Q4 2023 MaxCyte Inc Earnings Call

Participants

Sean Menarguez; Senior Director of Innovation and Business Development; MaxCyte, Inc.

Maher Masoud; President & CEO; MaxCyte, Inc.

Douglas Swirsky; CFO; MaxCyte, Inc.

Jacob Johnson; Analyst; Stephens Inc.

Dan Arias; Analyst; Stifel Nicolaus & Company Incorporated

Matt Larew; Analyst; William Blair & Company LLC

Mark Massaro; Analyst; BTIG

Steven Mah; Analyst; TD Cowen

Matt Hewitt; Analyst; Craig-Hallum Capital Group LLC

Presentation

Operator

Good day, and thank you for standing by, and welcome to the MaxCyte fourth quarter earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your first speaker today, Sean Menarguez, Senior Director of Innovation and Business Development. Please go ahead.

Sean Menarguez

Well, thank you and good afternoon, everyone. My name is Sean Menarguez, and I'm the Senior Director of Innovation & Business Development here at MAX site. Thank you all for participating in today's conference call. On the call from that site, we have Maher Masoud, President and Chief Executive Officer; and Douglas J. Swirsky, Chief Financial Officer.
Earlier today, Max that released financial results for the fourth quarter and full year ended December 31, 2023. A copy 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 other than statements of historical facts provided on this call, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations are forward-looking statements.
These statements about us or our industry and involve substantial known and unknown risks, uncertainties and assumptions, including those that are discussed in detail in our annual report on Form 10-K and elsewhere in our SEC filings that may cause our actual results, performance or achievements to be materially different than any other future results, performance or achievements expressed or implied by such date.
These statements are inherently uncertain and investors are cautioned not to unduly rely on these statements. The Company undertakes no obligation to publicly update any forward-looking statements, whether because of new information, future events or otherwise, except as required by law.
And with that, I'll turn the call over to Maher.

