908 Devices Inc.

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, May 9th, 2023. With that, I would like to turn the call over to Kevin.

Thanks, Joe. Good morning, and thank you, everyone, for joining our first quarter 2023 earnings call. I'd like to start off by thanking our team for their hard work and dedication as we continue to demonstrate encouraging process across our business. First, quarter revenue increased 14% year-over-year to $9.5 million and replaced 78 devices, bringing our installed base to more than 2,400 devices. Notably, we saw continued strength in recurring revenue, which grew 67% over the prior year period. We are pleased to see this increasing need for accessories, consumables, and service as it demonstrates that our customers truly value analysis at the point of need. Overall, I'm pleased with our execution, given the continuing challenges within the bioprocessing space. Importantly, our technology is broadly extensible with applications across different end markets. Our handheld products are serving critical forensics market applications, including the devastating rise of counterfeit pharmaceuticals. We view the diversity of our end markets as a key advantage. 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 uniquely positioned to both capture the bioprocessing opportunity in front of us while executing with our handheld devices. In January, we started the year off with the launch of our first online device, Maven. that provides real-time monitoring and control of glucose and lactate in cell culture and fermentation processes. Maven is a complement to our Rebel device and a precursor to Rebel Online. We are encouraged by the feedback we have been receiving from prospective customers and the increasing opportunities we've seen in the funnel over the past few months, particularly in the cell therapy space. Maven adds to our growing portfolio of desktop products for process analytics. Now I'd like to provide you a brief update on the progress we have made across our three focus areas for 2023. Starting with our first objective, penetrate and radiate across key accounts. Our focus is to penetrate new accounts to create a foothold and then radiate across these accounts to drive broader enterprise adoption. For our handhelds, we continue to expand our international presence. Last year, we received our NATO stock number, which was a significant step in facilitating the procurement process for our MX-908 device. We now have a purchase vehicle in place, which is valid for up to five years and provides NATO member states and four additional countries with the ability to purchase up to approximately 80 units in a streamlined fashion. With this in place, we've already seen a handful of units purchased and look forward to growing international adoption. We are proud to receive this designation for the MX-908, which is becoming recognized as a standard bearer for handheld chemical detection and identification. We also received additional MX-908 orders for use in Europe and the Middle East during the quarter. The U.S. State Department and existing customer purchased several units intended for use in Ukraine. The Customs and Border Agency in Saudi Arabia purchased multiple units primarily for narcotic detection and identification. We are pleased with the traction we're gaining internationally, along with the broader adoption within our enterprise accounts. Closer to home, in January, the Ohio Attorney General's Office announced the expansion of the MX-908 program in Southeast Ohio. This is the final region in the statewide rollout, which began in October of 2021. In the announcement, Attorney General Dave Yost noted that MX-908 has the potential to revolutionize how drug testing is done in Ohio. We value our partnership with the Ohio Attorney General's Office, and we are working to replicate the success across other states as the need remains substantial. We believe programs like this would be impactful in every single state across the United States. In fact, today is National Fentanyl Awareness Day, a day dedicated to raising awareness about the dangers of fentanyl, most often found in counterfeit pharmaceuticals. According to the CDC, fentanyl is involved in more deaths of Americans under 50 than any other cause of death, including heart disease, cancer, and all other accidents. And just last month, the Biden administration declared fentanyl mixed with xylosine as an emerging threat in the U.S. Fortunately, as we work closely with first responders who identified xylosine as a growing concern early on, We added this analyte to our MX908 device software nearly three years ago, and our customers have fielded capability now to deal with this issue. This is a great example as how additional value is unlocked for our customers with our continuous service and support offerings. We'll continue to ensure our handheld device provides our customers with rapid, actionable answers and enables them to keep our communities safe as the federal crisis evolves. For our desktops, we've been working over the quarter to engage potential additional OEM partners in bioreactors, cell expansion systems, and integrated cell therapy platforms. The aim being to add online analytics to their systems for real-time monitoring and control of key process parameters such as glucose and lactate throughout the cell therapy process, from process development through clinical manufacturing. The value proposition is clear. Online analytics enhances process understanding as well as reduces the risk of contamination and saves operator time as technicians no longer need to enter the clean room to perform manual sampling. Turning to our second objective, advancing and broadening our product portfolio. Our core mission is to develop