908 Devices Inc.

Good morning ladies and gentlemen and welcome to the 908 Devices fourth quarter 2022 financial results conference call. At this time all lines are in listen only mode. Following the presentation we will conduct a question and answer session. If at any time during this call you require immediate assistance please press star zero for the operator. This call is being recorded today Tuesday, March 7, 2023. I would now like to turn the conference over to Kelly Gura, Investor Relations. Please go ahead.

Thank you. This morning, 908 Devices released financial results for the fourth quarter and full year until December 31, 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 Knopp, 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 factors section of the company's annual report on Form 10-K for the year ended December 31, 2022, and in its other filings with the Securities and Exchange Commission. Except as required by law, 908 Devices disclaims any intention 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. March 7th, 2023. And with that, I would like to turn the call over to Kevin.

Thanks, Kelly. Good morning and thank you for joining our fourth quarter 2022 earnings call. Throughout 2022, we continued on our mission to support the critical-to-life applications of our customers. I want to thank our team for their dedication and commitment to serving our customers throughout the year. We ended the fourth quarter with $11.6 million in revenue, bringing our total revenue for 2022 to $46.9 million, up 11% from the prior year. For the full year, our desktop revenue grew at more than two times our overall growth rate at 25%, in line with our expectations. We also saw strong recurring revenue contributions, more than 100% increase year over year. While the underlying need for our products remained strong, as forecasted, Adverse macroeconomic factors impaired our progress in Q4. As previously communicated, we began to see protracted capital purchasing cycles in mid-2022, and we continue to see them here in Q1. While we anticipate these industry headwinds to persist through the first half of 2023, I'm confident in our long-term trajectory and feel we are doing the groundwork needed for both near-term and long-term success. We are keeping a tight rein on our operating expenses, Joe will provide more detail shortly on some recent actions we have taken in that regard. We are developing and launching new products to meet the growing demand for robust analytics at the point of need. We are pursuing diversified end markets, forensics, bioprocessing, and research. And importantly, we are retaining a solid cash position with multiple years of runway. We have made some encouraging progress throughout the year. Now I'd like to provide a brief update on our progress across the five focus areas we set for 2022. Starting with our first objective of driving customer adoption, for our desktops, we grew our combined Rebel and Zip Chip base to more than 350 devices, adding 80 devices over the year. Nearly one quarter of these placements are within top 20 pharmaceutical companies, with 10 accounts now each having a half a dozen devices or more. This larger combined footprint across Top Pharma is important as it strengthens our ability to serve these customers and allows us to broaden our conversation as we define, develop, and launch additional bioanalytic products. We have also been seeding future rebel opportunity through broadening our base of users with more rebel orders from new customers than existing. When looking at the full year, roughly two-thirds of devices were placed with new customers. desktop consumable purchases and service revenues were up year over year by more than 55%. In Q4, we also received our second highest number of scheduled consumable orders, indicating our customers' intent to incorporate Revel into their 2023 priorities. While we have seen the bioprocessing industry, and specifically the preclinical process development customers, become under pressure in the second half of 2022, We are still seeing enthusiasm for our products and a strong underlying fundamental need for more analytics to enable more advanced therapeutics. Our desktop devices today are being used in support of advanced therapies, and the forecasted pipeline of cell therapies is a key driver of our expanding total addressable market in the coming years. According to the Alliance for Regenerative Medicine, there are now 2,220 active clinical trials for advanced therapies, up slightly from mid-year 2022, and there's been an 11% year-over-year increase in the number of cell and gene therapy developers worldwide. At the recent Advanced Therapies Week conference in Miami this January, the main theme was the need to accelerate corporate investments in digitization and analytics. Our messaging for the need to transition analytics from disparate offline manual instruments to at-line and online automated and connected solutions rang clear. For our handhelds, we grew our MX908 base past 2,000 devices, adding 370 devices over the year. As mentioned in this year's United States President's State of the Union Address, tragically, the opioid crisis continues with deaths of more than 70,000 individuals annually. This crisis continues to be a major driver of customer adoption, In December, the Washington Post ran a week-long series on fentanyl's deadly surge in the U.S. The first article profiled a seasoned Homeland Security Investigations agent who uses our MX-908 device at overdose scenes to quickly determine when a lethal batch of fentanyl hits the streets. The article highlights the crucial time lost for investigative leads when samples are sent to a lab, which can take weeks to process, which is just untenable. The applications for trace fentanyl detection are pervasive. We received multiple orders for the MX last year from the Department of Corrections in New England, the Midwest, and the West. A Minnesota corrections official noted that the MX-908 has been an integral tool to combat the introduction of narcotics into Minnesota state prisons. As a result of such impact, we are continuing to build a pipeline of opportunity through the progression of testing, trials, and pilot programs that turn into valuable enterprise accounts. In 2022, we saw progression with 15 accounts in pilot programs representing approximately 100 units of opportunity, up from 11 accounts at year-end 2021. In addition, we now have 17 enterprise accounts with more than 800 devices of additional combined opportunity up 15% compared to year-end 2021. Overall, we're pleased with the adoption for new and existing customers across all our product lines in 2022 and believe that our handhelds provide diversification in 2023 amidst the more challenging bioprocessing macro environment. Turning to our second objective, accelerating commercialization, we had targeted growing our commercial team to 80 team members by year-end, While we finished the year close to this target, in the middle of 2022, we shifted to a more strategic investment approach given the macro market. This included bolstering our European presence through leveraging our acquisition of Trace Analytics. Now, as 908 Devices GmbH, we have a legal entity and base of operations in Germany to better serve our European customers and to enable direct sales and support in the region. Turning to our third objective, developing and advancing our product portfolio. We were thrilled to acquire Trace Analytics last August, which