, 2023. The increase was driven by an increase in program-related revenue.

Previous wording

Total core revenue for the three months ended March 31, 2024 was $8.2 million, an increase of $0.4 million, or 5%, compared to core revenue of $7.8 million for the three months ended March 31, 2023. Our overall increase in core revenue was primarily driven by increases in disposable sales of $0.8 million in the cell therapy market and drug discovery markets, primarily offset by decreases in instrument sales and lease revenue of $0.3 million and $0.2 million, respectively.

Current wording

Total core revenue for the six months ended June 30, 2024 was $15.8 million, a decrease of $0.3 million, or 2%, compared to core revenue of $16.1 million for the six months ended June 30, 2023. Our overall decrease in core revenue was primarily driven by decreases in instrument sales and lease revenue of $0.6 million and $0.3 million, respectively, offset by an increase in disposable sales and other revenue of $0.5 million and $0.1 million, respectively.

Previous wording

Research and development expenses increased by $0.6 million, or 10%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase was primarily driven by a $0.8 million increase in compensation expense and a $0.2 million increase in lab expense, offset by a $0.4 million decrease in stock-based compensation.

Current wording

Research and development expenses increased by $0.6 million, or 5%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase was primarily driven by a $0.8 million increase in compensation expense, a $0.5 million increase in lab expense, and a $0.3 million increase in occupancy expense, offset by a $0.6 million decrease in stock-based compensation, a $0.2 million decrease in engineering expenses, and a $0.2 million decrease in professional fees and other expenses.

Previous wording

Sales and marketing expenses increased by $1.1 million, or 17%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase was primarily driven by a $0.7 million increase in compensation expenses as a result of increases in headcount, and a $0.4 million increase in professional fees.

Current wording

Sales and marketing expenses increased by $1.2 million, or 10%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase was primarily driven by a $1.2 million increase in compensation expenses as a result of increases in headcount, and a $0.5 million increase in professional fees, offset by a $0.3 million decrease in occupancy expenses and a $0.2 million decrease in marketing expenses.

Previous wording

Interest income represents interest on our cash balances and investments, which increased by $0.5 million, or 20%, for the three months ended March 31, 2024 compared to March 31, 2023. The increase was driven by increases in interest rates during the three months ended March 31, 2024.

Current wording

Interest income represents interest on our cash balances and investments, which increased by $0.5 million, or 10%, for the six months ended June 30, 2024 compared to June 30 2023. The increase was driven by increases in interest rates during the six months ended June 30, 2024.

Previous wording

Since our inception, we have experienced losses and negative cash flows from operations. For the three months ended March 31, 2024, we incurred a net loss of $9.5 million. As of March 31, 2024, we had an accumulated deficit of $185.3 million. To date, we have funded our operations primarily with proceeds from sales of common stock, borrowings under loan agreements and cash flows associated with sales and licenses of our products to customers. On August 3, 2021, we completed our U.S. IPO, generating gross proceeds of $201.8 million. We received net proceeds of $184.3 million after deducting aggregate underwriting commissions and offering expenses of $17.6 million.

Current wording

Since our inception, we have experienced losses and negative cash flows from operations. For the six months ended June 30, 2024, we incurred a net loss of $18.9 million. As of June 30, 2024, we had an accumulated deficit of $194.7 million. To date, we have funded our operations primarily with proceeds from sales of common stock, borrowings under loan agreements and cash flows associated with sales and licenses of our products to customers. On August 3, 2021, we completed our U.S. IPO, generating gross proceeds of $201.8 million. We received net proceeds of $184.3 million after deducting aggregate underwriting commissions and offering expenses of $17.6 million.

Previous wording

If we are unable to execute on our business plan and adequately fund operations, or if the business plan requires a level of spending in excess of cash resources, we may have to seek additional equity or debt financing. If additional financings are required from outside sources, we may not be able to raise such capital on terms acceptable to us or at all. To the extent that we raise additional capital through the sale of equity or debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include covenants restricting our ability to take specific actions, such as incurring additional debt, selling or licensing our assets, making product acquisitions, making capital expenditures or declaring dividends. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish some rights to our technologies or our products, or grant licenses on terms that are not favorable to us. If we are unable to raise additional capital when desired, we may have to delay development or commercialization of future products. We also may have to reduce marketing, customer support or other resources devoted to our existing products.

