908 Devices Inc. Q4 FY2021 Earnings Call

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 speaker’s presentation, there will be a question-and-answer session. Please be advised this call is being recorded. I would now like to hand the conference over to your host today, Kelly Gura. Please go ahead.

Thank you. This afternoon, 908 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 would 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, March 7, 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% 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’d like to take this opportunity to welcome Tony Hunt, President and CEO of Repligen, to our Board of Directors. Tony has a wealth of knowledge and experience in bioproduction, and his perspective will be an important addition to our Board as we broaden our bioanalytics 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 biopharma applications. Starting with our sales channels and commercial organization, we continued 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 in more 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 was strong throughout the year. In the fourth quarter, we added 221 devices and 45 new customers, bringing our installed base to 19,135 devices. With our handheld, we significantly progressed enterprise-wide adoption of our MX908 with leading agencies, including the Department of Homeland Security, the Drug Enforcement Administration, the Department of Agriculture, and 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 100,000 drug overdose deaths in the U.S. between May 2020 and April 2021, a staggering 30% increase from the prior year. The CDC also reported that synthetic opioids, mainly fentanyl, were involved in 64% of these overdoses. This is evident in the State of Ohio, which has one of the highest rates of drug overdose deaths involving opioids. To combat this crisis, the Ohio Attorney General’s Office has deployed multiple MX908 devices within its Bureau of Criminal Investigation. In October, they implemented a pilot program for police departments in three cities where law enforcement officers are using the MX908 for rapid mobile drug testing, and the agency’s office considers the MX to be a game changer, with success reported in the news. Recently, BCI agents used the MX908 after a suspect broke open a bag of a suspicious substance, and minutes later, agents determined lethal fentanyl was included in the mixture. This is a great example of how high-fidelity chemical detection at the point of need can really make an impact in critical life applications. Our goal is for our handheld mass spec to become the standard bearer for global chemical response, and we are making strong progress towards this objective. This includes our partnerships with leading training organizations, including Guardian Centers of Georgia and LSU National Center for Biomedical Research and Training, which collectively train thousands of first responders worldwide each year on the best modern tactics. Turning now to our desktop, we have reached our goal of placing our desktop devices into all 20 of the top pharmaceutical companies. Since the launch of REBEL in November 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 multiple REBEL units. As we previously shared, there’s a growing need to measure multiple product critical quality attributes, or CQA, and to monitor and control the underlying process in order to improve yield and predictability in biotherapeutics. Our desktop devices are well positioned to meet these needs. Last year, Amgen and GSK published papers on the use of ZipChip to measure multiple critical quality attributes simultaneously. These papers noted efficiency gains, including increased throughput by 20x from 200 minutes down to just 10 minutes, with comparable results to conventional LCMS methods. The processing performance power of the REBEL analyte panel was demonstrated by Johns Hopkins University researchers in a paper published in Biotechnology and Bioengineering in November. Researchers developed a model to facilitate process control of mammalian cells, providing a cost-effective method to control nutrient growth and limit undesirable metabolomic byproducts. Our REBEL device facilitated the development and validation of the model through enabling at-line analysis. The REBEL's processing power was also demonstrated by Sartorius scientists in their in silico predictive modeling work, which presented at our first Integrated User Meeting focused on bioprocess monitoring, counterfeit pharmaceuticals, and high-throughput drug screening and proteomics. Moving to the expansion of our technology platform, during the year, we continued 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 mass spec handheld device, we released an aerosol module accessory to detect and identify aerosolized chemical hazards and a Bluetooth capability that enables seamless data transfer and accelerates support in the field. We also added 19 new analyte targets, mainly synthetic drug compounds such as cannabinoids, cathinones, and opioids. For desktops, we partnered with Sartorius to integrate our REBEL's insights into their SIMCA data exploratory tool to allow customers to garner deeper actionable insights. We released a new assay kit for our ZipChip device that provides a simple, rapid, and cost-effective method for illegal nucleotide analysis. Recently, Protegene, a leading European CRO within Protein Sciences, noted that our ZipChip Oligos kit 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 for harsh eye-impairing agents, and it requires only a small amount of sample, something they already appreciate with all their other ZipChip kits. While we are largely focused on bioanalytics as the primary application for our desktops, there is a breadth of opportunity for our products and technologies beyond bioanalytics, including proteomics and metabolomics. At the Annual Conference of the American Society for Mass Spectrometry or ASMS, we presented developments in these areas. We updated the scientific community on our microfluidic chip technology advances, highlighting a ten-fold improvement in sensitivity, allowing us to capture and measure lower abundance proteins. Also at ASMS, scientists from Dana-Farber Cancer Institute presented their results using our prototype microfluidic chips, which showed significant time savings: 20 minutes versus 90 minutes with traditional chromatography 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 