908 Devices Inc (MASS) 2021 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the 908 Devices First Quarter 2021 Financial Results Conference Call. (Operator Instructions) Please be advised that today's conference may be recorded. (Operator Instructions) I would now like to hand the conference over to your speaker today, Carrie Mendivil, Investor Relations. Please go ahead.

Thank you. This morning, 908 Devices released financial results for the quarter ended March 31, 2021. If you have not received this news release or if you'd like to be added to the company's distribution list, please send an e-mail to IR@908devices.com. Joining me today from 908 is Kevin Knopp, Chief Executive Officer and Co-Founder; and Joe Griffith, Chief Financial Officer.

Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section entitled Forward-looking Statements in the press release 908 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, 2020, and in its other filings with the Securities and Exchange Commission.

Except as required by law, 908 disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast, May 13, 2021.

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

Thanks, Carrie. Good morning, and thank you for joining our first quarter 2021 earnings call. We started the year strong with the first quarter revenue growing 39% to $5.5 million, and we placed 66 devices during the quarter, bringing our installed base to over 1,400 devices across our 3 products. This is double the number of devices placed compared to the first quarter of 2020.

Over the course of the quarter, our team continued to execute and made outstanding progress towards our vision of democratizing mass spec by breaking it out of the confines of the central lab and bringing its power to the point of need. To continue this momentum throughout 2021, we're executing to drive expansion across our sales channels, customers and platform. And since we last updated you at the end of March, we've continued to make incredible progress across all 3 of these dimensions of our business.

Starting with our sales channels and commercial team, we ended the quarter with 41 sales, marketing and product management employees, adding 11 employees over the course of just the first quarter. I'm really pleased by the incredible talent we're attracting to 908. We're continuing to track toward our goal of reaching 60 employees by Q1 2022, doubling the number of sales and marketing employees from the third quarter of 2020.

To further support growth across our entire organization, we're excited to announce Michele Fournier as our new VP, Chief People Officer, who joined our team in mid-April. Prior to coming onboard at 908, Michele most recently served as the Chief Human Resource Officer at Parexel International, a large clinical research organization. She brings a wealth of global experience in attracting and retaining top talent and will be instrumental as we ramp up our commercial organization.

Moving on to customer traction. We continued to see strong adoption from both new and existing customers. Across our product portfolio, we focus on leveraging our customer success in testing, trials and pilots into enterprise-wide standardization for both devices and consumables. We are particularly encouraged by the adoption of our products by industry-leading customers whose influence will be critical as we grow across the sector.

Specifically, with our handhelds, such adoption helps progress our efforts to have our devices become the standard bearer and go-to tool for all responders, especially those combating the opioid crisis. We're pleased to announce that the United States Department of State purchased multiple MX908 devices during the first quarter. The state department partners with countries worldwide sharing best practices and building capacity to identify and exploit vulnerabilities at each level of the international drug supply chain. The MX908 devices will be used with these global partner countries to detect and identify a range of suspected narcotics and illegal drug substances.

Another key handheld customer that purchased during the first quarter was the LSU National Center for Biomedical Research and Training, which is a nationally recognized organization that provides thousands of trainings each year to the emergency response community throughout the United States and across the globe. This partnership is a great step in our efforts to have our handheld mass spec become an industry standard of safety response. In April, we are proud to announce that the U.S. Border Patrol has adopted more than 60 MX908s in 2020 to standardize its trace detection at 20 field locations across U.S. borders. We're encouraged by the value we are adding to our customers and are honored to be partnered with these premier organizations.

Turning now to our desktops. We deepened traction within biopharma with multiple Rebel devices placed with existing customers. To date, approximately 40% of our total installed base is across top 20 biopharma companies. During the quarter, we onboarded several new customers that will use Rebel for cell and gene therapy applications. Other key players, including Bristol Myers Squibb, are already leveraging Rebel for this use. BMS is currently using Rebel devices across their domestic and global operations, including in their CAR-T cell therapy process engineering and technology development lab.

