Q4 2021 908 Devices Inc. Earnings Call

March 7, 2022

Okay.

Good day.

And thank you for standing by welcome to the 908 devices fourth quarter 2021 financial results Conference call. At this time, all participants are in a listen only mode.

After the Speakers' presentation, there'll be a question and answer session.

Ask a question during this session you will need to press star one on your telephone.

These be advised this call is being recorded.

If you require any further assistance. Please press star zero I would now like being in the conference over to your host today Kellie Gould. Please go ahead.

Thank you. This afternoon Lino eight devices released financial results for the quarter and full year ended December 31, 2021. If you have not received this news release or if you'd like to be added to the companys.

<unk> list. Please send an email to IR at nine O eight devices Dot com.

Joining me today from nine away as Kevin cannot Chief Executive Officer, and co founder and Joe Griffith Chief Financial Officer.

Before we begin I would 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 nano 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, 2021 and in its other filings with the Securities and Exchange Commission.

Except as required by law nine or eight 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 17 2022.

With that I would like to turn the call over to Kevin.

Thanks, Kelly good morning, and thank you for joining our fourth quarter 2021 earnings call I could not be more pleased with the positive trajectory of our business as we closed out 2021, we ended the fourth quarter with $15 $8 million in revenue, bringing our total revenue for 2021 to $42 2 million up 57 <unk>.

<unk> from the prior year. These results are testament to the strength of our organization and I. Thank our employees for their efforts.

Before I provide more detail on our fourth quarter and full year results I would like to take this opportunity to welcome Tony Hunt, President and CEO of replica <unk> to our board of directors, Tony has a wealth of knowledge and experience and bio production and his perspective will be an important addition to our board as we broadened our bio analytics platform.

Throughout 2021, we made meaningful progress on the growth objectives, we set forth at the start of the year. These objectives included scaling our commercial team demonstrating traction within our growing customer base and expanding the capabilities of our existing products and the reach of our technology platform within our core forensics research and <unk>.

Pharma applications.

Starting with our sales channel and commercial organization, we continue to add top talent throughout the fourth quarter and we now have reached our goal of 60 commercial employees doubling from a year ago as of year end, we have employees in 12 countries and their handheld and desktop devices are available across six continents.

Than 40 countries. We have also expanded our distribution channels to further our global reach.

Moving on to customer traction adoption for existing and new customers across all product lines with strong throughout the year in the fourth quarter. We added 221 devices and 45, new customers, bringing our installed base to 90 to 135 devices.

With our handhelds, we significantly progressed enterprise wide adoption of our <unk> 98, with leading agencies, including the department of Homeland Security the drug enforcement administration. The department of Agriculture in U S Defense forces.

The growing opioid crisis continues to be a major driver of customer adoption. According to the CDC. There was an estimated 100000 drug overdose deaths in the U S. Between May 2020, and April 2021, a staggering 30% increase from the prior year.

<unk> also reported that synthetic opioids, mainly fentanyl we're involved in 64% of these overdoses. This is evident in the state of Ohio, which has been one of the highest rates of drug overdose deaths involving opioids to combat. This crisis, the Ohio Attorney General's office has deployed multiple amex 98 devices within its bureau.

Medical investigation in October they implemented a pilot program for police departments in three cities, where law enforcement officers are using IMAX nine wait for rapid mobile drug testing. The Ags office considers the amex to be a game changer and successes continue to be reported in the news recently PCI agents use the amex nine away after.

Suspected broke open a bag of suspicious substance and minutes later agents determined lethal fentanyl. It was included in the mixture.

A great example of how high fidelity chemical detection at the point of need can really make an impact and critical life applications.

Our goal is for our handheld mass spec to become the standard bearer for global Chemical response, and we're making strong progress towards this objective. This includes our partnering with leading trading organizations, including Guardians Center of Georgia, and the LSU National Center for Biomedical research and training, which collectively train thousands of first responders.

<unk> each year on the best modern tactics.

Turning now to our desktop we've reached our goal of placing our desktop devices into all 20 of the top 20 pharmaceutical companies since the launch of rebel in November of 2019, we have sold 100 units, notably nearly 40% of these devices went to the top 20 pharmaceutical companies and 15 customers have already purchased.

<unk> rebel units as.

As we've previously shared theres, a growing need to measure multiple product critical quality attributes or <unk> and to monitor and control the underlying process in order to improve yield and predictability and biotherapeutics. Our desktop devices are well positioned to meet these needs <unk>.

Last year, Amgen and GSK published papers on the use of <unk> to measure multiple critical quality attributes simultaneously. These papers noted efficiency gains, including increased throughput by 20 X from 200 minutes down to just 10 minutes with comparable results to conventional LC Ms methods.

The process informing power rebel analyte panel was demonstrated by Johns Hopkins University researchers in a paper published in biotechnology and bioengineering and November researchers developed a model to facilitate process controlled mammalian cells, providing a cost effective method to controlled nutrient growth and limit undesirable metabolome.

Byproduct.

Our rebel device facilitated development and validation of the model through enabling line analysis.

