MaxCyte Inc

NASDAQ:MXCT

Earnings Call Transcript 2021-Q2

[Sean Menarguez, IR]

Good afternoon, everyone. Thank you all for participating in today's conference call. On the call for MaxCyte, we have Doug Doerfler, Chief Executive Officer, and Amanda Murphy Chief Financial Officer. Earlier today, MaxCyte released financial results for the second quarter ended June 30, 2021. A copy of the press release is available on the company's website.

Before we began, I needed to read the following statement. Statements or comments made during this call maybe forward-looking statements within the meaning of federal laws. Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking statement. Actual results may differ materially from these expressed or implied in the forward-looking statement due to a variety of factors which are discussed in detail in our SEC filings. The company undertakes no obligation to publicly update any forward looking statements, whether because of new information, future events, or otherwise.

And with that, I’ll turn the call over to Doug.

[Doug Doerfler, CEO]

Well, thank you, Sean. And good afternoon, everyone, and thanks for joining MaxCyte’s second quarter earnings call. I'll begin the call with discussion about business and operational highlights during the quarter. Follow that, Amanda will give a detailed financial review and then we'll open up the call for questions.

I like to start off by saying that we're very excited to be speaking with you for the first time following our IPO back on July 30. After trading five years on the LSE [ph] which we look forward to continuing, I feel the U.S. offering we raised approximately $200 million in gross proceeds which followed a $55 million price earlier in 2021. And on behalf of the MaxCyte team, I would like to thank everyone who was involved with and supported us during the IPO process.

We are thankful for the hard work of our MaxCyte dedicated team, our board of directors, our advisors, and for the support of our customers partners their patients, new stock shareholders and your ongoing supportive long-term shareholders both in the UK and the U.S.

With the NASDAQ IPO now complete, we're raising over $200 million and $73 million in cash and short term investments on the balance sheet as of June 30, 2021. We are better positioned than ever to become the premier cell engineering platform technology to support the development of advanced therapeutics.

Now Amanda will provide more details later in the call, but we realized very strong second quarter results as outlined in the press release published just a few minutes ago. This was driven by robust performance and our core enabling cell therapy engineering business, in both cell therapy and drug discovery end markets.

Total revenue was just over $7 million representing growth close to 40%, compared to the same period in 2020. Cell therapy and drug discovery revenues including both instruments and disposables each grew approximately 50% versus FY 2020. We also recognized $0.5 million in pre-commercial milestone revenues from our SPL Strategic Partnership Licensed commercial partners.

As many of you know investment into innovation and next generation of cell therapy has been explosive. The next generation cell therapy market has become quite an exciting activity from MaxCyte as it has become one of the fastest growing and most promising treatment modalities to address a host of human diseases’ high unmet medical needs.

We're seeing incredible and ongoing success from our partners in their efforts to progress next generation cell therapies into and through the clinic. And this has translated into positive revenue momentum in our enabling cell engineering business and burgeoning strategic partnership pipeline.

MaxCyte’s proprietary Flow Electroperation platform provides both a scale up and high performance needed to support the development and manufacturing of complex next generation their cell therapies in a CGMP compliant manner. We believe MaxCyte’s value has been validated by long run success we’ve had in signing usually beneficial long-term collaborative arrangements with a growing number of leading self-directed developers across a broad range of applications.

With the addition of Myeloid Therapeutics in the first quarter Cellularity the second quarter, and Sana Biotechnology in the third quarter, we now have 14 of those agreements are referred to as certified licenses or SPLs. In addition, our electroporation system has been used to manufacture drug products now for over 35 clinical trials.

As of January 20, 2021, we indicated the SPL set the potential to generate close to $1 billion in pre-commercial milestone revenues, and all of our licensed programs were achieved regulatory approvals. Given our commitment to providing confidentiality to our partners, we expect to update key metrics around the SPL agreements more formally at the end of the fiscal year, including the potential pre commercial milestone revenue, number of programs covered on the SPLs and progression of those programs into the clinic.