Maher Masoud

Thank you, Sean, and good afternoon, everyone, and thank you for joining Mack-Cali's fourth quarter and full year 2023 earnings call. As you know, I was appointed the world President and CEO of Max site effective as of January 1 of this year.
It is an honor to lead max site through its next phase of growth. After working closely with the executive team and Board over the last seven years, I would like to thank our founder, Doug, the offer for his contributions to Maxar over the past 25 years.
In my first couple of months, as Mike's CEO, we have continued to execute our core mission and strategy, expand our strategic platform licenses or SPL portfolio and support the next generation of cell-based therapies with our expert expression platform.
Our top priority remains supporting our customer success throughout the lifecycle research, clinical development and commercial launch. I believe we have substantial opportunities ahead of us in the cell therapy industry and I am committed to leading our organization with a high-level focus along with disciplined expense management and capital deployment.
2022 was a challenging but exciting year from a site. We faced a difficult operating environment along with many others in the industry as our customer base saw conservatism and capital spending lower than expected activity levels and prioritization of programs.
Despite these challenges, 2023 was a transformative year for Max Life. Our technology support the approval cash, Javier, the first non-viral cell therapy product approved by the FDA developed by us build clients, crisper therapeutics and Vertex Pharmaceuticals.
Backside extra platform is not the only electrification platform test supported a nonviral therapy through FDA approval and is now the only electrification platform supporting commercial therapy. We believe this is just the first of many potential pools by Max ISDL. clients over the coming years. And we are working hard to remain the platform of choice when it comes to electroporation.
Max, our reported $41.3 million of total revenue for the full year of 2023 at the high end of the revenue range we preannounced in January 2024. Core business revenue was $29.8 million, also at the high end of our preannounced range. We were pleased to see our business begin to stabilize in the fourth quarter and with the strong execution of our team in a challenging environment.
In 2023, we grew our instrument installed base to 683 as compared to an installed base of 616 at the end of 2022. While the instrument installed base expand this year, both instrument sales NPA sales decline in 2023 compared to 2022 across cell therapy and drug discovery customers.
As I mentioned, we are operating in a challenging environment were early-stage customers and cell therapy and drug discovery have limited access to capital and some clinical customers have adjusted their spending and extended project timelines. This environment remain largely unchanged in the fourth quarter, though we are optimistic that the financing market for the cell therapy industry will improve over time.
Non-viral cell therapy market trends continue to bode well for maXTouch platform. Customers at various stages of development are pursuing different approaches and indications. Developers continue to move towards non-viral cell engineering approaches that encompass multiple steps and complexity of edits, innovation and complexity and cell therapy development drives demand for Max sites, electroporation technology.
While we are cautiously optimistic about near term market factors impacting our customers and non-viral cell therapy opportunity and regulatory backdrop for cell therapies continues to improve. Outside core business, we generated $11.5 million of SPL program related revenue for the full year of 2023 and $8.5 million during the fourth quarter.
Both our full year 2023 and fourth quarter 2023 S field program related revenue came in at the high end of our preannounced range, driven primarily by Billy approval milestones from our clients in the fourth quarter of 2023.
As a reminder, SBL program related revenue includes development and approval milestone payments as well as sales-based payments and or royalties from commercial clients. Across our [26] SPL to date, there are many nuances to the SPL contracts and the revenues associated with commercial products can vary.
Generally receive 1% of product sales through either a royalty or sales-based payments in addition to receiving revenue from lease instruments, NPA sales to FPL customers, which is included in core revenue. As stated by Vertex of their fourth quarter 2023 earnings call the commercial launch of cash JV has commenced. As patients are screened and identified free treatment. They will enter the program at authorized training centers in which they will undergo pretreatment cell collection and manufacturing.
And finally, Truman infusion max. I will only recognize revenue once a patient has been infused, which can take a number of months from the time a patient enrolls a therapy. Our visibility into timing of patient dosing is quite limited, and we will rely on Vertex provide us and the markets with updates on patient enrollment status as they come.
At this time, we do not have enough information on timing of patient dosing to forecast expected commercial royalty revenue from the sales cash JV for 2024. As we move throughout the course of the year, we hope to have better insight into the patient journey and dosing timelines remain very optimistic about the long-term prospect for cash, and we look forward to the many patients receiving the treatment in the years to come.
As I mentioned earlier, we continue to lay the groundwork for long-term growth at max site, just as we did several years ago with crisper to support ways now cash heavy. In 2023, we signed five new SPL clients, bringing the total number of FPL's to 23 as of December 31, 2023. These 23 SPL.'s represent over 160 programs of which 16 are programs in clinical development, along with one commercial program.
