Maxcyte, Inc. Q3 FY2025 Earnings Call

Good day, and thank you for standing by. Welcome to the MaxCyte Third Quarter Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Eric Abdal, Investor Relations. Please go ahead, sir.

Good afternoon, everyone. Thank you for participating in today's conference call. Joining me on the call from MaxCyte, we have Maher Masoud, President and Chief Executive Officer; and Douglas Swirsky, Chief Financial Officer. Earlier today, MaxCyte released financial results for the third quarter ended September 30, 2025. 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 meanings 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. Except as required by applicable law, the company has 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 Maher.

Thank you, Eric. Good afternoon, everyone, and thank you for joining MaxCyte's Third Quarter 2025 Earnings Call. Today, I want to briefly highlight our financial performance before diving into the future we are building at MaxCyte. Consistent with our preliminary financials announced last week, MaxCyte reported $6.8 million of total revenue in the third quarter, which included $6.4 million of core revenue and $0.4 million of SPL program-related revenue. While the third quarter was a bit light due to timing of instrument orders, revenue was in line with our expectations and previous guidance, with the second half of the year weighted more towards the fourth quarter. We recently signed a new strategic platform license with Moonlight Bio, bringing the total number of signed SPLs this year to 4, in line with our guidance for a number of new SPLs for the year. On the services side, SeQure DX is fully integrated, and we are excited by the market validation of the technology and long-term opportunity. As covered in our previous earnings call, the operating environment remains challenging. We continue to believe in the curative potential of our customers' therapies and the long-term commercial viability of our SPLs, but we understand that the funding environment for ex vivo therapies has remained depressed longer than anticipated, and the commercial adoption has been slower than expected despite our belief in their long-term potential. While we will discuss the impact of these events, I'd like to first discuss the long-term value of our SPL partnerships, which we believe is increasing. Ensuring we capture the value of those agreements drives many of the decisions we make about our business. When thinking of our SPLs, 14 of our SPL customers have a total of 18 active programs in the clinic. Five of these current 18 clinical programs are anticipated to enter pivotal studies in the next 6 to 18 months, programs run by CRISPR, Wugen, Imugene, Caribou, and one undisclosed SPL. We believe these programs have the potential to launch commercially in 2027 and 2028 and can help shape the future of cell and gene therapy. This past Monday, Caribou announced positive Phase I data for the allogeneic CAR-T programs for lymphoma and multiple myeloma, on par with autologous CAR-T therapies and with a safety profile that supports outpatient administration. It is exciting to see our second wave of SPL programs, which are the next generation of cell and gene therapies, advance pivotal studies and potential BLA submissions. Our balance of SPL clients continues to get stronger as we sign new licenses. As a reminder, in the third quarter, we signed 2 new SPLs, Adicet Bio, who is working to develop allogeneic gamma delta T cell therapies for cancer and autoimmune diseases; and Anocca AB, a T cell immunotherapy company developing a deep pipeline of T cell receptor engineered therapies. Recently, both completed financing rounds to fund the advancement of their therapies following Adicet's positive preliminary Phase I data and Anocca AB's preclinical data for their lead T-cell receptor therapy. We are encouraged by this financing activity, which highlights investor interest in the space and allows for funding through key milestones for these important customers. We are also excited to highlight the most recent SPL we announced in October, Moonlight Bio, where MaxCyte will support the scalable development and manufacturing of its T cell therapy pipeline. Moonlight Bio was our fourth SPL signed this year, bringing our total number of signed SPLs to 32. Despite the continuation of a difficult operating environment, we see our consistent additions of new SPLs as a testament to the strength of the Expert platform. We also continue to increase the programs we work with at the top of the funnel, now supporting 20 programs in preclinical development with a launch potential in 2032 and beyond. The opportunity from our current SPL base remains very large with MaxCyte well positioned to participate in the economics of successful and unsuccessful programs. I also want to take a moment and highlight the breadth of indications we are supporting these SPLs and why our licensing model can provide significant growth in the years to come. Our business model has positioned us to build franchises across disease states. For example, we are supporting 4 programs for B-cell malignancies; 8 clinical programs for blood cancers; multiple programs for autoimmune diseases such as lupus, vasculitis, and type 1 diabetes; as well as 5 late-stage programs for solid tumors. While we know individual programs have clinical or commercial risk, we are confident that the multiple shots on goal that we have on the same indication and the multiple indications we have in our portfolio provide a high probability