10-K
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tm2110439d1_10k.htm
FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
For the fiscal year ended
December 31, 2020
OR
For the transition period from
to
Commission file number: 001-39815
908 DEVICES INC.
(Exact name of registrant as specified in its
charter)
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including
area code: (857) 254-1500
Securities registered pursuant to Section 12(b) of
the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.001 per share MASS The Nasdaq Global Market
Securities registered pursuant to Section 12(g) of
the Act:
None
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes ̈ No x
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ̈ No x
Indicate by check mark whether the registrant:
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes x No ̈
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ̈
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ̈
Non-accelerated filer ☒ Smaller reporting company x
Emerging growth company x
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ̈
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared
or issued its audit report. ̈
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ̈ No x
As of June 30, 2020, the last business day
of the registrant’s most recently completed second fiscal quarter, there was no established public market for the registrant’s
common stock. The registrant therefore cannot calculate the aggregate market value of its voting and non-voting common equity held by
non-affiliates as of such date. The registrant’s common stock began trading on The Nasdaq Global Market on December 18, 2020.
As of March 26, 2021, the registrant had
27,297,871 shares of common stock, par value $0.001 per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s Proxy Statement
for its 2021 Annual Meeting of Stockholders, which the registrant intends to file with the Securities and Exchange Commission not later
than 120 days after the registrant’s fiscal year ended December 31, 2020, are incorporated by reference into Part II and
Part III of this Annual Report on Form 10-K.
908 Devices Inc.
Table of Contents
Page
PART I
Item 1. Business 4
Item 1A. Risk Factors 28
Item 1B. Unresolved Staff Comments 57
Item 2. Properties 57
Item 3. Legal Proceedings 58
Item 4. Mine Safety Disclosures 58
PART II
Item 6. Selected Financial Data 60
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 75
Item 8. Financial Statements and Supplementary Data 76
Item 9A. Controls and Procedures 105
Item 9B. Other Information 105
PART III
Item 10. Directors, Executive Officers and Corporate Governance 106
Item 11. Executive Compensation 106
Item 14. Principal Accounting Fees and Services 106
PART IV
Item 15. Exhibit and Financial Statement Schedules 107
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains
forward-looking statements, which reflect our current views with respect to, among other things, our operations and financial performance.
All statements other than statements of historical facts contained in this Annual Report on Form 10-K, including statements regarding
our future results of operations and financial position, business strategy and plans and our objectives for future operations, are forward-looking
statements, and are made under the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. The words “believe,” “may,” “will,” “estimate,”
“continue,” “anticipate,” “intend,” “expect,” “should,” “could,”
“target,” “predict,” “seek” and similar expressions are intended to identify forward-looking statements.
We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends
that we believe may affect our financial condition, results of operations, business strategy, short- and long-term business operations
and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions,
including those described in the “Summary of Risk Factors”, Part I, Item 1A “Risk Factors” and elsewhere
in this Annual Report on Form 10-K. Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge
from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business
or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any
forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances
discussed in this Annual Report on Form 10-K may not occur and actual results could differ materially and adversely from those anticipated
or implied in the forward-looking statements.
The forward-looking statements included in this
Annual Report on Form 10-K are made only as of the date of this report. You should not rely upon forward-looking statements as predictions
of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee
that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will
be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking
statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Annual
Report on Form 10-K to conform these statements to actual results or to changes in our expectations.
The market data and certain other statistical
information used throughout this Annual Report on Form 10-K are based on independent industry publications, governmental publications,
reports by market research firms or other independent sources that we believe to be reliable sources. Industry publications and third
party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable,
although they do not guarantee the accuracy or completeness of such information. We are responsible for all of the disclosure contained
in this Annual Report on Form 10-K, and we believe these industry publications and third party research, surveys and studies are
reliable. While we are not aware of any misstatements regarding any third party information presented in this Annual Report on Form 10-K,
their estimates, in particular, as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties and
are subject to change based on various factors, including those described in Part I, Item 1A “Risk Factors” in this
Annual Report on Form 10-K. Some data are also based on our good faith estimates.
We own various trademark registrations and applications,
and unregistered trademarks, including MX908, Rebel, ZipChip and 908 Devices and our corporate logo. All other trade names, trademarks
and service marks of other companies appearing in this Annual Report on Form 10-K are the property of their respective holders. Solely
for convenience, the trademarks and trade names in this Annual Report on Form 10-K may be referred to without the ®,TM or
RTM symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest
extent under applicable law, their rights thereto. We do not intend to use or display other companies’ trademarks and trade names
to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
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SUMMARY OF RISK FACTORS
The following is a summary of the principal
risks described below in Part I, Item 1A “Risk Factors” in this Annual Report on Form 10-K. We believe that
the risks described in the “Risk Factors” section are material to investors, but other factors not presently known to us or
that we currently believe are immaterial may also adversely affect us. The following summary should not be considered an exhaustive summary
of the material risks facing us, and it should be read in conjunction with the “Risk Factors” section and the other information
contained in this Annual Report on Form 10-K.