And finally, moving to expansion of our platform. As we shared on our last earnings call, we are continuing to expand our platform's capability to increase the areas of use for our customers and continue to open up our addressable market. Over the next 12 to 18 months, you should expect to see a continued cadence of new capabilities to enhance our devices to further support our customers' needs. These will include analyte panel expansions, new software applications, additional assay kits, accessory modules, third-party hardware and software integrations and other scientific demonstrations of the ultimate reach of our platform.

To that end, we recently announced significant updates to our MX908 handheld device. These enhancements include an aerosol module accessory to detect and identify aerosolized chemical hazards; added targets, allowing for responders to identify additional priority drug substances; and a Bluetooth capability, which enables seamless sharing of important information, facilitates data transfer and accelerate support in the field. These added capabilities are aimed to address gaps in the responders' workflows, increase engagement and drive utilization.

With this update, the onboard machine learning algorithms can now detect and identify cathinones and cannabinoids. In the United States Drug Enforcement Administration's annual report, the agency reported synthetic cannabinoids and cathinones are the most commonly abused drug substances in the United States. And the number of new classes and variances of these substances is constantly growing. These additions to the MX908 analyte capabilities are pivotal for responders in our local communities.

We're also continuing to develop and release updates and new capabilities for our desktop devices. Specifically for our Rebel product, we're enabling new software and data integrations with third parties, which include process data management and multi-variant data software. Rebel provides a wealth of new data to our customers, and we are committed to making it easier and easier for them to mine it and garner critical insights.

We've previously discussed our goal to create a bioanalytics platform that leverages our versatile technologies from biotherapeutic development through production. FDA's widely publicized quality-by-design initiative has stressed the importance of understanding, monitoring and controlling process parameters to ensure finished biopharmaceutical products meet proper critical quality attributes, also known as CQAs. The pharmaceutical industry also recognizes that enhanced process understanding and control leads to improved yields and predictability, particularly important with the newer therapeutic modalities. Our devices are directly positioned to serve these needs.

Our Rebel product continues to expand its reach and impact in culture media qualification, bioprocess characterization and development. For example, yesterday, at the American Society of Gene and Cell Therapy Conference, Bristol Myers Squibb presented on the utility of Rebel for CAR-T process understanding, development and ultimately control, ensuring the right first-time production of CAR-T immunotherapies for clinical trials and production.

Our efforts are also expanding downstream into late-stage development and finished product quality domains. Recently, we announced a joint collaboration to develop an extended CQA workflow solution for protein characterization. Bio-Techne, owner of the leading protein analysis portfolio called ProteinSimple, will pair its Maurice cIEF separations instrumentation with our ZipChip device to deliver a seamless workflow for deeper protein characterization. The ProteinSimple line of cIEF systems are considered the benchmark for protein size and charge heterogeneity quantitation, but are limited when detailed identification and speciation is required. The pairing of Maurice and ZipChip allows in-depth characterization of biotherapeutics on an intact and near-native level and a vastly simplified and time-saving workflow. Our ZipChip product line provides rapid high-resolution identification and speciation of intact protein forms with thermal, broker and Sciex mass spectrometers with minimal sample preparation.

CQA assays are necessary from lead optimization phase of drug development through production and release testing. A growing need in the biologics market is the ability to measure multiple CQA simultaneously for protein therapeutics. One such method is referred to as multi-attribute monitoring, or MAM, method. MAM is a growing initiative to obsolete the many disparate and often low-tech legacy analytical techniques by measuring CQAs with mass spec-based methods capable of measuring a broad array of CQAs simultaneously and with higher informing power.

A publication from Amgen recently called attention to the severe throughput limitations imposed by liquid chromatography in CQA analysis. In their published comparison of optimized UPLC (sic) [UHPLC] mass spec to ZipChip chip mass spec for MAM of 15 CQAs, they concluded ZipChip shows potential to improve efficiency by increasing throughput by up to 20x, 10 minutes versus 200 minutes, while providing results comparable to those acquired using conventional UHPLC separations. In addition to finished product CQA analysis, the publication noted that ZipChip shows great potential to streamline early phase molecule assessment, directly impacting development time lines by expediting lead candidate selection. We were particularly pleased to see that their ZipChip analysis was completing using our turnkey kits and chips without further optimization or modification, making analysis fast and remarkably easy.

