Good day, everyone, and welcome to the MaxCyte third quarter 2023 preliminary financial results conference call. Today's call is being recorded, and I would now like to turn the call over to Sean Menarguez, Head of Investor Relations. Please go ahead, sir. Thank you, Lisa, and good afternoon, everyone. My name is Sean Menarguez. I'm the Head of Investor Relations at MaxCyte. Thank you all for participating in today's conference call. On the call from MaxCyte, we have Doug Doerfler, President and Chief Executive Officer, and Douglas Swirsky, Chief Financial Officer. During the call, management will review the preliminary third quarter 2023 revenues, revenue results and updated full year 2023 revenue guidance that we released at the close of the market today. After our prepared remarks, we will take questions. We plan to report our full financial results for the third quarter on November 8th. Before we begin, I need to read the following statement. Statements or comments made during this call may be forward-looking statements within the meaning of federal securities laws. Any statements contained in this call that relate to expectations or prediction of future events, results or performance are forward-looking statements. Actual results may differ materially from those expressed or implied in any forward-looking statements due to a variety of factors, which are discussed in detail in our SEC filings. The company has no obligation to publicly update any forward-looking statements, whether because of new information, future events, or otherwise. With that, I'll turn the call over to Doug. Thank you, Sean, and good afternoon, everyone, and thank you for joining us. This afternoon, we announced preliminary third quarter total revenue is expected to be in the range of $7.8 million-$8 million. Preliminary core business revenues for the third quarter is expected to be $6.4 million-$6.6 million, which is well below our prior expectations. SPL program-related revenue is expected to be approximately $1.4 million in line with prior expectations. Based on our preliminary third quarter revenue results and due to the ongoing broader operating and research environment, we have reassessed our outlook for the remainder of the year. We now expect total revenues for 2023 to be in the $34 million-$36 million range. This includes core revenue guidance in the range of $28 million-$30 million compared to our previous guidance of roughly flat versus 2022. We are reiterating our SPL program-related revenue guidance of approximately $6 million for the full year. Our enthusiasm for expected milestone payments and commercial royalty revenue to become a meaningful contributor in the coming years is unchanged. We believe the development outlook for our SPL partners remain intact. As you are likely aware, later this month, Vertex and CRISPR exa-cel will have an FDA Advisory Committee meeting. We are looking forward to the potential regulatory approval of this important therapy, which we view as necessary for patients. More specifically, we believe it's a welcome opportunity to discuss the clinical impact of CRISPR technology and non-viral delivery. As previously discussed, we believe we have made the necessary and significant investments in manufacturing, regulatory, quality, and alliance management to support the commercial launch of exa-cel. We scheduled today's call due to the high level of volatility in our operating environment for biotech companies in general and cell therapy companies in particular, and in order to update our shareholders on the current trends that are impacting our core business. The main driver of the revenue shortfall in the quarter and for the balance of the year, in each case, compared to our prior expectations, is lower than expected processing assembly disposable sales. We believe that the weakness in processing assembly, or PAs, can be attributed primarily to early-stage customers conserving spend due to the current challenging funding environment for them. This has led to lengthening timelines for preclinical and early clinical activities as customers reevaluate their pipeline portfolio and R&D initiatives and focus on their primary assets in order to extend their cash runways. PA sales weakness is evident in early-stage customers across cell therapy and drug discovery. Additionally, we believe that the continued PA softness is a result of customers drawing down on their inventory from prior year more than we originally anticipated. We saw a buildup of inventory in 2022, and some of our customers and partners may have anticipated a different operating environment in 2023, or had concerns about overall supply chain constraints that they saw across the market in 2022. Throughout this year, we have seen customers and partners change the way they handle their own inventory as they are focusing on short-term inventory needs to preserve cash, as opposed to long-term, long-range planning we saw in the past. PA sales have been soft among our clinical SPL partners compared to earlier in the year. This has been the result of delayed clinical timelines due to challenges obtaining additional funding for their