908 Devices Inc.

Hello and welcome to the 908 Devices Second Quarter 2024 Financial Results Conference Call. My name is Elliott and I'll be coordinating your call today. If you would like to register a question during today's event, please press star followed by one on your telephone keypad. I would now like to hand over to Kelly Gurra, Investor Relations. Please go ahead.

Thank you. This morning, 908 Devices released financial results for the second quarter ended June 30th, 2024. 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 Knopf, Chief Executive Officer and Co-Founder, and Joe Griffith, Chief Financial Officer. Before we begin, our commentary today will include the presentation of some non-GAAP financial measures. These measures should be considered as a supplement to and not a substitute for GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures can be found in today's earnings press release, which is available in the investor relations section of our website. Additionally, 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, 2023 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, August 6, 2024. With that, I would like to turn the call over to Kevin.

Thanks, Kelly. Good morning, and thank you for joining our second quarter 2024 earnings call. We delivered solid execution on a multitude of fronts in the quarter, and we ended the second quarter with revenue of $14 million, representing 16% growth year-over-year. This included $3.1 million of revenue from RedWave Technology, which we acquired on April 29th. We are excited to add RedWave's devices for bulk chemical identification to our commercial engine, complementing our handheld MX908 mass spec for trace chemical detection. We now have an expanded portfolio of handheld chemical analysis devices for forensics workflows. Our customers value our point-of-need offerings as demonstrated by consistent recurring revenue, which for the first half of the year represented 41% of our revenues. Our goal has always been to win point-of-need chemical analysis in life-altering applications, from forensics through to biopharma process control and characterization. Our progress towards that goal in the quarter is measurable. During the quarter, our team completed the commercial integration of RedWave technology, including product training for the sales teams, plus CRM and website integration. Also, we received our first multi-system order, 13 devices in total, from the same customer that included both our handheld MX908 and RedWave Explorer devices. Overall, we sold 153 devices total in the quarter. I want to thank our team for their enthusiasm and relentless work to quickly bring Red Wave into 908 devices and for the tremendous momentum they've created as a result. We also recently welcomed Michelle Leonhart, former administrator of the U.S. Drug Enforcement Administration, to our board of directors. Michelle is a determined leader in the fight against illegal drugs and a passionate advocate for substance abuse prevention in young adults. She brings extensive government knowledge and experience, which will support our efforts to further penetrate the forensics market. For our desktop portfolio that serves the life science instrumentation and bioprocessing markets, macro market pressures have persisted, and we continue to see an overall conservatism towards adopting innovative technologies and capex spending. Despite ongoing pressures, we continue to focus on building a foundation that will position us well for the future. We are aggressively pursuing partnerships with hardware innovators in the cell therapy space and I'll show more on our progress there shortly. As we launched two new desktop devices last year, we're focused on capability upgrades to our existing products this year. This includes developments to enable integrations and simplifying and hardening our technology with the ultimate goal to present as a simple process sensors. For our Rebel device introduced in 2019, we're optimizing the device's software and hardware that have begun initial testing with key pharma customers. Feedback has been positive, with one customer noting that they now plan to use Rebel for routine manufacturing support in addition to its current use in process development lab. We're truly appreciative of our customers' input and support in these product enhancements and improvements. Now I'd like to provide more detail on the progress we have made across our three focus areas during the second quarter. Starting with our first objective, market expansion, our focus is to expand our market outreach by engaging with new key accounts, fostering strategic partnerships, and extending our reach across global enterprise accounts. We are proud that first responders choose our handheld devices in their mission to protect the public and key infrastructure from chemical hazards. Of particular concern, especially at large public events, is the ability to detect and identify unknown gases, vapors, and aerosols. Our Explorer handheld FTIR device can quickly identify thousands of gases and vapors, including complex mixtures, and our MX-908 beacon complements this by providing remote detection and monitoring of vapors and aerosols at trace levels. Both devices were used by local response