for material commercial revenues. Balancing a belief in the long-term potential of our SPLs and the short-term challenges in our end market, we made the difficult decision to engage in a restructuring initiative, which included a 34% global workforce reduction, bringing MaxCyte's total full-time employee headcount to 89 today compared to 133 as of January 31, 2025, after the SeQure DX acquisition. I undertook this restructuring to maximize the cash available to deploy on organic and inorganic investment opportunities and ensure our operating spend is aligned with the current environment. As part of the cost reduction initiative, we reorganized the company and removed layers of management in certain areas to ensure a more efficient and entrepreneurial environment that will continue to enable growth. To put in perspective the size of our organization and why our ability to grow has not been affected by the restructuring. Today, we have 89 employees compared to the 51 employees in January 2020 when we began to scale the organization for the future growth of our end market. We anticipate this initiative will result in $17 million to $19 million of annualized savings, with $13.6 million of annualized savings previously disclosed from headcount reductions, which will begin to be realized in the fourth quarter of 2025, but will be more impactful to the 2026 P&L. These savings reflect a detailed review of non-headcount-related spending and have identified $4 million to $5 million of incremental cost reductions on an annualized basis, which we expect to realize in 2026. In R&D, our reductions primarily relate to reducing layers of management and natural expense reduction that we expect as the new product we are developing moves out of R&D and into commercialization. We still expect to invest heavily in new technology, which we intend to do via both organic and inorganic means. We have optimized the function to reduce the spending in certain areas that we believe no longer aligns with the market. It is important to note that we have maintained the structure of our field application scientists team, which provides much of the innovation of the company via collaborations with our SPL customers. In G&A, our headcount reductions related to consolidating management of functions and reducing layers. Non-headcount-related spending will decrease from a reduction of public company expenses that were associated with our AIM listing, as well as a reduction of vendor spending driven by our detailed review of finding lower-cost alternatives. It is important to note that these reductions are not inclusive of the $900,000 in transaction expenses related to SeQure DX, which we also expect not to recur. Lastly, our sales and marketing reductions primarily related to marketing, where we will look to be more diligent in our spend. We will continue to build our brand in the field with our world-class FAS team and sales team and the superior results of our platform in the hands of our customers. My main priority of this restructuring was to position MaxCyte to remain nimble, operate with accountability, and grow our offerings organically and inorganically even as we face short-term headwinds from some of our key customers who have rationalized programs this year, which will continue to create a drag on our growth through the first half of next year. This will allow the organization to invest for the future and operate efficiently for an SPL pipeline that remains strong and diversified. Regarding our desire, capacity, and willingness to invest, these cost savings will result in a cash burn of roughly $10 million to $15 million in 2026. We also expect our operating cash burn to improve further in the coming years as our customers progress through their clinical programs. As mentioned previously, we continue to see a large opportunity to grow our portfolio and consolidate the tool space in advanced therapies by means of organic and inorganic investment. We have already invested in a new product discussed during our second quarter earnings call. This product is a line extension to our leading Expert electroporation platforms, and we are working with beta users that will continue to validate the platform before a broader commercial launch in 2026 that will contribute to revenue. While this product is moving from the investment to commercialization phase, we will continue to look for additional opportunities to expand our Expert franchise. To summarize, I firmly believe in the future of cell and gene therapy and the role that MaxCyte plays in it. We are transforming our company into an end-to-end platform with multiple products that can support cell and gene therapy customers at different stages in their development with an appropriate cost structure to reach profitability. Before turning the call over to Doug to discuss our financial results, I want to thank Doug for his support over the years. As we announced today, Doug will transition from the role of CFO in the first half of 2026, and we have initiated a search process to identify a successor. I would like to truly thank Doug for his hard work and contributions to MaxCyte. Doug and I have decided that now is the right time for both him and the company to undertake this transition. I appreciate his willingness to stay with the company through the transition period and act as an adviser to the company in the future. We do not anticipate any disruptions to operations or financial results during this period. With that, I will now turn the call over to Doug to discuss our financial results.