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PART I
Except where the context otherwise requires
or where otherwise indicated, the terms “908 Devices,” “we,” “us,” “our,” “our company,”
“the company,” and “our business” refer to 908 Devices Inc.
and its consolidated subsidiary.
Item 1. Business.
Analysis for Life
We are leading a revolution in measurement
devices for chemical and biochemical analysis. We are democratizing laboratory mass spectrometry instruments with our simple handheld
and desktop devices, addressing critical-to-life applications. We are reimagining where Mass Spec technology can be used if it is sufficiently
small in size, low in cost, and simple to operate.
Company Overview
We have developed an innovative suite of purpose-built
handheld and desktop mass spectrometry, or Mass Spec, devices for the point-of-need. Leveraging our proprietary platform technology, we
make the extraordinary analytical power of Mass Spec available in devices that are significantly smaller and more accessible than conventional
laboratory instruments. Our Mass Spec devices are used at the point-of-need to interrogate unknown and invisible materials and provide
quick, actionable answers to directly address some of the most critical problems in life sciences research, bioprocessing, industrial
biotech, forensics and adjacent markets.
We create simplified measurement devices that
our customers can use as accurate tools where-and-when their work needs to be done, rather than overly complex and centralized analytical
instrumentation. We believe the insights and answers our devices provide will accelerate workflows, reduce costs, and offer transformational
opportunities for our end users.
Since the launch of our first device, we have
sold more than 1,350 handheld and desktop devices to over 350 customers in 34 countries, including 19 of the top 20 pharmaceutical companies
by revenue, as well as numerous domestic and foreign government agencies and leading academic institutions.
Our current products are available for both battery
powered handheld and desktop applications, including our flagship devices -- MX908 and Rebel.
Front-line workers rely upon our handheld devices
to combat the opioid crisis and detect counterfeit pharmaceuticals and illicit materials in the air or on surfaces at levels 1,000 times
below their lethal dose. Our desktop devices are accelerating development and production of biotherapeutics by identifying and quantifying
extracellular species in bioprocessing critical to cell health and productivity. They sit alongside bioreactors and fermenters producing
drug candidates, functional proteins, cell and gene therapies, and synthetic biology-derived products. We believe the insights and answers
our devices provide accelerate workflows, reduce costs, and offer transformational opportunities for our end users.
Mass Spec is the gold-standard analytical technology
for laboratory-based molecular analysis and can identify and quantify sample components via molecular weight measurements. Mass Spec is
highly regarded for its ability to provide an extraordinarily detailed analysis of a wide variety of samples -- from small molecules to
large complex proteins. While Mass Spec is an extremely powerful analytical tool, conventional Mass Spec instruments are very large, expensive,
and highly complex, which has profoundly bottlenecked market opportunities and relegated them to the equivalent of mainframe computers
in central facilities. We are seeking to reimagine where Mass Spec technology can be used if it is sufficiently small in size, low in
cost, and simple to operate.
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Our proprietary Mass Spec platform relies on extreme
miniaturization of the core of Mass Spec -- the ion trap and its vacuum system. Using semiconductor microfabrication techniques, we design
and produce components that are more than a thousand fold smaller in volume when compared with most laboratory Mass Spec instruments and
costs only dollars to manufacture. The vacuum system alone in a typical laboratory instrument weighs hundreds of pounds and requires several
hundred watts of power, 24 hours per day, 365 days per year. Our miniaturized vacuum system weighs less than a pound, and our Mass Spec
in total requires less power than a 20-watt LED light bulb. These landmark proprietary advances have enabled the first truly handheld
Mass Spec devices and compact desktops.
Sample preparation and separation can be a painfully
slow hours-long process, and we have invested heavily in the development of microfluidic sample preparation and microscale separation
technologies to reduce preparation and separation time from hours to minutes. The size of a business card, our microfluidic capillary-electrophoresis,
or CE, chip has demonstrated world-class performance and speed in separating everything from small molecules such as metabolites and drugs,
to biopharmaceutical proteins, antibodies, and oligonucleotides.
Lastly, it is imperative that a point-of-need
solution is operable by the widest possible user base. We have an industry-leading software automation and machine learning team comprised
of five members, each with advanced scientific degrees, who have collective experience working on 30 commercial product launches and have
won numerous research and innovation awards. They have applied advanced software automation and machine learning techniques to both control
the hardware in our devices and interpret the incredibly rich and complex data streaming off of them. It is common for expert data interpretation
from a laboratory Mass Spec instrument to take hours or days -- we can provide answers immediately to maximize value to the customer in
critical-to-life applications where minutes matter.
