Maxcyte, Inc. Q3 FY2021 Earnings Call

Good afternoon, everyone. My name is Sean Menarguez, and I'm an analyst on the MaxCyte team. Thank you all for participating in today's conference call. On the call from MaxCyte, we have Doug Doerfler, Chief Executive Officer; and Amanda Murphy, Chief Financial Officer. Earlier today, MaxCyte released financial results for the third quarter ended September 30, 2021. A copy of the press release is available on the company's website. 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 predictions 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 undertakes no obligation to publicly update any forward-looking statements, whether because of new information, future events, or otherwise. And with that, I will turn the call over to Doug.

Well, thank you, Sean, and good afternoon, everyone, and thank you for joining MaxCyte's third-quarter earnings call. I will begin with a discussion of our business and operational highlights during the quarter, and then we'll follow with a detailed financial review from Amanda. We'll then open up the call for questions. I'm very excited with our performance in the third quarter of 2021, our second time reporting as a NASDAQ-listed company. During the quarter, we continued to deliver on all financial and strategic aspects of our plan as the premier cell engineering platform technology, supporting the development of advanced cell-based therapeutics. Amanda will provide more details later in the call, but I note that we realized very strong third-quarter results, as outlined in the press release published earlier today, driven by strong performance in our core cell engineering business as well as substantial SPL, which is strategic platform license CARMA related revenue recognized during the quarter. To summarize, total revenue was just over $10 million, representing a 50% growth compared to the same period in 2020. Our core instruments and disposables business grew 25% in the quarter, which lines up with our historic 5-year CAGR of 25%. We also recognized $2 million in pre-commercial clinical milestone revenues from our strategic platform licensed commercial partners. This was well above our expectation for $1 million in SPL related revenue for the remainder of the year, which we communicated last quarter. Revenue recognized from our SPL partners in the quarter was a result of multiple clinical milestones recognized in the quarter, some of which were recognized earlier than we initially anticipated as our partners achieve clinical development progress. So to preempt any specific questions about the specific drivers of milestone revenues during the Q&A session and as we have previously indicated, to ensure the confidentiality of our partnership agreements, we will be unable to answer any questions related to the SPL partners and progression of their program specifically. We believe the key takeaway is that this quarter's performance shows the power of our business model and our ability to share in the economics of our partners' ongoing clinical success. Investment into innovation in next-generation cell therapies has been explosive and continues at a high level throughout 2021. We have all seen the reality of regulatory uncertainty in this space as developers navigate a new world of advancing novel cell therapy approaches through the clinic, but we have also seen powerful data updates and progression toward approvals for next-generation cell therapies. And consequently, this quarter's results show the potential for MaxCyte to participate in that progress. While we expect our partners to evolve their broader pipelines over time, more importantly, we have not seen any change by our partners and their intentions to invest in ex vivo cell therapies. To support this, we have seen continued growth in our SPL partner base as we believe MaxCyte's proprietary electroporation platform provides both the scalability and high performance that is essential in supporting the development and manufacture of complex next-generation engineered cell therapies in a cGMP compliant environment. MaxCyte's value continues to be further validated by our expanding customer base, including the ongoing success we have had in signing SPLs, with 4 of these arrangements signed year-to-date, as well as the value of our FDA master file and equivalent technical files outside the U.S. We now have signed 15 SLs signed after adding Sana Biotechnology in the third quarter and InCarda Therapeutics announced earlier this month. We continue to build a burgeoning pipeline of SPL partner opportunities across a variety of cell types, approaches, and indications in ex vivo cell therapy. From an investment and growth acceleration perspective, we're committed to investing in the business and as such, have focused on refreshing and refining our long-term strategic plan. We intend to ramp investments in our research and development and sales and marketing competencies to take advantage of opportunities we see in this space to provide added value to our customer base. This includes expanding our manufacturing footprint as our partners move closer to potential commercialization. We are moving into a 67,000 square foot facility in 2022 and are working to further in-source key elements of our manufacturing process, particularly around processing assemblies. We're also making significant investments in our process development lab, which will benefit both our cell therapy and biomanufacturing markets and customers. We are also focused on further developing our ExPERT product portfolio. We're on track for the release of our new VLX platform under the ExPERT brand by the end of the year while the market expansion opportunities for the VLX and the large-scale bioprocessing applications will take time to evolve. We're encouraged by the preliminary interest from initial customers. We are constantly evaluating potential market opportunities for the VLX and look forward to updating investors on the evolution of the VLX product roadmap over time. We launched the R-50x8 processing assembly in September 2021. This exciting portfolio expansion will allow scientists to do more transfections in less time and at a reduced cost per transfection, which will open up new applications for research on our platform and accelerate optimization. We believe this product can attract new customers to the technology in new applications and in earlier stages in their programs, helping us to establish relationships earlier and grow our customer base. We're also investing meaningfully in people and hiring at a fast pace. This year, we have made key hires and announced the important internal promotions discussed in the previous call. We have added resources to our alliance management team as a reflection of increased interest on the part of commercial cell therapy developers to work with us on a more strategic basis. As we look to the fourth quarter and into 2022, I continue to expect MaxCyte to invest and grow headcount in all major areas of the organization. We have a bright future and are investing in the people that will help get us there. For example, our sales and marketing team is growing as we see opportunities to move into new applications and geographies. Investing and growing our sales and marketing team includes the hiring of James Lovgren as Senior Vice President of Global Marketing. James brings deep experience in cell therapy to the role, and we look forward to his efforts to grow adoption of the ExPERT platform in cell-based research and next-generation drug development. In addition to James, we look forward to expanding the commercial team to support market development and customer engagement. We announced that our Board of Directors has appointed Richard Douglas as Chair of the Board. Richard Douglas has been a Board member since February 2018. He succeeds J. Stark Thompson, who will remain as a consultant to MaxCyte. I look forward to Richard's leadership in his new role, and thank Stark for setting the global foundation as we build MaxCyte. It's been a true honor to work with him, and we thank him for his dedication and perspective. In closing, we have had a strong third quarter as we continue to execute on our financial and strategic goals. We are very excited about our opportunity going forward, particularly in the cell therapy market and believe we are making the right investments to drive growth across the business. I will now turn the call over to Amanda to discuss our financial results.

