Aktis Oncology, Inc.

Good day, ladies and gentlemen, and welcome to the ACOUSTIS Technologies Business Update conference call. As a reminder, this conference call is being recorded. At the conclusion of the company presentation, ACOUSTIS management will take questions. To ask a question, please press star 1 on your telephone keypad to be placed into the queue. A replay of the call will be available on the investor relations section of the ACOUSTIS website. It is now my pleasure to introduce Tom Sepinzi, Director of Investor Relations. Thank you. You may begin.

Thank you, Operator, and good morning to everyone on the call. Welcome to ACOUSTA's second quarter fiscal 2021 business update conference call. We are joined today by our founder and CEO, Jeff Shealy, Interim CFO, Ken Bowler, and EVP of Business Development, Dave Eichle. Before we begin, please note that today's presentation includes forward-looking statements about our business outlook. All statements other than statements of historical facts included during this conference call, including statements regarding our strategies, operations, costs, plans and objectives, including the timing and prospect of product development and customer orders, our expectations regarding achieving design wins from current and future customers, the possibility of entering into collaborative or partnering relationships, potential impacts of the COVID-19 pandemic, and guidance regarding expected revenue, product orders, and milestones for the current and future fiscal quarters are forward-looking statements. Such forward-looking statements are predictions based on the company's expectations as of today and are subject to numerous risks and uncertainties. The company and our management team assume no obligations to update any forward-looking statements made on today's call. Our SEC filings mention important factors that could cause actual results to differ materially. Please refer to our latest Form 10-K, and Form 10-Q filed with the SEC to get a better understanding of those risks and uncertainties. In addition, our presentation today will also refer to certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP measure is presented in our earnings call highlight release available in the investors section of Acoustus.com. I would now like to turn the call over to Jeff Scheele, founder and CEO of Acoustus.

Thank you, Tom. and welcome everyone to our 2021 second fiscal quarter business update call. We ended the calendar year with another strong quarter, exceeding our original guidance by 30% with revenue of $1.3 million, our highest quarterly revenue to date in our core chip business, driven by XBAL filters and filter-related revenue. Revenue increased over 100% quarter over quarter in December, as we generated revenue from each of our major commercial markets, including Wi-Fi, 5G network infrastructure, 5G mobile devices, and defense. We now have 15 commercial Xbox filters in our product catalog, with many more planned. Our production ramp with our first Wi-Fi 6 customer has been a great success, and we delivered additional filters to our Tier 1 5G network infrastructure customer in the December quarter. We expect additional success throughout calendar 2021 as we layer in new products and customers across our focus markets. We also called for the redemption of $10 million of our convertible debt in the December quarter. And last week, we announced that we have delivered notice of the redemption for the remaining $15 million to our existing node holders. This will retire all convertible debt remaining on the balance sheet and put Acoustis on a more sound financial footing. Our outlook remains confident as we continue to execute across multiple markets with the opportunity to deliver significant top and bottom line revenue and earnings growth for years to come. We currently expect to report strong revenue growth in the March quarter in the range of 2.0 to 2.5 million or up 70% at the midpoint. We are fully booked to the midpoint of our revenue target for the March quarter. The increase will be driven by our current Wi-Fi 6 customer, shipments to our Tier 1 5G small cell network infrastructure customer, initial shipments of our new 5G mobile filters to two of our three announced 5G mobile customers, engineering revenue from multiple 5G RF front-end customers, network infrastructure providers, and our recently announced DARPA contract. I would now like to provide a quick update on the impact of COVID-19 on our business and markets. We continue to employ precautionary steps, including selective remote work authorization and worksite isolation from outside visitors. The incredible flexibility afforded by our in-house manufacturing model in the current environment has allowed us to continue to develop and ship our products with minimal impact, During the pandemic, Acoustis has continued to operate with all key personnel as an essential business in both New York and North Carolina, and we continue to accelerate product development consistent with our strategic roadmap. We