devices that are simple to use, smart by providing customers with robot answers at the point of need, and connected for improved process understanding. First responders need to be equipped with devices that provide them with answers where and when they need it. To that end, we continually add analytes to our MX908 software. In the first quarter, we released version 3.4 that added four additional analyte targets. We also released the core clear and charge station, a maintenance accessory that improves the device's usability and maximizes its uptime. As previously mentioned, we have created an interface control protocol to make it easy for our handhelds to be integrated into new ecosystems, such as robots, drones, and other related workflow equipment. We recently supported DualDraw's integration of MX908's aerosol and vapor detection capabilities with their downdraft technology to enable a mail-speeding platform that protects operators and allows them to safely perform inspection and packages. This is a great example of how the MX-908 can help expand the reach of critical chemical detection and connect to a broader set of users. For our desktops, we released a data analysis tool for our Rebel device that is built on the Jump statistical software package. Raw data from the Rebel can quickly and easily be visualized in just one click, leveraging a statistical software many of our customers already use. Users can now more easily access the tremendous amount of information the Rebel provides for improved process understanding by easily visualizing amino acid depletion or accumulation trends over the course of time within a bioreactor and facilitating adjustments to the feed strategy. To that end, as previously noted, we are collaborating with UK-based Center for Process Innovation, or CPI, to optimize cell culture media and feeding strategies in small volume bed batch bioreactors through process scale-up using a Rebel and now Maven devices. Using Rebel, daily detailed amino acid data was generated for both AMBER15 and 250 runs, and the data was analyzed using Rebel's new data analysis software tool. By adding in depleted essential amino acids along with low levels of feed media, CBI scientists achieved a meaningful titer increase while keeping toxic metabolites low and maintaining a high cell viability. With MAVEN, scientists were able to implement a continuous control strategy for glucose, which is highly desirable to achieve healthy growing conditions. Taken together, REBEL and MAVEN enable process development scientists to optimize titer and cell growth while preventing the accumulation of toxic metabolites that can negatively impact protein CQAs. Biopharma manufacturing company Resilience has adopted the REBEL analyzer to inform and optimize cell culture feed strategies in perfusion bioreactors. In a monoclonal antibody-expressing cell line, resilience process engineers demonstrated a 50% increase in titer while reducing costs of goods by adding back only the nutrients the cells depleted. Cell culture media and feed costs are significant in the perfusion process, while at-line media analysis Resilience can now optimize and accelerate biotherapeutic development to reduce cost of goods and time to submission. Our ZipChip CE mass spec, which is a complement of our Maven and Rebel devices, is an offline device used for monitoring key process parameters and for rapid characterization of multiple product critical quality attributes, or CQAs. This fast separation method was highlighted in a new paper published in Analyst, a Royal Society of Chemistry publication. In this paper, Amgen researchers used our zip chip device to separate and characterize bispecific antigen-binding biotherapeutic fragments within 12 minutes or less, and with higher resolution and better sensitivity than traditional LC-MS methods. Similarly, in a webinar hosted by LCGC, scientists from Ireland's National Institute for Bioprocessing Research and Training, or NIBRT, presented on how our Zipchip TEMS device accelerates peptide mapping workflows for analysis of MAD critical quality attributes. Vibrant scientists noted that Zipchip provides robust determination of important quality attributes in less than 20 minutes, which provides a faster alternative to more standard LC-MS approaches that can take hours. As these examples illustrate, our devices are providing our customers with robust and real-time analytics that enable them to improve product quality and process efficiency. And finally, turning to our third objective, Langenomics Foundation, we see a clear and emerging need for accelerating mass spec-based workflows to address proteomics and metabolomics opportunities. At the U.S. Hoopoe Conference in March, Drs. Will Thompson and Scott Mellers from 908 Devices presented a poster and lightning talk titled, Double Your Funds. high-throughput multiomics using microchip capillary electrophoresis, which utilize ZIP chip for metabolomics and our prototype SPE-enabled chips for proteomics on thermoscientifics-explorers mass spectrometers. Dr. Thompson, in collaboration with Duke University researchers, will expand on the investigation into multiomics in his oral at the American Society for Mass Spectrometry Conference, or ASMS, in June. His talk will show how our prototype microfluidic chips enabled independent metabolomic, peptidomic, plus top-down and bottom-up proteomics from a single sample containing 20 microliters of dry blood. Also at ASMS, we are presenting a record 19 posters with collaborators from key research institutions, biopharmaceutical companies, and mass spec vendors. We look forward to discussing these highlights and takeaways on our next earnings call. With that, I'll turn it back over to Joe for more details on our financials.

