Good morning and thank you for standing by. Welcome to the 908 Devices' First Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session.

I would now like to hand the conference over to your speaker today, Kelly Gura, Investor Relations. Please, go ahead..

Thank you. This morning, 908 Devices released financial results for the first quarter ended March 31, 2022. If you've not received this news release or if you'd like to be added to the company's distribution list, please send an e-mail to ir@908devices.com.

Joining me today from 908 is Kevin Knopp, Chief Executive Officer and Co-Founder; and Joe Griffith, Chief Financial Officer. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section entitled Forward-Looking Statements in the press release 908 Devices issued today.

For a more complete list and description, please see the Risk Factors section of the company's annual report on Form 10-K for the year ended December 31, 2021, 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, May 10, 2022.

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

Thanks, Kelly. Good morning, and thank you for joining our First Quarter 2022 Earnings Call. We started the year strong with first quarter revenue growing 50% over the prior year period to $8.3 million, and we have placed 83 devices during the quarter, bringing our installed base to over 2,000 devices across our three products.

I'm incredibly proud of our team's execution in managing our supply chain, strengthening our customer relationships and expanding into new accounts, all while dealing with the ongoing challenges of the pandemic. Our results are a testament to their hard work and effort as we grow our company.

Last quarter, we outlined five focus areas that drive our long-term growth. I would like to highlight some of our progress in each of these areas, starting with our first objective surrounding customer adoption.

As noted previously, we are employing a penetrate-and-radiate strategy in which we work to penetrate new accounts, creating a foothold and then radiate across these enterprise accounts driving broader adoption.

Looking first at our progress with our desktops, we placed 20 devices during the first quarter with an even-split of new and existing customers, continuing the trend we saw in the second half of 2021.

Further, for our REBEL product, nearly a third of our placements were for cell and gene therapy applications for customers ranging from small biotechs to top pharma companies. We are really encouraged by the increasing excitement for REBEL in these applications.

As presented previously, we continue to expect our total addressable market to expand significantly over time as the advanced therapies take hold in the market and REBEL's adoption in this segment is a focus as a result. Our ZipChip also continues to gain ground in biopharma for critical quality analysis.

One important highlight was a recent order from US Pharmacopeia or USP. USP is dedicated to helping improve global health through standard setting in compounding biologic, pharmaceutical manufacturing and other fields. We're excited to support USP's mission to build trust and supply of safe quality medicines.

For our handhelds, we had several key international orders, including the Australian Border Force, a new customer. We also received an order for additional units from the UK National Center, a multi-agency training center supporting chemical response across the UK.

These adoptions highlight new enterprise account potential and further partnership with a leading training organization as we work towards the goal of our handheld mass specs becoming the standard bearer for global chemical response. Turning to our second objective, accelerating commercialization.

We continue to harness our commercial investments from last year and will further expand our distribution channels and expand our commercial organization to 80 by the end of the year.

During the first quarter, we made progress in both areas, adding to our commercial team and extending our APAC reach by adding a distributor in India for our desktop devices. These complement our recent investments in China and our distribution partnership with Sartorius in Korea.

Turning to our third objective, developing and advancing our product portfolio. We continue to unlock our platform's capabilities through consistent releases of additional analytes, assays, accessories and data integrations in order to increase areas of use for our customers and to penetrate our addressable market.

For our handhelds, four new drugs and drug precursors have been added already this year, including fentanyl analogs, cannabinoids and a potent new class of illicit drugs nitazenes. Our handhelds are a game changer for the opioid crisis with the ability to detect and identify trace amounts of these drugs.

There continues to be a growing need for first responders to have safe and accurate detection technology at the point of need. The National Institute of Drug Abuse issued a report in March, noting that law enforcement seizures of pills containing illicit fentanyl increased dramatically between January 2018 and December 2021.

The number of PLCs increased from 42,000 to over 2 million during this time frame. These deadly counterfeit pills are often made to look like prescription drugs in a study published in April in the Journal of American Medical Association, adolescent overdose death in the U.S.

more than doubled from 2010 to 2021, even though drug use amongst teens is currently historically at a low. The study noted that in 2021, fentanyl was involved in more than 77% of adolescent overdose death. These are sobering statistics.

We remain committed to regularly updating our devices, analytics and machine learning to keep pace with the evolving needs of first responders to effectively combat this crisis.