That total pre-commercial revenue potential for Asco programs is now greater than $1.95 billion, up from $1.55 billion at the end of 2022, an increase of over $400 million in potential milestone payments. As you've probably already seen thus far in 2024, we have signed three additional appeals, bringing our total assigned SPL.s to 26 as of today.
We believe the breadth of our expanding Esco portfolio continues to demonstrate the unique and valuable technology at max site use across cell types and editing tools. By way of example, Lyon TCR, whenever SPL customers, which we announced this year is a Singapore-based clinical-stage biotechnology company focused on development of T cell receptor therapies.
For solid tumors, a life-threatening viral infections. Rspo alliance CCR has allowed us to expand our global presence into Asia to support the development of new therapies for patients with solid tumors we also signed as build energy, a clinical stage immuno-oncology company that's developing a range of new treatments that seek to activate the immune system of cancer patients to identify and eradicate tumors.
Our platform technology was officially transferred from Precision BioSciences when global rights for Asiacell were obtained by imaging in August of last year, and we look forward to supporting imaging as they move towards a potential Phase 2 registrational trial for Asia selling cancer, an allogeneic CAR-T candidate, our most recent sign SPL client is with Legion, a clinical-stage biotechnology company, developing allogeneic off-the-shelf cell therapies to treat a broad range of hematological and solid tumor malignancies.
Importantly, there room CAR T zero seven lead asset is currently in a global Phase 1(2) clinical trial for the treatment of relapsed or refractory T-cell acute lymphoblastic leukemia or lymphoblastic lymphoma and adolescent and adult patients.
It has received orphan drug, Fast Track and rare pediatric disease designations from the FDA for the treatment of such conditions. We are encouraged by these recent appeals and are excited to witness the clinical progress that we believe our clients may make in the upcoming months and years with the support of our platform.
The SPA agreements that were signed earlier this year have been many months or even years in the making our team worked very hard with customers to understand and optimize their research and development processes and objectives. This relationship office starts in research where customers utilize our expert ATX and then seamlessly scale to the GTx prior to entering the clinic as companies make progress towards entering clinical development.
There's dynamic discussion around the SPL. relationship that takes quarters to negotiate and arrive at the final agreement following the success of our ability to enter into new SPL.s over the past couple of years, we are continuing to build and expand STL Pipeline as time progresses.
We believe that having the only commercial nonviral therapy, which utilize our platform to engineer the cells, will generate additional interest and finalizing a number of new SPO agreements, which have been in discussion for some time and that new discussions can begin to support continued SPL signings in the years to come. We believe that there's opportunity for substantial clinical milestone and commercial revenue as RSDL clients' programs move towards late stage clinical development and commercialization.
As we look into 2024, we have a robust STL Pipeline, which we will continue to execute on over the past two years. Max, I have strategically invested to support the growth opportunity ahead of us. Notably, we have made investments to ensure that we have the strongest manufacturing, regulatory and quality capabilities to support our customers throughout development and commercialization.
We have added to our teams across the organization in order to scale the business and we have made targeted product development enhancements, including development of the BLX. We have developed disruptive technology in the BLX that will enable rapid production of transiently expressed proteins at large scale for preclinical and early clinical use that we believe will offer a much more efficient manner for research.
We believe the commercial opportunity in the bioprocessing market is large, but will take some time to develop following feedback from industry and in more detailed evaluation of the opportunity for the Vilex, we are taking a more measured approach to developing applications and understanding customer needs before launching robust commercial offering for the Vilex, we remain committed to taking the time necessary to deliver the most efficient platform for our customers.
Starting with evaluation of our beta customer feedback throughout 2024 and 2024 will be measured in our investments and focus on areas that we believe will deliver significant returns to our customers and maximizing the long term. The key areas of moderate investment may include improvements are best in class electrification systems, building additional application know-how, building capabilities to work with customers earlier in the continuum of development and selling into new applications for electroporation.
In summary, we have entered 2024 well-positioned to deliver on our financial and strategic goals this year. Max, I will continue to navigate the operating environment methodically, recognizing the challenges we experienced in 2023 were felt industry-wide and staying vigilant of changing dynamics in our industry. I firmly believe in the long-term opportunity from that site as a premier enabler of non-viral cell therapies.
With that, I will now turn the call over to Doug to discuss our financial results. Doug?