Thank you, Maher. I greatly enjoyed being a part of MaxCyte, and I look forward to working together on a smooth transition during the first part of 2026. The company is in a better position financially than it was when I arrived, and I believe MaxCyte's future is very bright. I am confident in Maher's leadership, the broader team and MaxCyte's long-term potential, but I have decided to take this opportunity to move on to a new phase in my career and personal life. Turning to our financials. Total revenue in the third quarter of 2025 was $6.8 million compared to $8.2 million in the third quarter of 2024. We reported core revenue of $6.4 million compared to $8.1 million in the comparable prior year quarter. Within core revenue, instrument revenue was $1.4 million compared to $1.8 million in the third quarter of 2024. License revenue was $1.8 million compared to $2.5 million in the third quarter of 2024, and processing assembly or PA revenue was $2.6 million compared to $3.4 million in the third quarter of 2024. Instrument license and PA revenue were adversely impacted by a large customer and clinical customers consolidating programs driven by the continuation of a challenging operating environment. 53% of our core revenue is derived from SPL customers in the third quarter of 2025, which compares to 53% in the comparable prior year quarter. Turning to our SPLs, program-related revenue in the third quarter was $0.4 million, including both clinical milestones and revenue from CASGEVY commercial royalty revenue. We remain excited by the opportunity of CASGEVY and the life-altering impact it delivers to patients. During Vertex's third-quarter earnings call, they highlighted that CASGEVY delivered approximately $17 million in revenue in the quarter. There are now 165 people globally who have completed cell collection, which included 50 people in the third quarter. So far, a total of 39 patients have received their infusions of CASGEVY, which included 10 patients in the third quarter. We are excited by the momentum in patient cell collections as Vertex highlighted that the number of patients per day having cells collected has doubled in 2025 compared to 2024. Turning to our cell and gene therapy services. We have seen progress in the business this year and continue to believe that SeQure assays will become part of the industry standard for off-target risk assessments for both in vivo and ex vivo gene editing. Total SeQure DX assay service revenue was roughly $248,000 during the quarter. We know that adoption of SeQure Services and Technology will take time, but we remain committed to the platform as we continue to receive feedback from customers and regulators regarding the value of the technology. Moving down the P&L, gross margin was 77% in the third quarter of 2025 compared to 76% in the third quarter of the prior year. Excluding inventory provisions and SPL program-related revenue, non-GAAP adjusted gross margin was 81% in the third quarter of 2025 compared to non-GAAP adjusted gross margin of 85% in the third quarter of 2024. Total operating expenses for the third quarter of 2025 were $19.4 million compared to $20.3 million in the third quarter of 2024. Total operating expenses included approximately $3.1 million of restructuring charges related to our reduction in force. Let me provide further details on the impact our recent cost reductions will have on full year operating expenses. Of the $17 million to $19 million in total cash savings we expect on a full-year basis, approximately $5.5 million is being reduced from G&A, $7 million from R&D, and $5 million from sales and marketing and $0.5 million from capital expenditures. As Maher noted above, these estimates do not include one-time expenses related to the SeQure acquisition and one-time severance costs. We finished the third quarter with combined total cash, equivalents, and investments of $158 million and no debt. The decrease in cash, cash equivalents and investments since the beginning of the year included approximately $7 million of purchase transaction and one-time costs associated with the acquisition of SeQure DX. Continuing to our 2025 guidance, we are reiterating our outlook and expect core revenue to be flat to a 10% decline compared to 2024, inclusive of revenue from SeQure DX. Additionally, we continue to expect SPL program-related revenue to be approximately $5 million in 2025, which includes both expected revenue from pre-commercial and commercial milestones and sales-based royalties. We would like to note that our SPL program-related revenue outlook is a risk-adjusted forecast that is achievable under a variety of potential outcomes across our SPLs and the planned clinical progress and commercial success of our customers. Lastly, as included in our preliminary announcement last week, we now expect to end 2025 with between $152 million and $155 million in cash equivalents and investments on our balance sheet. Our revised forecast here reflects near-term cash utilization from the restructuring, which will lead to lower costs and cash use in the future. Now I'll turn the call back over to Maher.