greatly appreciate our employees and value their flexibility and discipline staying safe during this challenging time. It is difficult to predict how or if the ongoing pandemic will impact our customers' future production ramp timing, or if we will be impacted by any supply chain disruptions going forward. Currently, we are experiencing a normalization of demand across our product markets, including Wi-Fi, especially given the emerging Wi-Fi 6E standard and the demand for HiQ microacoustic ball filters that can address these new high frequencies. I would now like to address our business performance by market segment, beginning with 5G mobile. The December quarter was our most significant quarter to date in 5G mobile, as we added not one, but two new customers who plan to incorporate RxBAW filters in upcoming products targeting 5G handsets. The two new customers are in addition to the existing Tier 1 RF module maker that we have been working with for over a year. The mobile handset market is our largest potential ball filter market opportunity by both unit volume and revenue, and we continue to see a broad increase in interest and activity in our XBall filters for the mobile market. In fact, our XBall filters have already been evaluated by several leading Tier 1 and Tier 2 mobile handset OEMs. As we have previously mentioned, entering the Tier 1 handset market in the near term would require a partner, However, we believe with our previously announced 500% capacity expansion of our New York FAB, which we expect to complete by this June, that we will have the wherewithal to enter the handset market, servicing our recently announced new RF customers and or several Tier 2 handset OEMs without a partner. Given the substantial interest in sales funnel activity for both our 5G mobile and Wi-Fi 6E filters, We're planning to further expand our New York FAB by doubling again our capacity by the end of calendar 2021 to support the ramp expectations of multiple 5G handset and Wi-Fi 6E customers in calendar 2022 and beyond. With respect to our first tier one mobile customer, we have remained actively engaged and are currently developing new 5G XBall filters for testing and approval. which is expected in the first half of calendar 2021. We shipped initial samples of XBAL filters to this customer in the second half of calendar 2020 and are currently executing against open purchase orders. Our second RF module customer, which we announced in early November, is moving quickly to develop a module for mobile applications using our XBAL filters. The customer's product is expected to be available for sale by the end of calendar 2021. I am happy to report today that we successfully completed the first filter design for this customer in the December quarter, which was one of our stated milestones, and this new design is currently running through our New York wafer fab. Finally, in mid-December, we announced a third Tier 1 RF solution customer, We are currently developing 5G mobile XBall filters for this customer with the goal of entering commercial production in calendar 2022. Given early discussions with this customer, we believe our engagement may expand to include multiple filters for multiple bands in both 5G and Wi-Fi modules. As this customer sells into multiple handset OEMs, we expect that this customer could become a significant contributor to both filter volume and revenue in calendar 2022 and beyond. We currently expect to complete the first filter design and provide early engineering samples for this customer in the upcoming June quarter. As we have discussed previously, we have dedicated engineering resources to the development of advanced chip scale packaging and wafer level chip scale packaging, or WLCSP, to address the next generation of 5G products One of our stated milestones for the December quarter was to deliver our first fully qualified CSP flip chip solution. I am pleased to announce today that the WLCSP process flow is now locked and we expect to complete technology qualification next month. Once qualified and released, we will be able to address the mobile market across our entire product line given the significantly smaller footprint of our new package solutions, which offer a one-to-one ratio to the size of the XBAW die. To summarize our 5G mobile activity, we have multiple customer-funded filters in design. We have announced three customer engagements, two Tier 1 RF component companies, and one leading RF front-end module maker. And all three customer engagements are active with either the design or manufacturing teams within our company. And finally, we have just completed the development of our first chip scale package and have additional designs slated for completion in the first half of calendar 2021. I will now discuss our achievements in Wi-Fi. We announced last week that we have successfully design locked our tandem 5.5 gigahertz and 6.5 gigahertz BAW microfilter solutions for Wi-Fi 6E. The designs are breakthrough and very challenging given their wide bandwidth requirement, which is