We fundamentally believe that the technology platform
we have built and the investments we are making will allow people to answer chemical and biochemical questions in times and places that
were previously inconceivable. Given the market opportunity, we expect to face substantial competition from large established manufacturers
of Mass Spec laboratory-based instruments and from new entrants; however, our proprietary advances have enabled us to manufacture the
first truly handheld Mass Spec devices and compact desktops and we believe we are well-positioned to face future competition.
As we democratize the extraordinary power of Mass
Spec, we believe our technology platform can expand in future opportunities far beyond the current $8 billion market for Mass Spec and
associated front-end separations. We estimate our total addressable market, or TAM, for our devices was $4.8 billion in 2020, and is growing
to an estimated $22 billion over the next five years. The TAM for our handhelds was estimated to be $1.5 billion in 2020 with expansion
to over $3 billion with software application extensions into GxP facilities for raw material inspection, counterfeit and adulteration
inspection, contamination and cleaning validation, and other quality assurance and quality control assays. Our desktop devices supporting
bioprocess development represented an estimated TAM of $260 million in 2020 expanding significantly to approximately $12 billion with
execution of our roadmap and the rapid growth of cell therapy. We see additional opportunity to address the estimated $3.0 billion in
2020 across the research chromatography market space growing to more than $6.9 billion with further market growth and roadmap expansion
into complex proteomics by 2025. Our estimates of our TAM are based on potential customer research and development spending, addressable
aspects of potential customers’ end product development process, and potential platform usage. We also utilize estimated penetration
and placement rates for our platform with potential customers in our target markets and historical patterns for consumables usage.
Our Strengths
We believe the following competitive strengths
provide us the ability to address point-of-need applications in forensics, life sciences research, bioprocessing, industrial biotech,
and synthetic biology:
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Our Growth Strategy
We are pursuing the democratization of the gold-standard
molecular analysis laboratory technique: Mass Spec. Just as mainframe computers transitioned to desktops, tablets, and mobile devices,
we are leading a transformation of the Mass Spec market. Our growth strategy includes the following key elements:
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Our Industry Background
Conventional Mass Spec -- The Mainframe
Computer of the Analytical Laboratory
Mass Spec is the gold-standard analytical technique
for molecular analysis. This technology is highly regarded for its ability to provide an extraordinarily detailed analysis of a wide variety
of molecular samples -- from small molecule chemicals to large complex proteins. Mass Spec instruments identify the components of samples
via highly detailed mass-to-charge (m/z) measurements, and in some cases, can quantify those components. Together with its associated
front-end separation technologies, Mass Spec can resolve and analyze the most complex of samples with high fidelity.
We believe Mass Spec has become the cornerstone
of the chemical laboratory within academia, industry and government, serving an extremely wide range of markets including forensics, life
sciences, environmental, and industrial. However, while Mass Spec is an extremely powerful analytical technique, the capabilities of conventional
Mass Spec instruments are largely relegated to centralized laboratory settings due to their size, complexity, and high price. When compared
in context to the computer industry, conventional Mass Spec instruments represent the mainframe computer of the analytical laboratory.
Mass Spec instruments contain three standard components:
an ionization source, a mass analyzer and an ion detector. Utilizing these three components, the Mass Spec process is completed in three
corresponding steps:
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Conventional “Mainframe” Laboratory Mass Spec instruments
Employing and building upon these three process
steps, conventional Mass Spec instruments have penetrated almost every analytical laboratory. It is estimated there are thousands of laboratories
employing more than 50,000 Mass Spec instruments according to a recent third party report. As the needs of laboratory scientists have
evolved, Mass Spec instrument manufacturers for decades have grown their franchise and stimulated capital equipment replacement cycles
by orienting their research and development towards sustained improvements in raw analytical performance metrics such as resolution, sensitivity,
and range. As a result, conventional Mass Spec instruments:
• are extremely large and not readily mobile;
• are expensive (often ranging from $100,000 to $1 million);
• require a dedicated fixed power source; and
• require onsite specialists to maintain and operate.
These significant limitations have profoundly
bottlenecked market opportunities for conventional Mass Spec instruments. Despite this, the conventional Mass Spec and associated front-end
separations market is significant, with estimated annual revenues of $8 billion.
The Democratization of Mass Spec—Handhelds
and Desktops
Given the inherent limitations of conventional
mainframe Mass Spec instruments, we believe there is a compelling opportunity for handheld and compact desktop Mass Spec devices. Analogous
to the democratization of computer technologies, as price, access, and complexity are reduced, user space expands, utilization increases,
and new applications emerge. While our expectation is that centralized laboratory Mass Spec instruments will continue to exist in laboratory
settings -- just as mainframes still exist today as supercomputers servicing the most challenging computational problems -- we believe
that the democratization of Mass Spec will open up new markets and applications. We also see many parallels with how next generation gene
sequencing, or NGS, was democratized and has expanded the market for NGS through desktop devices.