Douglas Swirsky

Thank you, Maher, total revenue for the full year was $41.3 million compared to $44.3 million in 2022, representing a 7% decline. Total revenue in the fourth quarter of 2023 was $15.7 million compared to $12.4 million in the fourth quarter of 2022, representing an increase of 26%.
In the fourth quarter, we reported core revenue of $7.2 million compared to $10.6 million in the comparable prior year quarter, representing a 32% decline. This includes revenue from Cell Therapy customers of $5.5 million and revenue from drug discovery customers of $1.6 million, which declined 27% and 46% year-over-year, respectively.
Within core revenue, instrument revenue was $2.3 million compared to $3.7 million in the fourth quarter of 2022 lease revenue was $2.4 million compared to $2.8 million in the fourth quarter of 2022. And processing assembly or PA revenue was $2.2 million compared to $3.7 million in the fourth quarter of 2022.
We saw sequential improvement in instrument revenue and stabilization in PA revenue compared to the third quarter of 2023. Year over year declines in revenue were due to the challenging market for our customers, which resulted in conservatism of spend and pipeline prioritization.
For the full year of 2023, we reported core revenue of $29.8 million compared to $39.6 million in 2022, representing a 25% decline. This includes revenue from Cell Therapy customers declining 25% year over year, and drug discovery revenue declining 23% year over year.
Within our core revenue instrument revenue was $8.3 million compared to $11.7 million in 2022. Lease revenue totaled $10.3 million compared to $10.9 million in 2022, and PA revenue totaled $10.3 million compared to $16 million in 2022.
Of note, 48% of our core business revenue was derived from SPL clients in 2023, which compares to 42% and 40% in 2022 and 2021, respectively, increase in revenue from SPL.s as a percentage of total core revenue highlights the challenges that early-stage pre-clinical customer space during the course of 2023, which we have spoken to you throughout the year.
While our SPL. clients were not immune to funding constraints and pipeline prioritization, the magnitude of the decrease in core revenue from SPL clients was less substantial compared to our earlier stage customers. We recognized $8.5 million of SPL. program related revenue in the fourth quarter of 2023 compared to $1.9 million of Espial carbon related revenue in the fourth quarter of 2022.
For the full year, we recognized $11.5 million in milestone revenues as compared to $4.6 million in 2022. We exceeded our initial milestone guidance for 2023, which was a risk-adjusted forecast for the year. The approval milestones from our STL Pipeline in multiple geographies drove the upside to our initial guidance.
Moving down the P&L. Gross margin was 90% in the fourth quarter of 2023 compared to 88% in the fourth quarter of the prior year, driven by our mix between core and SPL. program related revenue.
Total operating expenses for the fourth quarter of 2023 were $22.2 million compared to $17.6 million in the fourth quarter of 2022. The overall increase in operating expenses was primarily driven by compensation expenses related to account professional base and lab and new product development expenses.
Moving forward, the Company plans to continue to make strategic targeted investments while moderating our rate of OpEx growth in 2024. We will be disciplined in our spending, valuating investments in business and corporate development, commercial sales and marketing operations and field application scientists to drive long-term growth. We finished the fourth quarter with combined total cash, cash equivalents and investments of $211 million and no debt.
Moving to our full year 2024 guidance. We provided initial guidance last week, and we are reiterating our outlook today. We expect core revenue of flat to 5% growth as compared to 2023. The components of our core business are anchored in lease revenue of clinical and commercial instruments, new instrument placements and the sale of processing assemblies, the consumables used by our customers.
We are confident in our ability to grow the core business in 2024, we are not forecasting any substantial positive or negative change in the macro-economic environment for our customers. So I will note that the capital raising activity by the industry and some of our customers has started off better than we expected.
Time will tell whether that capital finds its way to R&D programs that will drive demand for Maxim products, but we are keeping an open ear to customers and the potential for updated plans as market conditions evolve, we adapted to the difficult environment we saw in 2023 and are confident in our ability to execute through a stabilizing environment in 2024 SPL. program related revenue expected to be approximately $3 million in 2024.
This is a risk-adjusted forecast that is achievable under a variety of potential outcomes across our SPL.s and their planned clinical progress. At the end of 2023, we recognized milestone revenue from one of our clients, which we had initially anticipated in 2024. Our expectations for SPL. program related revenue for 2024 will reflect the timing of this milestone and the resulting difficult year-over-year comparison.
While we do not have visibility on the timing of cash getting patient infusions, we expect to begin to recognize royalty revenue from Vertex later in the year. However, we have not included royalty revenue from past Jebi in our initial 2024 outlook.
Finally, Max sight remains in a strong financial position and continues to expect to end 2024 with approximately $175 million in cash, cash equivalents and investments and no debt on our balance sheet. I would like to close by stating that we are confident in our 2024 revenue outlook and believe that our modest cash burn and strong balance sheet will serve to support backside long-term growth.
Now I'll turn the call back over to Mr. Maher.

Maher Masoud

Thank you Doug. Overall, we believe our accomplishments in 2023 and further validate endpoints of our expert electrification platform and the long term growth potential from Exide. We look forward to supporting our customers through the development stages and commercial activities to deliver new cell-based therapies to patients in need.
Nexstar remains excited about the potential of our clients' assets as they progress through clinical development. And we are committed to expanding our SBL portfolio in 2024 and beyond. I'd like to thank the Maxar team for their dedicated work, which has helped solidify max size position as a premier enabler of non-viral cell therapies.
With that, I will turn the call back over to the operator for the Q&A. Operator?

Question and Answer Session

Operator

Thank you. (Operator Instructions)
Jacob Johnson, Stephens.