Current wording

If we are unable to execute our business plan and adequately fund operations, or if the business plan requires a level of spending in excess of cash resources, we may have to seek additional equity or debt financing. If additional financings are required from outside sources, we may not be able to raise such capital on terms acceptable to us or at all. To the extent that we raise additional capital through the sale of equity or debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include covenants restricting our ability to take specific actions, such as incurring additional debt, selling or licensing our assets, making product acquisitions, making capital expenditures or declaring dividends. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish some rights to our technologies or our products, or grant licenses on terms that are not favorable to us. If we are unable to raise additional capital when desired, we may have to delay development or commercialization of future products. We also may have to reduce marketing, customer support or other resources devoted to our existing products.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2024 was $10.6 million, and consisted primarily of our net loss of $9.5 million, offset in part by net non-cash expenses of $2.4 million, including stock-based compensation of $3.0 million, depreciation and amortization expenses of $1.1 million, and an aggregate $0.2 million in bad debt recoveries and other non-cash charges offset by amortization of discounts on investments of $2.0 million. We also had net cash outflows of $3.4 million due to changes in our operating assets and liabilities. Net changes in our operating assets and liabilities consisted primarily of an increase in accounts receivable of $0.3 million, a decrease in accounts payable and accrued expenses of $3.3 million due to timing considerations, a decrease in deferred revenue of $0.6 million, and a decrease in operating lease liabilities of $0.1 million, offset by a decrease in prepaid expenses and other current assets of $0.7 million and a decrease in inventory of $0.2 million.

Current wording

Net cash used in operating activities for the six months ended June 30, 2024 was $15.4 million, and consisted primarily of our net loss of $18.9 million, which was offset in part by net non-cash expenses of $5.7 million. Net non-cash expenses include stock-based compensation of $6.6 million, depreciation and amortization expenses of $2.2 million, and an aggregate $0.6 million in other non-cash charges offset by amortization of discounts on investments of $3.7 million. We also had net cash outflows of $2.2 million due to changes in our operating assets and liabilities. Net changes in our operating assets and liabilities consisted primarily of a decrease in accounts payable and accrued expenses of $3.5 million due to timing considerations, a decrease in deferred revenue of $1.7 million, an increase in other assets of $0.3 million, and a decrease in operating lease liabilities of $0.2 million, offset by a decrease in prepaid expenses and other current assets of $1.3 million, a decrease in accounts receivable of $1.3 million, and a decrease in inventory of $0.8 million.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2023 was $4.3 million, and consisted primarily of our net loss of $10.9 million, offset in part by net non-cash expenses of $2.6 million, including stock-based compensation of $3.3 million and depreciation and amortization expenses of $1.0 million, and other non-cash charges of $0.1 million, offset by amortization of discounts on investments of $1.7 million. We also had net cash inflows of $3.9 million due to changes in our operating assets and liabilities. Net changes in our operating assets and liabilities consisted primarily of a decrease in accounts receivable of $3.4 million due to increased cash collections, an increase in accounts payable and accrued expenses of $1.2 million due to timing considerations, a decrease in tenant improvements allowance (“TIA”) receivable of $0.9 million, a decrease in prepaid expense and other current assets of $0.5 million, and a decrease in other assets of $0.4 million, partially offset by a $1.7 million increase in inventory and a $1.0 million increase in deferred revenue.

Current wording

Net cash used in operating activities for the six months ended June 30, 2023 was $14.4 million, and consisted primarily of our net loss of $21.4 million, offset in part by net non-cash expenses of $5.6 million, including stock-based compensation of $6.8 million, depreciation and amortization expenses of $2.0 million, and other non-cash charges of $0.4 million, offset by amortization of discounts on investments of $3.6 million. We also had net cash inflows of $1.3 million due to changes in our operating assets and liabilities. Net changes in our operating assets and liabilities consisted primarily of a decrease in accounts receivable of $4.0 million due to increased cash collections, a decrease in tenant improvements allowance (“TIA”) receivable of $1.9 million, a decrease in prepaid expenses and other current assets of $0.7 million, a decrease in other assets of $0.2 million, and an increase of $0.1 million in operating lease liabilities, offset by a $2.5 million increase in inventory, a decrease in deferred revenue of $2.0 million, and a $1.0 million decrease in accounts payable and accrued expenses.

Previous wording

Net cash used in investing activities during the three months ended March 31, 2024 was $14.4 million, which was primarily due to purchases of investments of $48.0 million and purchases of property and equipment of $0.8 million, offset by maturities of investments of $34.4 million.