The rebels process informing power was also demonstrated by <unk> scientists and they're in silica predictive modeling work, which presented at our first integrated user meeting focused on bioprocess monitoring counterfeit pharmaceuticals, and high throughput drug screening in proteomics.

Moving to the expansion of our technology platform during the year, we continue to unlock our platform's capabilities by increasing areas of use for customers and opening addressable markets to accomplish this we released analyte panel extensions new software applications assay kits accessory modules and third party hardware and software integrations for our.

Matt Beck handheld device, we released an aerosol module accessory to detect and identify aerosolize chemical hazards and a bluetooth capability that enables seamless data transfer and accelerate support in the field. We also added 19, new analyte targets, mainly synthetic drug compounds, such as cannabinoid capital and <unk>.

Right.

For desktops, we partnered with sartorius to integrate our rebels analyte stream into their symptoms data exploratory tool to allow customers to garner deeper actionable insights, we released a new assay kit for our ZIP chip device that provides a simple rapid and cost effective method for illegal nucleotide analysis recently proto.

<unk>, a leading European cero within protein Sciences noted that our ZIP chip oligos provided substantial value for their customers compared with conventional approaches. They said the new workflow gives them the possibility to analyze new sample types without the need of harsh <unk> pairing agents and it requires only a small amount of sample something they already appreciate with all their.

Other zipkin kit.

While we are largely focused on bio analytics as the primary application for our desktops theres, a breadth of opportunity for our products and technologies beyond <unk> and analytics, including proteomics and metabolomics at the annual conference of the American Society for mass spectrometry or SMS, we presented development in these areas we updated the scientific community.

<unk> on our Microfluidic chip technology advances, highlighting a 10 fold improvement in sensitivity, allowing us to capture and measure lower abundance proteins also at ASML scientists from Dana Farber Cancer Institute presented their results using our prototype Microfluidic chips, which showed a significant time savings 20 minutes versus 90 minutes with traditional chromatography.

These methods.

Importantly, the opportunity for our products is large and rapidly growing today, we estimate that the total addressable market for our products is approximately $5 billion across forensics research and bio processing, reaching customers in pharma biotech government and academia we.

We have shared that over the coming years, we expect the opportunity to grow to $22 billion for our handheld and desktop as we extended the QA QC and expand our desktop capabilities in research and bioprocess with the emergence of advanced therapies.

We see the Biopharma <unk> industry is indeed, nearing an inflection point with the increasing pipeline of advanced therapeutics and the critical need for analytics to enable more real time control for process efficiency and predictability I want to share a few industry metrics that really underscore this first as of Q3 2021.

The alliance for regenerative medicine estimates that there are more than 2200 ongoing clinical trials to regenerative medicine, including cell and gene therapies second the FDA is experiencing significant growth in cell and gene therapy field with original investigational new drug applications growing from approximately 148 in 2006 to approximately 300000.

<unk> 21, and finally this past January at the advanced therapies week conference. The FDA stated that they expected approximately 10 to 20, new advanced therapy approvals per year through 2025.

Given these industry trends, we continue to expect our total addressable market to expand significantly over time as these advanced therapies take hold in the market compared to traditional monoclonal antibodies advanced therapies require a multi fold increase in the number of measurement due to the smaller production batches given the personalized nature of these therapies.

Our desktop devices are well positioned to meet this growing need for analytics, our rebel device automates the outline monitoring of process attributes and enables the streaming of 32 analytes critical to cell function and productivity prediction.

Chip device enables the rapid characterization of multiple quality attributes simultaneously 20 X faster than conventional fee with little to no method development.

We are already making significant progress in penetrating this opportunity with the rebel devices as of year end nearly one in every four rebel placements was for cell and gene therapy applications double that from a year ago. We also have several significant research collaborations with more than a third of these partnerships.

Specifically focused on cell and gene therapies.

And we are confident this is only the beginning we continue to believe we have a strong value proposition to offer the biopharma industry as well as other markets looking forward to 2022, we are focused on five key areas to drive long term growth first expanding our installed base and increasing utilization within accounts second acts.

<unk> commercialization third developing and advancing our existing products fourth broadening our bio analytics platform and fifth.

<unk> foundation to address emerging opportunities.

With our first objective surrounding customer adoption.

For handheld we're building a strong foundation of testing trials and pilots that we have the potential to evolve into valuable enterprise accounts as of year end. We now have more than 10 pilot programs of approximately 100 units more than the double one year ago. We also progressed to 12 enterprise accounts and maintained significant ongoing potential.

700, plus units across those accounts despite shipping approximately 300 units to these accounts over the last year, we continue to see significant pipeline opportunity for handhelds and work closely with our customers to identify budget and funding to drive enterprise adoption.

For our desktops, we are employing a penetrate and radiate strategy, we're working to penetrate new accounts and importantly, radiate across the large number of Biopharma accounts, where we now have a foothold our sales opportunity pipeline continues to grow and at year end is 50% higher than that of a year ago.

Turning to our second objective accelerating commercialization, we are harnessing the investments from 2021 and plan to further expand our commercial team to 80 by the end of the year. This will position us to continue ramping up our international efforts and geographic investment.