With the three additional partners year-to-date, MaxCyte has potential to real life and potential future downstream economics continue to grow. As we have indicated, as these partners move closer to commercialization, one of our major initiatives is position ourselves to support our customers through the regulatory process and into approval, which includes investing in our own manufacturing capability and automation.

Following our NASDAQ IPO, we are committed to investing in the business to accelerate growth. We're expanding our commercial efforts and investing in research and development. More specifically, we're investing in research and development initiatives for the export portfolio as well as developing new applications for our systems, including the commercialization of our largest scale VLx platform under ExPERT umbrella.

We're on track to release the improved the VLx large scale system by the end of 2021. And as a reminder, the VLx can process 10 times the capacity of the number of cells, as our CGMP complaint system with GTx used by cell therapy developers. And while our long-term initiatives we're excited about the opportunities for the VLx to enable the company to expand into larger scale bio-processing applications over time.

We're also investing meaningfully. This year, we have made key hires and announced important internal promotions, including the promotion of Dr. Sarah Meeks the Senior Vice President of Business Development, Dr. Jim Brady, the Senior Vice President of Technical Applications, and Steve Nardi joined us recently from Haemonetics, the Senior Vice President of Manufacturing and Engineering Operations.

We are also adding resources to our Alliance management team as reflection of our increased interest on the part of commercial cell therapy developers to work with us on a more strategic base. We're expanding our corporate development team, including the addition of Kevin Gutshall, Vice President of Strategy and Corporate Development, who recently joined us from MilliporeSigma. Finally, we continue to add to our sales, marketing and field application team with opportunities we seem to move into new applications, and new geographies.

Finally, we expanded our board of directors with the additional Ms. Rekha Hemrajani, current Chief Executive Officer and Director of Jiya Acquisition Corp, Yasir Al-Wakeel, current Chief Financial Officer and Head of Corporate Development for Kronos Bio, Ms. Hamrajani Dr. Al-Wakeel bring valuable insights and perspective to our board and we look forward to their contributions in the future.

So in closing, we had a very strong first half of the year highlighted by our IPO in NASDAQ, the announcement of 3 SPLs and an important additions to our team and our board. We're very excited about our opportunity to go forward, particularly in the cell therapy market, and believe we are making the right investments and executing on our plan to drive growth across all of our business.

I will now turn the call over to Amanda to discuss our financial results. Amanda?

[Amanda Murphy, CFO]

Thanks, Doug. And good afternoon, everyone. I think you should all have the press release at this point, but I'll just run through some high level financials before we take Q&A.

As Doug mentioned, we had a strong second quarter driven by strength in our core business. We put a total revenue of $7.1 million, which was up close to 30 -- sorry, close to 48% this quarter. Again, strength is really driven by our underlying cell therapy business and a resurgence of growth in drug discovery. So this is our business excluding milestone payments associated with our partnerships.

Cell therapy revenue was $4.8 million, that would 59% and over the second quarter of 2020. So just drug discovery revenue of $1.8 million was up also 60% over Q2. So again, a pretty strong quarter for the underlying business.

Just as a quick background, I don't want to go into too much detail but in case, people are new to the story on the call. The way we define the end market so to speak, is cell therapy is where our [Indiscernible] actually make the drug. And in that case, we either sell the instrument or in some cases license the instrument. And then of course, we have our proprietary disposables that we sell as well. And those are used predominantly to make ex-vivo cell based therapies, preclinical and in the clinic. And we're seeing an expansion of use, as I'll talk about in a second across many indications.

Drug discovery on the other hand, is where mostly CARMA uses our platform to make proteins more for virus manufacturing applications. So using cells as factories, so to speak to make transients proteins, as I mentioned, or other proteins like monoclonal antibodies. And in that market, we sell the drugs -- sorry, we sell the instruments and then also recognize revenue from the proprietary disposables as well.

So I guess net-net, the strength from the square really came from that that core underlying business. We did get $0.5 million of milestones associated with our strategic partnerships as Doug mentioned. And I'll talk about that in a second as it relates to guidance for the year.