clinical operations. Some SPL partners continue to fund development programs, while others require significant additional capital to complete the development, the full development of their pipeline assets. Companies have been more conservative with their PA usage as a result of heightened capital cautiousness on early-stage programs as they await clinical development milestones from their lead assets to potentially support their fundraising activity. We are actively working to increase our visibility into customer PA patterns and inventory levels. However, this is a challenge because customer activity can change fairly quickly, especially in this funding environment... In addition, when speaking with early-stage commercial customers, we have learned that they have become incrementally more conservative on large capital expenditures as the year has progressed, which has impacted our instrument sales. While some SPL partners have become more cautious with their capital, our lease revenues has remained fairly stable year-over-year, which points to less spending friction among customers that are active in the clinic. A number of our customers have important clinical milestones over the next 12-18 months, which we believe will continue to, to demonstrate the value of the ExPERT platform and our business model. Overall, we are disappointed in our core business performance year-to-date. The overall macro environment has been unfavorable, and as a result, we have less visibility than we would like. We believe it is imperative to drive commercial execution to improve performance at all stages of our business. The global commercial organization of MaxCyte is actively working to increase and expand revenue opportunities for the balance of 2023 and into 2024. Despite our lower-than-expected revenue, our balance sheet remains strong. We believe our cash position is a competitive differentiator in the market as we have flexibility to continue to invest in our growth. Given the challenging operating environment, we have been prudent with respect to our own expenses in 2023 and still expect to end the year with approximately $200 million in cash. Our year-end cash balance outlook has not changed throughout the year, despite the expected decline in core revenues. We believe our adaptability with respect to our cost management reflects our commitment to shareholder value created over the long term. In closing, we remain confident in our ability to support our current SPL partners and to further expand our portfolio of partnerships. We firmly believe in MaxCyte's business model and the value proposition that we deliver to cell and gene therapy innovators as the nonviral cell engineering technology of choice. Looking out over the next several years, we anticipate multiple waves of therapies will enter the market, which we believe will ultimately drive value for MaxCyte. Now I'd like to open the call for questions. Thank you. If you would like to ask a question on the phone lines today, you can press star one on your telephone keypad. If you would like to remove yourself from the queue, that is star one again. We'll pause for a moment to allow everyone a chance to assemble. We'll take our first question from Julie Simmonds with Panmure. Please go ahead. Good afternoon, guys. Obviously, slightly disappointing in terms of where you are. In terms of sort of the PA revenue, the PA utilization, I know you say you're sort of trying to get a feel, better feel for what's going on within customers. Do you—in terms of sort of the larger customers that you have, has it changed across all of them, or is it sort of one or two where you're seeing an issue, or is this generally across everybody that the variation is occurring? Hi, Julie. Thanks for the question. This is DJ. So the PA sales weaknesses, we've seen it a lot in the early-stage preclinical customers. They've got the most funding constraints right now, so I don't, I think the weakness is a little bit sort of, you know, wide amongst the customer base, but I'd say it would predominantly or disproportionately would impact the earlier stage companies that have, again, funding, more funding challenges. Thank you. And is it, I mean, is pricing any part of this falloff in revenue, or is this purely, volume related? It's not pricing, it's volume related. Absolutely. Lovely. Thank you. I'll let somebody else begin. Thanks, Julie. We'll take our next question from Dan Arias with Stifel. Afternoon, guys. Thanks for the questions. Doug, can you just maybe give some granularity to project cancellation activity versus purchase delays and the extent that one or two of those is accelerating? And then, you know, as a follow-up, the natural next question for DJ would be, you know, three cuts in three quarters, not all of which were in your hands, but for the company, how confident are you that you've left yourself room in 4Q, just given that the situation here is clearly tough to characterize? Yeah. Thanks, Dan. We're seeing a slowdown in purchases. We've mentioned that we have a couple customers, some of our customers in the SPL clients that had built up inventory, and they're depleting that