Since its discovery, the use of CRISPR has exploded. It is being licenced by companies for research, for medicine and for the development of new cancer therapies. The technology could enable humans to treat or even to cure inherited diseases such as sickle cell anaemia.

CRISPR joins other new advances such as CAR T-cell therapies as part of a new vogue of technologies that allow us to reengineer human cells and DNA. These technologies are bringing about a revolution in medicine that will change life as we know it. The US markets are home to the vast majority of the companies who are part of this revolution, but there are also some choice options for UK-focused investors.

MaxCyte (LSE:MXCT) is a London-listed US-based company whose share price has grown five fold over the last year as investors have grasped the magnitude of the oncoming biotech revolution. MaxCyte owns and licenses the proprietary cell-engineering platform technology that biopharmaceutical companies rely on to develop the technologies that they have licensed, such as CRISPR, into new cell therapies, including DNA editing.

For example, in May 2020 MaxCyte entered a licence agreement with Caribou Biosciences that will enable Caribou to utilise the MaxCytre platform to develop its CRISPR gene-edited allogenic T cell therapy programmes. MaxCyte will receive development and approval milestone payments as well as other licencing fees.

Deals like this mean that MaxCyte now has 20 of the top 25 pharma companies as its client, with licences granted to over 120 cell therapy programmes. The aggregate potential value of pre-commercial milestones payments that Maxcyte could receive from current licence deals is over $800m, and MaxCyte could double this annually based on wider trends.

In October 2020 MaxCyte reported half year revenues 30% up on 2019, which were already 30% up on 2018. MaxCyte grew the number of commercial deals that it has in place to 11, up from just four in the previous year. The company also doubled the number of clinical products that it has under development, with over 90 products currently under licence.

MaxCyte revenues are driven by visible high margin recurring annual fees from its cell therapeutics business, as well as instrument sales and clinical milestone payments. As companies continue to licence the CRISPR technology, I believe it is MaxCyte that stands to benefit as it becomes the ‘platform of choice’ for the development of cell engineered projects.

What are the downsides? Revenues may be growing by more than 30% year on year but are expected to be a relatively modest $20m at the full year results in April 2020. And despite MaxCyte reaching break even, a market capitalisation of £354m at the time of writing may seem high. And as a constituent of AIM the liquidity of MaxCyte stock is low, with only 16.5% in public hands.

Investors who feel that too much future growth is already priced in to MaxCyte to make it an interesting investment proposition might want to look deeper into the wider ecosystem of licencing deals for cell and DNA engineering, which is booming. The cell and DNA engineering revolution is only just beginning, and I feel MaxCyte is well position to directly correlate its prosperity with the exponential growth of these new technologies.

Investors who are prepared to play the long game may well get to enjoy the ride from obscure AIM company to FTSE 100 blue chip in less than 10 years. You heard it here first.

Right now, I’m looking at the prospects for MaxCyte (LSE: MXCT), which released first-half results Tuesday. MaxCyte is a US-based biotechnology company with a listing in London, and it’s in the pioneering field of cell-based medical treatments — an area with terrific potential.

The company saw revenues rise by 13.6% to $6.2m in the period, though with operating expenses of $9.5m we’re not expecting to see profits for a few more years. Things look financially secure, though, with £20m ($27m) raised on AIM in April — the firm’s cash balance stood at $30.2m at 30 June.

Impressive technology

MaxCyte’s CARMA technology is a big hope, and it has Johns Hopkins Kimmel Cancer Center and the Washington University in St Louis on board with ongoing collaborations. Research indicates the potential of the CARMA platform for developing immunotherapies for the treatment of solid tumours, and any potentially significant advance in cancer therapy has to be exciting.

A commercial agreement with CRISPR Therapeutics and Casebia Therapeutics in March to develop therapies for haemoglobin-related diseases and severe combined immunodeficiency sounds promising too, especially as MaxCyte has already received some up-front payments. Immunodeficiency is another growing health bugbear of the 21st century.

With the shares at 247.5p, it’s hard to put any fundamental valuation on them — further losses are forecast for the full year and for 2018. With these blue-sky prospects, all we have to go on is our subjective take on the new technology, and that’s risky — but I’m seeing a risk that I think is worth taking here.

Slow and steady

One way to offset a risk like MaxCyte is to combine an investment with a safer mature company, and I reckon adding some GlaxoSmithKline (LSE: GSK) shares to the mix could be an ideal route to a balanced investment in the pharmaceuticals and biotechnology sector.

Glaxo has been generating cash and rewarding shareholders with progressive dividends for decades, and I’m seeing late 2017 as a very good time to get hold of some shares. Last year brought an end to years of earnings falls due to the loss of some key patents, and a 35% EPS rise looked impressive. Growth is expected to continue this year and next, though at a slower rate — but even the modest growth rates on the cards for 2017 and 2018 put the 1,453p shares on a forward P/E of only around 13.

Dividends looking stronger

I was concerned that dividends could come under pressure during the downturn, and 2015’s payment wasn’t even covered by earnings. But with cover getting back up to around 1.4 times, I’m seeing the mooted 5.5% yields as pretty safe now. In fact, at the interim stage the company said it expects to maintain its payout at 80p both this year and next, while stressing the payment of dividends as one of its key priorities in its use of cash.

Interim sales were up 14% at actual exchange rates (AER) and 3% at constant rates (CER), which seems assuring. But more excitingly, new product sales of £1.7bn represented a 62% rise at AER (47% CER). 

Coupled with the steady stream of upbeat drug trial news coming from the pharmaceuticals behemoth, Glaxo is firmly a buy in my books, especially at today’s bargain price level.