bioprocessing, reaching customers in pharma, biotech, government, and academia. We have shared that over the coming years, we expect the opportunity to grow to $22 billion for our handheld and desktops as we extend the QA/QC and expand our desktop capabilities in research and bioprocess with the emergence of advanced therapies. We see the biopharmaceutical 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 2,200 ongoing clinical trials of regenerative medicine, including cell and gene therapies. Second, the FDA is experiencing significant growth in the cell and gene therapy field, with original investigational new drug applications growing from approximately 148 in 2006 to approximately 300 in 2021. And finally, this past January, at the Advanced Therapies Suite Conference, the FDA stated that they expect 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 measurements 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 at-line monitoring of process attributes and enables the streaming of 32 analytes critical to cell function and productivity prediction. Our ZipChip device enables the rapid characterization of multiple quality attributes simultaneously, 20x faster than conventional LC 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 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, accelerating commercialization; third, developing and advancing our existing products; fourth, broadening our bioanalytics platform; and fifth, laying the Omics Foundation to address emerging opportunities. Starting with our first objective surrounding customer adoption, for our handhelds, we are building a strong foundation of testing, trials, and pilots that 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 double from a year ago. We also progressed to 12 enterprise accounts and maintained significant ongoing potential of 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 our 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 are 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, we have a robust product portfolio and we are 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 analytes, assays, accessories, and data integrations across our handheld and desktop devices throughout the year. Furthermore, this includes efforts with customers and partners to advance 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 a 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 months to 36 months, with the aim of expanding device capabilities and introducing new generations of products and capitalizing on replacement cycles. Turning to our fourth objective, broadening our bioanalytics platform, we are creating a comprehensive bioanalytical platform for biotherapeutic development through production. Our goal is to become an enabler of Biopharma 4.0 with a tech stack of connected process monitoring and critical product quality attribute analysis devices that informs models that support better real-time predictive outcomes. With increasingly advanced therapies, the industry necessitates automated solutions to drive biomanufacturing 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 the entire biomanufacturing 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 the growing drug pipeline. Lastly, our fifth objective, laying an Omics foundation. With the rise of Proteomics 2.0 and the broader desire for an understanding of how proteins orchestrate a cell’s function, there is significant interest in determining protein abundances, which proteins are present, localization where they are, and activities what they are doing within and around cells. With this interest and demand, we see an emerging need for accelerating mass spec-based workflows to address proteomics and metabolomics opportunities. Mass spec Omics workflows are bottlenecked by sample preparation and high-performance separation. The latter, in particular, can take hours with conventional chromatography. Our electronically driven chip technology has the potential to reduce sample preparation requirements and accelerate the separation step from hours to minutes. To that end, Dr. Will Thompson, principal scientist at 908 Devices, presented a poster and lightning talk just last week at the U.S. HUPO Conference in Charleston, showcasing serum measurements with attomolar sensitivity using high-resolution separations that could be completed in just minutes. We expect a continued cadence of technology research and publications with key opinion leaders and partners to support future product launches and workflows in the Omics domain. We have shown tangible results across these areas throughout 2021, and we are well positioned for continued growth in 2022. I am confident we have laid a solid foundation and built 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 need. I will 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 of 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 MX908 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 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 and further see additional potential in our enterprise account pipeline. Desktop revenue from our REBEL and ZipChip 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. 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%. The 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 $300,000 and $1.1 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 to revenue on a go-forward basis. Our installed base grew to 19,135 units with 221 devices shipped during the fourth quarter. We shipped 191 MX908 handheld devices, 20 REBEL desktop devices, and 10 ZipChip 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 headcount 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 908, we have always had a culture of disciplined capital allocation. 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 are well positioned to achieve our stated objectives and deliver strong growth for 2022. This year, we expect seasonality to be consistent with prior years, reflecting the impacts of the U.S. government year-end purchasing cycle of September 30th and typical year-end pharma and biotech spending in the fourth quarter. As a result, we expect 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. 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 are just scratching the surface of what is possible with our technology and we look forward to updating you on our progress across our different focus areas throughout the year. With that, we will now open it up for questions.