In addition to new drug targets, we have expanded the capabilities of our MX908 handheld device to continue to build a closer connection to our customers enabled more use cases. We have now added iOS capabilities and our customers can now data transfer wirelessly from their MX908 device to an app on their iPhone.

This is in addition to our existing Android capabilities and further streamlines workflows and accelerate field support for our customers. We have also provided customers and partners with technical integration specification for the MX908 to ensure they can easily integrate our devices into larger systems, such as robots and drones.

As our install base increases, we are seeing the impact of our handheld devices in keeping people safe at large, prominent events and in smaller local institutions. At the Boston Marathon last month, the Boston Fire Department placed our handheld devices with the Arrow module near the race's finish line to monitor for chemical airborne hazards.

Our devices have been used at other national events including the Super Bowl in Los Angeles to screen mail and to respond to other potential chemical emergencies. Our MX908 device is also being used to protect people in smaller, yet important community institutions.

Earlier this year in Falmouth, Massachusetts, a hospital emergency room was shut down temporarily when several hospital and law enforcement personnel began to fill ill after being exposed to an unknown powder hitting the closing of a suspected overdose patient. A state hazmat team was called in and using the MX908 determined the powder was fentanyl.

The hospital staff was then able to quickly remediate and resume operations. Another example occurred in Oneida County, New York, when in January, two corrections officers at the county jail were hospitalized after being exposed to fentanyl through incoming mail.

As a result of this incident, Oneida became the first correctional facility in New York State to procure the MX908 to preliminarily test all incoming legal mail. At a recent press conference, Oneida County executives noted the device gives them the capability to positively identify even residual amounts of drugs in second.

We are pleased that our products are positively impacting our customers and we foresee these new additional device capabilities will continue to provide rapid, actionable answers and keep our communities safe. Turning to our fourth objective, broadening our bioanalytics platform.

As more advanced therapies enter the pipeline, innovators need to identify and understand critical process parameters and their impact on critical quality product attributes during process development and the entire biomanufacturing workflow.

Our goal is to become a key enabler of Biopharma 4.0 by providing simple, automated analyzer devices for measuring and monitoring process and product attributes. As a plug-and-play device, our ZipChip CEMS device is simple to use and provides rapid characterization of multiple product quality attributes.

Our customers highlighted devices sensitivity and speed in the recent papers and presentations. In a paper published in analytical chemistry, researchers from Fudan University in China conducted a multilevel glycomic analysis using ZipChip.

Glycosylation plays a pivotal role in a variety of biological processes and is an important parameter in optimizing drugs such as monoclonal antibodies. Fudan University researchers noted higher resolution, faster speeds and less sample consumption with the ZipChip device compared to liquid chromatography methods.

Symphogen, a Denmark biotech company is currently developing an innovative antibody combination therapy to improve the lives of cancer patients.

In a presentation at the Bioprocessing Summit in Barcelona, a Symphogen scientist noted that the ZipChip workflow is the preferred charge separation method for mass spec characterization as ZipChip provides unrivaled separation resolution of charge variants, along with analytical speed and sensitivity.

Biopharma researchers use our REBEL device to gain an improved understanding of the cell culture environment within a bioreactor. Data from the REBEL enables researchers to identify and control key process parameters in bioprocessing workflows.

This is evident in our work with key organizations focused on developing and implementing new biomanufacturing processes. CPI is an independent UK-based innovation organization that works with companies to develop, prove, scale up and commercialize new products and processes.

We've teamed up with CPI's biologic center to optimize cell culture media and feeding strategies in small volume bioreactor systems through to process scale-up. Data for our REBEL analyzer is providing significant insights into the cell metabolism, in addition to typical cell culture parameters such as cell count, viability and basic metabolite data.

Data generated from the REBEL is being used to develop predictive models for feed control, leading to improved efficiency and robust product quality. We've also formed an alliance with AMBIC, an industrial academic consortium that is developing technologies and methods to fast-track advanced biomanufacturing processes.

There are several projects underway whereby researchers are utilizing our REBEL device for frequent outline measurements of cell nutrient consumption to develop predictive media feeding models for improved product quality and reliability.

In one project, researchers have engineered a more robust mammalian cell line and are developing a media feeding structure to grow the cell. Another research project focuses on cell media development and optimization for recombinant adeno-associated virus or AAV vectors, which are widely used in gene therapy applications.