We're excited that our customers are seeing impact across the stages of biotherapeutic development. We're also proud to highlight that our customer, Transcenta, a global biotherapeutics company, has announced that its continuous perfusion cell-culture platform has achieved industry-leading volumetric productivity of greater than 6 grams per liter per day while maintaining process and product quality attributes in the states of control for a 4-week culture. Transcenta relies upon Rebel for process monitoring and ZipChip for rapid product quality attribute testing. Whether for fed-batch or continuous perfusion processes, we see roles for our devices.

To guide our platform expansion into the future, we recently announced the expansion of our Scientific Advisory Board and a focused panel on bioprocessing and biotherapeutics. We're excited to welcome these 6 new members. This new-formed panel of world-renowned expert spans academic leaders at the forefront of cell and gene therapy and process optimization to seasoned industry experts in process development, scale up and production. The depth and breadth of this panel will be instrumental in providing feedback and guidance on our near- and long-term technology road map.

Overall, I'm really encouraged by the momentum we're seeing from customers, the talent we are adding to our team and the technology platform progress we are making. With that, I'll turn the call over to Joe for more details on our financials.

Thanks, Kevin. Revenue for the first quarter 2021 was $5.5 million compared to $4 million in the prior year period. Products and service revenue for the first quarter of 2021 was $5.4 million, up 103% from the prior year period. This increase was driven predominantly by an increase in MX908 and Rebel units as well as strong recurring revenue. Importantly, we are starting to see increasing contributions from recurring revenue as our customers become more active and our desktop installed base continues to grow.

License and contract revenue for the first quarter 2021 was approximately $200,000, down $1.2 million from the prior year period. The decrease was anticipated, and we do not expect license and contract revenues to be a significant contributor of revenue on a go-forward basis. As our business evolves, our revenue mix is more weighted toward product and service revenue, which is a more sustainable growth driver of long-term growth.

Our installed base grew to 1,427 units with 66 devices placed during the first quarter. This increase in placements was driven by MX908 and Rebel devices. This included the shipment of a number of MX908 units in Q1 that we had previously anticipated for shipment in Q2.

Gross profit was $2.9 million for the first quarter of 2021, a 39% increase from $2.1 million for the prior year period. The increased gross profit was driven by a $1.7 million increase in product and service gross profit, partially offset by the lower licensing contract contribution. Product and service gross margin was 52% for the first quarter 2021, an 1,100 basis point improvement from 41% for the prior year period.

Total operating expenses for the first quarter of 2021 were $8.7 million compared to $4.9 million in the prior year period. The increase was driven by headcount expansion across our business, primarily focused on our commercial organization and increased expenses related to operating as a public company. Net loss for the first quarter of 2021 was $6.1 million compared to $3 million in the prior year period. We ended the first quarter of 2021 with approximately $149 million in cash and cash equivalents. In addition, we also had $15 million of debt outstanding.

Turning to our outlook for 2021. We continue to expect revenue to be in the range of $38 million to $40 million, representing growth of 45% at the midpoint over the prior year period. We are pleased with our performance this quarter, but our outlook for the year remains unchanged. We continue to expect the majority of revenue to be more heavily weighted to the back half of the year as we continue to ramp up our commercial efforts and experience seasonality over the second half related to year-end cycles.

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

Thanks, Joe. Before closing, I want to thank our team for their incredible work to bring to fruition our vision of democratizing mass spec by breaking it out of the confines of central lab and bringing its power to the point of need. What I'm most excited about is the momentum and enthusiasm we're seeing across our customers and pipeline of customers. We made great progress this quarter and to continue this momentum throughout 2021, we are executing to drive expansion across our sales channels, customers and platform. We look forward to updating you on our future progress.

With that, we'll now open it up for questions.

(Operator Instructions) Our first question comes from Doug Schenkel with Cowen.

Kevin, maybe a couple for you to start, and then I got a follow-up for Joe. First, could you help us contextualize the importance of the MX908 enhancements? I'm wondering if these in themselves open up any new market segments or make it easier to move into some adjacencies than relative to how you were positioned before? And then were there -- were some of these enhancements communicated to customers in advance of announcing this today? I ask because I'm just wondering if these enhancements themselves had an impact on order trends over the recent weeks or months?