Thanks, Doug, and hello, everyone. As Doug mentioned, we saw very strong revenue growth this quarter with total revenue of $10.1 million, which was up 50% over the third quarter of 2020. This growth was driven primarily by strength in our underlying cell therapy business as well as SPL CARMA related revenue, which I'll dive into in more detail in just a minute. Cell therapy revenue of $6.2 million grew 38% over the third quarter of 2020. Just as a quick background, cell therapy represents sales or licenses of instruments and sales of disposables to customers that are using the ExPERT platform to manufacture ex vivo based cell-based therapies for human use, whether that be in preclinical, clinical, or ultimately commercial use. Despite a more difficult year-over-year comparison related to the third quarter, given COVID-related dynamics, we reported growth in the core cell therapy business that's exceeding our historical run rate. Instrument purchases in cell therapy can often act as a precursor to SPLs as customers first purchase platforms in early-stage programs. So that's encouraging in terms of the potential for SPLs in the future, and we've talked about our burgeoning pipeline in that area. Notably, our cell therapy customers are also less tied to CapEx spending, so to speak. So we're seeing a dynamic where revenue from our core business is less weighted to the fourth quarter as we have seen in the past, given the strong performance we saw this quarter. And that's particularly driven by our cell therapy customers ramping clinical trials. In terms of drug discovery, as a reminder, drug discovery represents sales of instruments and disposables to customers using the ExPERT platform for smaller scale biomanufacturing applications, such as transient protein production and the manufacturing of proteins, such as monoclonal antibodies, viral vectors, vaccines, and for small molecule discovery, and those sales are primarily made to large pharma. Drug discovery revenue in the quarter was $1.9 million, which was down 5% over the third quarter, but slightly up on an absolute basis over the second quarter. Drug discovery revenue was notably strong in the third quarter of 2020 as people got back to work after the lockdowns of COVID. So we had also had a more difficult year-over-year comparison in that segment as well. Ultimately, drug discovery becomes a smaller part of our overall revenue mix, given the strong growth in cell therapy. The shift in revenue mix towards cell therapy has been consistent over the past 5 years, and we saw that again this quarter with cell therapy representing 77% of revenue, excluding milestones and drug discovery representing just over 23% of revenue excluding milestones. That said, we are encouraged by the sequential uptick in the drug discovery business versus the second quarter of this year. It's a business that's been more challenged over the past couple of years, driven by COVID and also a more challenging environment. So we're cautiously optimistic regarding the impact of some of the multi-vial PA introductions that we've made over the past couple of years that serve to lower the per transaction cost for customers and also have had active efforts to expand academic collaborations with translational centers that seem to be gaining traction. We reported $2 million in CARMA related revenue from our SPL customers in this quarter as compared to $0.3 million in the third quarter of 2020. As Doug mentioned earlier, we recognized SPL CARMA related revenues from some of our customers earlier than we had anticipated, and these were made up of multiple milestones from customers. Surprises like this are encouraging, and again, in our view, a testament to the value that MaxCyte provides to our partners and the uniqueness of our revenue model and our ability to participate in downstream economics of our customers' programs. It does also demonstrate the difficulty we face in predicting the timing of SPL revenue as these are predicated on our customers' clinical successes and regulatory processes, given the early stage nature of our cell therapy