Aktis Oncology, Inc.

Good day, ladies and gentlemen, and welcome to the Acoustis Technologies Fiscal 2023 Second Quarter 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 keypad to be placed into queue. A replay of the call will be available on the Investor Relations section of the Acoustis website.

Thank you, Operator, and good morning to everyone on the call. Welcome to ACUSTA's second quarter fiscal 2023 conference call. We are joined today by our founder and CEO, Jeff Shealy, 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 in this conference call, such as expectations regarding our strategies, operations, costs, plans and objectives, including the timing and prospects 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, litigation matters, guidance regarding expected revenue, product orders and milestones for the current and future fiscal quarters, and expectations regarding the integration of acquired business operations 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. A reconciliation of these measures to the most directly comparable GAAP measures is presented in our earnings call highlight release available in the investors section of Acoustis.com. I would now like to turn the call over to Jeff Scheele, founder and CEO of Acoustis.

Thank you, Tom, and welcome everyone to our fiscal 2023 second quarter conference call. I am pleased to report that the December quarter was a transformative period for Acoustas. This transformation is centered around our entry into the 5G mobile handset market through the qualification of our new wafer-level packages that were developed and manufactured in less than one year in our upstate New York FAB. The availability of this disruptive package technology facilitated our first design win, along with a high-volume order for the 5G mobile handset market, our largest addressable market by volume and revenue. In January, we completed the acquisition of privately held Grinding and Dicing Services Inc., or GDSI, a strategic addition to our business model across multiple fronts. GDSI has been a key part of our back-end supply chain over the past year as we increase the usage of chip-scale packaging, or CSP, and wafer-level packaging, or WLP, in our XBAL RF filter product portfolio. Further, GDSI adds a critical piece to our strategy in 2023 to pursue Chipsac funding to reshore our back-end packaging supply chain on our existing campus in upstate New York. Integrating and expanding GDSI into our New York operations will create an end-to-end domestic semiconductor manufacturing process, supporting national security while also creating many attractive, high-paying jobs in the Finger Lakes region of New York State. Finally, for our current RF filter customers, we expect that the integration of GDSI will enable Acoustis to substantially speed up the prototype process and consequently reduce the time to market for our leading X-Ball filters. This acquisition could not have happened at a better time as demand is rapidly increasing for ball filters that operate at frequencies in our sweet spot above 3 GHz in the 5G mobile, Wi-Fi, network infrastructure, defense, timing control, and other markets. I am pleased to report another quarter of record revenue with 5% sequential growth over the September quarter. Our XBAL filter revenue grew sequentially in the December quarter, and we expect continued growth on a quarterly basis moving forward. This revenue growth was achieved despite significant macro headwinds across most of our operating segments. Looking ahead to the March quarter, we are expecting 20% to 40% sequential growth across multiple products and services, participating in multiple end markets. The weakening demand in the tech sector, along with several other macro challenges, may impact the rate of growth of our business in the near term, which is consistent with recent commentary and guidance from other semiconductor companies. During the December quarter, we experienced broad weakness in our soft filter business in end markets such as automotive, IoT, medical devices, and particularly in China and Europe. We expect strengthening in our SAW business in the current quarter. However, in our XBAL filter business, we expect to see growth increase in the second half of the calendar year as we ramp in mobile and our next generation Wi-Fi 6E products begin to ramp with multiple customers. While we navigate near-term challenges, we continue to expect incremental sequential growth each quarter throughout this calendar year. Further, we remain focused on executing our entry into the 5G mobile device market with volume shipments beginning this quarter, providing Acoustus with a significant opportunity to grow rapidly in both unit volume and revenue for the foreseeable future. I would now like to give a brief update regarding the Chips and Science Act of 2022 and how Acoustis hopes to benefit from the act. The Chips Act legislation was introduced and authored in part by Senate Majority Leader Chuck Schumer. Its goal was to boost U.S. competitiveness with China by allocating tens of billions of dollars to increase domestic semiconductor manufacturing and science research. As some of you may recall, Senator Schumer has personally visited and toured the Acoustus Fab in upstate New York twice, once in June 2021, and again this past September. He was pleased with the growth in