Thank you, Doug. I want to end this by thanking every employee at MaxCyte for their dedication to driving our mission forward. I look forward to continuing to provide high-quality offerings to our customers and driving future growth. With that, I will turn the call back over to the operator for the Q&A.

Our first question comes from the line of Matt Larew with William Blair.

First question on the environment that you and your customers are dealing with. Obviously, it's been, as you alluded to, Maher, kind of tougher for longer than many expected. But it does seem like maybe in the last few months here, both kind of biotech funding has improved. There's been some M&A in the space. A number of your peers have cited at least some stabilization perhaps from biotech. I would just be curious for your perspective on kind of the environment and obviously acknowledging that this isn't the first time in the last couple of years that we've had a day or a week or a month where maybe we felt better?

Yes, exactly, Matt. Great question. You're right. I mean, obviously, it's now been a couple of years where it's ourselves and many of our peers in our industries are saying that they're hoping this is the bottom. So you can't take 1 or 2 months as an indicator. However, on our business, we do see stabilization. We have been impacted by a few key customers this year, which I mentioned, I believe will have an impact in the first half of next year. But we're starting to see that some of the concerns that we had in the past from some customers related to NIH funding related to some changes at the FDA having an impact on capital expenditure decisions. That seems to be stabilizing, Matt. We're hopeful that, that continues going into next year. And we're building the base of the company based on that hope. But again, I think let's see how this plays out over the next month and into next year.

Yes. We've seen some encouraging financings. I think overall sentiment and spend discipline across the biotech sector remain a bit cautious. So we're planning based on the assumption that the environment stays roughly where it is today, at least through the first half of next year. But obviously, we stand ready, willing, and capable of taking advantage of an improvement in that environment.

Okay. Fair enough. And then I guess the second one is a bit of an environment question, too. You referenced some changes to the FDA. And again, if I think kind of year-to-date, there's been some wins and maybe some non-wins for new modalities. What's your assessment I guess there were some leadership changes announced again last night of your customers, I guess, confidence in working with FDA and maybe how that combined with the funding environment affects willingness to initiate trials or move on to next phases?

Sure, we haven't seen any customers indicate that the FDA changes or the funding environment will slow down the review process or delay any programs in development. We've heard no concerns from our customers. In conversations with other CEOs in the industry, they aren't seeing such issues either, which is a positive sign, and we don't expect any slowdowns. The changes appear to be related more to the funding environment and hesitancy regarding purchases of equipment. We haven't observed anything that would impact development timelines or approval processes. We are not seeing that at all.

Okay. Fair enough. And then I guess just thinking about next year, again, it sounds like you have the key customer overhang, but SeQure will have been in the portfolio for about a year. You have a new platform coming. I guess, what's your expectation in terms of the SeQure ramp into next year? I think maybe it's been a little slower this year. And what kind of impact the new platform can have as well? And that would be it for me.

Sure. That's a great question. Let me address both points separately. Regarding SeQure, this year we need to focus on building their capabilities for what I believe is significant potential next year and beyond. The ramp-up is promising, as the pipeline we’re developing for them going into next year is much larger than what we had when we acquired them and also larger than what we expected for this year. We anticipate much greater bookings and a more extensive pipeline for next year. However, it's critical that we take a step back to ensure they continue to strengthen their leading assays, which we focused on this year. Given the number of customers they currently have and the discussions we're having, there is strong interest from various sectors, whether it's ex vivo or in vivo, and this interest is expanding, which I find very encouraging. I'm pleased with the decisions we've made at SeQure this year to position them for growth next year and to effectively manage the current customer projects coming in. Overall, I have confidence in what we are doing at SeQure and its potential in the coming years. Regarding the new product launch, it's currently with beta users. This gives us a solid foundation to reach a wider audience in the research sector. It ties in with our work on SeQure DX and broadens our customer base. We have a strong presence among clinical and commercial customers, and this allows us to engage with them earlier in the process, ensuring we can further develop the Expert platform. Our official commercial launch is scheduled for early next year, and I'm optimistic that this will provide additional growth alongside the initial growth we are starting to see from our customer base, outside of the few customers that had an impact on us this year, which will also affect us in the first half of next year.