customers' pipeline. So we do expect the timing of milestone events to be lumpy for the near-term until we see SPL partner pipelines mature and as the number of SPL partners and active programs continues to expand. We'll do our best to provide visibility into SPL related revenue potential over time as the milestones continue to grow. We continue to be encouraged, however, by the potential of SPL related CARMA revenue over the next 12, 18, 24 months, particularly as our partners progress, enter and move through the clinic and given the potential for approvals even in the next couple of years. So we anticipate a growing and more broad-based revenue stream related to the SPLs over the long term. Moving down the P&L, gross margin was 91% in the quarter versus 89% in the third quarter, with the difference being driven almost entirely by milestone revenue. So excluding milestone related revenues, gross margins were flat relative to the second quarter of last year. Total operating expenses for the third quarter of 2021 were $11.6 million compared to $8.9 million in the third quarter of 2020. This increase was primarily driven by increases in headcount. As Doug mentioned, we are expanding in many areas in the business in terms of adding resources as well as growth-based stock-based compensation, which was driven primarily by the increase in our stock price. And as a reminder, there were no meaningful CARMA-related expenses in this quarter. As Doug mentioned, we are making and plan to continue to make increases in investments in many areas of the business. And we saw that this quarter, R&D was up 36% over the last year's quarter, and that's excluding CARMA-related expenses. Sales and marketing was up 58% over a year ago. And again, the primary goal here is to take advantage of the opportunities we see to accelerate organic growth over the next few years that we've talked about. We expect this investment to continue to ramp into 2022, primarily driven by additional headcount and overall investment in operations, particularly around investment in manufacturing and marketing, product development, and we can talk about this more in the Q&A. We are coming into the end of 2021 and into 2022 with a very healthy balance sheet. We have total cash and short-term investments of $256 million as of the end of the third quarter and no debt. Lastly, we wanted to update our fiscal year 2021 revenue guidance given the strength you're seeing in the core cell therapy business and drug discovery markets year-to-date. The success of our cell therapy partners this year has shifted the typical seasonality. We normally see, as I mentioned, where we normally see revenue heavily weighted to the fourth quarter, which is more driven by CapEx and end-of-year budget cycles. As you can imagine in clinical trials, timelines are less correlated to these dynamics, and we've seen some of our partners ramping ahead of progression in the clinical trial and clinical trial progression, and so we are encouraged by that progression, but it does change the seasonality a little bit for this year. As a result, we expect total revenue growth for the year to be greater than $33 million. This implies growth of roughly $26 million, so slightly ahead of where the beat in the quarter would put the numbers for the year versus our prior target of greater than $30 million. This does include SPL CARMA-related revenue. As it relates to our expectations for CARMA-related revenue in the fourth quarter, we would guide you to think about the magnitude being closer to what we saw in the first and the second quarters. Again, timing of these SPL milestone recognitions and data points can be hard to pinpoint. So we continue to track above our 5-year 25% revenue CAGR for the full year, and we're encouraged by the strength in our core cell therapy business. I will just note cautionary language around any meaningful changes in COVID. We obviously are assuming status quo as it relates to COVID. And I'm sure many companies are making the same comments that wanted to make that caveat. With that, I'll turn it back over to Doug.