We have demonstrated progress with the addition of employees across our key regions and we expect to build upon this by deepening our footprint in these locations over the course of the year.

Turning to our third objective developing and advancing our product portfolio today.

Today, we have a robust product portfolio and we're continuing to build upon the capabilities of the existing products as well as expand the reach of our technology platform. In 2022, we will continue to unlock our platform's capability to increase the areas of use for our customers and further penetrate our addressable market. These new capabilities include the.

Consistent releases of additional analyte assay accessories, and data integrations across our handheld and desktop devices over the course of the year. Furthermore, this includes efforts with customers and partners to advanced data utilization and process understanding leading to progressively higher pull throughs on rebel over time, which is meaningful today at approximately 40% for active users.

At our core we are technology, driven company with a broad and differentiated platform for organic growth going forward, we anticipate major product releases on our cadence of every 24 to 36 months with the aim of expanding device capabilities and new generations of products and capitalizing on replacement cycles.

Turning to our fourth objective broadening our bio analytics platform, we are creating a comprehensive bio analytic platform for biotherapeutic development through production. Our goal is to become an enabler of Biopharma for pointed out with a tech stack of connected process monitoring and critical product quality attributes analysis devices that informs models that support better real.

Time predictive outcomes.

With increasingly advanced therapies, the industry necessitates automated solutions to drive bio manufacturing quality efficiency and cost improvements to achieve production of the desired product manufacturers need to identify and understand critical process parameters and their impact on critical quality product attributes during process development and into.

Bio manufacturing workflow the need for simple automated analyzer devices for measuring and monitoring process and product attributes has never been greater specialized scientific and engineering personnel are in high demand and workloads or expanding your proportionate to growing drug pipeline.

And finally, our fifth objective laying in omits foundation with the rise of proteomics to point out in the broader desire for an understanding of how proteins orchestrate a sales function. There is significant interest in determining protein abundances, which proteins are present localization, where they are and activities what theyre doing within <unk>.

Around cell.

With this interest in demand, we see an emerging need for accelerating mass spec based workflows to address proteomics and metabolomics opportunities mass spec all mixed workloads are bottleneck by sample preparation and high performance separation. The latter in particular can take hours with conventional chromatography or electronically driven chip.

<unk> has the potential to reduce sample preparation requirements and accelerate the separation step from hours to minutes.

To that end Dr will Thompson.

<unk> scientist at 900 devices presented a poster and lightning talk just last week at the U S. Hoopoe conference in Charleston, showcasing serum measurements with Adam molar sensitivity using high resolution separations that could be completed in just minutes. We expect the continued cadence of technology research and publications with Kols and partners.

Of course, future product launches and workflows in the <unk> domain.

We have shown tangible results across these areas throughout 2021, and we are well positioned for continued growth in 2022, I'm confident we've laid a solid foundation and build a strong team that will enable us to execute on these initiatives.

We are better positioned than ever to capitalize on the opportunity ahead and continue towards our goal of democratizing laboratory mass spectrometry and bringing it to the point of view I'll now turn the call over to Joe who will provide more detail on our financials and discuss our outlook for 2022.

Thanks, Kevin revenue for the fourth quarter, 2021 was $15 8 million compared to $12 5 million in the third quarter and $5 7 million in the prior year period total revenue for the full year 2021 was $42 2 million up 57% from $26 9 million.

In 2020.

Product and service revenue for the fourth quarter, 2021 was $15 6 million compared to $5 9 million in the prior year period, representing growth of 163%.

The increase was primarily driven by our handheld devices, where we shipped 140 more devices in the fourth quarter of 2021 compared to the prior year period.

Total product and service revenue for the full year 2021 was $41 1 million up 66% from $24 8 million in 2020.

Handheld revenue from our <unk> product for the fourth quarter 2021 was $11 3 million, an increase of $8 2 million compared to $3 1 million in the prior year period.

The increase was primarily driven by our pacing of shipments to the U S Army.

For the full year of 2021, we have recognized approximately 50% of the revenue from the existing purchase commitments in place with the U S Army.

Throughout 2021, we added to the initial opportunity further see additional potential and our enterprise account pipeline.

Desktop revenue from our rebel and ZIP chip products for the fourth quarter 2021 was $4 3 million compared to $2 8 million in the prior year period, representing growth of 53%.

This was primarily due to an increase in device placements.

For rebel and flip chip as well as an increase in recurring revenues.

Recurring revenues consisting of consumables accessories and service revenue for the fourth quarter 2021 was $2 4 million compared to $1 4 million in the prior year period, representing growth of 73%.

Increase was primarily driven by service revenue as well as an increase in consumable revenue related to rebel kit sales.

License and contract revenue for the fourth quarter 2021 was approximately $300001 1 million for the full year of 2021 down 49% over the full year 2020.

As previously stated we do not expect license and contract revenues to be a significant contributor of revenue on a go forward basis.

Our installed base grew to 1935 units with 221 devices shipped during the fourth quarter. We shipped 191 Amex nine await handheld devices 20 rebel desktop devices and 10 ZIP trip interface desktop devices during the quarter.