In terms of the gross margin, we were at 89%, this quarter versus 91% the quarter prior. We did receive a little more milestone revenues vis-à-vis this quarter. So the difference really was driven by the difference in milestones. And so underlying the gross margin was pretty flat, quarter-over-quarter.

In terms of operating expenses, we reported total operating expenses of $10.7 million, which was up from $7.5 million. Most of that increase was really driven by headcount increases. As Doug mentioned, we are hiring quite a few people in stock-based comp, with the stock price increase that we've seen over the past year or so. And we did have, and we are going to have some increased public company expenses as you can imagine, with the NASDAQ listing, particularly in the back half of this year. Most of which will be recurring.

We are planning to make investments in Op expense. So including R&D that was up quite a bit this year, a 60%. That's excluding CARMA. Again, we're adding quite a bit of headcount there. As you can imagine, with working on the VLx and some new products. Also, our sales and marketing expenses up about 60%. Again, this is really driven by our views that we see opportunities to accelerate organic growth. In part, some of that was also driven by stock-based comp increases.

I also wanted to just give you -- as you know, we've talked about in the past adjusted EBITDA excluding CARMA. So just to give you an idea, our CARMA sum is pretty minimal this quarter, about 426,000 with minimal stock option expense, just so that you can, from a modelling perspective, compare apples-to-apples. And we expect the CARMA related spend from a clinical perspective to be pretty immaterial going forward. The wind down of the CARMA clinical expenses have been pretty -- has tracked along with our expectations, and coming to a close in the first half of 2021.

So just as I mentioned, we're coming into the end of 2021 and into 2020 with a very healthy balance sheet. We've got total cash of just shy of $75 million cash and cash equivalents. And that does not include that just over $200 million that we raised as part of our recent NASDAQ offering.

We wanted to give some guidance for 2020. Historically, we've talked about total revenue growth, we had tried to give the market a sense of our core business and how that's trending both in cell therapy and drug discovery as well as the milestones. We are seeing quite a bit of strength in the core businesses as I mentioned in the first half. And that's continuing into the third quarter. Of course, with the caveat that COVID and I'm sure many of you are making a caveat that you never know how that's going to go. So this is a guidance, it can sort of assuming standard state of affairs as it relates to COVID.

But essentially, if you look at the growth we saw in the core business, year-to-date it would imply a sort of consensus remains the same for the back half growth of just shy of our historical 25% 5-year CAGR. Based on the trajectory we're seeing, ultimately we could see growth attached higher than that. And, again, we mentioned we had $0.5 million of program related revenue or milestone revenue in this quarter. We're pretty confident we could see another $0.5 million in the second half. So if you kind of aggregate all that up, that would imply about $30 million and approximately of total revenue for the year. And again, that would be a kind of just a historical 25% CAGR run-rate that we've been seeing in the past.

In terms of the SPLs and the milestones, I know that a lot of folks have questioned around that. It's very hard to pinpoint the timing. As you can imagine, given a lot of this is out of our control. We have a very strong SPL pipeline, showing us again, despite the fact that we have won 3 additional SPL agreements, including most recently Sana third quarter. Very strong pipeline, we're seeing a lot of depth in terms of new application. So we're confident that the next 12 to 18 months we could see meaningful revenue contribution from our partners in terms of program economics.

As we said before, this year is fairly back-end loaded. We have two customers that are moving into pivotal trials potentially really to determine exactly when those might fall, whether it be this year or that year -- the next year. So we are more confident that 2022 looks like -- is shaping up to be one of the better years in terms of program economics, particularly with the pivotal trials.

I think that's pretty much it from a guidance perspective. And I'll address questions later. But in the meantime, I'll turn it over to Doug, just to wrap up before we move into Q&A.

[Doug Doerfler, CEO]

Well, thanks, Amanda. And obviously we remain very excited about the place in the industry, with our technology and supporting the development of these really novel and exciting, advanced cell-based therapeutics, successfully completed our NASDAQ IPO. And we're really pleased to announce the second quarter results and provide this preliminary full year guidance projections. And we remain very well-positioned, and we're excited about the opportunities ahead.