Thank you, Amanda. We remain excited about the opportunity to lead the industry forward as the premier cell engineering platform technology, supporting the development of advanced cell-based therapeutics. Following the successful completion of our NASDAQ IPO, we were pleased to report strong third quarter results and update full-year guidance. MaxCyte remains well-positioned for growth, and we are excited about the opportunities ahead.

And our first question is from Julie Simmonds from Panmure Gordon.

Well done on an excellent quarter. Quick question on, firstly, the VLX. Just wondering in terms of sales because clearly, it's got sort of application in both drug discovery and cell therapy applications. Is that going to be a sale or a license opportunity when you get that to market?

Thank you, Julie, for your continued support and for your comments. The VLX is on track for release by the end of this year, December 2021. You are correct; it will serve both the cell therapy sector for allogeneic stem therapy and the drug development sector for rapid monoclonal production, as well as for producing certain viral vectors in suspension cells. We are currently developing the value pricing model for these applications, which may vary. I anticipate that we will adopt a hybrid model, incorporating some sales, leasing, and licensing depending on the application. We are in the process of finalizing this and will share more details as we become more confident about the full product launch in 2022.

And another one just on recruitment. Clearly, you're sort of scaling up various different parts of the business following the NASDAQ IPO, which is all very encouraging. Are you finding there are any areas where it's more difficult to recruit than others? And is that a limitation on how fast you can grow at the moment?

Yes, it's a challenge. Having a NASDAQ symbol has increased our visibility, which is positive as people are able to find more information about us. We are currently hiring in process development, sales, and marketing. Over the years, we have built a strong reputation in the field, making it challenging to find the right individuals. However, we are expanding our recruiting resources. Specifically regarding process development, it's a struggle to find experienced individuals, particularly in the sciences, as there is significant investment in this space and a limited pool of experienced professionals in cell therapy. This plays to our advantage since we have a strong commercial team. While recruiting is challenging, we believe that from a marketing and sales standpoint, we can leverage our strengths to help customers address their issues.

And our next question is from Max Masucci with Cowen & Company.

Nice quarter. So to start, nice to see the sales leadership higher, along with some other hires in the commercial organization in recent quarters. In Q3 product revenues beat, you've now signed 4 SPLs this year above the original expectation of 3. So could you give us your latest view on the sales targeting strategy in terms of customer types and applications and the amount of focus that you're committing to new customer wins versus same customer growth?

So Max, our view is that we're continuing the same approach. We're focused on expanding our market presence, especially in the digital space. We're also discovering numerous opportunities with our current partners as they enhance their programs, both in terms of indications and applications. That's encouraging. You will notice our efforts in attracting earlier stage cell therapy assets to the MaxCyte platform. We initiated this with the release of the ATx around two years ago, and we've launched several additional disposables that process assemblies, which lower the transfection costs for these early-stage companies. This enables them to engage with our platform more economically during their initial development phases. We're not concentrating on any specific area; instead, we have a strong pipeline. Our task is to ensure that these companies remain in the pipeline while also identifying new assets being developed in universities and early-stage incubators.

Great. On PAs, you launched the R-50x8 PA in September. You've also launched a number of other processing assemblies in the past, say, 6 months. Understanding it's still early, can you speak to the demand you've seen for some of the more recent PA launches? And maybe just any tests that drove the strength in the Razor-Razorblade model during the quarter?

Yes. When we launch disposables or processing assemblies, we carefully manage the rollout to ensure we can support our customers, maintain inventory, and grow that business. We're actively working on this, which is crucial. We're seeing overall increases in PA sales. If you have any additional thoughts on that division, it seems we are experiencing strong growth across the board in both PAs and our instruments and licenses.

Yes. I would just add that the new PA launches in the past couple of years have really focused on the drug discovery side of the market, as Doug mentioned, with multi vials and lowering transfection costs, and we have more developments on the way. This has contributed to improved results in drug discovery, and we remain cautiously optimistic about its impact. We have a roadmap that we’re actively working on, but we haven't disclosed specific details regarding cell therapy and finding the best applications for various uses. Earlier, you asked about some of the SPLs we’ve added this year, and we continue to broaden the types of cells we're working with. For instance, some new team members are focusing on NK cells, and we consider this in our PA launch planning moving forward. We're keeping this information close as it pertains to cell therapy. Overall, the cell therapy segment had a strong quarter, especially on the instrument side with both sales and leases. The leases are encouraging because they generate recurring revenue; being part of the SPL leads to an annual access fee. The more this contributes to our installed base, the better it is for visibility and recurring revenue. Additionally, on the sales side, we gain insight into future SPLs since many of our partners initially make purchases and then engage in clinical studies as they proceed, which is where conversion happens. Overall, the outlook is positive, and we have exciting plans on the cell therapy front regarding new PAs, focusing on optimal applications.