Jacob Johnson

Hey, good afternoon, everybody. Thanks for taking the questions. Maybe, Doug, just first on the guidance, I guess two questions. One, it doesn't sound like you're assuming any improvement in the end market can you just talk about if you've seen any signs from kind of the recent funding of moving more positivity from your customer base?
And two, I understand, we're not including cash heavy royalty in the program revenues. Is any of that contemplated in the NEPA. or any PA sales contemplated in the core revenue guidance?

Douglas Swirsky

Great. Thank you, Jacob. So I'll take those questions one at a time first, with respect to the guidance that we're providing and how we might be feeling about the macro environment, we've tried to be realistic in set conservative, achievable goals for ourselves this year. We do believe that that will probably hit the trough in terms of the overall market in cell therapy and or other end markets.
So we're cautiously optimistic that things could improve this year, but this guidance does not really reflect an improving environment. So I think that there's certainly some upside there if the market improves, we've seen some early signs and we'll be encouraging some large financings done, and we'll see how that visit additional capital that's available that's flowing into the space might benefit us.
But again, we're just being conservative in the way we've built. Our revenue has always been based on buildup from specific identified opportunities for on the instrument placement side, it's using a PA run rate. That's where we were at the end of last year as opposed to expecting and building into the forecast that things would improve. So again, I think a conservative and realistic forecast. And if the market improves and we do see some reason to be optimistic, then we could potentially benefit from that. But it's not built into the forecast.
With respect to cash JV, what we've done there because of we're not including in our guidance for as pill burden related revenue. We're not including anything there. It's just challenging to really look at that. And also we don't want to get ahead of our partner in terms of predicting what sales would be some of the growth in core revenue, again, we're projecting or guiding to zero to flat. So we assume there will be some growth and that growth is going to be sort of with and without additional pieces of debt from cash out.

Jacob Johnson

Got it. Thanks for that. And then maybe, Maher, you mentioned how important the support of the commercial therapy is that maybe it'll it will help you close some additional NPLs. I'm just curious, it's been a couple of months since the approval of cash. You have a just curious kind of what your business development team targeting those last couple of months and if you're getting more inbounds now that you support the commercial therapy?

Maher Masoud

Yes. Thank you Jacob. Nice senior most any question from you as always, I guess I just want to take a step back. Obviously, cash has been validating, as I've said before in terms of what it means for the company and also a means for the nonviral acetyl space. But in terms of obviously, we signed three SPL.s this year to date already.
It definitely allows us to have that further conversation with the STL partners that are already in the negotiation phase and are those customers that are looking to transition to the clinic. But I don't want to take a step back here for a second cents.
So if you look at how we've built our business development team over the last few years and really over the last six, seven years, even we're having more and more traction. Now the relationship we have with our customers really starts off in the early research, right? Where we're with them, oftentimes for 9 months, 12 months, 1.5 year.
We are working into early research, helping them to talk to optimize our process and when they're ready to get into the clinic, that's when we enter into those negotiations. So cash, it gives us the ability to have those continued discussions and give us the ability to really help us with our increasing pipeline for SPL.s.
But these relationships that we have is not just relying on our approval of a commercial product that's really relying on the team we've built here over the last few years and that scientific relationship that we've built with customers from research all the way through past the into the clinic for call to answer your question, Jacob.

Operator

Thank you. Dan Arias, Stifel.

Dan Arias

Afternoon, guys. Thanks for the questions. Maher, just wanted to ask a follow-up question on cash JV and in doing so I think I'm probably just asking a broader question about the way that these commercialization events that your SPL.'s benefit you now that we're in the early days of seeing that play out.
I mean, obviously, you have the royalty revenues on the sales of the drug. And I know you've said you don't have enough information there to make a call, which is fair. But to Jim's point, I mean, I'm just curious about the general ramp up in instrument utilization and activity that takes place at Vertex are crisper or wherever once they move into patient treatment mode.
I mean it seems like that should go up as you as they make more product post-approval but is that true or is there a way of thinking about that? It would just be kind of helpful to understand the way that the model could be impacted when we think about these approval successes?