Gross profit was $9 1 million for the fourth quarter of 2021 compared to $2 6 million for the prior year period. The increased gross profit of $6 6 million was primarily driven by a $6 1 million increase in product and service gross profit, resulting from higher device sales across our products.

Gross margin was 58% for the fourth quarter 2021, as compared to 45% for the prior year period.

Gross margin was 55% for the full year 2021 in line with the prior year period.

Total operating expenses for the fourth quarter of 2021 were $12 7 million compared to $6 5 million in the prior year period.

The increase was driven primarily by head count expansion across our business as well as expenses related to marketing activities consulting and travel.

Net loss for the fourth quarter of 2021 was $3 5 million compared to $10 2 million in the prior year period.

Net loss for the full year 2021 was $22 2 million compared to $12 9 million in the prior year period.

We ended the fourth quarter of 2021 with approximately $224 million in cash and cash equivalents.

This includes approximately $94 million of net proceeds from our follow on offering completed in November 2021.

In addition, we had $15 million of debt outstanding.

We are well capitalized to execute on our current strategic priorities.

At nine we have always had a culture of disciplined capital allocation and.

In 2022, we will continue to prioritize our operational expenditures to achieve our long term growth objectives.

Looking ahead for 2022, we expect revenue to be in the range of $52 million to $55 million representing growth of 23% to 30% over full year 2021.

This range contemplates some remaining macro uncertainties of COVID-19 supply chain constraints and the delay of the full year 2022 U S. Federal government budget as operational risks even with this lingering impact. We believe we were well positioned to achieve our stated objectives and deliver strong growth for 2022.

This year, we expect seasonality consistent with prior years, reflecting the impacts of the U S. Government year end purchasing cycle of September 30, and typical year end pharma and biotech spending in the fourth quarter.

As a result, we expect revenue for 2020 to be similar to our cadence of 2021 with approximately two thirds of revenue to be recognized in the second half of the year.

At this point I would like to turn the call back to Kevin for closing comments.

Thanks, Joe we ended the year strong as we steadily executed on our commercial strategy, while providing value to our customers through our mass spec devices I am confident that the foundation. We have laid for 2022 will support our long term sustainable growth. We're just scratching the surface of what is possible with their technology and we look forward to.

Getting you on our progress across our different focus areas throughout the year with that we'll now open it up for questions.

And thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press. The pound key we do ask that you limit yourself to one question and one follow up please standby compile the Q&A roster.

Our first question comes from Brian Weinstein from Blair.

Line is now open.

Hey, guys. This is Justin on for Brian .

In relation to what what's going on in the macro environment right now and all of the uncertainty.

I'm wondering what you guys are seeing from customers right now, what's the appetite I'm, bringing new technologies.

And what's the overall awareness of your product, especially on the desktop side.

Yes, Hi, Justin this is Kevin.

Yes, I think we are today.

We're really addressing what we think it's critical to life application. So as you know, we're really working to accelerate Biotherapeutic development and then we're also working to make a dent in impact in the opioid crisis. So we have continued to see throughout the last 24 months that we've considered to see customers keeping our technology.

Our priority because they have these real and measurable impacts on on those important.

Yeah.

Great. Thank you and then I know you gave some color on the U S. Army contract said about 50% was realized but.

How should we think that falls through through the rest of 2020.

Sure.

So on the due to the competitive dynamics as well as some of our customers sensitivities, we won't be disclosing exact amounts as you're probably aware, but U S. Army is baked into our 2022 guidance and the visibility that we have into this revenue.

Adoption of large enterprise customers really gives us that full enterprise customers confidence as others come into play.

We're excited to be partnered with the U S Army.

We continue to see shipments we had them in Q3 Q4 and fulfill the rest of the devices over the first nine months of 2022, you feel you've made progress with enterprise accounts.

Which are forecasted to grow in 2022 contemplated in our guidance.

Happy to address any other questions that you have but super excited by that opportunity.

Sure.

Lastly, maybe just wondering what youre seeing on the broader sales cycle is that improving.

Over time as you are making the incremental commercial investments in your sales team I know you mentioned, bringing that up this year, but just wondering how that is tracking.

Yes.

We are expecting the investments we made in sales and marketing in 2021 to help drive growth here in 2022, and they are contributing in maybe three different ways I would say the funnel progression with the marketing team increasing the lead Gen and then driving the application support for the pre and post sales, which is still a portion to get customers.

Driving the referrals and then direct reps had been out prospecting and these new new territories and expanding territory for many of our reps are our new reps are really focused on the desktop area as we see as a big priority for us. So we expect our desktop revenues to to have good growth overall for.

For 2022, and as they come up that productivity curve. So by mid year. Yeah. We really expect these reps to be pretty productive and thats going to help us get us to our goals here in the back half.

Great. Thank you.

Okay.

And thank you.

And our next question comes from Puneet Sutent from SBB Leerink. Your line is now open.

Yes, hi, Kevin Thanks for taking the questions. So first one on the guide.