Researchers appreciate the REBEL's desktop size as it can be located next to a bioreactor, enabling real-time measurement and monitoring of nutrients critical to cell growth.

Genetic Engineering & Biotechnology News hosted a recent webinar on leveraging at-line data for Biopharma 4.0 where a principal research scientist from Sartorius noted REBEL's value in facilitating real-time bioreactor monitoring and decision-making.

He noted that particularly in a perfusion process that can run from 60 to 90 days, the ability to tweak and steer to keep the process in control as a necessity with tools like REBEL important to enabling next-gen manufacturing processes.

As these examples illustrate, there is a critical need for analytics, along with speed and sensitivity to enable more real-time control to improve product quality, process efficiency and predictability. Our devices are well-positioned to meet this need.

And finally, our fifth objective, laying an Omics foundation, while our focus is on broadening our bioanalytics platform, we've seen emerging need for accelerating mass spec-based workflows to address proteomics and metabolomics opportunities.

Our electronically-driven chip technology has the potential to reduce sample preparation requirements and accelerate the separation steps from hours to minutes. In the area of metabolomics, scientists around the globe are working to understand the metabolic building blocks and energy supply of cancers.

We are working with leading research institutions in these areas to apply our REBEL and ZipChip products to aid in their understanding. In a recent pivotal paper published in Nature Cell Biology, scientists from Duke University uncovered a new signaling role in cancer cells for classical neurotransmitter called GABA.

Using a time course and stable isotope tracing, researchers found that specific cancer cells convert the amino acid glutamine into GABA and that intracellular GABA can serve as an activator of tumor cell proliferation and as an immune cell suppressor. This understanding provides a new avenue to target cancer cells pharmacologically.

The isotope tracing experience providing the direct evidence of GABA production from glutamine in cancer cells was conducted using our ZipChip. ZiPchip enabled simple sample preparation and fast high-resolution separations in just four minutes with only a small 10-microliter sample.

We expect a continued cadence of publications, technology and research with premier academic institutions and research partners to support future product launches and workflow specific to the Omics domain.

To that end, in early June, we'll be participating in the American Society of Mass Spectrometry Annual Conference, which we think of as the Super Bowl of all mass spec conferences.

We are planning a strong showing with a dozen presentations, several of which highlight our progress in developing new micropolitic chips for our platform for proteomics applications. Also a majority of our presentations include collaborations with academic institutions and industry partners.

We're excited to be able to showcase the breadth of our platform to the scientific community, who'll provide more detail on our conference presentation in next quarter's earnings call.

In summary, I'm encouraged by customers' adoption of our technology and the enthusiasm we're seeing across our end markets for real-time analytics at the point of need. With that, I'll turn the call now over to Joe for more details on our financials. .

Thanks, Kevin. Revenue for the first quarter of 2022 was $8.3 million compared to $5.5 million in the prior year period, representing growth of 50%. Handheld revenue from our MX908 product was $4.5 million, an increase of $1.2 million compared to the prior year period. This included additional device placements and higher service revenue.

Desktop revenue from our REBEL and ZipChip products for the first quarter 2022 was $3.6 million, compared to $2.1 million in the prior year period, representing growth of 68%. This was primarily due to an increase in device placements as well as an increase in recurring revenues.

Recurring revenues consisting of consumables, accessories and service revenue for the first quarter 2022 was $2.5 million, compared to $1.4 million in the prior year period, representing growth of 73%. This increase was primarily driven by both service and consumable revenue related to REBEL kit sales.

Our install base grew to 2,018 units with 83 devices shipped during the first quarter. This includes 63 MX908 handheld devices, 15 REBEL desktop devices and five ZipChip interface desktop devices. Gross profit was $4.1 million for the first quarter of 2022 compared to $2.9 million for the prior year period.

The increased gross profit of $1.2 million was primarily driven by an increase in product and service gross profit resulting from higher sales volume, offset in part by investments in personnel and facility-related costs as we scale our service and operation teams.

Gross margin was 50% for the first quarter 2022, as compared to 52% for the prior year period. The decrease in gross margin aligned with internal expectations as we invested in service and operations personnel and infrastructure during 2021 and the first quarter of 2022 to support growth and scale.

We expect gross margins to expand through the back half of the year as we leverage our fixed investments, and we continue to expect gross margins to be in the mid-50s for the full year 2022. Total operating expenses for the first quarter of 2022 were $13.7 million, compared to $8.7 million in the prior year period.