inventory. We've got one customer, one program that is on a pause right now as they look for partners. But generally, it's across the board, as DJ said earlier. In terms of, you know, sort of our confidence level in this revised projection for a full year, I think there's a high degree of confidence. You know, we're a lot further along in the year. We are not making any assumptions about, you know, turnaround in the market in terms of, you know, the rate of PA sales and whether or not, you know, things are going to accelerate, as we have seen typically in some fourth quarters. So I think we're taking a fairly conservative view here, and there's a lot less variables from this point forward that are going to impact whether or not that we can achieve the range we've set for ourselves. ... Okay, and just maybe as a follow-up, Doug, can you just talk a little bit about what it is that you were able to do to increase that visibility into the customer activities that you referenced there? Yeah, good, good question. So, obviously, all hands on deck, all focus on getting back to a growth scenario. We, we just hired a Head of Bioprocessing who has, quite a bit of good strategic marketing experience. We brought Ali in about a month ago. We've, we've been focusing, some of our team in certain other market segments so we can better understand how we can be more, you know, to get back to growth. We're looking at expanding some of our, our geography reach. So I think all the typical things one would expect when you're, you know, trying to get back to a growth scenario. And, and just also really just getting much, much closer to our partners. You know, I just have to, and I think you're going to appreciate this because you've been concerned about the markets for quite some time, and I've said it this morning that, you know, when you're in a rising tide, the boats all kind of float, and it's, and but when the tide's falling, it's much more difficult to figure out what's going on with customers. Their, you know, their behavior changes from maybe fear, greed to fear. They become a bit more close in terms of information. So there's, I think we're just trying to navigate through all those changes, too. It's a different environment, as you well know, and it's really impacting, I think, a lot of, you know, buyer behavior and just overall, the attitude of our customers and clients. That said, you know, we still see quite a bit of good progress with a number of our SPL partners. You look at Caribou and, EDIT-301, VOR33, those are all progressing toward phase II, phase II right now. So, you know, we're seeing good uptake with partners that are in the clinic, moving toward, you know, clinical milestones, which they need to raise more money. Hopefully, that gives you a little bit more color to how we're thinking about this. Yeah, it does. Thanks, Doug. We'll take our next question from Matt Larew with William Blair. Hi, this is actually Madeline on for Matt. Just thinking about sort of the stocking impact and customers working down their inventory, how much of that do you think is from customers having overbought or stocked up during 2022? And how much of that is from customers maybe buying appropriately and now having fewer programs or less use cases for the inventory they purchased? I don't think we can parse that out specifically. I think you identified, you know, the two of the main reasons that are probably, you know, bringing down the level of PA sales than we expected. But in terms of parsing that out specifically, I think it's challenging to do that. Got it. And then sort of following up on the Q4 question, I know you said you still feel a great deal of confidence in your ability to hit that, but it does look like there's going to be a bit of a ramp between Q3 and Q4. Just wondering what you anticipate is going to be driving that? No, I mean, I think to do the math here on where we are after three quarters, and you'll see that we're not expecting a significant ramp here for the fourth quarter. So that's one of the reasons we feel relatively confident here. We had -- there were a lot of challenges in terms of how these numbers came together for Q3, and we're saying, you know, PA sales continue at the rate that they're doing it, you know, this is the number we would expect to hit. So we're not, I don't-- there's not a real ramp baked in there for Q4, so the bar is at an appropriate level, given where the markets are. We also obviously have had pretty stable lease revenue throughout the year. That gives us a little bit of a base of support in terms of, you know, towards that fourth quarter number we need to hit. So I think for a lot of reasons, we feel comfortable that we're not baking in any market recovery. We're not baking in any changes in customer behavior that would be positive for us. There are things that could have us exceed this range, but I think based on everything we know, and assuming that the market doesn't improve, and assuming that our customer behavior patterns will be consistent between Q3 and Q4, we think the target for Q4 is appropriate and it's conservative. Great. Thank you. Thanks, Madeline. We'll take our