Thanks, Kevin. Revenue for the first quarter of 2023 was $9.5 million compared to $8.3 million in the prior year period, representing an increase of 14% over the prior year period. Handheld revenue from our MX908 product for the first quarter of 2023 was $6.2 million, an increase of $1.7 million compared to $4.5 million in the prior year period. We shipped 62 MX908 handheld devices during the first quarter. The increase in handheld revenue was primarily driven by an increase in the recurring revenue for our MX908 devices, both service and accessories. Desktop revenue, primarily from our Rebel, Zip Chip interface, and Maven products for the first quarter of 2023 was $3.1 million, a 13% decrease from $3.6 million in the prior year period. We shipped four Rebel, six Zip Chip interfaces, and six Maven devices during the quarter. We'll continue to break out placements by device in the near term. However, as our portfolio broadens, we will focus more on overall revenue and combine desktop placements as the key metrics for growth. The decline in desktop revenue was primarily due to a decrease of device placements year over year. We were encouraged to see the uptick in recurring revenues, demonstrating the value that our devices bring to our customers. Recurring revenues consisting of consumables, accessories, and service revenue for the first quarter of 2023 increased 67% to $4.2 million compared to $2.5 million in the prior year period. The increase in recurring revenue was primarily related to higher service revenue and higher handheld accessory and consumable revenue, including the Arrow module. Notably, recurring revenue as a percent of total product and service revenue has increased from 31% in Q1 2022 to 45% in Q1 2023. Gross profit was $4.4 million for the first quarter of 2023 compared to $4.1 million for the prior year period. Gross margin was 46% for the first quarter of 2023 as compared to 50% for the prior year period. The decline in gross margin was largely due to lower device production bills and higher non-cash charges for stock-based compensation and intangible amortization during the first quarter of 2023. Total operating expenses for the first quarter of 2023 were 17.4 million compared to 13.7 million in the prior year period. This was driven by an increase in personnel-related costs from the impact of headcount added throughout 2022, as well as a 0.8 million increase in stock-based compensation and a 0.3 million increase in acquisition-related costs for intangible amortization and valuation of contingent milestones. Net loss for the first quarter of 2023 was $12.5 million compared to $9.4 million in the prior year period. We ended the first quarter of 2023 with approximately $161 million in cash and cash equivalents. During the quarter, we paid down $15 million of debt and ended the first quarter with no debt outstanding. Looking ahead for 2023, as of today, we are not seeing meaningful improvement in the capital purchasing cycles within bioprocessing. particularly affecting our rebel placements. We expect these pressures to persist into at least the third quarter of the year. Our team is working hard to educate existing and potential customers on the value of the technology and broaden adoption across sites. So as funding becomes available, we are a high priority for our customers. Notably, we are seeing strong adoption of our handheld devices that serve the forensics market. In this challenging macro environment, we view it as a competitive advantage that our extensible technology serves a diversity of users and end markets. So that being said, we anticipate second quarter revenue growth to be centered around our handheld device revenue in recurring revenues, similar to what we experienced in the first quarter. While ongoing pressure in the bioprocessing environment is likely to continue longer than we had previously anticipated, we are seeing very strong adoption of our handheld devices, which we believe will offset this impact. Taken together, we still expect full-year revenues to be in the range of $48 to $52 million, representing growth of 2 to 11% over full-year 2022. At this point, I would like to turn the call back to Kevin for some closing comments. Thanks, Joe.