So let me stop here and turn it over to the moderator for any questions that you may have, that Amanda and I can contribute to.

[Operator]

Thank you. [Operator Instructions] Our first question comes from Julie Simmonds with Panmure Gordon. You may proceed with your question.

[Julie Simmonds, Panmure Gordon]

Hi, congratulations on excellent quarter. I was just wondering as far as historically, you've talked about the number of programs you've got ongoing and the number of clinical programs you've got ongoing. I was wondering if you could give us some idea about how those numbers are progressing.

[Doug Doerfler, CEO]

So Julie, I mentioned in my part that we're going to be reporting against the SPLs and trade promotion milestones, the numbers of programs. And we'll do that at the end of the fiscal year. So we'll update those. We have to be careful about confidentiality and each of the deals that as you can well imagine.

[Julie Simmonds, Panmure Gordon]

Could you give us some idea of sort of the proportion that are in the client [ph] expense? Just sort of getting a feel for where that or the proportion you have clinical relationships with just because that helps in terms of the modelling going forward?

[Doug Doerfler, CEO]

We announced in the S1 that we've had 15%. This is 50% of 75 program we're currently in the clinic. Hopefully that will help.

[Amanda Murphy, CFO]

Actually one of the things really to add. We're obviously having -- we're obviously cognizant of confidentiality as it relates to reporting that we did also talk about the LOAs. I think at the last when we said that we had 30 trials that had referenced our LOAs actually increased the 35, we are seeing progression, and obviously adding two -- I think the last time we updated numbers we've added two SPLs since then. So all of those numbers are likely to be higher. But just out of respect for our customers, we're going to keep the formula updating those numbers on an annual basis.

[Julie Simmonds, Panmure Gordon]

Lovely, thank you.

[Operator]

Thank you. Our next question comes from Max Masucci with Cowen. You may proceed with your question.

[Max Masucci, Cowen & Co.]

I congrats on a strong first print as a NASDAQ listed company. To start, can you just walk through some of the assumptions in the $30 million plus revenue guide? Any swing factors on both the core razor-razor blade business whether it's the manufacturing and shortages we've seen for certain bio-processing applications? Just in terms of your visibility into the timing of some milestone triggering events?

[Amanda Murphy, CFO]

Yeah, so I'll pick that and maybe Doug wants to add in. So I think if you look at the consensus numbers for the core business for 2021, we're assuming around 20% growth. If you were to just plug in the actual that we reported this quarter closer to 25, just shy of 25%. I think what we're seeing just with the trajectory so far as we expect to be a bit above that. So, again, our 5-year CAGR revenue rate, which was doesn't really include milestones have been around 25.

I would say we're a little bit ahead of that, which is great. And I think part of that is -- we have, like I said, a couple partners that are coming in to pivotal trials. And so we're seeing some -- obviously the less seasonality there in terms of preparing for the trials than we might normally see and some recovery or resurgence of growth so to speak in drug discovery. We've launched a couple of new PAs is and we actually just wanted another one recently that allow multiple experiment times instead of lowering the transaction costs.

And so I think that's being -- as you know again, a driver of the resurgence in growth. So we have pretty good visibility for the remainder of the year in some respects, because we do have a number of platforms as you know that are leased. And so we know that revenue is -- we have a pretty good visibility there into the license or leased piece of the instrumentation. So we have pretty good visibility there, the pulsar rates are pretty consistent. And that was -- in terms of what we've given recently as well.

And so really it comes down to COVID, being something that could affect the business like every other business. The team has done a great job of switching to virtual demos. But the reality is conferences are important in terms of we're seeing some conferences switch to more in-person. So that's encouraging. But we're being fairly cautious, I would say in terms of the guidance based on what we're seeing and in the strength in the business, but that's one variable that that is hard to pin down.