Yes. Got it. Yes. Thanks, Doug, for the question. Yes, we're excited for the enhancements to the MX908, the handhelds there. We had stated in the past we're really creating this momentum as we see it and building out our platform across handhelds and desktops and adding new features and capabilities.

The ones we announced this week for the MX, we do think are meaningful. The Bluetooth connection allows the device to more seamlessly connect with the cloud for updates and allow service support and transfer of information. And then also, we announced the Aero, which allows it to do another state of matter. Today, it does solid, liquids and papers. And now with the Aero, it allows it to do aerosolized particles. So meaning things like fentanyl and opioids, which are so toxic to our first responders. So we think they're meaningful.

Yes, we've worked with customers to define, as we do for all of our product releases, with key customers to define it. So there certainly are some customers that are knowledgeable about what's been coming, and we use their input to define. But I think they're meaningful. But I think at the end of the day, they're really just a good proof point for the continued expansion of capabilities and the value when a customer buys an MX, that we're going to keep investing in it, keep upgrading their capabilities. And it's something that is worthy for them to step forward and continue their adoption.

Okay. That's helpful, Kevin. And maybe one more for you. Just on ZipChip and your strategy to address the large molecule characterization market. Could you tell us a little bit more about how you're thinking about that moving forward? I mean it certainly seems like you could be in a both competitive as well as the complementary position to some of the existing large mass spec incumbents. So anything you could share on how you anticipate moving more aggressively with ZipChip in this application would be, I think, of interest.

Yes, absolutely. I mean ZipChip is founded on our microfluidic technology. And it's essentially the same consumable technology that's within our Rebel device that we talk a lot about for bioprocessing. But ZipChip is more of a broad capability platform that connects to a conventional mass spec, as you know, and it allows them to be more of a discovery open access tool to explore new spaces and large molecule detection and characterization and monitoring. Those are very important for the industry of biopharma, of course. And we see ZipChip as really an alternative to LC or UHPLC rather than -- because it's connecting to a typical conventional mass spec. So I would say if anything, it's more competitive with those front-end separations technologies.

Where it really, really excels is its simplicity of sample prep and the speed of separation. And our strategy there is really to work with key opinion leaders and see successes across biopharma. Quite a number of our products are being used for charge variant analysis and critical quality attributes characterization. And we had a very recent paper, as I mentioned, from Amgen that really shows advantages compared to conventional LC. Dramatic time savings there, so maybe more like 10 minutes versus 200 minutes for a CQA run there. So that's exciting for us. And then really, we also are looking to partner with organizations to allow us to connect into workflows that move downstream into later stages, and we announced the Bio-Techne R&D collaboration where that's the goal.

Awesome. Okay. Last one for Joe, and then I'll get out of the way for others. Joe, I think in your prepared remarks, you mentioned that some of the MX908 placements -- I may be mischaracterizing this, so feel free to just correct me, but I think you talked about maybe some of those placements kind of getting pulled ahead into Q1. Is -- I guess, kind of what would be helpful would be, as we're updating our models, anything you could do to kind of help us either quantify that? And/or I guess, even just talk about kind of pacing Q1 to Q2 in our model. So to kind of clean up my jumbled question here, it'd be helpful if you could kind of talk about how -- what was the value of those placements that were pulled into Q1? And how mindful of that should we be as we update our models, especially on a quarterly basis?

Yes, no, absolutely. Thanks, Doug. So yes, you're right. As I mentioned in the script, we did include the shipment of a number of MX908 units in Q1 that we had previously anticipated of shipment in Q2. And it was all connected to one opportunity, and it was the majority of the beat for the spread here in Q1. As far as pacing and we think about going forward, we expect revenue consistently to be more heavily weighted to the back half of the year, probably about 2/3 of our guidance. This would align with historical trends on some of the government year-end spending and far more year-end push.

As you might recall, 2020 was an exception with the deployment of handhelds in Q2 2020, where we accelerated the shipment due to some COVID uncertainties, and we'd expect 2021 to return to more traditional trends. So hopefully, that helps as far as thinking about Q1, Q2 and the full year, which is really our primary focus of the $38 million to $40 million for the year.

Our next question comes from Puneet Souda with SVB Leerink.

