908 Devices Inc.

Hello everyone and welcome to the 908 Devices fourth quarter 2023 financial results conference call. My name is Seb and I will be the operator for your call today. If you would like to ask a question during the Q&A session, you can do so by pressing star 1 on your telephone keypad or press star 2 if you would like to withdraw your question. I will now hand the floor over to Kelly Gurra, Investor Relations, to begin. Please go ahead.

Thank you. This morning, 908 Devices released financial results for the fourth quarter and full year ended December 31st, 2023. 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, Nanowave 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, where the year ended December 31st, 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 5, 2024. With that, I would like to turn the call over to Kevin.

Thanks, Kelly. Good morning and thank you for joining our fourth quarter 2023 earnings call. We ended the fourth quarter with $14.4 million in revenue, up 23% from the prior year. Total revenue for 2023 was $50.2 million, up 7% from the prior year, with product and service revenue up 12%. I'm very pleased with how our team has continued to execute, stay focused on our customers, and deliver a solid close to the year. The variety in our product portfolio and our presence in multiple markets have been a strength and distinct advantage. Revenue from our handheld devices that serve the forensics market grew 28% in 2023 with consistent year-over-year growth each quarter. This growth significantly offset the macro headwinds that have pressured the life science instrumentation and bioprocessing markets, which includes revenue from our desktop devices. While we expect these headwinds to continue in the near term, particularly in the first half of 2024, we are encouraged by three indicators. First, we saw an uptick in fourth quarter bookings, resulting in our best desktop bookings quarter since Q4 2021, helped in part by contributions from our new products, Maven and Maverick. A second indicator is that we generated 25% more opportunities in the second half of 2023 for our desktop devices, compared to the first half of the year, helped in part by our new product launches. And third, we generated 50% more leads in the second half of the year than over the first half, helping us fill the top of our funnel. We saw strong demand for our handheld devices throughout 2023 and expect demand will continue this year as applications for chemical detection and identification at the point of need continue to gain traction in the US and internationally. We ended the year with 16 pilot accounts, which have potential for more than 100 unit placements, and 22 enterprise accounts, which have potential for more than 1,000 unit placements, an increase of 25% year over year. Key drivers of handheld adoption continue to be significant level of ongoing geopolitical risk with conflicts in Europe and the Middle East, along with rising tensions in other areas, such as in Southeast Asia with Taiwan. The ever-expanding fentanyl crisis is another key driver, including its unfortunate attempted use to disrupt elections with fentanyl being sent in the mail to election centers and officials. Between 2020, the year of our IPO, and 2023, revenues from our handheld portfolio have grown at a 29% CAGR, serving as a consistent contributor to top-line growth. We finished 2023 with zero debt and a healthy cash balance of over $145 million. We remain laser focused on balancing prudent cash management with necessary spending to support our top line growth objectives. As mentioned during our call a year ago, we set a target to ensure that our 2023 operating expense growth was paced with our revenue growth, which I'm proud to say we achieved. Entering 2024, we intend to remain good stewards of our cash as we continue our push into underserved handheld and desktop market opportunities. Now I'd like to provide a bit more detail on the progress we have made across our three focus areas during the past year. 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 steadily expanded our international presence and our MX 908 device is now being deployed in 56 countries, up from 45 countries at the end of 2022. In 2023, 25% of our MX 908 device sales were from outside North America. compared to 20% in 2022. We anticipate further growth in our international opportunities. In the fourth quarter of 2023, we were awarded a contract from DrugDetectEU, an innovative procurement project co-funded by the European Union for drug detection in correctional institutions and prisons. The project requires detection solutions be available 24-7 to prevent delays to internal processes and it also mandates that solutions must be non-invasive and compliant with European data privacy laws. Our MX-908 proudly meets these requirements. Our initial contract includes multiple devices for correctional facilities in Greece and Belgium. After personnel were trained on a unit at the Ghent prison, the Belgian Minister of Justice publicly noted that they now can use our device continuously to combat drug use in prison, removing the need to call in a police doctor. We look forward to partnering with the Belgian ministry as they deploy our MX-908, as well as supporting the drug detect project more broadly across the EU. Closer to home, the ongoing fentanyl crisis shows no signs of abating. The US Drug Enforcement Administration, or DEA, seized more than 77 million fentanyl-laced fake prescription pills in 2023, up over 50% from 2021. VA laboratory testing also showed that 7 out of 10 pills tested contained a potential deadly dose of fentanyl, an increase from 6 out of 10 pills in 2022 and 4 out of 10 pills in 2021. To meet this overwhelming need, we continue to partner with state and local law enforcement agencies as they grapple with identifying and removing lethal counterfeit pharmaceuticals, often with fentanyl, from our communities. In August of 2023, we announced a pilot program with several Tennessee law enforcement agencies and drug task forces to enhance the speed and efficiency of the state's drug identification process. The program's primary objective is to decrease the quantity of illicit drug samples sent to central labs for testing, similar to our successful multi-year program in Ohio, which has resulted in significant reduction in evidence testing backlogs. tennessee pilot