That's great. If I could just maybe sneak one more in. Is there any feedback you can share from users of the first generation VLX instrument that's being used during the early access period? And then second, just if you look at the roadmap to getting that instrument launched, are the final adjustments to the interface to standardize the instrument sort of done and just gearing up for the launch? Or are there still some technical factors that you're solving ahead of the launch?

Are you talking to me? Can you rephrase the second part of the question, Max? Is that around the PAs or is that something different?

Yes. So just the roadmap between now and when the VLX is officially launched broadly. Just curious, yes, if there are still some technical factors or final adjustments you're making to the technology? Or if it's just gearing up ahead of the commercial launch?

Yes. We invest significant effort in understanding our customers' needs so that we can help them effectively use our technology and expand its applications. We have been successful in identifying and addressing these needs promptly, allowing customers to utilize the PAs. Regarding the VLX, we haven't released it yet, and I want to mention that there are often last-minute changes that take place just before a product launch. These changes are not major technical issues; they are more about fine-tuning for manufacturing management and supply, rather than concerns with the basic PAs for VLX.

I want to add that the VLX has been on the market. We are now bringing it under the ExPERT brand, which includes improving the user interface and considering design aspects. This transition allows us the potential to enter entirely new markets, particularly in large-scale bioprocessing applications. Think of this as a release under the ExPERT umbrella. From here, we need to build out data to support large-scale applications like transient protein production and viral vector manufacturing. We are encouraged by the interest expressed by early customers, which motivated our decision to align it with the ExPERT brand. However, this represents a longer-term revenue opportunity for us since we are dealing with newer markets. As Doug mentioned, it could play a role in cell therapy as these businesses grow, but those markets are still in the early stages. We are excited about the product and have noticed early interest, which justifies our investment in it. We can see potential for market expansion, but we want to be cautious about our expectations.

And our next question is from Dan Arias with Stifel.

This is Evan Stampler, speaking on behalf of Dan. You mentioned some data points from the quarter that seemed to concern the market regarding cell therapy. I'm curious if you've noticed any slowdown or acceleration in activity among your customers or within the industry, or if there's been a shift in sentiment recently. Looking ahead, while you had always expected some fluctuations, do you believe these developments could affect the anticipated timelines for bringing products to market and achieving milestones, particularly considering the regulatory environment?

Let me address this initially and then Amanda can add more details. First, it's important to note that we are still in the early phases of advanced cell therapies. Additionally, our emphasis on manufacturing is significant. Over the last year, we have realized the necessity of better characterizing these products, enhancing our ability to measure potency, and ensuring consistent manufacturing. These are three crucial aspects where MaxCyte can make a meaningful impact. We believe that focusing on these issues will facilitate our business growth, as it aligns well with industry trends. There is considerable interest from our partners in ensuring correct execution and dedicating more time to product characterization, which ultimately benefits MaxCyte. I have not observed many companies retracting their programs; rather, they appear to be streamlining what they have in clinical settings. Many cell therapies are targeting similar goals, leading to a need for both clinical and commercial rationalization as these products progress.

Yes, Evan, I would just add that it’s early, but we've seen some positive surprises. We discussed some milestones achieved this quarter. While we can’t detail them specifically, they were unexpected, which suggests that at least some of our partners are progressing faster than we anticipated. Looking at the news in the industry regarding investments, there’s a significant amount occurring, particularly partnerships between some of our SPL partners. We shouldn’t overlook the seriousness of clinical holds, as this has occurred with other companies previously. There are pros and cons to consider, given the early stage we’re in. However, we aren't seeing any shifts in priorities. We continue to sign SPLs, which we see as our primary measure of success. In terms of whether the field is advancing, if we are generating downstream revenue, and if our pipeline continues to expand, we are indeed seeing growth, which is encouraging.

Yes. No, that's super helpful. And just, I guess, maybe an easier question for you guys. Just for the quarter, you mentioned kind of the strength in the instruments, which I saw in terms of kind of pull-throughs in the quarter. I mean, how did that kind of trend versus 1Q and 2Q? And then in terms of the mix between leased and sold, is there anything notable there or any change?