Current wording

Net cash provided by investing activities during the six months ended June 30, 2024 was $5.0 million, which was primarily due maturities of investments of $85.4 million, offset by purchases of investments of $79.4 million and purchases of property and equipment of $1.1 million.

Previous wording

Net cash provided by investing activities during the three months ended March 31, 2023 was $29.6 million, which was primarily attributable to maturities of investments of $89.0 million, partially offset by purchases of investments of $57.8 million and purchases of property and equipment of $1.6 million.

Current wording

Net cash provided by investing activities during the six months ended June 30, 2023 was $56.3 million, which was primarily attributable to maturities of investments of $163.3 million, partially offset by purchases of investments of $105.0 million and purchases of property and equipment of $2.1 million.

Previous wording

Net cash provided by financing activities during the three months ended March 31, 2024 and 2023 was $0.7 million, and $1.5 million, respectively, which was attributable to the exercise of stock options.

Current wording

Net cash provided by financing activities during the six months ended June 30, 2023 was $1.6 million, which was attributable to proceeds from the exercise of stock options.

Previous wording

Our contractual obligations and commitments as of March 31, 2024 consisted exclusively of operating lease obligations. In May 2021, we entered into the Headquarters Lease for new office, lab and warehouse/manufacturing space. The Headquarters Lease term expires on August 31, 2035. The total incremental remaining non-cancellable lease payments under the lease agreement are $27.7 million through the lease term. We expect to be able to fund our obligations under this lease, both in the short-term and in the long-term, from cash on hand, investments and operating cash flows.

Current wording

Our contractual obligations and commitments as of June 30, 2024 consisted exclusively of operating lease obligations. In May 2021, we entered into the Headquarters Lease for new office, lab and warehouse/manufacturing space. The Headquarters Lease term expires on August 31, 2035. The total incremental remaining non-cancellable lease payments under the lease agreement are $27.2 million through the lease term. We expect to be able to fund our obligations under this lease, both in the short-term and in the long-term, from cash on hand, investments and operating cash flows.

Previous wording

There have been no material changes to our critical accounting policies and estimates from those disclosed in our consolidated financial statements and the related notes and other financial information included in the Annual Report on Form 10-K filed with SEC on March 12, 2024.

Current wording

There have been no material changes to our critical accounting policies and estimates from those disclosed in our consolidated financial statements and the related notes and other financial information included in the 2023 Form 10-K.

Previous wording

We are an emerging growth company, (“EGC”), under the Jumpstart Our Business Startups Act of 2012, (the “JOBS Act”). Section 107 of the JOBS Act provides that an EGC can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of the delayed adoption of new and revised accounting standards and, therefore, we will be subject to the same requirements to adopt new or revised accounting standards as private entities. We also intend to rely on other exemptions provided by the JOBS Act, including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.

Current wording

We are an emerging growth company, (“EGC”), under the JOBS Act.. Section 107 of the JOBS Act provides that an EGC can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended for complying with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of the delayed adoption of new and revised accounting standards and, therefore, we will be subject to the same requirements to adopt new or revised accounting standards as private entities. We also intend to rely on other exemptions provided by the JOBS Act, including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.

Previous wording

We will remain an EGC until the earliest of: (i) December 31, 2026, which is the last day of the fiscal year following the fifth anniversary of our initial public offering in the United States; (ii) the last day of the first fiscal year in which our annual gross revenue is $1.235 billion or more; (iii) the date on which we have, during the previous rolling three-year period, issued more than $1 billion in non-convertible debt securities; and (iv) the last day of the fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of June 30 of such fiscal year.

Current wording

We will remain an EGC until the earliest of: (i) December 31, 2026, which is the last day of the fiscal year following the fifth anniversary of our IPO in the U.S.; (ii) the last day of the first fiscal year in which our annual gross revenue is $1.235 billion or more; (iii) the date on which we have, during the previous rolling three-year period, issued more than $1 billion in non-convertible debt securities; and (iv) the last day of the fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of June 30 of such fiscal year.

Previous wording

We are also a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million as of the last business day of our second fiscal quarter or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million as of the last business day of our second fiscal quarter. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

Current wording

We are also a “smaller reporting company,” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million as of the last business day of our second fiscal quarter or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million as of the last business day of our second fiscal quarter. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies.

Previous wording

A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Current wording

A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.