Maher Masoud

Yes. Yes. So Dan, thanks for that question of great points. So obviously, that we will we don't want to speak ahead of Vertex. But as the patient enrollment increases as more patients more patients are screened and then eventually, if you'd absolutely wait.
So we'll see that trajectory that that's what we hope is that the hockey stick for adoption of our cash valuation increases, the revenue that we have on the back end as well. So obviously, our net sales are a few that are our percentage of the candidate is based on the net sales of cash. I mean that would be for any commercial product that's approved that utilize our system.
So yes, you can expect that ramp we can't speak to the numbers as to whether that is because we will that will that Vertex speak to what they anticipate being the forecast cast of the sales, but that's correct.
I mean, as we have more and more patient adoption will have more utilization of consumables, more utilization of our of our instruments, which adds to that recurring instrument license fees that we have on an annual basis. So I ve been helped out a couple of them.

Dan Arias

Yes, that is. Okay. And then just as a follow-up, where do you think we are when it comes to draw down on the PA inventory levels? That's obviously been a factor. It seems like there could maybe be a little bit more visibility there than just a capital raise activity or pipeline progression.
So just curious if you think that there is more visibility there and as that's an element that maybe is looking a little bit better as you're thinking about the next couple of quarters.

Douglas Swirsky

Thanks, Dan. This is Doug. So I think with respect to having an inventory drawdown, I think a lot of that was completed last year, and I certainly don't want to get ahead and speak too much about Q1. I think we're off to a reasonable start.
This year, we are seeing some reasonable activity, particularly from SPL partners on pull through. And so I don't think that we're going to see. I don't think we have that same issue that we had last year about folks really working through inventory that they have built up in previous years.

Operator

Thank you. Matt Larew, William Blair.

Matt Larew

Good evening. Sort of following up on Dan's question there and thinking about the cadence throughout the year. Most companies in the space have pointed to a much more back half loaded year. And you typically have done about I think, 43% of total revenue in the first half of the year. I'm just wondering if the split participating is any different than your historical level?
And then if there's any discrepancies from a instrument versus a PA utilization perspective, particularly early on in the year, and we should be thinking about it.

Douglas Swirsky

Thanks for the question. This is Doug. So the way we've set our forecast for the year, we're not expecting any significant seasonality here come. So in terms of back weighting versus the front end of the year, we're not expecting any major seasonality here.
If you will know, typically there have been reasons why Q4 usually is a little stronger that people are getting to the end of the year moving to the deployed budget, but was clear for us and maybe this speaks to the conservative nature for how we set guidance this year.
There's absolutely no sort of recovery built into our forecasts, right versus the current market conditions. We're facing PA utilization for our forward guidance here based on where we came off of 2023. So I can't speak to how other companies set their guidance, but we certainly have not baked in any component that requires the industry to it significantly improved the macro environment for our client base this year, but does have and that represents some upside.

Matt Larew

Okay. And then just on VLX., obviously, that product was launched in fall 2022 sort of on a beta basis and took it out there in the market with select customers for some time at this point you're sort of referencing does I've gone back to the drawing board at least sort of reevaluating applications and commercial approaches.
I'm just wondering what particular you think needs to be tweaked or added or subtracted from and to make that product find the right market?

Maher Masoud

Yes. No, it's absolutely. So this is Maher. Obviously, it's not tweaking it, but we're taking the approach in the sense of very similar to what we did in the cell therapy space, right, which is when we entered the cell therapy space, which really took the time to understand the application needs of all of our customers, right?
And so we're doing the exact same thing, the bioprosthetic space. So we're working with a few early adopters truly understanding where is the utilization the Vilex going to show the most promise in terms of applications and for which cell lines and how much, you know in terms of the production needs are going to be there for the BOX. So it's not working, right?
So the engineering on the deal actually we have it's something that that's either weekly or when we launched it at the end of last year in order to showcase their ability to produce, translate produce protein and a significant amount. Now it's ensuring that we're working with several early adopters where we truly understand the applications that will allow us to launch into a much bigger market.
So when I say tweaking, it's more learnings from our customers, just like with the cell therapy space. And it's more learnings of the MarketSoft to understand what we when we do more bus launch, how do we how do we ensure that that happens in a fashion where we're no longer work with early adopters that will work across prospecting of customer. So it's not squeaking. It's really understanding the market more than we have currently.