I can take a step. We haven't changed the ranges we provided regarding pull-through. Cell therapy, as we mentioned, is increasingly becoming a significant part of our business. It is growing faster and generally has a higher pull-through, although this can vary based on where our partners are in the development cycle. As mentioned previously, we will update these metrics toward the end of the year. We previously noted 75 programs, with about 15% currently in the clinic, including three new SPLs. Those numbers might increase, but they remain relatively small. We've also discussed high usage in the preclinical phase, where there are lower volume PAs, and that tends to decrease during Phase I due to a smaller patient population, depending on the indication. Over time, we see that ramping up and starting to normalize. We're still within the ranges we provided, but we haven't formally updated anything. Regarding the leases, the SPLs we've signed involve instruments that are more associated with an access fee model rather than traditional leasing. This is becoming a larger part of our installed base percentage, which we noticed again. It is a gradual process, as there is a smaller number of individuals in clinical settings. We haven't provided specific numbers yet, but we'll share more information at the end of the year, similar to last year. Those are the qualitative trends we're observing.

Okay. If I could ask one more question. I understand you won't provide details on the CARMA-related revenues for the quarter, but could you reiterate what you mentioned earlier? Did you mention the number of customers contributing to those revenues? Also, you mentioned that some customers had multiple milestone payments. Could you clarify or repeat what you previously stated?

I'm sorry if there was any confusion. What we meant to convey is that the CARMA-related revenue was not sourced from a single customer. We did not specify whether multiple revenues were received from the same customer; we only indicated that there was more than one milestone received during the quarter. This is the extent of our disclosure. We need to be careful about what we say, and I believe last quarter we anticipated $1 million for the year, which implied around $0.5 million this quarter or next. The larger figure we reported was unexpected based on the progress our partners are making, which is certainly encouraging. We also expect similar results in Q4 compared to Q1 and Q2, indicating consistent figures like those seen in the first half of the year. We continue to see progress from our partners, although perhaps not as much as this quarter. Looking ahead to next year, we anticipate that as we build our pipeline, the visibility into our forecasts may improve, although it remains challenging to predict outcomes on a quarterly basis given the nature of partner collaborations and FDA involvement. However, as we sign more agreements and stack programs over time, we should be able to provide more reliable guidance, reducing the volatility we experience quarter-to-quarter in the biotech sector.

And our next question is from Matt Larew with William Blair.

It was interesting to see the entire SPL because I think that was the first confirmed NK cell therapy program. And I was curious, you referenced the burgeoning pipeline on the SPL partner side. So just curious if there's been any notable changes to the composition of that pipeline with respect to cell types approaches or indications?

Yes, I think we mentioned last time that our pipeline is stronger than before and continues to expand. When looking at companies that have been financed over the last couple of years, we see various approaches, including different cell types, loading molecules, and indications. We are keeping up with the diverse strategies being explored in advanced cellular therapies, which is quite exciting for us. There is a shift towards more allogeneic therapies compared to a few years ago, and we are observing new cell types entering non-oncology areas that hold great promise. Overall, we are consistently aligned with the direction in which the field is developing.

And the cellularity also has an NK-based approach as well as part of the pipeline.

Congrats on nice quarter. Maybe, Doug, going back to something you mentioned earlier, you talked about working with earlier stage customers. Can you just talk about your efforts to work with large academic medical centers and maybe how important that is for you to kind of build out the beginning of the funnel?

Great question, Jacob. It's always been important for us, as you can imagine, most of the advanced therapies related to cell care have come out of academic centers. We are continuing to see that trend. We have been formalizing our relationships with these groups, and we have long-standing connections with some major active and translational medical centers. We also see opportunities to expand into newer centers that are beginning to develop centralized facilities for cell therapy. There is a growing interest in new applications of cell therapies beyond oncology, which is exciting. We are hiring people to understand how to build alliances with large translational academic centers globally and their requirements. I think we have a solid grasp on that. Part of our expansion process is to ensure we are properly resourced to collaborate with these companies and principal investigators at the early stages of developing new cell therapies. The challenge is that we want to avoid becoming too involved in pure academic research. There is a fine line we are navigating to focus on translational therapeutic centers and the work directed toward potential commercial products.

And our question is from Jacob Johnson with Stephens.