It appears you're bracketing the street number and essentially in line with that.

We look at the business you had 20 rebel placements, which was ahead of US you have solid momentum, but the army orders and amex.

<unk> nine O eight.

Rebel is been on the market for two years and getting into cell and gene therapy and now you are expanding your.

Salesforce, which correct me if I'm wrong it expanded from 6% to 60 and now you are expanding it to 80 so.

On the commercial side, so with all that momentum maybe could you just talk to us about sort of what is.

Driving you to be having some.

It doesn't mean the guide for the full year.

Absolutely.

As we think about the guide and the opportunity there.

Set our initial guidance based upon the knowledge at the time, when considering certain market factors and expectations on our investments that we've made as you highlighted here in 2021.

With those investment activities as we move into the first half. We believe we are laying a strong foundation for growth.

For 2022 and beyond so as we think about that range and some of the levers and the opportunities.

Yes.

Maybe downside is on Covid may not enable some of the international activities to open up.

Until maybe late Q2 number each two which could limit growth opportunities for both our handhelds and our desktops.

The U S. If they don't pass a budget.

We're forced to live within the continuing resolutions, where we are today, if not resolved by early Q2 that could put pressure on our ability to realize some of the handheld sales in.

And the guide from our existing and new accounts.

Do you see upsides with our handle customers. If we are able to secure funding and progress more rapidly through those pilots and the adoption of our technology across a broader user base.

Also for successful and our affiliated radiate and penetrate rebel as you mentioned, we had a strong Q4 on those Russell customer accounts expand our installed base and our drive higher active utilization among our install base.

Quite a balanced approach.

Got it.

Okay, No that's fair.

And then.

Kevin.

Great to see Tony on the board as you look at the bio processing capabilities that you have the rebel capabilities.

I think you highlighted a couple of points I just wanted to make sure I mean, what are the priorities for that platform. This year and an expansion in terms of maybe the analytes.

And overall.

Features and capabilities that you would want to add obviously.

It's great to see the progress that youre doing in cell and gene therapy accounts.

Yes. Thank you, yes, we really as previous mentioned in the script, there, but really do see that the biopharma industry nearing that inflection point and just really demanding these analytics like that we can provide with our desktop revenue Zip chip in the pipeline as you said there on the advanced therapeutics that we've been getting some subtraction.

Really really drives that critical need and to enable more of the real time control. If you will for process efficiency and predictability. So I think we're quite pleased with our progress there I think as you look forward into 2022, there's two real areas. One is that what wed like to coin that penetrate and radiate, where we got to those top 20, but really just seating.

The beginning of an account that we believe can have significant capacity within and so we're working to radiate across that and then in parallel really working as we build those placements to continue our recurring revenue our consumable stream. There. So one of the priorities that youre going to see and continue to see here is on the on the.

Consumable pull through related to their utilization in terms of measurements that we call it that informing power on the rebel and we highlighted that we have worked with.

John Hopkins put a beautiful paper out there.

That showed that the analyte power.

What <unk> provides is very informing of their next steps of these predictive models and sartorius as well showcase than silica model that again analytes that like the rebel provides are very informative so youre going to see us prioritizing continuing the placement of new new boxes into those accounts and radiating across that and then continuing to work.

On the utilization.

Okay Super and then just last one for me in terms of the proteomics.

Thanks for the update there when should we expect that that new product to reach the market.

Thank you yes.

Very excited about the proteomics workout today. It is an R&D project and we really do commit to keeping the scientific community updated and as you know we created a great panel with some wonderful proteomics leaders that are helping advise us and we did just have a very nice to talk with some with some really game changing performance last week.

Down at the Grupo so but today, it's really remains an R&D project is based on our ZIP chip platform as you know, adding a solid phase extraction and bad to that so if you look forward to it through 2000 22022, we don't have a.

We considered an R&D project and we don't have a contribution for this work and our guidance for 2020. So it will take some time, but stay tuned and we'll keep everybody abreast through the community of scientific progress.

Okay, great. Thanks, guys good to see the progress thanks.

Okay. Thank you.

And our next question comes from Dan Arias from Stifel.

Your line is now open.

Good afternoon, guys. Thanks for the questions.

Kevin or maybe Joe can you just expand on the comments on Bradley usage, and maybe talk to pull through for 2022, I mean, I know that calculation gets impacted by the new users that come in in the denominator and they come in at low contributors, but if you just sort of look at the existing customers and Kevin to your idea of <unk>.

<unk> utilization is one of your goals.

What kind of growth do you think you might see amongst those that have <unk> today and are often using using them.

Just maybe I'll start off and then Kevin can chime in too and.

And we have seen some broad range of customer use cases over the last year and really two years since we started.

We have some customers that are more in that two to three but lots of us getting out of the gate and we are seeing more as customers utilize the device more and more they get more comfortable and take more measurements. So today. The active users at approximately that one kid a month, we see that likely continuing in 2022 and how we.

Looked at it.

Within our guidance.

Guidance range that we put out there we are focused on driving higher utilization and are seeing paths for that.

Seeing some customers start to consider purchasing multiple units.