The increase was driven primarily by headcount expansion across our business and stock-based compensation, as well as expenses related to marketing activities, consulting and travel. Net loss for the first quarter of 2022 was $9.4 million compared to $6.1 million in the prior year period.

We ended the first quarter of 2022 with approximately $223 million in cash and cash equivalents. In addition, we had approximately $15 million of debt outstanding. We have a strong balance sheet and remain prudent with capital.

Here in May, as part of good corporate housekeeping, we are filing a universal shelf registration statement on Form S-3 for up to $200 million. This will enable us to have options at our disposal to maintain a strong balance sheet, but we have no current intent to conduct an offering and raise cash.

We believe we are well-capitalized to execute on our strategic product and commercial road map. Looking ahead for 2022, we continue to expect revenue to be in the range of $52 million to $55 million, representing growth of 23% to 30% over full year 2021.

Within our range, we expect desktop growth relating to biopharma and bioprocessing applications to approach 2x the growth rates of the overall business in 2022. We continue to expect seasonality to be 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 the revenue for 2022 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. It's been an exciting start to the year as we advanced our product capabilities, broaden our bioanalytics platform and deepen our customer relationships. We look forward to updating you on our progress throughout the year. One final comment.

I'm excited to announce that we are holding our first Discovery Day for the investor community on June 15 at our Boston headquarters. We will showcase our technology, products and platform. We'll also highlight key applications and recent scientific presentations as well as conduct some hands-on product demos.

This is an in-person event, and I look forward to sharing our team's expertise and enthusiasm for our mission to democratize mass spec in critical-to-life applications. With that, we'll now open it up for questions..

Thank you. Our first question comes from Puneet Souda with SVB Securities. Your line is open..

Yes, hi, Kevin, Joe. Thanks for taking the questions. First one is on REBEL. You pointed out the stop placements were strong and you're pointing to 2x the growth for the bioprocessing side in the guide. Just trying to understand.

I appreciate the one-thirds of the devices are going into cell and gene therapy accounts, but maybe can you help us understand how are they utilizing the devices today? Which applications you're seeing the most pick up? And should we think about more REBEL boxes placements versus the consumable pull-through? Or should we expect acceleration on both of those fronts as you go and further penetrate these accounts?.

Yes. Sure. Happy to expand on that, Puneet. Yes, we're pleased with the progress REBEL's been on. We have, as you know, a good penetration into large top pharma, but also small pharma and CDMOs as we go.

I think a common theme -- before we get into some of the momentum -- a common theme is cell culture media, measuring spent culture media with time course data and with the ultimate goal of being able to actually change their feeding schedule and helping to optimize and accelerate the bioprocess.

So we're seeing that the placements have been -- we've described before as this penetrated radiate, right? So, now we've got a great foothold in the large accounts and we're working to go across because each of these have quite a bit of capacity and we're well past the early adopters, but we have about 115 total devices out there.

Seeing good pickup on those new placements, about 50% coming from new customers and 50% from existing. So, I think you should keep expecting to see those placements. A quick comment on the consumables. So obviously, our product is a point of need product. So people like to have it near.

We remain committed to about 1 kit a month of the consumables, which we've been seeing, and then we've got efforts underway to try to drive that higher. .

Okay, got it. And then just following up on the commercial organization and REBEL. You've expanded meaningfully there and more further commercial organization expansion, as you pointed out to 80 folks in the organization by year-end. Can you outline for us what changes in the strategy that you're taking to drive both in U.S.

and OUS? How should we see the contribution from international growth as well as REBEL continues to expand? And also, it seems like the comments that you made on Australia and UK, MX908 also continues to grow there. So, maybe just help us understand how should we think about the international growth overall..

Yes, absolutely. So international for us, historically, last year as well as in Q1, it's around 20% is outside the Americas from the revenue perspective. It is an area we're investing quite a bit, particularly on the desktop side, the commercial side.

So, as you think about our goal of going from 60 employees that we discussed on our last call to 80 by the year-end, those are more weighted to folks on our desktop side. We are having good success though outside the U.S. with our handhelds as well and we've been broadening both direct sales capabilities, but also our international channel.

And as we discussed last time, in important areas for biopharma. Sartorius Korea, for instance, has been stood up and is now online representing as one in APAC..

