908 Devices Inc.

Good day, and thank you for standing by. Welcome to the 908 Devices Third Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kelly Gura, Investor Relations. Please go ahead.

Thank you. This morning, 908 Devices released financial results for the third quarter ended September 30th, 2022. If you've not received this news release or if you'd like to be added to the company's distribution list, please send an email to ir at 908devices.com. Joining me today from 908 is Kevin Knapp, Chief Executive Officer and Co-Founder, and Joe Griffith, Chief Financial Officer. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section entitled Forward-Looking Statements in the press release 908 devices issued today. For a more complete list and description, please see the Risk Factor section of the company's annual report on Form 10-K for the year ended December 31, 2021, and in its other filings with the Securities and Exchange Commission. Except as required by law, Nanowate Devices disclaims any intentional or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast of November 14, 2022. With that, I'd like to turn the call over to Kevin.

Thanks, Kelly. Good morning, and thank you for joining our third quarter 2022 earnings call. I'd like to start off by thanking our entire team for their tremendous effort in bringing the third quarter to a successful close. I'm really proud of their continued focus and dedication to support our customers' critical-to-life applications. We are operating in a challenging macro environment, and our team is going above and beyond. We delivered strong growth during the third quarter with revenue increasing 26% over the prior year period to 15.8 million. About 20% of third quarter revenue was from the remaining U.S. Army device shipments and 80% was from new business and other customers. While we are pleased with our third quarter results and year-to-date performance, we've begun to see a slowdown in our funnel with prolonged purchasing cycles over the summer months and into the fall. We believe this is largely due to the adverse impact of macroeconomic factors across the markets we serve. We expect these headwinds and impairment to continue over the next couple of quarters. Given this impact, we now expect full-year 2022 revenue to be in the range of $46 million to $49 million, representing annual growth of 13% at the midpoint of the range. As discussed on our last earnings call, progression of a few larger handheld opportunities would be required to achieve our previous four-year guidance, and we've seen protracted cycles in test trials to pilots to enterprise conversion. Despite this near-term pressure, we firmly believe the opportunity for rapid and robust analytics at the point of need is as strong as ever. This positive view was reinforced at our user meeting in September, Critical Mass 2022. which covered the full breadth of our product platforms and their applications. This event brought together more than 175 customers, both virtually and in person, to share their success using our mass spec devices to provide rapid and robust, actionable information at the point of need. We heard from customers serving and spanning industry, academia, and government, including Baringer Ingelheim, MIT, Clemson University, Ohio Bureau of Criminal Investigation, and the Fresno, California Police Department. It was truly inspiring to hear the impact that our technology is having to advance biotherapeutics and combat the opioid crisis. Now I'd like to provide a brief update on our progress across the five focus areas we set for 2022 to drive growth over the longer term. Starting with our first objective of driving customer adoption, For our desktops, we are continuing to see underlying demand for more advanced therapeutics, the need for more process control, and the steady increase in proteomics and metabolomics research, all of which fuel the biopharmaceutical industry's long-term growth. However, the shift in the macro environment has begun to slow some near-term demand for our desktop devices, particularly in cell and gene therapy application, where technology is being adopted to support the process development preclinical space. The Alliance for Regenerative Medicine recently issued its first half 2022 report on advanced therapies, which noted that 2022 has already been a record year for the approval of new cell and gene therapies, with several other therapies on track for regulatory decisions in late 2022 and 2023. However, the number of ongoing clinical trials globally decreased by 13% from the end of 2021, and investment levels have slowed after two record-breaking years. Across our desktop, we continue to see orders from a fairly even split between new and existing customers. With our Rebel device, we continue to see traction with additional units in several of the top 20 pharma companies, and with some of these companies ordering their second or even fourth device. With our Zip Chip device, Genentech procured its fourth unit during the quarter. In a paper published in September in Analytical Chemistry, Denentec researchers noted the device's ability to quantify peptide exchange at high throughput and at high sensitivity in a CAR T-cell therapy application. Overall, we believe that our penetrate and radiate strategy, in which we work to penetrate new accounts, create a foothold, and then radiate across these enterprise accounts, will continue to drive broader adoption and acceptance over the long term. Turning now to our handhelds, The opioid crisis shows no signs of abating. In August, the National Center for Health Statistics, a