Largely for convenience.

So increasing utilization within the accounts, but lowering the run rate with each within each unit. So I think you were touching on so as far as accelerating global pull through there are multiple factors, we feel in play, including the ramp time as alluded to in <unk>.

The focus on placements in 2012 and here in 2022, I think we'll have a lot of focus on additional placements getting out there to build that installed base and that will affect the overall average around 10, a month for us.

Okay. That's helpful and then Kevin can I, just maybe ask about you.

Your expectations today versus where they were.

Initially when you guys went public I mean, the IPO took place basically mid Covid. So obviously you found yourself in an operating position that was different at that time than it was a year earlier as we enter 2022 here.

How do you feel about the commercial team relative to those initial expectations just in terms of infrastructure.

The ability to reach customers geographically.

You mentioned higher I'm just curious how.

How that's going to play out just from a global perspective, and then just overall I'm trying to recalibrate, where we are just on the selling side.

Just as we approach what is hopefully going to be a more accommodative environment.

Yes.

I think in general if you look back to the IPO point in December 2020, I mean, we feel really good about the progress that we've had since that date and we've got some real products out there and they are really changing the paradigm of chemical and biochemical detection and customers want to need this analysis and they can't really wait on a supercomputer.

In all cases, and they need these laptops and tablets and we see that ultimately is a pretty large opportunity. We did just hit our 10 year anniversary last month.

I think we've come quite far and a lot to do from a commercial team side. We had about 30 people on the commercial side at the time of the IPO and that we just passed the 60 and we'll keep investing over this year to around <unk> 80 for the year.

I think we've had great progress I don't think we see ourselves on short of opportunity. It is a massive addressable market there thats really in front of us and we've got a highly differentiated.

Allergy product to get after it I do see that the world is opening up a little bit more obviously as Joe mentioned there is always the concern that the new variant comes by and for US. It probably is more impactful on the international side of our business, but historically thats been a small percent and were really looking at that as an opportunity to grow.

Yes, I hope that gives you some color.

It does if I could just sort of finish the thought there.

What percentage of normal would you say you are right now in terms of reach.

Reaching global customers. So someone in London wants you to come over and demo machine or just talk to them.

How much of the capability at this point, given where we are with with Covid do you have.

Yes.

So obviously were more U S centric, but we do have employees now in 12 different countries as you know our commercial leader.

For our life science all of our desktops.

Just out of the UK. So that particular example, we've really been growing up teams across the UK and Europe .

I think we're getting stronger by the day there to reach customers in Boston, We're calling you were finally without any math. They just lifted the mass mandates here in Boston until all employees are at the office without so I think that's all continuing to open up I'd say Asia is probably a more challenging area across APAC really more limited, especially as a small team.

So traveling from one country to another in the APAC region.

Is challenging and Thats, probably the last thing to open up as.

And as far as percent of normal probably at the higher a higher percentage maybe as specific as you look at our business were greater than 80% are in North America base revenues.

We do see our business a bit more insulated than others, maybe in our space now.

We grew at a healthy rate during the pandemic and believe these critical life devices have remained a priority for our customers. So I don't if I can put it.

Specific percent on it, but it's probably greater than 80% greater than 90% in our case.

Okay helpful guys. Thank you.

Okay.

And thank you and our <unk>.

Next question comes from Max Masucci from Cowen. Your line is now open.

Hi, Kevin and Joe Congrats on a nice finish to the year and happy 10 years at 10 nanometers Kevin.

Yes.

We attended the event therapy week, I think leaving that conference. We admittedly, we're a bit chocolate at how clear the demand was for at line analyzers.

But the awareness of the available solutions that exist in the market was still somewhat challenged.

So anytime you have a disruptive technology.

It requires solid outbound strategy so.

Would just be curious for rebel salesforce it doubled over the past year.

To breakout.

How you are number one the ability to drive new customer wins and number two ability to drive existing customer growth has changed.

With the expanded sales force that would be great.

Yes, yes.

Conference was straight down the fairway of the results that you and others have published out of there and certainly that the needs that were discussed at that conference and very much aligned to the needs that we're driving to serve with our bioinformatics platform across cross rebel and Zip.

ZIP chip.

Youre right its more than just feet on the street and prospect you definitely have to raise the full horn, a little bit rates and we're a small company and you're trying to do so so as we talk about the 30 that became 60 there.

As a fraction of those that are on the marketing side and that's across product management. The outbound marketing side, everyone responsible for all stages of the funnel from demand generation through the marketing qualified leads in inside sales and Theyre also quite efficient and getting the word out and we've also been really ramping up over last year.

Or just the number of things, we're doing with external parties and key opinion leaders and we will continue to do that in 2022. So I think there is a thirst for new analyzers.

There is a demand for new insights as you look at these advanced therapies in the analytics, we really view as key and Theyre going to keep working to make sure were hurt.

That's great.

Yes, just a follow up here and then I'll save.

My question's for our discussion tomorrow, but my assumption is that the.

The messaging to the sales force.

For 2022 is we're going to continue to prioritize placements.