program began with an initial seed of eight mx908 devices and we recently received an order for three additional devices in january of 2024 with more being planned this year during 2023 we also made significant progress with a multi-year project for the united states department of defense in conjunction with our partner of the project smith detection We were selected to provide an initial production of 122 portable aerosol and vapor chemical agent detectors, otherwise known as AVCAB. Our high pressure mass spectrometry technology enables these next generation chemical detector systems, which will support worldwide missions for the US military. This is also a precursor to a potential full rate production award in 2025 that has the potential of providing over $10 million of revenue per year. Turning to our desktops, we are excited about our progress in cell therapies as tools that provide real-time analytics are pivotal in helping manufacturers develop more robust and reproducible processes. In November, we announced a collaboration with Terumo Blood and Cell Technologies to integrate our Maven device with Terumo's QuantumFlex expansion system for real-time monitoring and control of glucose and lactate without the risk of manual sampling and with less labor. With MAVEN, lactate concentrations, which are highly correlated indicator of cell viability, can be continuously monitored to inform feeding strategies and when to harvest, both critical as they can vary patient by patient. Recently, we were thrilled to announce another collaboration with a leading cell therapy developer and manufacturer, Solaris, to integrate inline monitoring of key cell culture parameters. We are partnering with Solaris to adopt our Maverick inline optical analyzer to be compatible with Solaris' cell shuttle system, which is a fully integrated, scalable cell therapy manufacturing platform. The benefit of real-time monitoring allows for immediate corrective action while maintaining sample integrity and reducing contamination risk. This collaboration, along with Terumo BCT, demonstrates the complementary nature of our new and existing capabilities when used alongside other cell therapy biomanufacturing enablers. According to recently released data from the American Society of Gene and Cell Therapy, the number of phase three trials increased for the first time in a year. As 2024 is shaping up to be a pivotal year, particularly for CAR T therapies, we are proud to partner with Taruma BCT and Solaris to further advance the efficiency, safety, and cost-effectiveness of these life-saving cell therapies. Turning to our second objective, advancing and broadening our product portfolio. Our product strategy is to develop devices that are simple to use and that provide customers with robust answers at the point of need. We continue to enhance the value of our flagship handheld device with software and hardware accessories that provide our customers with additional capabilities. Last year, we introduced the MX-908 beacon for remote area monitoring of toxic aerosol and vapor hazards. Beacon leverages our MX-908 device and Arrow module and adds a cloud-based solution that enables first responders to gather intelligence remotely and continuously while ensuring public safety at large events and at key infrastructure. In November, our MX-908 Beacon was awarded a Gold Aster's Homeland Security Award from the American Security Today for Best CBR&E Detection Solutions. In 2023, we significantly advanced and broadened our bioprocess portfolio with the launch of two devices. 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. With its novel aseptic sampling probe, MAVEN enables cell-free, sterile, and safe sampling with no volume loss or prep required. Later in September, we launched Maverick, the first turnkey device that utilizes Raman spectroscopy for real-time inline monitoring and control of multiple bioprocess parameters with no modeling or development required. As an inline device, Maverick is directly connected to the bioreactor, enabling scientists to take immediate corrective actions that improve product quality and process efficiency. We were honored that the analytical scientist named Maverick one of the top 15 innovations in 2023. Maven, Maverick, and our Rebel at-line cell culture analyzer enable process scientists to monitor and control critical process parameters, and our Zip Chip interface enables scientists to measure critical quality attributes. Taken together, we now have a complementary suite of PAT desktop devices which we plan to use to deepen our engagements with biopharma customers this year and position us advantageously to seize opportunities as the current macro headwinds subside. And finally, turning to our third objective, laying an omics foundation. There's a clear need for accelerating mass spec-based workflows to address proteomic and metabolomics opportunities. We believe our ZIP chip device, along with our prototype microfluidic chips, can ultimately meet this need for speed. During the fourth quarter, there were several peer-reviewed articles published in scientific journals that noted the speed of our ZipChip device for high-resolution separations, and here are a highlight from two articles. In a publication in the Journal of Analytical and Bioanalytical Chemistry, scientists from Ireland's National Institute for Bioprocessing Research and Trading, or NIBRT, highlighted the use of ZipChip for rapid characterization of AAV capsid proteins, with runs performed in as little as five minutes. Researchers concluded that ZipChip's rapid characterization illustrates its strength in monitoring product quality during AAV production. In a publication in the Journal of American Society for Mass Spectrometry, scientists from Amgen employed our ZipChip technology to enable rapid intact mass analysis of oligonucleotide single strands. Baseline separation of equal length oligos was achieved in less than four minutes. compared to run times of 15 minutes with LC-MS analysis. In addition, with Zipchip, no method development nor ion pairing reagents are required. Overall, I'm pleased with the progress we made on our stated objectives in 2023, including the launch of two devices in the process analytical technology space and the continued penetration of our handheld and enterprise accounts. With that, I'll now turn the call over to Joe for more details on our financials.