Operator

Thank you. Mark Massaro, BTIG.

Mark Massaro

Hey, guys. Thank you for the questions. And congrats on a good start to the year with the new SPL.s added. I wanted to start on guidance. And Doug, I know you mentioned that your guide does not assume any improvement on our any end market improvement.
I just wanted to double check that you're likely referring to improvement in cap and the capital raising environment and then related to that, I believe you guys indicated that capital raising environment is starting the year a little bit better than you expected. Could you please elaborate on that and maybe any comments on public companies versus private companies.
Anything that you're seeing would be helpful

Douglas Swirsky

Or can we take that in reverse order in terms of capital markets? Or will we go back to the first question, when I when I said improvement in the macro, I guess we really are talking about the capital availability for our customer base and at the end of the day, we can untether ourselves from the market we serve and provide enabling technology to.
So as things are strong there from terms of having access to capital and that will help us last year, capital wasn't free flowing as much as it had been and you had companies rationalizing their pipeline, you've had people pausing some things.
And I think that there is some signs of life here. We've seen some I mean we can talk about some specific financing that we've seen in the market. But I think you can certainly see what those were I am mostly referring to public companies. We do know that the private companies will have access to capital.
But I think the way this typically works is you need some of the public companies to have some better results to do some financings that are viewed as successful by market participants and then perhaps that rolls that rolls down to some of the private companies.
I think it's predominantly been the public companies that we've been able to observe specific announcements regarding significant financings for companies in the space to start the year we did not build into our forecast that the markets will improve.
And while we've got some reasons to be encouraged based on what we've seen, it's still early days here in terms of how things are going to roll out for the year. And so again, we've taken a very conservative tried to set achievable goal for ourselves with this guidance to make sure that we are again, forecasting pull through, for instance, based on what it looked like last year. And that's just I think, the best way to do it. Obviously, we want to be in a position to achieve what we set out to do this year.

Mark Massaro

Okay, great. And then maybe just another guidance, clarification question on obviously, 2023 was a tough year for the full year, your car business was down 25%. It was a little worse than that in Q4, down 32%. So you know, for 2024 for you to guide flat to plus five, obviously does imply an improvement in trends.
So yes, I guess what I'm trying to get at is what informs your assumption that you can come in flat to up this year. Can you just give us a sense of if you think a lot of the but the business will come in through PAs versus placements.
And related to that, I think you placed 67 new systems last year versus 114 in the prior year. So just give us a sense for how much of this growth or flat to slightly up will come from PA consumption versus new system placements?

Douglas Swirsky

We typically and we're not going to do a breakdown of that guidance in terms of the specific comments, but let me just remind you how we build this up because again, it's I think it gives you some comfort or some understanding of how we're thinking about the market and how that might impact utilization of our platform.
So the three main components of core revenue are the leases for the instruments that are under the SPL. arrangements, it is the instrument, the instrument that sales to the other markets we serve. And of course, the PA revenue came from innovation.
That is a pull through that. We're basing that analysis again on where we ended the year. We're looking at specifically what's the rate of PAs that we were selling at the end of the year and we said, let's be conservative. Let's look at that and roll that forward for 2024.
Now, the instrument placements for the for 2024, we're building that up from specific identified opportunities that comes in through our commercial team that we model out is to determine what the likelihood of any particular opportunity is coming through, again, using what we think are improving assumptions about what's going to hit, and that's how we build off this revenue.
So I can't specifically say how much of this is PA utilization, but I can say that the PA utilization that we're using to build that number up based on where we came out through the end of the year. And I recognize Q4 was tough on a year-over-year basis. It was certainly better in many ways for that to happen the third quarter.

Operator

Thank you. Steven Mah, TD Cowen.

Steven Mah

Great. Thanks for taking the questions. On the SPL numbers in 2024, and I don't think you guys are guiding to a number, but how should we think about new scales in the year, given your historic three to five per year, especially that you're kind of already in that range with three already year to date? And then also given your comments that the SPL pipeline is robust?