Our Technology Platform
We have developed a technology platform designed
to bring Mass Spec out of the confines of central laboratories and to the point-of-need. Our technology platform democratizes the Mass
Spec market with high-fidelity handheld and desktop devices. We believe this democratization gives rise to:
• an expanded and more diverse set of users;
• more frequent measurements; and
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• new use
cases that were previously untenable.
These results are possible as our handheld and
desktop devices are designed for extreme convenience and speed, requiring minimal training and maintenance. Our platform uses proprietary
microscale Mass Spec and microfluidic technologies to prepare, separate, and characterize species at the molecular level, with integrated
machine learning and analytics to automatically provide answers regarding identity, purity, and quantity. The core elements of our technology
platform include:
• Our High-Pressure
Mass Spec, or HPMS, approach enables Mass Spec at the point-of-need;
• microfluidics
enable convenient sample preparations and fast separations; and
• analytics
and machine learning technology provide actionable answers versus raw data.
HPMS Approach Enables Mass Spec at the Point-of-Need
A key component of our technology is our proprietary
microscale ion trap, which we estimate is 1,000 times smaller than those in conventional laboratory Mass Spec instruments. These microfabricated
traps are able to operate a million times closer to atmospheric pressures than conventional Mass Spec instruments. This HPMS approach
results in devices with dramatically smaller size and lower cost-of-goods through a reduction of vacuum pump requirements and power consumption,
and an overall simplification of the hardware topology.
Conventional laboratory Mass Spec Our Mass Spec
HPMS allows us to build ultracompact, high-fidelity
measurement devices that are purpose-built for specific applications and deployable at the point-of-need. HPMS allows us to circumvent
the complexities associated with the conventional and much larger, general-purpose, central laboratory Mass Spec instruments.
Our technology operates at size and cost scales
that are multiple orders of magnitude smaller than conventional mainframe laboratory instruments. And while large, expensive, high maintenance
vacuum systems have been a historical requirement for Mass Spec, our HPMS approach is capable of running with extreme efficiency on very
small, robust, low-cost scroll pumps of our own proprietary designs. Our technology requires significantly less power than a 20-watt light
bulb, allowing for up to 100x lower power consumption when compared to a competing product. The flexibility afforded by our approach provides
access to existing and new market segments that were previously inconceivable for conventional Mass Spec instruments. We believe the insights
and answers our devices provide will accelerate workflows, reduce costs and offer transformational opportunities for our end users.
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Microfluidics Enable Convenient Sample Preparations
and Fast Separations
Today, most central laboratory Mass Spec instruments
are paired with large, complex solid and liquid handling systems for sample preparation and separation. Common examples include liquid
chromatography stacks and robotic sample preparation systems. These systems are engineered for general applications and require large
quantities of solvents, high level of maintenance, and expertly trained users, leading to higher operating costs.
Our approach integrates proprietary microfluidic
sample preparation, separation, and ionization technologies on a single chip that can be produced efficiently at scale using semiconductor
microfabrication techniques. These microfluidic chips can be paired with our microscale Mass Spec technology to create devices with extraordinary
performance that are accessible and usable at the point-of-need by non-experts.
Our integrated microfluidics—sample
injection, preparation, separation and electrospray simplified
Our integrated microfluidic chip brings the benefits
of:
• highly
controlled small sample injections at the nanoliter, or nL, scale;
• integrated
preparation such as desalting;
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• extractions
and preconcentration by physical and chemical properties;
• capillary
electrophoresis, or CE, for extremely high-resolution separations of complex samples; and
• integrated
nanoscale electrospray ionization.
The integrated microfluidic CE can perform extremely
high-performance separations of a wide range of molecular species from small molecule metabolites, amino acids, and vitamins, to intact
antibodies and other proteins. Importantly for our platform, microfluidic CE is electrically driven and requires no bulky liquid pumping
and valving systems. The microfluidic chip consumes only 100-200 nL of electrolyte per minute making it remarkably efficient with source
and waste fluids. Microfluidic CE separations can be an order of magnitude or faster than similar chromatography separations. This allows
for highly complex separations with high resolution to be completed in minutes.