Our next question will come from the line of Matt Hewitt with Craig-Hallum Capital Group.

I want to touch on the FDA again. With the recent changes in administration and leadership at the FDA, it seems they're emphasizing the need for cures rather than just treatments. I'm interested in how these comments and their statements over the past few quarters might be influencing decisions made by your SPL customers, and whether this is leading to any additional decisions that may affect you. Any insights you could share would be appreciated.

Yes, good question, Matt. This has been a priority since the new leadership at the FDA took charge, focusing on curative therapies. We are primarily involved in this area, specifically in cell and gene therapy, which I believe represents the future of medicine. Additionally, the recent funding that some of our clients have secured demonstrates their confidence in these therapies and their decision-making to advance them into clinical trials, especially with the FDA and CBER leadership backing them. This support plays a significant role in their choices. Moreover, it is reflected in our ongoing success with SPL agreements, where we are signing three to five annually, a trend we expect will continue. These developments are promising for our clients and their potential investments.

That's great. And then maybe as far as the SPL pipeline is concerned, obviously, another strong year. This is a few in a row where you guys have met or exceeded your target for the year. And I'm just curious what that funnel looks like and whether that continues to build and sets the stage for another strong year in '26?

Yes. Thank you, Matt. To address your question, I believe that achieving 3 to 5 SPLs next year and in the foreseeable future is quite achievable and something I firmly support. Our pipeline is solid and continues to strengthen, even in a market that has optimized programs. We remain confident in our capabilities. It's important to note that we engage with our customers much earlier in the process, well before they commit to signing an SPL with us. This is due to the efforts of our FAS team, sales team, and internal team, as we develop applications for customers. We are currently collaborating with customers who are two years away from finalizing an SPL, and because of the dedication shown by our employees and scientists here, I am optimistic that we can maintain our goal of signing 3 to 5 SPLs next year and beyond.

Our next question comes from the line of Mark Massaro with BTIG.

This is Vidyun, on for Mark. So I think in the prepared remarks, you alluded to reinvesting from the recent workforce reduction. Could you just remind us on your priorities around M&A? And just anything you can share about the stage or number of conversations ongoing here as it relates to M&A?

Thank you, Vidyun, it's good to hear from you again. The restructuring was intended to accelerate our path to profitability compared to our past position. It also provides us with the flexibility to continue the work we've focused on for the past two years since I became CEO, particularly in mergers and acquisitions. We're actively exploring a wide range of companies in the cell and gene therapy sector that can integrate into the comprehensive platform we're developing. We approach this with discipline; for instance, our acquisition of SeQure DX was strategic, bringing in assets that have the potential for future growth and establishing a foundation for off-target assessments required by the FDA, EMA, and others. We're consistently seeking similar opportunities that can position us as a consolidator in the field, offering our SPL and non-SPL customers a complete suite of scientific expertise and products in a single location. We are careful to ensure that these pursuits are best-in-class and do not adversely affect our financial profile or health, which we've been improving over this past year.

Perfect. Just one quick one for text for me. So I understand that you can't comment on their business. I think they did mention during their call significant growth in '26 for CASGEVY. Just any more color you could share on how we should think about royalty contributions from CASGEVY or if you might start breaking out that revenue looking to '26?