Maher Masoud

Yes, (inaudible) So obviously, we signed three this year and we're confident in what we've done in the past, which is three to four, three to five of the three this year doesn't mean that we're assigning three every quarter, right? So the way it normally works on these, as Kelly mentioned earlier, Randy's relationships oftentimes for the 9 months, 12 months, 18 months with the customer all the way.
Through sometimes whether bolus where by the time that we've done across the Zama work for that customer where the rates become to go into SPL negotiations, you might have a bolus where you have a few customers that are signing around the same time.
But overall, we're comfortable with the pipeline we've built that we can maintain the historical trend of that three to four plus number on an annual basis and that's what we're that's what we're guiding to right now as well. So you know that that three number I wouldn't take as three every quarter, but to help you know, were it not for the pipe, but.

Steven Mah

Yes, yes, no, no. Understood. And then maybe Maher, you talked about $1.9 billion in potential value from the from SPL partnerships in your portfolio are popping up from $1.5 billion last year. It has there been any internal changes to your NPV calculations in I know interest rates are trending down, maybe there's a better approval and regulatory environment which might improve probability of success and therefore, your discount rate, how should we think about Have there been any changes are you guys being conservative in your calculations.

Maher Masoud

So to be clear, and you know that that number that you reference is not a risk-adjusted number. So it's not discounted. It's not risk adjusted in any way on how we think about NPV of our programs. We do factor in those.
Are those factors both is that the metric that you're that you're mentioning, Steve, does not include any discounting or risk adjustment. Is it strictly what is available to us under the SPL. agreements you had every item in there hit?

Operator

Thank you. (Operator Instructions)
Matt Hewitt, Craig-Hallum.

Matt Hewitt

Good afternoon and thank you for taking the questions. Maybe to follow on one of the questions a couple of ago on I think you were acknowledging Q4 was tough when everybody knows that it was tough. But what are you seeing so far in the first quarter?
Obviously the funding seems to be improving a little bit, but are you seeing that slight improvement in funding translate into some slight improvement in the PA utilization in the discussions that you're having with potential SPO customers?

Maher Masoud

Yes. Hi, Matt. Let me take that for. So we are seeing that stabilization that we saw in Q4 really materialize in Q1 as well. And that's kind of the funding environment that's also been from our SPL in the customers that we believe will begin to trickle down into non-industrial customers. You saw a few of our customers are raising over $1 million recently in public offerings. So we're seeing that stabilization.
In terms of the pure utilization, I'll let Doug speak to that. Obviously, with the stabilization, we're hoping that that continues throughout the year. So did you want to comment on the payer here.

Douglas Swirsky

I mean, let's just talk about where we are Q1. First off, just to recall, what we're talking about in response to a previous question is that at least, it has been a seasonality here in the cadence of the business. So there's nothing built in here that says, hey, as long as we have a big second half of the year, we're going to be able to achieve what we set out to do here. So given that we are sitting here a couple of weeks out from the end of the first quarter. We feel good about where we are today. We think we're on track.

Matt Hewitt

Got it. And then maybe a separate question on your partners have talked about on the there's a multistep process with kind of JV on the patient enrollment on the cell recovery, all of that, and it's multiple months with each of those steps.
And hence, the I guess the desire or the need to be conservative at least this first year. But is it your expectation that as we get through and as your partners get more comfortable with that process that that time line shrinks. And so maybe you get a more normalized pattern of patient enrollment to patient treatment and the time line shrinks. So maybe '25 and beyond become more normalized, if you will.
Yes.

Maher Masoud

Let me take that one, Matt. So the time line will shrink because that's the patient journey, whether it's now or in '25 or '26. But what will happen is as you have more patients that are having infusions, you will normalize in the sense of you have more patients now that are in any given month being treated with cash heavy. So it's not necessarily a crunch of the time line.
It's more of a normalization in terms of the use of the cash usage for us. It is based on how many patients are being dosed, which we are hopeful that over the next year and then two years that you'll have more adoption of cash and we have more patients being treated on a monthly basis. So I hope that answers your question.

Operator

Thank you. That's all the time we have for questions today. I would now like to turn the call back over to Mr. Maher Masoud, CEO, closing remarks.

Maher Masoud

Yes. No, thank you, everyone, for participating, and we look forward to speaking with everyone on our Q1 call.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect, and everyone have a great day.