manufacturing capacity and new jobs that we have delivered over the past year. Acoustus Senior Management is working closely with the local, regional, and state government of New York, along with Senator Schumer's office, to support implementation of CHIPS Act opportunities in upstate New York, which we expect will present a significant opportunity for the revitalization of upstate New York's semiconductor presence and, in particular, the greater Rochester area, where Acoustis RF filter chip manufacturing facility is located. Over the past five years, Acoustis has proudly manufactured its innovative RF filter chip products in the USA We believe the CHIPS funding is meaningful to Acoustis and its shareholders and that we perfectly fit Senator Schumer's blueprint to make New York the global innovation and semiconductor hub. We plan to apply for funding under CHIPS Act shortly after the submission window opens to add multiple new 8-inch silicon wafer manufacturing lines at our New York site. In addition, Given the supply chain delays, energy shortages, and constraints associated with our Asia packaging partners, we hope to secure Chips Act funding to leverage the back-end expertise of our GDSI business to build a U.S.-based advanced packaging center for the purpose of reshoring our packaging supply chain to reduce product costs and deliver our filter products with shorter time to market. This U.S. packaging facility would support ACOUSTIS XBAL filters as well as be offered to GDSI's 250-plus customers requiring back-end services. With respect to the possible magnitude of the funding for ACOUSTIS, we previously indicated the magnitude of our proposal could be a multiple of the current market cap of ACOUSTIS. Of course, there is no guarantee that we will receive the amount of funding in our proposal, And it is noteworthy to say that the requirements and processes for submitting a proposal for funding under the CHIPS Act is yet to be published. The projects financed by such funding would position Acoustis to manufacture and deliver billions of XBall filter chips annually and to serve both Tier 1 and Tier 2 mobile device companies for 5G smartphones, as well as other multi-billion dollar end markets, including 5G network infrastructure, high frequency Wi-Fi devices, and other wireless markets. I would now like to provide a little more color on our primary target market. We recently achieved one of the most important milestones in company history, allowing us to participate in the 5G mobile market with the completion and qualification of our internally developed wafer level packages, or WLP. This new package technology is significantly smaller than our legacy technology and is the key that has allowed us to enter the 5G mobile device market, where miniature size is a gating factor. Our new packages are pen for pen compatible with rival ball filter competitors and enable Acoustus to compete strictly on performance, where we believe we compare quite favorably. Bringing the WLP process in-house enhances substantially our ability to control the quality, cost, and customization of our advanced packages. The successful development and qualification of our new WLP solutions facilitated our first 5G mobile design win and follow-on high-volume order, both of which we announced in the last two months. This new filter solution will be incorporated in our customers' multiplexer for 5G mobile handsets and other portable devices. The multiplexer supports a major 5G mobile chipset reference design that is planned for introduction in the first half of calendar 2023. We expect to begin shipping to this first 5G mobile RF component company customer in the current quarter. And finally, during the December quarter, we delivered the first of two filters, one of which will be down selected after both have been completed and tested. to a tier one RF front end module customer that is targeting a production ramp in calendar 2025. The customer is leveraging our leading XBAR technology to develop a filter that can address difficult coexistence issues in 5G mobile and is expected to develop additional filters using our technology upon the successful completion of this initial design. Next, I would like to discuss recent developments in our Wi-Fi business. During the December quarter, we announced three new design wins in Wi-Fi 6E for carrier class applications. We've received two of the design wins from a leading European Wi-Fi OEM that will be using Acoustis' 5.5 gigahertz and 6.5 gigahertz standard XBAL coexistence filter solution, as well as our 5.6 gigahertz and 6.6 gigahertz standard X-Ball coexistence filter solutions that allow for greater usage of the Uni-4 band. The first Wi-Fi 6E router entered production at the end of calendar 2022, and the second router is expected to begin ramping by the end of March 2023 quarter. The third design win is from a global network communication solutions provider that will be using Acoustis' 5.6 gigahertz and 6.6 gigahertz standard XBAL coexistence solutions and a Wi-Fi 6E extender for its carrier partner with a production ramp expected by late summer 2023. In October, we announced new next generation Wi-Fi 6E and Wi-Fi 7 filter solutions designed to meet the stringent rejection requirements enabling coexistence with the UNI 1 through 3 and Uni 5 through 8 frequency bands. They offer what we believe is the best