And thank you. And our first question comes from Brian Weinstein from Blair. Your line is now open.

Hey, guys. This is Dustin on for Brian. In relation to what’s going on in the macro environment right now and all the uncertainty, we are kind of wondering what you guys are seeing from customers right now. What’s the appetite for bringing new technologies and what’s the overall awareness of your product, especially on the desktop side?

Hi, Dustin. This is Kevin. Today, we are focusing on what we believe is essential for life applications. We are dedicated to speeding up biotherapeutic development and also making a significant impact on the opioid crisis. Over the past 24 months, we have observed that customers continue to prioritize our technology due to its real and measurable effects on these critical issues.

Great. Thank you. And then I know you gave some color on the U.S. Army contract, so about 50% was realized. But how should we think that falls through the rest of 2022?

Sure. Absolutely, Dustin. So, due to competitive dynamics, as well as some of our customer sensitivities, we won’t be disclosing the exact amounts as you are probably aware. But the U.S. Army is baked into our 2022 guidance and the visibility that we have into this revenue. Their large adoption of large enterprise customers really gives us that full enterprise customer confidence as others come into play. We are excited to be partnered with the U.S. Army and we continue to see shipments. We have them in Q3, Q4 and fulfill the rest of the devices over the first nine months of 2022. We feel we have made progress with enterprise accounts, which are forecasted to grow in 2022 and are contemplating our guidance. But happy to address any other questions that you have. But super excited by that opportunity.

Sure. And lastly, maybe just wondering what you are 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.

Yeah. I mean we are expecting the investments to be 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 so important to get customers and drive referrals. Our direct reps have been out prospecting in these new territories and expanding territories. Many of our reps, 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 have good growth overall for 2022 as they come up that productivity curve. By mid-year, we really expect these reps to be pretty productive and that’s going to help get us to our goals here in the back half.

Great. Thank you.

And thank you. And our next question comes from Puneet Souda from SVB Leerink. Your line is now open.

Yeah. Hi, Kevin and Joe. Thanks for taking the questions. So first one on the guide, it appears you are bracketing the street number and essentially in line with that. But as we look at the business, you had 20 REBEL placements, which was ahead of us. You have solid momentum with the Army orders and MX908. I mean REBEL has been on the market for two years since getting into cell and gene therapy and now you are expanding your sales force, 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 have some conservatism in the guide for the full year?

Absolutely. As we think about the guide and the opportunity there, we set our initial guidance based upon the knowledge at this time and considering certain market factors and expectations on the investments that we made as you highlighted here in 2021. With those investment activities as we move into the first half, we believe we are laying that strong foundation for growth for 2022 and beyond. So as we think about that range and some of the levers and opportunities, I think, on the maybe downside, is on COVID may not enable some of the international activities to open up until maybe late Q2 and into H2, which could limit growth opportunities for both our handhelds and our desktops. The U.S., if they don’t pass a budget, we are forced to live within the continuing resolutions where we are today. If not resolved by early Q2, this could put pressure on our ability to realize some of the handheld sales within the guide from our existing and new accounts. But we do see upside with our handheld 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. And also, if we are successful in our ability to radiate and penetrate REBEL, as you mentioned, we had a strong Q4 on those REBEL customer accounts to expand our installed base and drive higher active utilization among our installed base with quite a balanced approach.