next question from Mark Massaro with BTIG. Hey, guys. This is Vidyun on for Mark. Thanks for taking the question. So maybe just at a high level, curious if you're seeing any changes in biopharma preference away from non-viral cell engineering approaches, or any change to competitive environment? Thanks. Yeah. So, two parts to that question. We're not seeing any change we're seeing to non-viral is actually acceleration. So, we continue to see certainly in the allo space and the autologous space, movement toward non-viral. There's no doubt about that. Competitively, we're not seeing anything that's out of the ordinary. We always have competition in the field. We're not seeing anything that would indicate that there's anything that is, you know, elongating or causing us to not be able to be effective. Okay, great. Thanks for taking the question. We'll take our next question from Steven Mah with TD Cowen. Hi, yeah. Thanks for taking the questions. A lot of ground already covered, so just do some incremental questions here. I know you guys mentioned, you know, the prior 2022 PA orders. Is there any way you can get any, you know, granularity on, you know, companies? You know, again, are they really just delaying or have they actually dropped programs? Because, you know, some other drug discovery companies have actually announced that they're actually dropping programs. I'm just wondering if you guys have any visibility on companies, you know, actually dropping programs and that, you know, if that was really driving the reset on value. Yeah. Thanks, Steve. I mean, most, as we mentioned before, most of the weakness that we saw and are seeing is really with these early-stage preclinical customers. You know, we signed five SPLs this year, and they're all preclinical. And so what you're seeing there is, you know, they're having funding challenges. We're seeing slower progression from customers in the clinic. But there's very few programs that have been stopped with our portfolio. I did mention one on pause, which was one partner that's looking to do some business development partnering around that one asset, but other than that, no. Okay. No, appreciate that. And then, last question for me. You know, it seems like you're maintaining the $6 million SPL revenue guide. You know, again, you know, just your level of confidence on hitting that $6 million. Thanks. Sure. So, you know, we're pleased where we are year to date in terms of milestone, program-related revenue. We do have a large item baked into Q4, which we've weighted appropriately to come up with scenarios that would generate that $6 million. I think we've said before that we will not reach it if that program does not get approved, and there are opportunities to exceed that number. So on a probability-weighted average, we came down to $6 million. But again, just to be consistent with what we said before, we won't hit that number if there's not an approval. Great. Thank you. Thank you. We'll take our next question from Jacob Johnson with Stephens. Hey, thanks. Good evening. Maybe just two follow-ups. One, just on the 4Q outlook, does that assume any... I know, DJ, you just talked about the program revenue from the large customer, you know, potential commercial approval. Does the 4Q revenue assume any pickup in PA demand associated with that launch, or is it kind of similar backdrop as 3Q? No, we've basically held the run rate, you know, sort of the daily rate, sort of, of orders for PAs. We've just held constant. We've looked at our Q3 experience. We didn't make any assumptions that things would improve from here. And we think that that's the right assumption to make. So we're not baking in any additional for, you know, any large customer to come in and do things. You know, things could come in and certainly improve the situation. We think we've appropriately covered the downside. Got it. Thanks, DJ. And then just, just on the PA stocking dynamic, is there any way to think about the, the shelf life of those products, if this persists, like, how long until somebody would have to to reorder if things remain muted? And then I'm just curious, you know, obviously, you're assuming things are weak again in 4Q. I know it's too early to think about 2024, but kind of what are you looking for in terms of customers for PA orders to maybe pick up? Like, when could that happen, and what needs to happen? Yeah. So we're really, because this product is, you know, is a room-stable product, there isn't any concern about shelf life with... So that, that's not an issue. You know, again, I, you know, I think we're just pointing to some of our partners' programs in the clinic that we believe are progressing toward good clinical data. That should improve our PA uptake after the fourth quarter. I really don't want to spend too much time on the 2024 until we really get 2023 under our belt right now, figure out what we're going to do about, you know, repositioning what we need to do for the company. Got it. Thanks, Doug. Thank you. That does conclude today's presentation and the end of the question-and-answer session. Thank you for your participation today, and you may now disconnect.