Just given a lot of these opportunities are they are advancing but still nascent but I would just be curious to hear.

How you are targeting consumable sales.

You have rebel focused reps that.

Our driving both placements and consumables or if you're splitting up those duties.

Yeah, Great question, and I think about entitled to your last question too and the growth and the execution of our sales channel on the desktop side.

We're expecting growth to approach approximately two times the growth rate overall, and that's really where a lot of excitement and opportunity is.

Part of it is with the sales team not only going after the devices, but but the consumables we have a handful of inside sales, but we do have our sales team in their bag bowls.

Upfront device as well as the consumables.

So there are quarters include both and we think that's important to keep them tied to the customer and the customer relationship.

They buy hopefully that effective an even more devices and buying in that upfront commitments on whether it's initial six months of consumables, our kits or coming back at renewal to get additional as they ramp up their utilization rates. So we do keep it all all in one bag supplemented by inside sales.

Great I appreciate the color and talk to you tomorrow.

Alright, thanks, guys.

Thank you.

And I am showing no further questions I would now like to turn the call back over to Kevin cannot for closing remarks.

Yes. Thank you very much thanks, everyone.

Joining our call. This afternoon and look forward to seeing somebody at the Cowen Conference. This week and have a great day.

This concludes today's conference call. Thank you for participating you may now disconnect.

Okay.

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Yes.

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Yes.

Thanks.

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Good day, and thank you for standing by and welcome to the nine O eight devices fourth quarter 2021 financial results Conference call.

At this time all participants are in a listen only mode.

After the Speakers' presentation there'll be a question and answer session to ask a question. During this session you will need to press star one on your telephone. Please be advised this call is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your host today Kellie Gould. Please go ahead.

Thank you. This afternoon I know eight devices released financial results for the quarter and full year ended December 31st 2021, 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 nine O eight devices dotcom join.

Joining me today from nine away, if Kevin cannot Chief Executive Officer, and co founder and Joe Griffith Chief Financial Officer.

Before we begin I would 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 Ninoy devices issued today.

This conference call contains time sensitive information and is accurate only as of the live broadcast March seven 2022.

With that I would like to turn the call over to Kevin.

<unk> from the prior year. These results are a testament to the strength of our organization and I. Thank our employees for their efforts.

Before I provide more detail on our fourth quarter and full year results I would like to take this opportunity to welcome Tony Hunt, President and CEO of <unk> to our board of directors, Tony has a wealth of knowledge and experience and bio production and his perspective will be an important addition to our board as we broadened our bio analytics platform.

Pharma applications.

Starting with our sales channel and commercial organization, we continue to add top talent throughout the fourth quarter and we now have reached our goal of 60 commercial employees doubling from a year ago as of year end, we have employees in 12 countries and our handheld and desktop devices are available across six continents and more.

Than 40 countries. We have also expanded our distribution channels to further our global reach.

With our handheld we significantly progressed enterprise wide adoption of our <unk> with leading agencies, including the department of Homeland Security the drug enforcement administration. The department of Agriculture in U S Defense forces.

Medical investigation in October they implemented a pilot program for police departments in three cities, where law enforcement officers are using the IMAX nine wait for rapid mobile drug testing. The Ags office considers the amex to be a game changer and successes continue to be reported in the news recently PCI agents used the amex nine away after.

Suspected broke open a bag of suspicious substance and minutes later agents determined lethal Sentinel. It was included in the mixture.

A great example of how high fidelity chemical detection at the point of need can really make an impact and critical to life applications.

Worldwide each year on the best modern tactics.

Multiple rebel units.

As we've previously shared theres, a growing need to measure multiple product critical quality attributes or <unk> and to monitor and control the underlying process in order to improve yield and predictability and biotherapeutics, our desktop devices are well positioned to meet these needs.

Process informing power.

<unk> analyte panel was demonstrated by Johns Hopkins University researchers in a paper published in biotechnology and Bioengineering and November researchers developed a model to facilitate process controlled mammalian cells, providing a cost effective method to controlled nutrient growth and limit undesirable metabolomics byproduct or <unk>.

<unk> device facilitated development and validation of the model through enabling outline analysis.

The rebels process inform empower was also demonstrated by <unk> scientists and they're in silica predictive modeling work, which presented at our first integrated user meeting focused on bioprocess monitoring counterfeit pharmaceuticals, and high throughput drug screening in proteomics.

Our mass spec handheld device, we released an aerosol module accessory to detect and identify aerosolize chemical hazards and a bluetooth capability that enables seamless data transfer and accelerate support in the field. We also added 19, new analyte targets, mainly synthetic drug compounds, such as cannabinoid <unk> and <unk>.

Right.

For desktops, we partnered with sartorius to integrate our rebels analyte stream into their symptom data exploratory tool to allow customers to garner deeper actionable insights, we released a new assay kit for our ZIP chip device that provides a simple rapid and cost effective method for oligonucleotide analysis recently pro.

<unk>, a leading European CRO within protein Sciences noted that our ZIP chip oligos provided substantial value for their customers compared with conventional approaches. They said the new workflow gives them the possibility to analyze new sample types without the need of harsh <unk> pairing agents and it requires only a small amount of sample something they already appreciate with all that.