Examples shown below illustrate the versatility
of our microfluidic CE chip and include separation of cell lysate with minimal sample preparation and a highly detailed characterization
of an antibody drug conjugate:
Faster
high resolution separations attainable in minutes using our microfluidic CE chip
Analytics and Machine Learning Technology
Provide Actionable Answers, Not Just Raw Data
The third crucial element of our technology platform
is holistic device design with embedded analytics and machine learning. Our development team designs devices for a specific purpose, rather
than for a wide scope of often disparate needs. Conventional Mass Spec manufacturers focus their attention on canonical analytical specifications
such as “instrument resolution” or “detection limit” or “data rate” in the hopes of appealing to a
wide range of laboratory specialist needs. Our devices are designed to do a job quickly, easily, and cost effectively. Achieving that
aim requires very sophisticated autonomous and adaptive control systems and the machine learning engine to interpret the data and produce
a clear, accurate result.
Control/optimization: Conventional Mass
Spec configuration and tuning is highly complex. An example of such a configuration panel is shown on the right below. Our devices need
to manage themselves autonomously for maximum value to the customer. They can manage themselves by adapting to environmental factors like
elevation, humidity, temperature, and vibration, and by optimizing themselves for the analytical objectives of the user, such as looking
for traces of potent drug substances or sniffing for airborne hazards. This ability to automatically control the system reduces or eliminates
the user’s responsibility and opportunity for error in set up, optimization, and troubleshooting. Our product’s “settings”
screen shown below on the left looks very simple, but the embedded analytics and machine learning system controls and optimizes more than
a hundred parameters continuously in real-time.
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MX908 Settings/Configuration Laboratory Mass Spec Settings/Configuration
Machine learning/embedded analytics: The integrated analysis
of our platform’s data is also critical to our customers’ success. Conventional platforms may give the user basic tools to
view data, and some limited analysis functionality, but they fall far short of completing the analysis loop. “Out of the box”
machine and statistical learning methods are not really applicable to complex analytical sensor data and real-life molecular systems.
Our data team has a commercial track record of embedding a “scientist in the box” with highly customized statistical and
machine learning methods for our platforms to complete the customer experience. Several examples of these elements are highlighted below
in the “Our Products” section.
Our devices are designed to provide fast,
statistically-rigorous answers by providing
autonomous control systems and applying rigorous machine learning methods.
Our Products
We were founded on a vision to deliver high quality
Mass Spec to a broad set of users at the point-of-need. We offer handheld and desktop devices, each of which are capable of providing
quick, high-fidelity and actionable results. These aspects are important to our customers, who previously have had to choose between a
slow and thorough analysis by Mass Spec in a laboratory or a point-of-need result that may have been more timely, but provided only a
partial measurement picture prone to false-positives. For instance, forensics customers who do not have access to laboratory-based Mass
Spec instruments have at best had access to the field techniques of Ion-mobility spectrometry and Raman/FTIR spectroscopy, each with its
own severe limitation of specificity (ability to distinguish one chemical from another) and sensitivity (ability to detect minute amounts),
respectively. Our bioprocess customers have likewise only had access to a cropped measurement picture by largely relying on simple enzymatic
and electrochemical sensors that can measure just a few simple gases and other analytes with poor accuracy. Our devices are changing this
paradigm and providing laboratory-like results at the point-of-need.
MX908®
Launched in June 2017, MX908 is a handheld,
battery-powered, Mass Spec device designed for rapid analysis of gas, liquid and solid materials of unknown identity. It is an agile,
multi-purpose device utilized by a wide spectrum of user segments for a variety of forensic field applications such as chemical, explosive,
priority drug and HazMat operations, detecting materials at the trace level.
We have sold approximately 1,100 MX908s into every
U.S. State, in 34 countries and across five continents. More than 5,000 operators, including in numerous domestic and foreign government
agencies, have been trained to use the MX908.
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When a civilian or military first responder, customs
agent, or front-line worker is presented with residue on a package, a powder in the ER, pills at a border crossing, an apparent overdosing
individual, or a mass casualty event, immediate actionable information is needed. The U.S. opioid crisis in particular is driving demand
for broadly capable point-of-need measurement devices that can detect a multitude of hazards at trace quantities.
The MX908 detects trace quantities of more than
100 named dangerous materials, including fentanyl and its many derivatives, explosives, and hazardous chemical agents with sensitivity
comparable to existing field-based technologies, but with much higher specificity. This allows users to conduct rapid field analysis for
a broad range of unknown substances at trace levels that would typically lead to confusion and false positives in other instruments. The
device is also able to identify a far greater number of substances than other trace technologies and with one million times the dynamic
range of those other handheld or mobile technologies. Compared to a leading transportable Mass Spec product, the MX908 is up to 15x faster,
up to 10x smaller and up to 2x cheaper. The MX908 is able to start up in less than a minute, completing analysis of gas and vapor materials
in less than ten seconds, and solids and liquids in less than a minute.
The MX908 was designed to operate in harsh outdoor
environments such as pervasive rain and dust, and scorching to freezing temperatures in a nimble 4.3 kg (approximately 10 lb) handheld
form factor. Our systems also undergo extensive mechanical shock, drop, vibration, and environmental testing as part of the development
and certification process.