And then on the milestones, that’s really out of our control. We obviously have some visibility near term that that may be proprietary to us based on our customers. And some of it we depend on public commentary, particularly the longer term piece. But it's really hard to --when you're depending on a partner, and then the FDA exactly pin down when those things might fall. So that's what we're saying we think 2022 looks pretty strong. It's not quite as back-end loaded as this year was. We do have the pivotal trials, but that are, again hard to know if it's 2021 or 2022, but that those would be net higher dollars in theory.

So I don't know if that's helpful in terms of bringing out potential areas of upside.

[Max Masucci, Cowen & Co.]

That's great. One more just sticking on PAs. Nice to see that the RUO multi-walled processing assembly. I guess more broadly, can you just give us a sense for how the several recent consumables PA launches have played into? Any competitive dynamics that you face from other electroporation-based instruments in drug discovery?

[Doug Doerfler, CEO]

Yeah, so the purpose of those multi-walled plates well, multi-wall are to put more transactions into a single disposables. So the result of that is the customer can do more at a lower production costs. And we don't have to cannibalize the kind of our pricing in order to do that, but extra wealth into the disposable. And that's allowed us to go down into the lower cost per transfecting. Or what you can without kind of playing in the more commodity market of both cell therapy and drug discovery.

And it's an ongoing process. I think we're quite good at voice a customer really understanding with our end. And if we can come in with a very, very high performance product provided at a cost that is reasonable, we're seeing quite a bit of adoption in the platform now and across drug discovery than earlier cell therapy research.

[Max Masucci, Cowen & Co.]

Great. Thanks for taking the questions.

[Doug Doerfler, CEO]

Of course.

[Operator]

Thank you. Our next question comes from Dan Arias with Stifel. You may proceed with your --

[Dan Arias, Stifel]

Afternoon, guys. Thanks. Doug wanted to just start with a sort of a topical industry question. The FDA panel that was held to discuss toxicity concerns related to viral delivery. Is that figuring into conversations at all that you're having with customers? Is it too early to say? Is it, do you expect it to? I guess, I'm just trying to understand whether safety is sort of something that's positioning your approach more favorably or whether that's just more innate that really isn't going to translate into a commercial impact?

[Doug Doerfler, CEO]

Dan, I don't know the answer to your question, frankly. I mean I think, we don't lead with that. We don't go in, we’re trying to compete against all vectors. I mean, I think we've been talking about why companies or why developers are migrating more towards non-viral. And safety is one issue, but it's also complexity and speed and cost.

We're still seeing combinations with non-viral and viral approach as well. So I think that there continue to be applications that make sense for all vectors. But I also think we're seeing a rather large shift toward using non-viral methods like CRISPR, and other gene editing tools, which allow people to gain the benefits of a non-viral system, but at the same time perhaps be able to move into more complex applications where safety is a bigger concern. Hopefully that answers your questions.

[Dan Arias, Stifel]

Yeah it does. It is early there, too. So I guess we'll just have to see. And then Amanda, on the VLx system, you mentioned ramping up by the end of this year. What should we expect when it comes to contributions from a commercialized product there? Is that something that could immaterial this year -- sorry in 2022? Or as the rollout going to be phased in a way where we should really start dropping revenues in 2023?

[Amanda Murphy, CFO]

Yes, well, I'll start with my CFO answer to that. And then I'll lead the way in more of the application potential that we see there. So simply with the VLx is available now, commercially, what we're doing is pulling it into the ExPERT umbrella, which we expect to have them by the end of the year. And that's really improving the industrial design, user interface that type of thing.

Then we'll work on GMP compliance and building out what we think are interesting large scale bio-processing applications. And we have interest from customers now to do that, and we have. I would say, it's early days there. In terms of contribution to revenue, these are newer markets. Some of the customers use our lower scale platforms for similar applications, but this is large segments, and 10 times the volume.

So this is really building out a whole new market, working with partners upstream and downstream. So I would really think about this as a two to three year revenue contribution opportunity, but also expanding or enabling us to expand beyond the cell therapy market so to speak, in terms of at least making the therapeutics. So we're definitely looking forward to it and excited about investing in it. But definitely a two to three year time horizon.