nearly 10 times wider than our first 5.2 gigahertz product for the Wi-Fi 6 market. Further, it requires the development of high-performance piezoelectric materials and the associated modeling design kits to engineer these filter solutions. Clearly, this was one of the most important milestones we set for the December quarter as the enormous momentum in Wi-Fi 6E continues to build both in the U.S. and worldwide as other countries are making room for extended Wi-Fi above 5.9 gigahertz. Wi-Fi 6E is emerging as one of our largest opportunities driven by the rapid release and adoption of Wi-Fi 6E CPE, and evidence that handset OEMs are planning to incorporate the new 6E frequencies in 5G mobile devices. The new filters will now be able to target the router, cable set top box, and other CPE markets, as well as the future 5G-enabled mobile device market, likely making the Wi-Fi 6E market significantly larger than the current Wi-Fi 6 market by both volume and revenue. We have multiple active engagements in OEMs, ODMs, SOC makers, and channel partners for Wi-Fi 6 and now Wi-Fi 6E. We are now in the advanced stages of the sales cycle with several customers for Wi-Fi 6E and expect additional design wins in the coming months. Specifically, last week we announced a volume order from our first 5.5, 6.5 gigahertz tandem Wi-Fi 6E solution from a new Tier 1 customer. The order is for multiple user, multiple in, multiple out, or MU-MIMO consumer-focused router using multiple 5.5 and 6.5 gigahertz XBAL filters. The customer expects to ramp this platform in the second half of calendar 2021. In the December quarter, we revised and improved our custom Wi-Fi 6D filters for one of our two announced Tier 1 enterprise class customers, and delivered volume prototypes for their engineering builds. Both customers intend to use our standard 5.5 and 6.5 gigahertz XBAL filter products, which we design locked last week. We remain on track with both customers and expect both to enter production once the respective product qualifications are complete. Our Wi-Fi 6 XBOW filter solutions entered the commercial router market in the December quarter as our high-profile Tier 1 consumer-focused customer began shipping finished products. The filters are being used in a tri-band MU-MIMO mesh router with multiple XBOW filters per device. Feedback from the customer continues to be extremely positive, and discussions are already underway with increased unit expectations for next year. In addition, we have provided this customer samples of our standard Wi-Fi 6E, 5.5 and 6.5 gigahertz filters for potential use in future Wi-Fi 6E platforms. We have met all delivery expectations for our 5.2 and 5.6 gigahertz filters, and I'm personally very proud of our design and operation teams that have successfully managed this first significant commercial production ramp during a pandemic during the december quarter we announced the addition of two new design wins with new wi-fi 6 customers the first design win announced during the quarter is for a gateway router product that will use multiple wi-fi 6 x-ball filters for a mu mimo product it is expected that this product will begin its production ramp late in the june 2021 quarter the second wi-fi 6 design win announced in the december quarter is from another new customer which intends to use the 5.2 5.6 gigahertz x-ball coexistence filters for a wi-fi bridge product and is expected to enter production in the second half of calendar 2021 as wi-fi is rapidly becoming one of our largest opportunities I want to highlight that Acoustus is one of the first to market with both the 5.5 and 6.5 gigahertz BAW microfilter solutions for the rapidly developing Wi-Fi 6E market, which we believe will expand significantly in calendar 2022 and beyond as 5G mobile device makers begin to incorporate the new Wi-Fi 6E standard in smartphones, tablets, laptops, and other devices. To be clear, We believe that Wi-Fi 6E will drive significant filter revenue and unit growth beginning in the current calendar year with significant growth in 2022 and beyond. To summarize our Wi-Fi activity, we have four completed XBall Wi-Fi filters, two for Wi-Fi 6 and two for Wi-Fi 6E. We have announced three design wins in Wi-Fi 6. one of which is already in a commercially available tri-band mesh router. We have announced two Wi-Fi 6E customers that are using our standard 5.5, 6.5 gigahertz solutions. We have signed a strategic purchase agreement and are building multiple custom 6E filters for a third enterprise class customer. And finally, we have over 15 customer engagements in Wi-Fi 6E customers. ten of which have already placed prototype purchase orders. Next, I would like to discuss the opportunities in 5G network infrastructure. Wide bandwidth, high power handling, low insertion loss, and high out-of-band rejection are the core filter performance requirements for 5G network infrastructure. Acoustis is ideally positioned to grow its market share in this segment, given our small form factor filter solutions, and our growing portfolio of RF filters above 