Designed with the non-technical user in mind,
the user interface on the MX908 requires no Mass Spec knowledge for navigation, operation or interpretation of results. The MX908 user
interface is very mission driven. These mission modes provide a categorization of functionality, allow the device to guide operators through
proper procedures with visual cues, and present results in a manner most relevant for that operational intent. The mission modes also
allow the software to optimize the hardware operation of the MX908 to maximize sensitivity and specificity for a given class of chemicals,
much as a laboratory chemist would do by changing the settings on their conventional Mass Spec.
The MX908’s machine-learning software, enabled
by our proprietary technology platform, serves as a critical element of the device. For example, one of the challenges associated with
analyzing fentanyl derivatives is that there are potentially thousands of pharmacologically-active variants for this same compound. However,
MX908 is pre-programmed to evaluate against the dozen most common fentanyl variants and is then able to utilize a machine learning classifier
to look for characteristic mass fragment loss patterns that are suggestive of the more than 2,000 fentanyl analogs.
Since introducing the MX908, we have continued
to expand the device's capability through mission add-ons via software updates, and we will continue to do so as we expand the product's
capabilities. We are currently working to expand the MX908’s mission add-ons to support the detection of adulterated and counterfeit
pharmaceuticals, detection of pesticide residues, and applications in quality control and quality assurance such as raw material purity
and GxP cleaning validation.
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Services and Consumables
Our MX908 comes with a standard warranty for up
to one year from purchase. Our customers also can purchase extended warranty service plans, which include hardware repair and replacement
coverage, technical support, and software updates. We designed the MX908 to be intuitive and easy-to-use, while ensuring that the MX908
is operating as it is intended is critical to our customers. The annual and extended warranty service plans provide the customer the ability
to contact us to assist in validating their results given the severity and context of the situations in which our devices operate. Our
technical support, also known as our Reachback program, allows any participating MX908 user to email, text, or call a 908 Devices Scientific
Support Team member to receive support 24 hours per day, 365 days per year to ensure the MX908 is working as intended. The Scientific
Support Team is staffed by M.Sc. and Ph.D. chemists and forensic scientists expert in the operation of the MX908 and other field analytical
technologies. Our extended warranty service plans are sold with multiyear commitments, which allows us to deepen our relationship with
customers and provides us with an upfront payment, a predictable recurring revenue stream, and an opportunity to offer additional future
services.
For simplicity and convenience, we also sell single-use
swab samplers for the analysis of liquid and solid materials. These swab samplers are most heavily used today by customers who are evaluating
drug substances. However, we designed the MX908 so that it does not require swab samplers or any other consumables for a number of other
applications. Our customers value the low-logistics tail of our MX908.
RebelTM
The
Rebel is a small desktop analyzer providing real-time information on the extracellular environment in bioprocesses. Compared to a traditional
central laboratory high-performance liquid chromatography, or HPLC, Mass Spec assay, Rebel’s price per sample is up to 10 times
lower, at approximately one-third of the capital cost, and delivers answers up to 2,000 times faster. Rebel provides results within seven
minutes, enabling critical on-the-spot decisions regarding bioprocess media optimization, accelerating process-development cycles and
maximizing bioreactor efficiency. Customers are using Rebel in environments subject to FDA and other regulatory guidelines regarding biological
and pharmaceutical product quality, or GxP environments, to evaluate fresh media for conformity to standards, track the extracellular
environment and metabolic flux during growth cycles, monitor performance during stress experiments, and characterize spent media.
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Since the launch of the Rebel in November 2019,
we have sold 46 units and 21 of those units have been placed with some of the top-20 pharmaceutical companies by revenue. Six organizations
have already purchased multiple units. Our focus has been on increasing U.S. placements, but we also have a meaningful international opportunity
and have recently sold Rebels in China, Japan, and Europe.
Cells have been harnessed to serve as microscopic
factories producing myriad molecular species large and small. The markets for cellular-derived products include therapeutics, including
cell therapy and personalized medicine, new and sustainable foods and beverages, and industrial materials. Many of these products, such
as protein-based therapeutics, can only be economically produced by cells in a bioreactor. Making these products in an efficient and reproducible
way remains a challenge to our customers in bioprocessing. Cell culture media forms the critical growth environment for the cell. Our
customers’ measurement of this extracellular environment in bioprocesses is critical to their development and operational efficiency.
However,
it is rare that researchers conducting these types of experiments have analytical tools for extracellular media characterization on their
local bench, which means samples need to be frozen, packaged, and transported to core laboratories for analysis with large HPLC Mass Spec
instruments. This adds substantial delays and cost and typically takes three to six weeks to produce lab reports equivalent to those produced
by the Rebel in only 15 minutes. The following graphics illustrate the complexity and processing time of a traditional HPLC Mass Spec
analysis compared to the Rebel process.