Let me begin, and then Doug can discuss the details for '26. We are very pleased with what Vertex communicated on the call last week. Doug also mentioned that 165 patient cells have been collected so far and that 39 have been dosed, leaving about 120 remaining. What is even more encouraging is that they have followed all the right steps for this product and these patients. They are part of one of the five FDC centers and are now collecting cells from twice as many patients daily compared to last year. This growth has been consistently improving each quarter, which is promising. They also confirmed that they project over $100 million in CASGEVY sales this year, which is a good sign for next year. It meets the needs of the patient community. They have performed exceptionally well, and we are here to support them in any way to make next year as successful as possible. We remain enthusiastic about CASGEVY, and nothing has changed in that regard. We see the progress being made, and I will let Doug provide insights on how we plan to forecast revenue for next year.

We are not going to provide guidance related to 2026 at this time. CASGEVY continues to be a significant long-term opportunity for us. We are encouraged by the recent increase in cell collection from patients and dosing, and we believe this will lead to additional treatments. We expect to see the corresponding royalty contribution grow. We view CASGEVY as the start of a growing stream of commercial royalties as more SPL partners advance their programs into the next wave, with multiple programs potentially becoming commercial stage customers starting in 2027.

Our next question comes from the line of Hannah Raiford with Stephens Inc.

You mentioned that there was some revenue that got pushed from 3Q into 4Q during the quarter. And I was just wondering if you could elaborate on this. How big of an impact do you think you saw there? And was this just normal timing part of the business? Or was there any part of this that was customers kind of pushing out orders due to continued hesitancy around the macro?

Yes, we don’t provide quarter-to-quarter guidance, but our outlook for the year regarding core revenue and SPL program-related revenue remains unchanged. It's challenging to account for revenue that shifts from one quarter to another, especially when considering the overall scale. We previously mentioned that we expected a slight bias towards Q4 for the remaining revenue needed to meet our established goals and guidance. This is really just a small number of items that shifted. For example, with SeQure, we recognize revenue upon the delivery of the final report to the customer, so we are at various stages of generating the data necessary to provide meaningful insights to our clients. While we would prefer to recognize this revenue within the current quarter, it may extend into the next. This isn't limited to a single item but involves several factors. We don’t feel particularly disappointed compared to our expectations since we always anticipated stronger performance in Q4. However, we had hoped more revenue would come in this quarter, leading to a small disappointment for us. Nonetheless, we are still on track; this is merely a timing issue. We don’t see this as missed opportunities, but rather things that were expected in September that have now taken place in October, and we acknowledge this as we are now in November.

Okay. Great. That's helpful. And then I think you've kind of mentioned that there are other elements of growth or positives that you're seeing outside of some of these customers rationalizing their pipelines. Are there any specific like positive KPIs that you would want to point out that's kind of giving you confidence that things are recovering outside some of these customers?

Sure. Absolutely, Hannah. So good question. So a few things. Obviously, we had a few key customers this year that really affected us for the year and affected us into the third quarter, and we think it's going to affect us into the first half of next year. But looking outside even the SPL customers, we are seeing stabilization with our non-SPL core, which is a testament to the number of instruments that we're selling, number of PAs that we're using. That gives me confidence that outside of a few key customers here and there, which is part of our business model. We've always known there was one customer here, one customer there and that happens at times. But we're seeing a stabilization in our non-SPL business in terms of the instruments we're selling, the PAs that we're selling, the pull-through of the PAs on a daily basis. We're seeing that stabilization. We're also seeing good growth in Asia as well. I mean we've invested in Asia from a very smart way, a very, I would say, tactical way to grow into Asia. We're seeing that growth in Asia as well year-over-year, and it's continuing to grow. Obviously, we all know where the cell and gene therapy space is and the investments in China and other parts of Asia have been growing year-over-year. And we took advantage of that, and we are expanding into that region as well, doing it in a very, I'd say, measured way. And that gives me confidence that we continue to do that going into next year as well. And the products that we're launching next year, right, gives us more breadth with the current customers and future customers. What we're seeing with SeQure DX, some of the customers that we're talking to, they're coming to us for really things that only SeQure DX can do and no one else can do for them. We're seeing the bookings. We're seeing the size of these potential contracts that they want to sign with SeQure DX gives me a lot of encouragement that we can begin to get back to that growth in the second half of next year.

