- MaxCyte provides a technology that helps deliver a cutting-edge treatment
- Companies whose drugs use this technology are likely to have to use the company for decades, so it should receive a meaningful percentage of sales
Philip Rodrigs, manager of Raynar Flagship fund (LU2203806885), explains why he invests in life sciences company MaxCyte (MXCT).
“The term unicorn is generally applied to a start-up firm that reaches a $1bn (£725.95m) valuation. While MaxCyte, which listed in the UK in 2016 at a valuation of around $50m, wasn’t strictly speaking a start-up by that time, it was very much at the beginning of an exciting and rewarding journey.
“Nurtured on Aim, MaxCyte took a huge stride forward by completing it’s dual-listing initial public offering (IPO) on the US Nasdaq exchange at the end of July this year. After a strong debut, the firm was valued at around $1.5bn, giving a share price return of 1,471 per cent between its original 70p IPO price and 1,100p share price at the end of July 2021. But is it possible for the firm to still be an attractive investment after such an increase?
“MaxCyte is a medical technology platform, operating in the field of cancer therapy. In recent decades, there have been waves of innovation in treating cancer, starting with chemotherapy and more recently biologics as fundamental discoveries lead to major new classes of treatments. At the cutting-edge is a new method that uses a patient’s blood cells to fight disease. By taking the patient’s own blood, inserting a DNA-type instruction into hundreds of millions of those cells and returning them to the patient, with much reduced rejection risk, the patient’s own cells fight the disease. Despite sounding like science fiction, early examples of this new class of therapy are producing very significant results.
“So how do you reliably inject DNA instructions into billions of cells? Some approaches use a modified virus and take many days. MaxCyte’s uniquely scaled and patented Flow Electroporation technology uses electrical pulses to deliver the same payload within a day.
“This game changer has seen MaxCyte sign up a succession of industry leaders to its roster. When these biotech companies sign up, they are entirely dependent on MaxCyte so must be very sure. Every drug designed to work with MaxCyte that is successfully approved will have to use this company for decades. This means a meaningful percentage of sales will be paid to MaxCyte.
“The company has the potential to become the ultimate next-generation biotech firm by facilitating many associated next-generation biotech firms. MaxCyte is theoretically worth a reasonable percentage of the market ascribed value of all its clients combined. At the moment, this amounts to dozens of companies but is set to become hundreds of chances for successfully approved drugs.
“MaxCyte, then, as the platform company for the next generation of science, is a very exciting proposition.”