Rebel
is currently configured to report concentrations of 32 critical extracellular metabolites in cell culture media, such as amino acids,
vitamins, and biogenic amines, which are known to substantially affect the growth profile and properties of the resulting biological entities
and their expressed materials. Incorporating our microfluidic sample handling and CE technology, as well as our microscale Mass Spec technology,
Rebel’s internal autosampler is capable of queueing approximately 96 such samples for unattended analysis and delivering reported
concentrations for each sample.
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A fit-for-purpose at-line system, the Rebel is
designed to be located within the same laboratory as a bioreactor, enabling more frequent monitoring of key cell media parameters. To
run this analysis, the Rebel requires as little as one microliter of cell culture media with little sample preparation. This allows customers
to run more tests while preserving precious cell culture media, which is extremely valuable for small batches as used in cell therapy
and personalized medicine.
The
Rebel, using its onboard algorithms, eliminates the need for manual calibration and delivers processed and actionable results in real-time.
As runs are completed, users can access the report either as a PDF print out or a laboratory information system compatible file exported
to the network. The Rebel software is compliant for operation in GxP environments.
Consumables and Services
Rebel’s operation requires a consumable
kit that includes:
• one microfluidic
preparation and separation chip;
• diluent
electrolyte for samples, including internal standards;
• background
electrolyte for separation; and
• performance
qualification and calibration standards.
Currently, customers of Rebel are consuming on
average one kit per month. With continuous operation, the Rebel is capable of consuming approximately one 200-sample kit a day.
We also offer an annual certification kit and
service plan. The certification kit is shipped to the customer, who loads the provided samples, and executes a certification protocol.
The system is remotely qualified and certified based on the data acquired meeting factory specifications.
Annual and extended warranty and service plans
are available for the Rebel.
ZipChip
Our ZipChip solution is a plug-and-play, high-resolution
separation platform that optimizes Mass Spec sample analysis. Our ZipChip platform consists of a ZipChip Interface, which is installed
into a conventional Mass Spec instrument, and consumable microfluidic chips, or ZipChips. We designed this technology to be compatible
with third party Mass Spec instruments. Powered by our integrated microfluidic technology, the ZipChip platform allows researchers to
consolidate a host of time-consuming biotherapeutic, metabolomic, and proteomic applications typically run on multiple instruments or
configurations onto a single platform. With ZipChip, researchers can switch applications in minutes, instead of hours typical with an
alternative such as liquid chromatography.
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Leveraging our data analytics capabilities, we
have also incorporated an automated software solution called DARWIN to expedite the analysis of the ZipChip and Mass Spec data for proteins
and biotherapeutics. DARWIN eliminates most of the manual choices, selections, and decisions encumbering typical analysis software and
directly and rapidly reports identified species, modifications and relative abundances.
Since launch of the ZipChip platform, we have
sold more than 150 ZipChip Interfaces and have established 18 multi-unit accounts in leading, global pharmaceutical organizations and
academic institutions. Our ZipChip platform is compatible with market-leading conventional Mass Spec instruments currently installed in
laboratories, and we intend to continue to expand the ZipChip platform to become compatible with any conventional Mass Spec instrument.
As an open-access discovery platform that can
interface with more than 10,000 conventional Mass Spec instruments, ZipChip provides us the ability to leverage the growing list of newly
established applications and publications from customers who have incorporated the device into their projects. By incorporating select
assays investigated on the ZipChip by customers into our MX908 and Rebel devices, we can create an evolving pipeline of new customer-driven,
point-of-need Mass Spec applications as the scope of analytes our devices can detect and analyze will continue to expand. We have already
incorporated a number of the customer-driven assays in our MX908 and Rebel devices, and we are investigating several more for our future
product pipeline.
ZipChip Consumables
We offer a variety of kits for the ZipChip Interface
that include microfluidic ZipChips and different reagents optimized for a wide scope of applications. These kits include intact antibody,
metabolomics, peptide and others. We also expect to grow our revenue from warranty and annual certification related to the ZipChip platform
as the product sales expand.
Market Opportunities
We have developed ultracompact, high-fidelity
Mass Spec devices to interrogate the unknown and invisible and provide actionable results in critical-to-life point-of-need applications.
Our first products are purpose-built handheld and desktop Mass Spec devices that currently address a range of applications and markets.