Okay, great. And then just last one, briefly, if I could. Anything that you would point out to on supply chain? Obviously, that's been a key question and inflationary pressures. So, I just wanted to check, it seems like you guys have things under control and if you can maybe help us understand time from order to delivery.

Any changes there? And obviously, you have a strong U.S. Army contract that's delivering in the second and third quarter. Any change in expectations there? Thanks, guys. I appreciate the questions..

Sure. No problem. Maybe touching on the U.S. Army contract. Nothing has changed there as far as the remaining units being delivered in Q2 and Q3. On some of the inflationary impacts, you're right, I feel like we have it under control. We are seeing additional costs related to inflation and supply chain.

It is hampering our margin expansion in 2022 as we balance the pricing of our products and our end customers and some of the potential volume leverage with the increasing revenues. But specifically on cost inflation, our supply chain impact, we're experiencing some direct and indirect impacts indirectly.

We're having to pull resources outside of the purchasing team, namely R&D to assist with vendor qualification, redesigns and ensure we have adequate supply of those key components. On the direct side, we're seeing some delays in our supply chain with vendors, their approaches to communication and the lead times and deliveries.

They're picking our build plan timing within 2022. We feel like we have it under control to be able to deliver to our customers a high-quality product.

So in essence, cost of materials cost of shipping expediting and pass-through costs and some of the labor inflation are factors within our supply chain and we're very vigilant on trying to manage and monitor those the best we can..

Great, thanks..

Welcome..

Thank you. Our next question comes from Dan Arias with Stifel. Your line is open..

Good morning, guys. Thanks for the questions. Kevin, on the REBEL, can you just talk a little bit about the workflow intensity that you're seeing when you look at the various project types? Maybe particularly as it relates to cell and gene.

I think the assumption there is that those guys have their instruments sort of going at a level on a frequency that's beyond other modalities.

So, are you seeing that play out once accounts get up and running? And is there any reason why I think the six to seven systems that you mentioned going to cell and gene labs this quarter wouldn't be accretive to the pull-through average once they get fully scaled up?.

Yes, sure. Happy to, Dan.

Yes, we see lots of excitement for the applications for MABs, but the advanced therapy cell and gene are particularly exciting and as we've said, we view it as an area that as we penetrate, it's really unlocking a large portion of the total addressable market, and that's because the typically being done in a more smaller batch, more personalized manner.

So, we watch that metric. We try to foster it with customers. I think we're seeing good utilization across the board, across the applications, but do have a lot of excitement for the future of the cell and gene area.

Again, I would say across our installed base, we see around that one kit a month utilization rate once a customer is up and running, and it could take a little bit for a customer to be productive.

And we think it's very important as well to really showcase what can be done and that's why we announced recently a new partnership with CPI and AMBIC for those reasons..

Okay. Just to push a little further there.

So, if one kit is the average that you're finding, which is pretty consistent with other periods, and that's obviously an average of highs and lows, are you finding that the high -- are the cell and gene companies, the ones that are coming in above one and therefore, lifting the average and that's offsetting the newer guys or the different modalities?.

I think, Dan, that we're seeing a range, and in some cases, they're selling gene customers, but also in a few cases on the MAB side. A lot of it gets to the utilization of the workflows of the end customers. And you're right, over time, we may see cell and gene trending more consistently above the average.

But I think that will continue to play out in the coming quarters and the year. .

Okay..

But we are seeing some....

Yes, I hear you. Thank you for that detail, Joe..

Welcome..

And just on the placement total for the year, do you feel like the reasonable expectation on mix between new and existing accounts is to sort of stay at that 50-50 split? Or is there a reason why maybe one half of that equation would change a little bit in the back half of the year?.

Well, we've certainly seen it true for I guess, about three quarters now. We've seen that playing out. We think it is a good healthy mix there because as we have a foothold in those, larger accounts have a lot of capacity and you can move throughout and get referenced within those companies. So we do expect that to continue to play out.

But we're busy in new geographies. We're busy working to get new accounts captured. So we'll see what the mix is, but I think it's been reasonable over the last three quarters..

Yes, okay. Appreciate it, guys. Thanks..

Welcome..

Thank you. Our next question comes from Max Masucci with Cowen. .

Hi, this is Stephanie on for Max Masucci. Thanks for taking the question.