Got it. Okay. No. That’s fair. And then, Kevin, it’s great to see Tony Hunt on the Board. As you look at the bioprocessing capabilities that you have, the REBEL capabilities. I think you highlighted a couple of points. I just want to make sure what are the priorities for that platform this year and 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 you are making in cell and gene therapy accounts.

Yeah. Thank you. Yeah. We really, as previously mentioned in the script there, but we really do see that the biopharma industry nearing that inflection point and just really demanding these analytics like we can provide with our desktop REBEL and ZipChip. The pipeline, as you said there, on the advanced therapeutics that we have been getting some traction in really drives that critical need to enable more of the real-time control, if you will, for process efficiency and predictability. So I think we are quite pleased with our progress there. I think as you look forward into 2022, there are two real areas. One is that what we would like to coin is that penetrate and radiate. We got to those top 20, but we are really just seeding the beginning of an account that we believe can have significant capacity within. We are working to radiate across that. In parallel, really working to continue our recurring revenue, our consumable stream there, so one of the priorities that you are going to see and continue to see here is on the consumable pull-through related to their utilization in terms of measurements that we call that informing power on the REBEL. We highlighted that we had work with John Hopkins put out a beautiful paper that showed the analyte power of what REBEL provides is very informative of their next steps of these predictive models and Sartorius as well showcased in silico models that provide that. Again, analytes that like the REBEL provides are very informative. So you are going to see us prioritizing continuing the placement of 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 new product to reach the market?

Yeah. We are very excited about the proteomics work. 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 SAB panel with some wonderful proteomics leaders that are helping advise us, and we did just have a very nice talk with some really game-changing performance last week down at the HUPO. But today, it remains an R&D project. It is based on our ZipChip platform, as you know, adding a soft phase extraction bed to that. So if you look forward to it through 2022, we don’t have any contribution for this work in our guidance for 2022. So it will take some time, but stay tuned, and we will keep everybody abreast through the community of scientific progress.

Okay. Great. Thanks, guys. Good to see the progress.

Thanks.

Thanks, Puneet.

And 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 REBEL usage and maybe talk to pull-through for 2022? I mean I know that calculation gets impacted by the new users that come in and a denominator. They come in at low contributors. But if you just sort of look at the existing customers and Kevin to your idea of expanding utilization as one of your goals, what kind of growth do you think you might see amongst those that have REBELs today and are up and using them?

Just maybe I will start off, Dan, and then Kevin can chime in, too. 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 the two to three, but a lot just 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 are approximately at that one kit a month, and we are likely continuing in 2022 and how we have looked at it within our guidance range that we put out there. We are focused on driving higher utilization and are seeing paths for that and seeing some customers start to consider purchasing multiple units, largely for convenience. So increasing utilization within accounts, but lowering the run rate within each unit. So I think you were touching on. So as far as accelerating REBEL pull-through, there are multiple factors we feel in play, including the ramp time, as I alluded to, and the focus on placements in 2020 and here in 2022. I think we will have a lot of focus on additional placements getting out there to build that installed base and that will affect the overall average of one kit a month for us in the future.

Okay. That's helpful. Kevin, can you share your current expectations compared to when you initially went public? The IPO happened during COVID, which likely placed you in a different operating situation than a year prior. As we move into 2022, how do you view the commercial team in relation to those initial expectations in terms of infrastructure and the ability to reach customers across different regions? You mentioned new hires; how do you see that impacting your global strategy? Overall, I'm trying to reassess where we stand on the sales side as we enter what we hope will be a more favorable environment.

Yeah. Yeah. I think, in general, if you look back to the IPO point in December of 2020, I mean, we feel really good about the progress that we have had since that date, and we have got some real products out there and they are really changing the paradigm of chemical and biochemical detection. Customers want and 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 as a pretty large opportunity. We did just hit our 10-year anniversary last month, and I think we have come quite far, and there is 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 we just passed 60, and we will keep investing over this year to around 80 for the year. I think we have made great progress. I don’t think we see ourselves short of opportunity. It is a massive addressable market that’s really in front of us, and we have got a highly differentiated technology product to get after it. I do see that the world is opening up a little bit more, obviously, as Joe mentioned, there’s always a concern that a new variant comes by. For us, that probably is more impactful on the international side of our business. But historically, that’s been a small percent, and we are really looking at it as an opportunity to grow. So, yeah, I hope that gives you some color.