Other zip ship kits.

While we are largely focused on bio analytics as the primary application for our desktop there is a breadth of opportunity for our products and technologies beyond Biola and analytics, including proteomics and metabolomics at the annual conference of the American Society for mass spectrometry or SMS, we presented development in these areas we updated the scientific community.

These methods.

We have shared that over the coming years, we expect the opportunity to grow to $22 billion for our handheld and desktop as we extend the QA QC and expand our desktop capabilities in research and bioprocess with the emergence of advanced therapies.

The alliance for regenerative medicine estimates that there are more than 2200 ongoing clinical trial to regenerative medicine, including cell and gene therapies second the FDA is experiencing significant growth in cell and gene therapy field with original investigational new drug applications growing from approximately 148 in 2006 to approximately 320.

21, and finally this past January at the advanced therapies week conference. The FDA stated that they expected approximately 10 to 20, new advanced therapy approvals per year through 2025.

Our desktop devices are well positioned to meet this growing need for analytics, our rebel device automates the outlined monitoring of process attributes and enables the streaming of 32 analytes critical to cell function and productivity predictions are zip chip device enables the rapid characterization of multiple quality attributes simultaneously 20 X faster than conventional.

I'll see with little to no method development.

We are already making significant progress in penetrating this opportunity with the rebel device as of year end nearly one in every four rebel placements was for cell and gene therapy applications double that from a year ago. We also had several significant research collaborations with more than a third of these partnerships.

Specifically focused on cell and gene therapies.

<unk> commercialization third developing and advancing our existing products fourth broadening our bio analytics platform and fifth.

<unk> foundation to address emerging opportunities.

<unk> with our first objective surrounding customer adoption.

We have demonstrated progress with the addition of employees across our key regions and we expect to build upon this by deepening our footprint in these locations over the course of the year.

Turning to our third objective developing and advancing our product portfolio today.

Today, we have a robust product portfolio and we're continuing to build upon the capabilities of the existing products as well as expand the reach of our technology platform. In 2022, we will continue to unlock our platform's capability to increase areas of use for our customers and further penetrate our addressable market. These new capabilities include the.

At our core we are technology, driven company with a broad and differentiated platform for organic growth going forward, we anticipate major product releases on a cadence of every 24 to 36 months with the aim of expanding device capabilities and new generations of products and capitalizing on replacement cycles.

Turning to our fourth objective broadening our bio analytics platform, we are creating a comprehensive bio analytic platform for biotherapeutic development through production. Our goal is to become an enabler of biopharma for <unk> with a tech stack of connected process monitoring and critical product quality attributes analysis devices that informs models that support better real.

Time predictive outcomes.

<unk> bio manufacturing workflow the need for simple automated analyzer devices for measuring and monitoring process and product attributes has never been greater specialized scientific and engineering personnel are in high demand and workloads are expanding in proportion to growing drug pipeline.

Around cell.

<unk> has the potential to reduce sample preparation requirements and accelerate the separation step from hours to minutes.

To that end Dr Weil Thompson.

Of course, future product launches and workflows in the <unk> domain.

Thanks, Kevin revenue for the fourth quarter, 2021 was $15 8 million compared to $12 5 million in the third quarter and $5 7 million in the prior year period.

Revenue for the full year 2021 was $42 2 million up 57% from $26 9 million in 2020.

Product and service revenue for the fourth quarter, 2021 was $15 6 million compared to $5 9 million in the prior year period, representing growth of 163% increase.

The increase was primarily driven by our handheld devices, where we shipped 140 more devices in the fourth quarter of 2021 compared to the prior year period.

Total product and service revenue for the full year 2021 was $41 1 million up 66% from $24 8 million in 2020.

Handheld revenue from our <unk> product for the fourth quarter 2021 was $11 3 million, an increase of $8 2 million compared to $3 1 million in the prior year period.

The increase was primarily driven by our pacing of shipments to the U S Army.

For the full year of 2021, we have recognized approximately 50% of the revenue from the existing purchase commitments in place with the U S Army.

Throughout 2021, we added to the initial opportunity further see additional potential and our enterprise account pipeline.

Desktop revenue from our rebel and ZIP chip products for the fourth quarter 2021 was $4 3 million compared to $2 8 million in the prior year period.

Representing growth of 53% this.

This was primarily due to an increase in device placements five each for rebel and ZIP chip as well as an increase in recurring revenues.

Increase was primarily driven by service revenue as well as an increase in consumable revenue related to rebel kit sales.

License and contract revenue for the fourth quarter 2021 was approximately $300001 1 million for the full year of 2021 down 49% over the full year 2020.

As previously stated we do not expect to license and contract revenues to be a significant contributor of revenue on a go forward basis.

Gross profit was $9 1 million for the fourth quarter of 2021 compared to $2 6 million for the prior year period. The increase gross profit of $6 6 million was primarily driven by a $6 1 million increase in product and service gross profit, resulting from higher device sales across our products.