First one, Joe, for you, just a quick follow-up. In terms of the pull forward that you mentioned here from second quarter to the first quarter, that would imply that maybe Rebel and ZipChip, and I totally appreciate that Rebel is a new product in the market, and it's early and it is going to be early days for our product in terms of a launch and adoption. So maybe given that context of MX908 within that 66 units that you had in the quarter, could you quantify for us maybe what's happening on the Rebel?

And then maybe another one for Kevin. Rebel is obviously a very important device, major innovation in this space in analytics and bioprocessing analytics. So could you maybe quantify sort of what are you seeing in terms of adoption? And what is the commercial sales force seeing out there right now and as you have conversations with customers?

Shall I start? I'll get the last one there and parse that out quickly. But really, I mean we're seeing good adoption, good color that we've seen with that through the quarter. As you mentioned, more than 50% of the placements were with new customers this quarter, but that's important as well because we've got good repeat customers there. And then we've got about 40% of those desktops now are in top 20 biopharma. So that's -- those are all good trends from where we see it.

We are seeing customers speaking more and sharing more about their successes, which is -- this is encouraging. We've mentioned that Bristol Myers Squibb did a nice talk yesterday, talking about how they see the value proposition of the Rebel in cell and gene therapy. And Transcenta, a global leader in biopharma in Asia, has had some of our devices, both ZipChip and Rebel, and they're seeing some encouraging results as they work to optimize their process, which is a perfusion process, by the way. But I'll turn it back to Joe.

Sure. Maybe for some additional color, Puneet. As we think about unit placements and growth across both desktops and handhelds, both grew year-over-year. To give a little bit more color on the 66 devices, 53 were MX908, we had 9 Rebel devices and 4 ZipChip. So excited by those 13 desktop deployments. And the 53 on the MX was where some of the opportunity to meet a customer request came in Q1.

Got it. That's super helpful, Joe and Kevin. Kevin, if I could ask around sort of the commercial expansion, which is obviously very important here in the near term. And you're on track for that right now, maybe even slightly ahead. If you could give a sense of -- in terms of Rebel, what are some of the key priorities? Are there -- what is some of the feedback from the customers in terms of applications and new product enhancement that they would like to have?

And again, along those lines, what is the pull-through that you have now? And I know you have given a number that is significantly higher by 2023 for pull-through on Rebel. Is that a number that is -- are you seeing acceleration in that number with some of your customers using this device for over a year?

And then lastly, if I could just ask on in terms of any updates on the Army contract. Is that still the second half? Is that how should -- how we should think about that contract and the cadence of that contract?

Sure. So from the R&D perspective and Rebel perspective and enhancements, true for handheld, true for desktops, really working to drive that drumbeat as we've talked before around the new capabilities, and that includes things like analyze panel, extensions, new software applications, additional assay kits that we've talked about, accessory modules like we've announced a bit here this week, but then third-party hardware and software integrations. And all of those, I think we're doing well and staying connected with the customer to ensure that they're on point for what they need. In particular areas that we're focusing immediately on the Rebel are is in those integrations with third-party softwares because we do see the value to a customer that now we're giving them 32 analytes that they can measure that they couldn't readily measure at their fingertips before, and that's a wealth of information, a wealth of data and helping them have an opportunity to mine that and make it easier and easier. We're very much committed to.

And outside of that, we're really still working towards that longer-term vision that you alluded to, which is moving it to an online device and moving it more and more -- to more being integrated with the bioreactor itself over the long term. Joe, do you want to comment on the pull-through that we're seeing there?

Sure, absolutely. So for Rebel, we are, as you know, still in the early stages, but gaining exposure and traction with our Rebel customers. We're seeing an average of about that 1 kit per month for active users. And we're continuing to monitor and learn from those customers in their use cases and the range of utilization that we might see over the coming months and years. So no change in utilization to what we communicated to date. But on the plus side, we are seeing some Rebel customers desiring to get on a regular schedule for their consumables, which is exciting.

Maybe to touch a bit on the U.S. Army question and RS SKO scale opportunity. So for 2021, our guidance does include some anticipated timing of the U.S. Army purchase order. We're not specifically giving the details, and there are some initial shipments in 2021, but the majority will be in the course of 2022. We did not have any here in Q1 related to that new purchase order, but do anticipate some to begin going out the door in the second half.