Doug do you have anything to add there in terms of market opportunity?

[Doug Doerfler, CEO]

Yeah. As Amanda said, we've been receiving orders for it over the last several years. We don't actively market it. I don't think many people would be on our website for quite some time. But, some customers knew we had it one of the user for a specific application. Currently though, we feel comfortable marketing in the way that are the products with the full application development support. And we want to nail that all down, we wanted to make sure that the system was cloud capable and had all the right software and the right user interface before we really push it out as -- in the end marketed as an ExPERT product. And so that now that we've got that. And we have a number of customers who are currently using it with some pretty interesting applications.

But it’s going to take some time. Hopefully won't take as long as Amanda thinks, but we're going to be pushing a pretty hard. I did a point we have to be thoughtful about this. And I think you can see MaxCyte as being relatively conservative. And going to applauding company when it comes to product introductions, and we're doing the same with a VLx. But it will be it will be released at the end of the year. And we've got a handful of customers, who are really looking forward to get your hands on it.

[Dan Arias, Stifel]

I got you. Okay, thanks very much.

[Doug Doerfler, CEO]

Thank you.

[Operator]

Thank you. Our next one's from Matt Larew with William Blair. You may proceed with your question.

[Matt Larew, William Blair]

Hi, good afternoon. Just think about the investment coming from the recent raising. You talked about, needed some of that cash to expand sales and marketing business development. You talked about some of the higher level leadership team you've added. Can you just maybe give us some sense for where you're planning to direct that investment, whether it's number of sales force and field location scientists, and then where that's going to be targeted in terms of product development? I think Amanda or Doug alluded to some interesting, maybe product development going on as well. Just curious, sort of where you're targeting the proceeds?

[Doug Doerfler, CEO]

Yeah. So we really as a company, don't believe that that we put up about 50 sales people that's going to result in a major increase in revenue. We just don't see that in this marketplace. I think attuned to what's going in the marketplace for identifying new applications and KOLs, new geographies that open up. We have excellent salespeople, they stick with us because we treat them right. And we want to make sure that we're building out a sales team in the right way.

Same with our FAs, they work hand in glove with our sales team. So, there's a structured way we think about this when we add people, we added marketing people. And so I think you're going to see that team grow a step or two ahead of the revenue. But I think it's going to be a good way to really build out a sustainable business in the sales and marketing side.

There's some very interesting applications on the R&D side that we're working in. I mean, once you have the platform established and invested and you have a system out there that works as well as ours, that now the next step is okay, what else can I do? What new applications? And we're finding, as you I'm sure you guys see pretty much almost like every month, there's a new cell type or a new approach to indication that's being developed. And we're seeing all those and that requires us to get out there and solve those problems so that when those companies are looking to move a product, even into the IND things it can help them do that.

And so that's another major part of what we're trying to achieve. And obviously, the VLx is going to take some additional investment as will the need to do more in house manufacturing and automation to support the success of our partners. So it's a pretty broad remit in terms of where we see opportunities that models what we said in the S1. We have no reason to suggest that that isn't the right direction and is being working on by the team. And we'll be executing against that in the next several years.

[Matt Larew, William Blair]

Okay, that's great. And then just I wanted to clarify that 1000, as these program with a revenue in the back half of the year. That's not CTX-001 milestone. I guess I just wanted to confirm that. And then second part was just you alluded to 2 pivotal trials upcoming, what other sort of tracking your progress? What other milestones or items or should we be looking for on the program side over the next year plus?

[Amanda Murphy, CFO]

Yeah. So we're not speaking to specific milestones from specific programs. We're just confident that we recorded $0.5 million this quarter. We're confident in the $0.5 million in the back half. We have as you know 14 partners now. The last number we've given more than 75 programs 15% in the clinic. We're not updating that like we said, but with additional partners.