The first one here, have you received any feedback from your customers following the updated FDA draft guidances for CAR-T development and gene editing in late March? How do your conversations today potential weather adopters differ from the conversations that you had 12 and 18 months ago? And what are the key factors determining a customer's decision to adopt or hold off on the purchase of a REBEL analyzer?.

Yes. Sure, happy to give some color, Stephanie. I think our conversation has obviously continued to evolve since the launch of the product. We're very much adopters with about 115 boxes therein.

I think that what really drives folks is that quest for more analytes, more information and as we said in the past, we really view it that the market for numerous reasons, some regulatory perhaps, but there is a strong demand for analytes and information, and we call that Bioprocess 4.0.

So, I think over time, we have been experiencing folks that are interested in having more frequent measurement of data. The conversation in the early days started with, 'Well, I normally send this out to the lab, and I do it at kind of time point 0 at the beginning of a bioreactor run.

But with your value proposition and my knowledge that these analytes are so important to the cell cycle, why shouldn't I measure it frequently throughout my, call it, two-week in process development?' So, I think our conversation now has elevated to, 'Well, what can I do with that information with higher frequency measurements?' And that's why we're working to make sure we have the right data integrations, one we said in the past, the Sartorius SIMCA platform that we can allow to push in, so we can have folks be able to see the streaming analytes and be able to visualize that and pull insights from that.

So, conversations continue to evolve there but we've seen good strength in the adoption and willingness to want more info..

Got it. Thanks for that color. And just a follow-up. You highlighted your objective to broaden your bioanalytics platform, and it was great to hear simple examples of your customers using your chip platform and their positive feedback.

As you expand your platform, can you give us a sense of how you plan to enhance it? Are your customers asking for any feature specifically?.

Yes. We were very excited that our platform is pretty broad in its capability. We've got with our ZipChip, really a focus in the product quality attributes and giving those in a time frame that can be 20x faster than legacy liquid chromatography.

And then with our REBEL, very excited that at-line, we're giving them the process attributes, these key process parameters that we're able to do. And again, things that are so critical to cell cycle, things that are informative of their predictive models that there's multiple institutions developing and the analyte panel being so enabling.

So we're continuing to work with customers to build that platform out, build those workflows out. We do have a strong roadmap there to look at increased analyte panels. As we've said before, other accessories, data integrations that can help with that entire workflow..

Got it. That's helpful. And last one for me on the new MX908 remote application for iOS devices.

Could this open up the opportunity for MX908 placements to law enforcement at the state, regional or local level? Are you seeing any differences in law enforcement budgets here in 2022 versus 2021 or 2020?.

Yes. Thus far, I don't think we are seeing anything measurable on a change in budgeting.

We put a few things in the script there because the applications that we're chasing here across state, local law enforcement, federal government under the organizations around counterfeit pharmaceuticals and illicit fentanyls and combating the opioid crisis, those seem to be remaining a high priority to our customers.

We are seeing adoption of our products across international, but a lot in our U.S. state and locals. Again, because this problem is affecting and killing so many.

So, I think things like our iOS app, things like adding analytes, it makes it easier for customers to ensure they're partnering with the right organization, that they're putting their capital dollars to work because we're giving them new features and functionality that are responsive to their job -- thing like the iOS app, we like a lot because it connects more intimately to the customer in their workflow, which we expect to be able to keep broadening over time..

Got it. Thanks so much for the color and thanks again for taking my questions..

Thank you. Our next question comes from Brian Weinstein with William Blair. Your line is open..

Hey, guys. Good morning. Thanks for taking the question..

Absolutely..

Just a couple of them.

First, can you just talk a little bit about what you're seeing from your end users on kind of the health of their businesses and their willingness to engage what you're seeing on kind of sales cycle? Is that as expected? Is that elongating a bit from small to large biopharma on the desktop side, but also anything that you're seeing and willingness to engage sales cycle or anything else with various governments on the handheld side?.

Yes, sure. Happy to add some color there. In the biopharma environment, we're not seeing really, I would say, any negative impacts. I would say, again, that we see that the driver of advanced therapy, some of the more complex modalities, it is making it clear and clear to individuals that they need more analytes, more information.

So, we're seeing a lot of engagement. Obviously, our product, driven by REBEL and the desktop side has been growing pretty nicely over the quarter. But it's still early days for us. We're well past the early adopters, but we have only about 115 or so out there. So there's a ton of sockets and runway.