division of the CDC, announced that U.S. life expectancy decreased last year to its lowest level since 1996. While COVID-19 was the primary cause of the decline, another leading cause was unintentional deaths, mainly comprised of overdoses. This crisis continues to be a major driver of customer adoption. there are several recent news reports that highlight the severity of the ongoing crisis. In September, new reports highlighted a shortage of Adderall used to treat ADHD and noted the dangers of sourcing the drug on the street as these counterfeits contain fentanyl and other drugs. The FDA has confirmed the Adderall shortage, noting that several generic forms may not be available until March 2023. And in Rhode Island, DEA authority seized more than 660,000 counterfeit Adderfield pills containing methamphetamine. Also in September, the DEA issued an advisory warning of brightly colored fentanyl, also known as rainbow or candy fentanyl, used to target young children. The DEA has seized multiple forms of rainbow fentanyl, including pills, powder, and blocks that resemble sidewalk chalk. Finally, in August, the Australian Federal Police and the Australian Border Force announced the seizure of the largest fentanyl shipment detected in Australia. preventing more than 5 million potential lethal doses of the drug hitting the streets. While the DEA has noted that fentanyl is the deadliest drug threat facing the U.S., we are seeing more and more evidence of it becoming a global crisis. These sobering statistics and alarming news reports continue to highlight the need for first responders and other frontline workers to have trace chemical detection at the point of need to combat the spread of highly dangerous drugs. A case in point is the increase in drugs coming in personal mail and legal correspondence at correctional facilities. We've received several orders from regional county jails for MX-908 device throughout the year, with another order in third quarter for five devices from a Department of Corrections based in New England. As previously noted, we build a pipeline of testing, trials, and pilot programs to drive enterprise adoption of our handheld devices. In the third quarter, we expanded an existing enterprise account, the U.S. Army, receiving an order for $3 million for aero modules to pair with their fleet of MX908 devices. Once last year, the first-of-its-kind aero module enables users to monitor, detect, and identify vapor and aerosol hazards quickly and safely. Turning to our second objective, accelerating commercialization, as of the end of the third quarter, we now have over 220 employees worldwide and are close to reaching our goal of 80 commercial team members. That said, we continue to be thoughtful, reviewing plans, commercial expansion across all our regions amidst this uncertain macro backdrop. Turning to our third objective, developing and advancing our product portfolio, we continue to unlock our platform's capabilities through consistent releases of additional analytes, assay accessories, and data integration in order to increase areas of use for our customers and to penetrate our addressable market. For our handhelds, We expanded the capability of our MX-908 device to detect eight highly toxic and illegal pesticides. These pesticides are being used to grow illegal marijuana, primarily on federal land, posing a threat to the environment, water sources, wildlife, and people. The issue is particularly critical in California, where the state is expanding its multi-agency seasonal illegal marijuana eradication program. This will now be a year-round effort with the aim of prosecuting underlying labor and environmental crimes. Previously, federal personnel had no safe and reliable method to conduct pesticide testing at the site that illegal marijuana grows and had to send samples to a central lab, often waiting several weeks to conduct a safe site remediation. In January of this year, we announced a research collaboration with the United States Forest Service and the United States Department of Agriculture to extend the capabilities of the MX-908 to detect these illegal pesticides. For our desktops, we continue to develop and refine tips to meet customer needs. We introduced version 2.0 of our spent media analysis kit for REBEL, which provided an additional analyte and enhanced calibration for improved accuracy and quantification results. We are developing another focused REBEL kit to be released in the first half of 2023 that pushes the boundaries of analytical performance for a specific set of amino acids commonly measured in most applications. In regard to our acquisition of Trace Analytics in August, we're extremely pleased with how well the Trace team is integrating with our R&D team to further our online development effort. As you may recall, our acquisition of Trace provided us with online aseptic bioreactor sampling and biosensor technology, which is a central addition to our microfluidic technology pillar and will help us unlock more of our total addressable market. Their technology in single use and reusable configurations has been proven in mammalian cell culture and microbial fermentation at all levels of the bioprocess chain, from research and development to large-scale production. At our user meeting, Wolfgang Cunuck, Trace Analytics founder and now the head of our bioanalytics R&D, presented the benefits of automated control of glucose and lactate in a process development lab, which includes cell-free, sterile, and safe sampling with no volume or prep required. As we have noted, our main focus this year has been to build upon the