out-of-band rejection capability available today and at a significantly reduced size given our new chip scale packages. We expect to fully qualify these next generation Wi-Fi 6E and Wi-Fi 7 products and ramp production in the first half of the current calendar year. Switching from legacy packaging to our new advanced WLP and CSP products is expected to greatly improve our gross margins over the next 12 to 24 months and supports our effort to achieve cash flow breakeven in the first half of calendar 2024. The Wi-Fi market continues to experience significant disruption from the supply chain issues we have discussed previously, as well as new headwinds in the retail market that have emerged with the impact of inflation on consumer spending. Overall, this market is characterized as performance-driven but competitive. Nonetheless, we continue to increase the number of design wins in high-frequency advanced Wi-Fi, given that we were an early entrant in Wi-Fi 6, 6E, and Wi-Fi 7 ball filter solutions. and today have one of the most extensive high-frequency Wi-Fi portfolios that address the enormous challenges of difficult dual-band coexist wide bandwidth operation within the 5 to 7 gigahertz frequency spectrum. While near-term macro supply chain issues remain, we are executing on design wins, new production ramps, and new product development at a higher pace than ever before. and we expect the outlook will improve quickly once the broader supply chain issues improve. And now I would like to discuss our network infrastructure business highlights. During the December quarter, we received an order for the development of an ultra high band demonstrator from a tier one 5G network infrastructure customer. If the demonstrator is successfully received, our customer plans to develop a 5G massive MIMO XBAL filter solution for a multi-element array. Recently, we have engaged an additional Tier 1 OEM for the same frequency and end application. We continue to ramp production with three Citizens Broadband Radio Service, or CBRS, infrastructure companies in the December quarter. We expect these three customers to continue to ramp throughout calendar 2023 and beyond. We started to ramp our 3.5 gigahertz 5G network infrastructure filter with a new network infrastructure customer in the December quarter. This is the second design win we have received for this filter. Our customer is targeting both small cell and MIMO applications with our XBAL filter in the European and Asian network infrastructure markets. We are sampling the first iteration of our 3.8 gigahertz XBAW infrastructure RF filter for the US 5G C-band market with multiple OEMs and expect to see greater small cell adoption beginning in the second half of calendar 2023. And now I would like to provide an update on our other business segment. As mentioned at the beginning of this call, we concluded the acquisition of GDSI which closed on January 1, 2023. The acquisition brings a new cashflow positive services business to Acoustis with 250 plus customers, significant technical expertise in backend services and alignment with our strategy to leverage the CHIPS Act to create new jobs and reshore core packaging technology from Asia. In our defense contract business, we continue to progress on our existing multi-year, multi-million dollar contracts with DARPA to further enhance our XBAL PDK and scale our XBAL technology up to 18 gigahertz. We achieved a critical milestone during the December quarter and are making excellent progress toward scaling our technology to 18 gigahertz for our customer. The milestone achieved was enabled by our patented single crystal piezoelectric nanomaterials which are unique to ACOUSTIS in the ball filter industry. During the December quarter, we completed and shared new XBAL resonator data targeting X-band frequencies for a Tier 1 defense customer. Our next step is to simulate two XBAL filter designs utilizing the resonator model for this X-band application, and we expect to move toward product development upon successful completion of the design study. Our RFMI business experienced challenges in the December quarter that we believe will be short-term in nature. These include a decline in the automotive market in China due to COVID lockdowns, general softness in its European business, which was impacted by the economic realities associated with the Russia-Ukraine war and rising inflation, and overall weaknesses in the medical market. While January will experience the expected seasonal headwinds associated with Chinese New Year, we do expect revenue from this segment to increase sequentially in the current March quarter and return to a more normal run rate as calendar 2023 progresses. We continue to make progress with our two ExBall timing control products and expect to complete the qualification of the first two solutions in the first half of this calendar year. The timing RF market represents a significant new opportunity for Acoustus in both unit volume and revenue. Our primary customer is developing products that could be disruptive in the timing RF component market, looking to displace older analog technologies with ultra-low jitter and phase noise devices. We are extremely excited that our leading XBall resonators can offer our customers disruptive performance. And now I would like to hand the call over to Ken to go through our financial highlights.