3 gigahertz, where 5G is being deployed worldwide. We are currently designing and or shipping filters in three main segments of the 5G infrastructure market, including small cell base stations, macro base stations, and citizens broadband radio service, or CBRS, equipment. Additionally, we are watching closely the ongoing FCC C-band auction for 3.7 to 3.98 gigahertz spectrum, which thus far has garnered more than $80 billion in gross bids. This will create yet another 5G network infrastructure opportunity for Acoustis, and we expect to demonstrate XBAL filters addressing this new spectrum in the first half of calendar 2021. We continue to ship XBAL filters to our Tier 1 5G small cell network infrastructure customer in support of its initial ramp. We have shipped a total of four filters to this customer and have received three design wins. The production ramp with this customer is presently slower than previously expected given operator-driven network deployment and timing changes, but we continue to expect to ramp production with multiple filters with this customer in the current year. We are currently on track to begin ramping our second small-cell 5G network infrastructure customer with volume shipments in the first half of calendar 2021. The Citizens Broadband Radio Service, or CBRS, has emerged as a new market for Acoustis after the Spectrum auctions that occurred this past summer. We continue to believe that the successful utilization of the CBRS bands within the 5G network will require a significant amount of high-frequency filters and Recent customer design activity appears to support our thesis. We locked the design of our first 3.6 gigahertz CBRS XBAL filter in March of 2020 and announced our first order from a distributor in the September quarter to support promotion and customer engagements. In the December quarter, we received our first order from a leading wide area network equipment provider for both CBRS infrastructure and customer premise equipment. We understand that this customer remains on track to begin commercial ramp in the second half of calendar 2021. Furthermore, we're currently engaged with over 10 SOC OEM and ODM makers for the development of CBRS networks using 5G and expect to have additional design wins in calendar 2021 and beyond. One of our milestones for the December quarter was to complete the development of a macro base station filter for our first Tier 1 customer and design lock the product. We successfully delivered a new high-performance filter design to this customer at the end of November and will update investors on the progress with this customer when possible. To summarize our 5G network infrastructure activity, we have five completed 5G network infrastructure filters four for small cell base stations, and one for CBRS. We have announced three design wins in small cell with our Tier 1 customer. We expect volume filter shipments to our second customer by June of 2021. We have announced a CBRS order from a leading wide area network customer for infrastructure and CPE. And finally, we have over 10 customer engagements, four of which have already placed purchase orders. I would now like to discuss our progress in our Other Markets segment. During the December quarter, we were awarded a new multi-year R&D contract from the Defense Advanced Research Projects Agency, or DARPA, to further develop ACOUSIS technology through the development of a Piezo MEMS Process Design Kit, or PDK, for the company's proprietary and patented XBAL process. The Direct to Phase II or DP2 contract is dedicated to developing a general-purpose PDK that will enable BAL and other similar MEM structures to be designed and fabricated using the company's state-of-the-art patented XBAL process. The Piezo MEMs PDK under development will encompass all aspects of the process, ranging from material properties, process rules for stack dimensions, process control monitoring, design rule checking, and example device models. Upon successful completion of the DP2 program, DARPA has an option to fund a Phase III program. This option supports multiple new customer engagements, leveraging the new PDK to create devices and circuits, including RF filters, using the company's XBAL process. We expect this will expand the opportunities for XBAL moving forward as other designers will be able to develop new products utilizing our novel piezoelectric materials and substrates outside the current devices, which could lead to new opportunities in adjacent vertical markets. To summarize our other market segment activity, we have seven completed XBAL filter solutions completed for the civilian and defense market. We have one design win and phased array radars and continue to ship production filters to our customer. We have already started and are currently progressing on our DP2 contract with DARPA. And finally, we have a total of three customer engagements, two of which have already placed purchase orders or provided NRE revenue. Now I would like to turn the call over to Ken to go through select financial highlights.