It does. And I could just sort of finish the thought there, what percentage of normal would you say you are right now in terms of reaching global customers? So someone in London wants you to come over and demo the machine or just talk to them. How much of a capability at this point, given where we are with COVID do you have?

Yeah. So, obviously, we are 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 our desktops is based out of the U.K. So that particular example, we have really been growing teams across the U.K. and Europe. I think we are getting stronger by the day there to reach customers in Boston. We are calling you finally without any mask. They just lifted the mask mandate here in Boston, so 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, as traveling from one country to another into the APAC region is challenging, and that is probably the last thing to open up.

As far as percentage of normal, probably at the higher percent maybe specific as you look at our business, where greater than 80% are North America-based revenues. We do see our business a bit more insulated than others maybe in our space, and we grew at a healthy rate during the pandemic and believe these critical to life devices have remained a priority for our customers. So I don’t know if I can put a specific percent on it, but it’s probably greater than 80% to 90% in our case.

Okay. Helpful guys. Thank you.

Thanks.

And thank you. And our next question comes from Max Masucci from Cowen. Your line is now open.

Hi, Kevin, Joe. Congrats on a nice finish to the year and happy 10 years at 908, Kevin.

Thanks.

Yeah. So we attended the Advanced Therapeutic; I think, leaving that conference, we admittedly were a bit shocked at how clear-cut the demand was for at-line analyzers. But the awareness of the available solutions that exist in the market was still somewhat challenged. So any time you have a disruptive technology, it requires a solid outbound strategy. So I would just be curious for REBEL, with the sales force, it’s doubled over the past year, if you had to break out how you are, number one, 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.

Yeah. Yeah. That conference was straight down the fairway, the results that you and others have published out of there, and certainly, the needs that were discussed at that conference is very much aligned to the needs that we are driving to serve with our bioanalytics platform across REBEL and ZipChip. You are right, it’s more than just on the street and prospecting. You definitely have to raise the bullhorn a little bit, right, and we are a small company and you are trying to do so. So as we talk about the 30 that became 60, there is 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 and inside sales. They are also quite efficient in getting the word out. We have also been ramping up over the last year just the number of things we are doing with external parties and key opinion leaders and we will continue to do that in 2022. I think there is a thirst for new analyzers. I think there is a demand for new insights as you look at these advanced therapies, and analytics, we really view as key and are going to keep working to make sure we are heard.

That's great. I have a follow-up question that I plan to save for our discussion tomorrow. My assumption is that the messaging to the sales team for 2022 will focus on continuing to prioritize placements, as many of these opportunities are developing, though still in the early stages. I'm interested to know how you are targeting consumable sales—whether you have dedicated REBEL reps driving both placements and consumables or if those responsibilities are divided.

Great question. And I think about your last question too, the growth and the execution on our sales channel. On the desktop side, we are expecting growth to approach approximately 2 times the growth rate overall. That’s really where a lot of excitement and opportunity is. And part of it is with the sales team, not only to go after the devices but the consumables. We have a handful of inside sales, but we do have our sales team in their bag, both the upfront device as well as the consumables. Their quotas include both and we think that’s important to keep them tied to the customer and the customer relationship as they buy, hopefully, that second and even more devices and buying in that upfront commitment on whether it’s initial six months of consumables or kits or coming back at renewal to get additional as they ramp up their utilization rates. So we do keep it all in one bag, supplemented by inside sales.

Great. I appreciate the color and talk to you more.

All right.

Thanks, Max.

And thank you. And I am showing no further questions. I would now like to turn the call back over to Kevin Knopp for closing remarks.

Yeah. Thank you very much. Thanks everyone for joining our call this afternoon, and look forward to seeing some of you at the Cowen Conference this week. Have a great day.

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