We estimate our TAM for our devices was $4.8 billion in 2020, and is growing to an estimated $22 billion over the next five years. The
TAM for our handhelds was estimated to be $1.5 billion in 2020 with expansion to over $3 billion with software application extensions
into GxP facilities for raw material inspection, counterfeit and adulteration inspection, contamination and cleaning validation, and other
quality assurance and quality control assays. Our desktop devices supporting bioprocess development represented a total addressable market
of $260 million in 2020 expanding significantly to approximately $12 billion with execution of our roadmap and the rapid growth of cell
therapy. We see additional future opportunity to address an estimated $3.0 billion in 2020 across the laboratory chromatography market
space growing to more than $6.9 billion with further market growth and roadmap expansion into complex proteomics by 2025. Our estimates
of our TAM are based on potential customer research and development spending, addressable aspects of potential customers’ end product
development process, and potential platform usage. We also utilize estimated penetration and placement rates for our platform with potential
customers in our target markets and historical patterns for consumables usage.
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Our
TAM for all device placements in 2020 and expanding in 2025 with product roadmap and market growth
Our Initial Market—Field Forensics
Forensic labs have historically used conventional
Mass Spec instruments to chemically analyze a diverse array of submitted samples. Testing for controlled substances is one of the major
drivers for the use of Mass Spec in the field forensics setting. According to the latest available data from the Bureau of Justice, U.S.
criminal forensic laboratories handled approximately 4 million requests, roughly 1.2 million of which were controlled substances-related.
We believe that this increase in requests will be even more acute for the point-of-need setting.
In the field forensics setting, high accuracy
and fidelity can be just at important at the point-of-need as it is in the laboratory. Simple and inexpensive colorimetric tests are being
abandoned in many jurisdictions due to their extremely narrow and poor performance capabilities, in favor of handheld technologies with
broad lab-like capabilities. This is creating an expanded market of individual users that is a multiple of the centralized laboratory
Mass Spec instrument market.
The need for such field technologies is acute
for controlled substances and identification of other priority chemicals and hazards at trace levels. The toxicity of fentanyl and its
analogs is 100 to 10,000 times the potency of morphine, creating an opioid crisis of unprecedented scale and breadth. Drug overdose deaths
saw a significant increase during the first few months of 2020. Preliminary data from the U.S. Centers for Disease Control and Prevention,
or CDC, shows that overdose deaths have increased by about 10%, with the CDC estimating the country could see more than 75,500 drug-related
deaths this year. The CDC estimates that the total economic burden of opioid abuse in the United States is $78 billion a year. More than
$35 billion in counter drug initiatives is being budgeted for fiscal year 2021 by the United States alone.
The potency and diversity of these emerging classes
pose a major challenge for point-of-need measurements, as depicted in the graph below. Near invisible quantities of opioids can be fatal,
and street drugs are often heavily obscured with filler materials, making trace detection with high-fidelity technologies an imperative
for success. The diversity of the problem also drives the need for agility with devices that can be rapidly updated in the field with
new machine learning updates. There are thousands of variants of these highly potent opioids, and other emerging classes such as cathinones
and cannabinoids that will further exacerbate the problem.
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In addition to controlled substances, point-of-need
Mass Spec instruments can address a wide variety of other use cases, including:
• first responders and local, state, and federal law enforcement;
• U.S. and international defense and homeland security;
• forensic laboratories' case management and triage;
• quality assurance and control.
We estimate that the TAM for our handhelds was
$1.5 billion per year in 2020 for trace detection of drugs, explosives, priority chemicals, and other hazards on surfaces and in the air.
Our TAM expands to over $3 billion with use cases in GxP facilities for raw material inspection, counterfeit and adulteration inspection,
contamination and cleaning validation, and other quality assurance and quality control assays. These use cases would be accessed through
release of additional software apps or mission modes for our base hardware.
Life Sciences
Mass Spec addresses a significant number of applications
along the life sciences research and biopharma value chain. It is integral in research and discovery, drug development, product validation
and quality control. Biologic therapeutic modalities and all cell-based products more broadly, use bioreactors to manufacture product
in two stages -- process development and clinical and GXP manufacturing.
Within a cell, thousands of intertwined processes
govern the cells ability to produce various proteins, its ability to perform a specific function, and its energy and waste expenditure.
But efficient intracellular operations are also highly reliant on the extracellular environment -- the cell culture media. In bioreactors,
the timely influx of raw materials, environmental controls, and management of waste can be not only essential to efficiency, but literally
to the life or death of the cells. The worldwide cell culture media market itself was estimated to be a $2 billion business in 2020. Regardless
of how carefully the starting cell culture media has been designed and selected, bioprocessing is by definition a dynamic and inhomogeneous
process. Cellular biology is complicated and unpredictable.
Due to issues with both the existing point-of-need
solutions and alternative laboratory-based workflows, development scientists currently lack an ideal solution to accurately analyze the
extracellular environment during or after the growth cycle without having to compromise between timing or completeness.
Democratization of Mass Spec will allow for significant
efficiencies and new applications for the technology within life sciences. With real-time access to comprehensive media profiles, bioprocess
development scientists can:
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