So a lot of the earlier stage partners that we add typically, as we talked about come in at close some around IND-enabling studies. So those milestones are potentially, one that may come through. And in the next year or so, it totally depends it's can be arranged. We do have -- actually we have a few programs that could move to pivotal in the next 12 days. CTX-001 is one you’ve called out, but in terms of a program we’re supporting but there's many that we have in.

I would just say that as we were trying to articulate in the call, we do see a pretty strong year next year the pivotal milestones are typically larger. And we are continuing to find partners and so that that builds the stack of each period. A little hard to pinpoint exactly which quarter they may or may not fall. And I think next year is looking like it's going to be less back-end loaded as this year was. But again, that that can move around.

So I think from -- at least from a magnitude perspective, we see a fairly strong year. This year, perhaps one of the strongest that we've reported. And I think those numbers are available, but it can move around. And so I hope that's helpful, we’re just not going to specific programs or partners at this point. We have no confidentiality requirements and things like that.

[Matt Larew, William Blair]

Okay, thanks, Amanda. Congrats on the quarter.

[Operator]

Thank you. Our next question comes from Mark Massaro with BTIG. You may proceed with your question.

[Mark Massaro, BTIG]

Hey, guys, congrats on the good quarter and on a successful NASDAQ IPO? My first question is really on delivery [ph]. So, you essentially beat our estimates on cell therapy, drug discovery and SPLs. But wanted to drill down in drug discovery, the growth rate of 60% sort of surprise to the upside. I would have thought that that business would not be growing as quickly in part because cell therapy dramatically outperformed drug discovery last year.

So, can you just talk about that 60% growth rate? To what extent do you see better growth than you expected as we look into the back half? You're almost done with Q3, can you just talk about trends that maybe occurred after June and how you think that business can trend later this year?

[Doug Doerfler, CEO]

Let me take a little piece of that first. The second quarter of 2020 was a tough quarter for a lot of companies. And the discovery businesses is typically, just talking about big biotech and big pharma. And many of these companies pretty much reduce their operations rather considerably in the second quarter of 2020.

What we're seeing in the field as people when they get back to work, and they're coming back to work. And so I think a lot of that is companies have a feeling much more comfortable about who they allow to work in and facilities are being designed to work in the lab. So we're just seeing people coming back into the office and back into laboratory. I think that that that general dynamic I think is helped us in terms of rebounding from a difficult second quarter 2020. So I think at the high level, that's the headline.

[Mark Massaro, BTIG]

Got it. And also my second question, we had an opportunity to speak with a number of your users. And, what I found which is unique to MaxCyte is just your high transaction efficiency relative to competitors, the gentle nature of your platform and not damaging cells, and variety of cell types that your platform works on.

I guess the last differentiator is just your FDA master file. I guess once all of these together, can you just maybe give us a sense for competitive dynamics? Because, in many respects, the four items I cited you guys seem to have an advantage relative to competition, though some of your competitors actually a higher access to capital. So how should we think about the competitive environment now and how that might change over the next year?

[Doug Doerfler, CEO]

I don't think anything's changed since we last spoke. We did the IPO, I think we just actually checked up and nothing’s changed. If you went through the list, that's the high efficiency, it’s computer controlled, it’s the IP, it's the master file, it's a large scale. And we do -- we’re top of class of all those, and no one can do any of them as well as we can. So they're going to have to go through a lot in order to be successful.

Yeah, I'm not sure it's purely a capital deployment. There's a lot of intellectual property, there's a lot of understanding. And you said it and when you ask the question, if you look at the number of applications, the nuances between one application using one cast versus another cast, using a knockout versus a knock in and using a stem cell, it’s derived from their precursor cell or a bone marrow stem cell all those cells are different. And we understand that.

And so when we go into a customer, we can design experiments to get them to where they need to be. So I think that the other thing that isn't all that appreciative is focused. And I think that the company is really focused on this one thing, which is engineering these cells for therapeutic purposes. And I just don't think that there's anyone in the -- anyone on the planet that has that kind of singular focus and understanding that we've been able to gain over the last 20 years.