Our next question comes from Dan Arias with Stifel.

I just wanted to ask a couple of market expansion questions on my own, if I could. Maybe starting on the MX system and just thinking about the opportunity in front of that product. Obviously, you have the set of forensics applications that you're working on, drugs of abuse, counterfeiting, et cetera. But during the process last year, you talked about the ability to place systems in the QA/QC environment related to GMP work as you kind of expand the base of software applications. Can you touch on that and how we should think about penetration in that portion of the market for the MX system, the MX device?

Yes. That's right, Dan. As you talked about that, we're still making our steps there. We do believe that the MX is a pretty capable mass spectrometer in a handheld form factor. And we do see opportunities in the areas that touch into that QA/QC domain and particularly in the GMP area, as you mentioned. Areas we've discussed in the past like cleaning validation and incoming inspection for pharmaceuticals are where we're looking at today. So we're making those strides. We're making hires in those areas. And today, it's really a development effort for us to work to unlock the capabilities and really design the software specifically to address those customers and users.

Okay. And then maybe on the Rebel system and then getting at some of the things that I think Puneet was trying to talk to there. Do you think when we see future versions of that device, we see sort of a phased advancement, so to speak, and that the analyte panel gets expanded and then that there's a version there? And then down the road, you get online monitoring or direct integration with the bioreactor? Or is it really we're going to go from Gen 1 to Gen 2, and Gen 2 will have all of the advancements that we're kind of talking about here?

Yes. I really see it as a continuous phased capabilities that are being added and unlocked with the existing box or future hardware variance of it. So yes, most immediately, it's things like working on the software integration, as I previously mentioned here, to make it more seamless to get the data out and allow people to mine it. But then also, we're seeing traction into areas like synthetic biology and [clean meats] and staying close to those customers and optimizing the kit, the consumable kit, if it's required, or the analyte panel, adding additional analytes, that could be interesting to customers through their feedback. We think it's a pretty comprehensive panel today, but adding additional continues there.

And then so we'll continue to walk that forward in these software and hardware, consumable updates and then working towards the online integration, which may be first through third-party integrations before it becomes something more intimately connected that we've talked about in the long-term vision. So yes, I think that's right to view it as a continuous progression.

Okay. Helpful. One more for me on the MX side and just thinking of the orders from the state department. One of the individuals that we spoke to had suggested that there's some efforts that are ongoing in the government to sort of standardize and, I guess, harmonize the approach to adoption and usage in the U.S. government. How much are you finding the siloed nature of the government to be a bottleneck today? And is this effort that she referenced something that you're seeing or you're hearing about from your seat? And if it is in place, do you think that can actually sort of help the speed of its uptake at the federal level anyways, maybe even the state level, but certainly at the federal level?

Yes. Yes, I think across all sections of the federal government and state and local government, there's definitely efforts to be more of a standard capability, more of that standard of response or standard of care equivalent, right? And we see that internationally as well. Many of these things can be more grassroots, organized within local states or states that work together or a response team within a particular area in the federal government. So I mean I wouldn't say there's one theme that we see across the entire United States, but I'd say there definitely are pockets.

And we mentioned on the call today that the part where we're excited for some of the adoptions that we've got is for the state department specifically, right. They're sharing best practices across the globe for how to stem the tide of these illicit and counterfeit drugs. So getting plugged in there, getting those customers successful, having that become a standard, if you will, is impactful, we think, long term.

We also mentioned at the LSU National Center for Biomedical Research and Training, which is really a training organization that sets standards and -- by doing thousands of training to the emergency response community across the U.S. and the globe each year. And that helps customers and future customers get an understanding of what best practices are and what to expect from devices like MX908 and really help ultimately inform buying patterns, we believe. So yes, so we think there's many customers there that we're working to ensure the success that will help in the standardization and getting more of that flywheel effect going.

(Operator Instructions) Our next question comes from Brian Weinstein with William Blair.