team at the Indianapolis 500 automobile race and Republican National Convention. And at both events, the Explorer was integrated onto Boston Dynamics spot robot. In addition, several beacons were deployed at large open air events in our nation's capital over the July 4th holiday. We value the confidence these response teams have in our first of its kind air monitoring technology and the partnership we have with these leading organizations. Turning to our desktop portfolio, I'm excited to announce that we have officially launched our MAVEN configuration for Terumo Blood and Cell Technologies Quantum Flex Cell Expansion System that enables real-time monitoring and control of glucose and lactate without the cost and risk of manual sampling. The Quantum Flex Cell Expansion System is used throughout the cell therapy process, from process development through clinical manufacturing. In a webinar in July, hosted by BioInsights, A Tarumo scientist noted that real-time automated glucose and lactate sampling allows more frequent data that can be used to maintain tight control over cell culture conditions. She further noted that automated systems like MAVEN ensure reproducibility and reduce the amount of hands-on time required from operators. Her respective teams are excited to offer cell therapy developers the ability to gain valuable process insights in order to reduce costs of goods and accelerate progress for these personalized treatments. Earlier this year, we announced a development collaboration with Solaris to integrate our Maverick inline analyzer into Solaris' cell shuttle system, a fully integrated, scalable cell therapy manufacturing platform. Maverick, a Raman-based TAT solution, provides real-time monitoring and control of critical bioprocess parameters. In addition to Solaris and Terumo, we are actively engaged with a handful of other hardware innovators and continue to seek other alliances as there is a need for simple, automated PAT tools, such as our novel devices, to enhance process understanding and ensure batch-to-batch reproducibility for these personalized treatments. It is critical to address cost and access for cell therapies, and our products directly contribute to this. Ultimately, we believe this integration strategy could create an inflection point for our desktops and an efficient path to market that complements our direct sales pursuits. To further the value of our desktop portfolio for cell therapy applications, we recently entered into a research collaboration with CTMC, a joint venture between National Resilience and MD Anderson Cancer Center. From process development to integrated regulatory support, CTMC aims to usher novel cell therapies seamlessly and efficiently through every step of the development journey. During cell therapy production, there are multiple points where sampling is required, which is a manual process that is labor-intensive and time-consuming. Our collaboration aims to demonstrate the benefit of continuous monitoring of glucose and lactate in GUX bioreactors, today's industry standard. MAVEN is an easy-to-implement solution for hands-off monitoring of cell therapy manufacturing, and we believe will ultimately lead to higher efficiency and more robust therapies. We've also expanded our partnership with the National Institute of Bioprocessing Research and Training, or NIBRT, based in Ireland. NIBRT's research focus is to make transformative discoveries that revolutionize the manufacturing of recombinant proteins, vaccines, and cell and gene therapies. Earlier this year, we began a collaboration that demonstrates how our desktop portfolio can add value in bioproduction and includes Maven, Maverick for real-time process analytics, with Rebel providing at-line cell culture analysis, and Zipchip for rapid product quality assessment. At the upcoming Bioprocessing Summit in Boston this month, Dr. Jonathan Bones, Principal Investigator at Maverick, will present findings on an integrated platform of Maverick, Rebel, and Zipchip that enables rapid generation of informative data on manufacturing process behavior for monoclonal antibodies. We believe these strategic partnerships and research collaborations lay a solid foundation for demonstrating and realizing the value of our innovative THC solutions. Turning to our second objective, portfolio engagement. We are leveraging our expanded product portfolios to maximize opportunities and strengthen engagements with our customers. In June, we launched an enhanced quantification software package for our Explorer handheld gas and vapor analyzer, enabling first responders to identify and quantify nearly 5,000 airborne chemicals. Explorer is the first handheld product of its kind that uses FTR spectroscopy to identify, quantify, track gases and vapors. The device is simple to use and can automatically and accurately identify multiple compounds simultaneously at the parts per million level. We believe Explorer is a game changer for firefighters. According to the National Fire Protection Agency, approximately 1.3% of all calls are for hazardous materials compared to 4% of calls for fire. Many calls are the result of unknown odors detected by civilians and fire departments need advanced technology in the field such as the Explorer, so that they