So we're looking, we obviously we keep our arrows. I think the thing that we allow us to sleep at night is when we do these SPLs. And again, we're a premium price supplier. If there's somebody out there that's coming up against us, we're going to hear about it first from our customers in addition to the work we've been doing competitively. So we keep already, and we feel very confident in our position in the marketplace right now, given all the things we've invested in all the things that we can just do.

[Mark Massaro, BTIG]

Sounds good. Thanks very much.

[Doug Doerfler, CEO]

Thank you.

[Operator]

Thank you. [Operator Instructions] Our next question comes from Jacob Johnson with Stephens. You may proceed with your question.

[Jacob Johnson, Stephens, Inc.]

Hey, thanks. And I'll add my congratulations, a nice quarter. Maybe just Amanda, first, just a quick modelling question. As we think about OpEx on the R&D side, if we take the $3 million and change expenses, and I think back out 400 something out of CARMA expenses this quarter? Is that a good baseline to assume R&D expenses grow off of? And then also just to clarify, on the G&A side public company costs are something that didn't really flow through this quarter, but should flow through the back half of this year?

[Amanda Murphy, CFO]

Yeah. So I guess if you back out CARMA from the R&D line that would give you a good with the caveat that obviously, as we’ve talked about investing. And I think we've given some commentary around R&D from a growth perspective. If you if you were to just look at the pure R&D so to speak, that that would continue to grow faster than revenue.

And in terms of the public company costs, we had some in the first half. But yeah, clearly, those are definitely going to fall more in the in the back half as some non-recurring but the budget is recurring. Things like insurance and legal fees that that will continue and things like that. So that that is going to be a step up, as it relates to G&A spend and in the back half. But over time, we haven't given long-term guidance. So what we've said is, as I mentioned is read, think about R&D growing faster than revenue, sales and marketing kind of in line to slightly above revenue.

And G&A eventually we'll see some leverage this leads without not including that, but that's step up from public company expense. And then, from a stock option perspective, we did see increases because of the stock price. So presumably that -- well, I'm not going to make a comment there but that didn't have -- that was a factor as well on the growth.

[Jacob Johnson, Stephens, Inc.]

Got it. That's helpful. And then Doug, maybe one question for you is, if some of your customers move towards pivotals. And I probably begin thinking about [Indiscernible]. Do you have a sense for what their manufacturing for those therapies will look like in terms of are those customers are in general, looking to have centralized manufacturing at a single site? Or what do you think your instruments would allow for manufacturing, kind of at the point of care in a decentralized fashion?

[Doug Doerfler, CEO]

Yeah, it's definitely either way, we're fine with it scaling out the process. And just remind we have over -- we've announced over 400 systems. So we know how to build these instruments, so they operate consistently across locations, which is going to be incredibly important. That's one thing we didn't talk about in terms of what competition happy to do. That to make systems that actually perform the same way in Tokyo as they perform in London right.

So that's another big part of what we're doing. And it really depends on the application. I think in some instances they are going to need close to patient returning cells around rather quickly. Some are going to be more better manufactured in a kind of a more traditional biologic sense. We're prepared for either with our GTx or now our VLx, which is large scale.

So we're just going to follow what the customers want and enable them to do what they think is their best manufacturing strategy. And we'll adopt with them and give them flexibility they need to successfully launching their product, which I think is a great place to begin and when they were going to work really hard to ensure that we understand. And we can say no a step ahead or step with our partners.

[Jacob Johnson, Stephens, Inc.]

Got it. Thanks taking the questions.

[Doug Doerfler, CEO]

Thank you.

[Operator]

Thank you. And I'm not sure any further questions at this time. I would now like to turn the call back over to Doug Doerfler for any further remarks.

[Doug Doerfler, CEO]

Well, thanks again for this call. This was an exciting for Amanda and Sean and myself and the whole team as our first earnings call. That's like with the company and it's good to do it on such a positive note. And we look forward to updating you on our Q3 progress on our next earnings call and thank you for support. And everybody stay safe. And thank you again for your support at MaxCyte.