If we could just kind of go back over TAM expansion, it's obviously a critical part of the story. You spent a lot of time today talking about it. You spent a lot of time in investor meetings talking about it. One of the questions that I'd like to maybe better understand is when we look at that massive TAM expansion over the next handful of years, how much of that is a function of the internal innovation that you guys are doing in terms of the sophisticated plumbing, as you've called it in the past, as well as the analyte addition and software updates versus what you're expecting from the end-market cell and gene therapy potentially in other end markets to grow? So is there any way to kind of tease out how much of that you control versus how much of that TAM expansion is really market-driven?

Yes. So I mean certainly, we've shared TAM expansion in numerous areas, things like we mentioned already today, the QA/QC dimension for handhelds; the research dimension for what we're doing with our ZipChip and pushing it into some of these other workflows that we already mentioned today. So I think all of those are very well under our control. And there is -- obviously, the market is favorable in terms of if you look at the biologics pipelines in biopharma to support that.

I think where you see a significant leverage point is that ultimate vision of taking Rebel to be that really that core analytical hub that's sitting next to -- integrated with the bioreactor. And we see a significant chunk of that TAM in what we shared in the 2025 time frame, driven by the rising tide of cell therapies and the biologics pipeline shifting over to those modalities, particularly the autologous cell therapies, which drives small batches and high numbers of them.

So it's a bit of a mix there. I agree with you. It is sophisticated plumbing, if you will, but that's -- I answered earlier that we really see this continued progression in the development that continuously unlocks that. And we see our ability to bring those enhancements out in our control, but then we see this leverage point that could be significant when we're timing to the cell therapy pipeline. So maybe that gives a little more color, Brian.

And then as it relates to guidance, can you guys talk about how customers are progressing through testing trial pilot and enterprise adoption? I mean in the past, I think you've given some numbers of customers that are kind of in various phases there. And I'm curious if the slowdown in COVID cases and kind of a return to normal -- starting to return to normal a little bit, if that's changed the process in how people are moving through those various phases?

Absolutely. So just circling back on guidance as a whole. We did issue our full year guidance at the very end of Q1. So we had line of sight to the quarter when it was issued and feel great about our business and the guidance range we put out. And as you saw, we hit $5 million for the quarter and planning to do between $38 million to $40 million in the year. So we have a lot of work ahead of us. But a big piece of that is the assessment and monitoring that progression through the funnel and the pipeline of the test, the trials, the pilots, ultimately to deployments. We do provide some specific breakdown at year-end. And we'll continue to assess that probably midyear and definitely annually. So we continue to see good progress.

U.S. Army that we announced in March was a great testament to the progression, Customs and Border Patrol and that recent announcement that they're in pilot and looking to deploy gives some opportunity for the back half. So I'd say no significant changes and don't see direct impact to COVID at this point related to that, especially at the federal and kind of military side. A little bit of impact on international, but that's really in kind of regions like EMEA and others where COVID is more rampant today.

Okay. And the last one for me, if I could squeeze one more in here. I can't remember, Kevin, if you said it, or Joe, if you said it in your prepared remarks, but I thought I picked up something about how the pull-through was trending -- starting to trend a little bit better. And then I think a Q&A answer you guys talked about kind of sticking kind of that 1 kit per month. I just want to kind of make sure that I heard you right that things were starting to trend maybe a little bit better. And if I didn't hear it right, then please correct me on that.

Sure. Yes. So on Rebel, yes, we're still seeing that about 1 kit a month from our active installed base. And we're excited that we are seeing units in 1 or 2 customers that might be more than that 1 kit a month, some less, but on average about 1 kit a month.

Part of the color that you heard me talk about was that overall, our recurring revenues were trending positive within the quarter. And a piece of that was with ZipChip and some of the consumption with folks being back in the lab field here in the first quarter. So we saw an uptake on the ZipChip side in recurring revenues.

And also on service, as folks are coming off warranty for MX and ZipChip, we're seeing the renewal rates and commitments to the customers pick up. And we're not seeing a blip coming off of the heels of COVID last year. So that was some of the color on the positive trends. But specifically on Rebel, that 1 kit a month, we're seeing that play out at this point.

And I'm not showing any further questions at this time. I would now like to turn the call back over to Kevin Knopp for any further remarks.

Yes. Just thank you all. Thank you all for your time today. We're looking forward to giving you further updates and have a great day.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.