strengthened our core microfluidics technology, providing us with online aseptic sampling and biosensor technology. In January, we launched Maven, our first online device that connects directly to the bioreactor, providing real-time monitoring and control of glucose and lactate in cell culture and fermentation processes. MAVEN enables cell-free, sterile, and safe sampling with no volume loss or prep required. This approach reduces lab costs and saves operator time, thereby accelerating workflows. We think of MAVEN as the rebel's buddy as the two devices work in concert. Rebel quantitates 33 additional cell culture media nutrients, including amino acids, in less than 10 minutes. Rebel leverages our microscale mass spec technology, while Maven incorporates discrete biosensors for glucose and lactate detection, which are two analytes difficult to detect using mass spec. Both devices are simple to use and measure key process parameters, leading to improved bioprocess control. We think the reduced lab cost and operator time savings of the online connecting Maven will resonate well with our customers in this market, and we are excited to see things develop. It's a great precursor to our rebel online as well. We are seeing commercial contribution now for Maven. In Q4, we shipped more than a half a million dollars of Maven and related sampling products to cell and gene, MAB, and fermentation customers, as well as to OEM partners. The key takeaway here is that we have a robust roadmap and strategy of process analytical technologies. Beyond any one product, we are creating a full portfolio of complementary devices, zip chips, Red Bull, Maven, and another new product we'll announce later this year, which will also be exciting and very differentiated. For our handhelds, we expanded the capability of our MX908 device in 2022 to detect highly toxic and illegal pesticides. We collaborated with the United States Forest Service, a division of the USDA, to develop this capability that enables its field personnel to safely conduct pesticide testing at remote illegal marijuana grow sites rather than to wait weeks for lab results. The results of this work are driving conversations now at the state level on how to better equip responders as an enterprise and create data awareness to enhance their safety. We value such collaborations with our customers as they can lead to impactful developments and expansion of our devices. Our Arrow module released in the spring of 2021 was informed by our customers, and we have worked closely with our customers on its validation. We have seen significant adoption of this accessory, with 100 shipped in 2022, and we credit our close customer collaborations. From time to time, we selectively work on customer-funded development efforts towards the same commercial goal and outcome. In 2022, projects included alternate MX configurations for longer runtime with enhanced communications for drone integration, and in partnership with Radico for integration with Spot, Boston Dynamics' nimble robot that climbs stairs and traverses through rough terrain with ease, yet is small enough to use indoors. We saw an uptick in Q4 contract and license revenue due to the timing of such projects, which Joe will discuss. Our focus commercially last year was to build upon the capabilities of our existing products, and we're excited to start off 2023 With a new product launch and our R&D team has a lot in the hopper for both our handhelds and our desktops. Turning to our fourth objective, broadening our bioanalytics platform. Our goal is to become a key enabler of BioPharma 4.0 with a tech stack of connected process monitoring and critical product quality attribute analysis devices that inform models that support better real-time predictive outcomes. Data from our Atline Rebel device enables biopharma researchers to identify and control key process parameters in bioprocessing workflows. Our online Maven device enables monitoring and, importantly, control of the base cell culture ingredient, glucose. Our ZipChip CMS is an offline but simple-to-use device that provides rapid characterization of multiple product quality attributes. Over 2022, we worked with leading institutions focused on developing and implementing new biomanufacturing processes and connecting our devices to the needed workflows. Our collaboration with UK-based CPI has 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 rebel to optimize nutrients resulting in the increase in titer by up to 40% and a reduction in toxic metabolite accumulation and a significant reduction in design of experiment times. In our alliance with AMBIC, an industrial academic consortium, researchers are leveraging REBEL's at-line informing power to develop predictive cell culture media feeding models for improved product quality and reliability. We've also been working with key academic research institutions such as Emory University where researchers are developing novel microbead libraries for CAR T-cell therapies and are using REBEL to inform feeding strategies to control and optimize T-cell activation. And at our user meeting in September, MIT researchers underscored REBEL's value in their ability to rapidly monitor and profile nutrient consumption of recombinant AAV-producing cells in a perfusion process. At conferences and in publications, Customers such as Boehringer Ingelheim, Biotechnique, Fudan University, and University of Connecticut highlighted ZipChip's high-resolution, high-sensitivity that is comparable to LC-MS methods, but with much faster separation and minimal sample volumes. Most recently, in a paper published in the Journal of Pharmaceutical and Biomedical Analysis, scientists from Regeneron Pharmaceuticals noted that our ZipChip CE-MS system is an alternative and complementary method to more traditional chromatography and that ICEF methods to support the characterization of charge variants in different types of therapeutic antibodies. Charge variant analysis is critical for understanding the structure of biotherapeutics during drug development and product release. We are always delighted to hear our customers and collaborators tout the value of our desktop devices in characterizing process and product attributes as we focus on creating a complete portfolio of complementary products. And finally, turning to our fifth objective, laying an omics foundation. As scientists seek to understand how proteins and metabolites orchestrate a cell's function, there's a rising demand for accelerating mass spec-based workflows, which is critical when working with large sample sets. As we've shared previously, we partnered with the University of Washington and Thermo Fisher Scientific to evaluate the coupling of our prototype microfluidic chips with very fast ion trap mass specs for proteomics applications. In December, in collaboration with our partners, we presented a poster at the World Hupo Conference that demonstrated the prototype chip's ability to deliver increased sensitivity 10 times faster than traditional nanoscale liquid chromatography. We are excited about the research progress we made in 2022 with these advanced microfluidic chips and look forward to continued scientific progress this year. Overall, while Q4 2022 presented challenges, we progressed our full year objectives and we remain confident about the value of our technology's platform and the enthusiasm we see for real-time analytics at the point of need. With that, I'll turn the call over to Joe for more detail on our financials.