I would also say that our products really fit well into a customer's existing workflow. We're not meeting a company to build out a new facility or a new line or add infrastructure capabilities in any way.

It's a simplified box that has a network connection, a simplified plug that sits right next to their bioreactors in their labs and their biology labs today. So, I wouldn't say we've seen any measurable change in their engagement.

For our handhelds, a little bit like I was just mentioning with Stephanie, the applications we're chasing, the metrics continue to be just staggering. The number of overdose deaths, the number of counterfeits that are out there amongst and causing harm to communities, so we continue to see a priority for our products throughout this time..

Got it, thank you. And I've asked the next question in various forms before, but I just wanted to revisit it here. The TAM expansion that you guys talked about was a big part of the IPO story, continues to be a big part of the story today. Right? And I guess there's probably no reason to revisit those numbers that you've put out previously.

But I just want to kind of better-understand and go back through how much of that TAM expansion is based on the capabilities that you're adding to your technology versus what is needed from kind of the underlying markets to grow themselves? And on the part of that, that it is related to your technology, you guys have talked about kind of major product releases every kind of couple of years.

I think it was 24 to 36 months.

So can you go through without giving, obviously, any kind of competitive information you don't want to give out, what should we be thinking about for what kind of major product releases and technology advances that we should be thinking about over the next year or two that kind of leans into what that TAM expansion looks like? Does that all make sense?.

Yes. It does. You're right. We think there's a sizable TAM today for the products we have at hand today. But you're right, we've shared and discussed at length in the past that we see that TAM broadening quite significantly.

A lot of it is with that tailwind of cell and gene therapy and getting our products adopted at these early stages as well as that expansion. And without going into all the details, you know the advanced therapies are growing quite a bit and having multiple increases and there's a lot of need in the space for technologies to address that.

And we see REBEL really beginning to do that, and that's why we highlighted that about 30% of our placements here in Q1, about 25% we reported last time overall, were in that space because we see that as an important driver and again, driving that thirst for analytics, which we think we're well-positioned to do with both our ZipChip and our REBEL.

From a roadmap standpoint, yes, we're a pretty innovative company. As you know, we're very vertically-integrated. We're working to have a constant cadence of releases of things like analyte panel expansion, software integrations, but then more major release as well.

Some of the more incremental, we announced just the other day and many last year, accessories and data integrations on the REBEL and handheld and we have many more plans for this year.

On the large side, yes, we've talked about products that are developments underway -- things like REBEL online, the ability to connect the REBEL more seamlessly to the bioreactor and avoiding the manual pipe heading step.

We think it's important to be driving with groups like CPI and AMBIC the need for frequent measurements while we lay the foundation of the hardware and get that released for REBEL online upcoming in the time frame you've mentioned.

And we also talked about that there's a long, long way in what we can do in the handhelds, really shrinking those devices down and getting those devices to be significantly smaller and ultimately spawning an upgrade cycle for the thousands of devices that we have in the field.

So, we have that, and we have, I would say, a considerable robust road map in general around the bioanalytics platform that we've taken into too much here today, but it's again around adding analytes and being a part of the established workflows there..

It's a great answer. Thank you for that. And then one quickly for Joe. Joe, I think Dan has asked for the question about the consumables and the pull-through there. It looked like it was about 30% of total revenue this quarter.

We've typically talked with you guys about that being closer to 20%, 21%, 22% as we think about kind of what the full year looks like.

Can you just tell us your thoughts within the guidance on what that recurring revenue should be kind of trending at 30% from Q1 reasonable?.

Absolutely. Just to revisit a bit, so for 2021, it was 19% on a full-year basis. You're right, it was 31% here in Q1, which was up from 27% in 2021 Q1. It is our lightest quarter from a top-line perspective, so I'd expect that percent to be higher as the installed base is growing.

But when you look at it from a full-year perspective, to start with the two, probably in the low 20 percentages is probably more reasonable than the 30%.

Now, as we dream and think longer term in the building installed base that have it start with a three in the future is absolutely something we're targeting, but not here in 2022 -- likely in the low 20s from a percent overall, if that's helpful..

Very helpful. Thank you, guys..

Your welcome..

Thank you..

Thank you. And there are no other questions in the queue. I'd like to turn the call back to Kevin for closing remarks..

Yes. Thank you all for your time and have a great day. We appreciate the questions and your participation..

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day..