And our next question comes from Brendan Smith with TD Cowen.

I wanted to build on some earlier comments. I know there is a lot to consider as you look ahead to next year. Given your current position and the flow of SPLs this year, along with your expectations for stability into next year, could you share what you see as the key factors that give you confidence in maintaining that trajectory into next year, especially in light of everything that has occurred this year? Additionally, regarding the financial aspects, considering the integration of SeQure, is there any change in your perspective on the long-term gross margin profile with everything combined?

Sure. Brendan, let me take the first one. And I'm assuming you mean by the cadence, you mean about the 3 to 5 a year that we're signing. I just want to clarify, is that your question?

What are the key factors that give you confidence as we move from this year into next year that this trend will continue?

Absolutely. Great question. So this is why I say I feel confident. We're working with these customers already, where we feel confident in next year, they'll be signing these SPLs with us. Take a step back, these are not people that we go to and just out of the blue speak with them. We've been working with some of these customers now for at least 12 months, some of them 24 months. And we have a line of sight to see who we're working with right now that we feel we can sign in that 3 to 5 range next year. It's very clear we're working with. We're supporting them in their labs. Our sales reps are speaking with them. Our FASs are there on site working with them to optimize their processes. That gives me the confidence that these customers that we're working with this year, and we've been working with even a little bit longer than that, become SPL customers next year. And Doug, I'll let you take the second one.

No. Look, in terms of the long-term trend for margins here, obviously, we still are very happy with our margins. They are not as lofty as they were during the peak. The things that are going to get them back to those higher percentages you've seen in the past will be increased sales of instruments, which will be able to spread those costs over more units. And then also what's important here to look at is that product mix, right? So I think the higher-end ticket, the more expensive instruments in our platform have been harder to sell in this operating environment. And so the product mix has shifted towards the less expensive instruments, although we still have good margins on those. But I think over time, we can get back towards those higher margins as the market gets stronger. We experience growth as that product mix shifts. And so again, very comfortable with where the margins are now. I think they'll be stable as we look ahead in the short term. And I think in the medium and long term, we can return to even higher levels.

And our next question comes from the line of Dan Arias with Stifel.

This is Rohan, on for Dan. Sorry to keep on the SPL piece here, but maybe just a quick one, 4 SPLs under your belt. Could you guys, I guess, give a little bit more depth on how business development conversations advanced during the quarter, maybe how the funnel is shaping up? Just a little bit more on that, if possible, please. I know I'm kind of beating a dead horse here, but I just want to hear a little bit more detail. Appreciate it.

Absolutely. So just to clarify, what you mean is in terms of just the conversations with the current customers who could become SPL customers, is that what you mean?

Yes, sir.

Yes, exactly. Let me provide some clarity. We're collaborating with these customers this year because we understand their position in the preclinical programs and their plans to file INDs. While those timelines may shift slightly, we are currently engaged with them, and they anticipate filing INDs within the next 6 to 12 months. This gives us confidence that we will finalize an SPL with them next year, which contributes to our expectation of signing between 3 to 5 agreements. Our efforts go beyond merely optimizing their processes; we have these conversations because it's essential to ensure they are prepared for their IND filings. They can utilize our Master File, which has been referenced in over 65 clinical trials, possibly even 70 now. The relationship is much deeper than just collaborating in the labs; it's about working closely together to make sure they are ready for their IND filings. Once they sign their IND and file the R&D, they will have an SPL with us. This is the approach we've taken throughout the year, and it gives us confidence that we will secure SPLs next year in the anticipated range. I hope this clarifies things for you.

And I'm showing no further questions at this time. And I would like to hand the conference back over to Maher Masoud for closing remarks.

Yes. Thank you, and thank you, everyone, for joining us on today's call. Obviously, the third quarter is a bit light, but we remain very confident in the rest of the year and going into next year and the future that we're building here. I look forward to speaking to you again on the next quarter earnings call.

This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.