can effectively manage and mitigate potential hazards. We continue to diligently monitor the evolving drug landscape and included new drug targets in version 3.5 software for our MX-908 handheld mass spectrometer, which was released electronically during the quarter, enabling all in-the-field devices to be easily updated. Drug target additions include three synthetic cannabinoids, one synthetic cathinone, and protonitazine, anitazine that has been identified in combination with other drugs of abuse. Concerningly, recent data has also shown that it is even more potent than fentanyl. Our MX908 is currently the only handheld device used by first responders that can identify protonitazine at trace level. In addition to MX908 analyte target updates released in software, our team of forensic chemists monitors new drug targets and concoctions that appear in the field through our reach-back data service, informing and educating our internal application team, and importantly, making customers aware of emerging trends. As an example, our team recently became aware of Tugeet, as known as pink cocaine, a drug cocktail that does not contain cocaine, but usually a mixture of ketamine, MDMA, methamphetamine, and other substances such as opioids. While pink cocaine has been seen mostly in Latin America and Europe to this point, it is gaining traction in the U.S., and in fact, our Reach Back team is now seeing it in U.S. field data. It remains hypercritical that law enforcement personnel and other first responders have advanced and upgradable technology in the field, such as the MX-908, along with the 24-7 support they need to stay current and to quickly and accurately identify illicit drugs. Turning to our desktops, we had a strong technical showing at the American Society for Mass Spectrometry, or ASMS, conference in June. At the launch of the thermoscientific stellar mass spectrometer, the pairing with our ZipChip C device was used to demonstrate fast metabolite acquisition speed and high-quality quantitative data. Results noted quantitative accuracy and precision for 124 compounds in less than two minutes, covering a wide concentration rate. It's great to see these newly launched mass specs that can exploit the full speed of our ZIP chip. Also at ASMS, our collaborators at NIBRT and the University of Wisconsin-Madison gave three oral presentations on their research using ZIP chips. Research applications included metabolomics, proteomics, and upstream production of monoclonal antibodies. Our team also presented 13 posters, which included collaborators from Biotechni, AstraZeneca, Thermo Fisher Scientific, and the University of North Carolina at Chapel Hill. Zip chip's ability to provide high resolution separations in minutes was also highlighted in several peer review articles published in the scientific journals in the quarter. In a publication in the journal Analytica Chemica Acta, Scientists from AstraZeneca highlighted Zipchip's high sensitivity and the short analysis time of less than eight minutes in the metabolite study of ATP, which serves as a primary energy source for living cells. In a publication in the Journal of Pharmaceutical and Biomedical Analysis, scientists from Pohl Pharma Biologics, NIBR, and the Center for Analytical Sciences in Amsterdam noted that charge variant analysis data from Zipchip enables rapid selection of the most promising cell lines during process development of a biosimilar. Finally, in a publication in the Journal of Pharmaceutical Sciences, scientists from Regeneron noted that Zipchip's high-resolution analysis enables identification of charge variant species under various stress conditions, thus supporting rapid process and formulation development of biotherapeutic. Overall, I'm pleased that we continue to strengthen customer engagement with our newly expanded handheld and desktop portfolio. Finally, our third objective, operational excellence. We are executing to a framework for sustained growth with a path to profitability. We've enhanced our financial profile significantly by acquiring Red Wave Technology, a profitable company that's accreted to both revenue growth and gross margins. And we have identified more than $5 million in forecasted annual cost synergies to be realized in 2026. Our integration is progressing smoothly, and our commercial team is effectively managing our broader portfolio of forensic solutions. We're pleased with RedWave's contributions to margins and revenues in Q2, which we view as an early evidence that our overlapping customer bases and call points will support improved scale and better leverage of sales and marketing investments. As we enter a seasonally strong second half for our forensics portfolio, we plan to leverage existing relationships with government accounts to further penetrate this opportunity with RedWave's complementary solutions, again creating efficiencies of scale. We believe these strategic efforts will accelerate our path to over $100 million in annualized revenues and accelerate our crossover to cash flow break even with a steeper profitability ramp thereafter. And importantly, we continue to expect that we'll be able to reach breakeven with our cash on hand. With that, I will now turn the call over to Joe for more details on our financials.