capabilities of our existing products and expand the reach of our technology platform. In 2023, we plan to shift our focus to releasing two new devices. We are excited to share more details early next year as we expect them to be impactful in 2023. Turning to our fourth objective, broadening our bioanalytics platform, as more advanced therapies enter the pipeline, Biopharma manufacturers need to identify and understand critical process parameters and their impact on critical quality product attributes during process development and the entire biomanufacturing workflow. Our devices are well positioned to meet this need. We continue to collaborate with key industry partners and academic institutions to demonstrate the value of our technology in providing rapid and robust information that enables manufacturers to accelerate biotherapeutic workflows. This value has been highlighted at a number of industry events over the past few months. Our collaboration with the Center for Process Innovation, an independent innovation organization in the UK, demonstrated the value of at-line cell culture media analysis to inform feeding strategies for improved cell growth. CPI process engineers used real-time data from the REVL to optimize nutrients, resulting in an increase in titer by up to 40% and a reduction in toxic metabolite accumulation and a significant reduction in design of experiment time. These results were recently presented in a webinar hosted by Biopharma International Magazine and in a poster at the CE Pharma Symposium in mid-September. Independent data from our rebel analyzers such as this is key to demonstrating our value proposition enabling broader adoption as process engineers conduct amino acid analysis more regularly. There were several other posters presented by our collaborators at the CE Pharm Symposium and the CAST Mass Spec Conference, including Biotechni, Protein Gene, Thermo Fisher Scientific, and Protein Metric. These posters highlighted the use of our Zip Chip device for several applications, including characterizing oligoduculotides, peptide mapping of recombinant AAVs, and charge variant analysis of small molecules. Zip Chip's benefits highlighted in these posters included high resolution and high sensitivity, comparable to LC-MS method, but much faster separations with minimal sample volume. And in the case of oligos, no harsh ion pairing reagents. At the Bioprocess International Show, part of Boston Biotech Week, our collaborators at Johns Hopkins University gave a presentation on leveraging the power of at-line amino acid measurement with the REBEL to enable complex bioprocess modeling. Also at the show, a principal scientist from Slythogen a biotech company, presented on mass spec-based characterization workflows in biopharmaceutical development labs and noted Zipchip's capability to perform high-resolution separations while minimizing sample prep burden. Finally, at our user meeting, scientists from Bornger Ingelheim touted Zipchip's very fast separations and high sensitivity in characterizing product quality attributes in the oligonucleotides and monoclonal antibodies. Additionally, MIT researchers underscored Rebel's value and their ability to rapidly monitor and profile nutrient consumption of recombinant AAV-producing cells in a perfusion process. We are delighted to hear our collaborators and biopharma customers highlight the value of our desktop devices to characterize multiple product quality attributes and control key process parameters, which ultimately leads to improved efficiency and robust product quality. And finally, turning to our longest-term objective, laying an omics foundation, We see a clear and emerging need for accelerating mass spec-based workflows to address proteomics and metabolomics opportunities. We continue to foster a cadence in publications, technology, and research with premier academic institutions and research partners to support future product launches and workflows specific to the omics domain. In the area of metabolomics, an academic research paper in the journal metabolites focused on characterizing cell-to-cell signaling molecule levels in healthy versus type 2 diabetes-affected human pancreatic ankylots. Researchers used ZIP chips coupled with a Brooker mass spectrometer and noted its fast separation time of within three minutes, along with a high confidence of analyte identification. As previously shared, we are advancing our microfluidic chips to address emerging proteomics and metabolomics opportunities. Last month, we hosted a meeting of our proteomics scientific advisory board, where key opinion leaders provided guidance and feedback on the direction of our omics-facing research development efforts. Our scientific advisory board members were enthusiastic about our continued development of on-chip peptide pre-consultation from the ZipChip platform, providing feedback on throughput and robustness requirements to address emerging low-input proteomics markets. We were fortunate to have this remarkable group of thought leaders share their insights as we advance our development efforts. In summary, we remain encouraged by the value our technology platform is providing to our customers to break mass spec out of the confines of a centralized laboratory and bring it to the point of need. While we face some near-term macro pressure, we continue to focus on serving our customers, expanding our user base, and making our technology even more accessible to broader audiences, which opens doors for new users and applications. With that, I'll now turn the call over to Joe for more details on our financials.