908 Devices Inc (MASS) 2020 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the 908 Devices' Fourth Quarter 2020 Financial Results Conference Call. (Operator Instructions)

I would now like to introduce your host for this conference call, Ms. Carrie Mendivil. You may begin.

Thank you. This morning, 908 Devices released financial results for the quarter and full year ended December 31, 2020. 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 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 on description, please see the Risk Factors section in 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, March 30, 2021.

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

Thanks, Carrie, and thank you all for joining us this morning. I'm very pleased to welcome you to our first earnings call as a public company to review our results for the fourth quarter and the full year of 2020. 2020 was an extraordinary difficult year on many levels. But despite all the macro challenges, we made important progress across our business.

Over the course of the year, we grew revenue 50% and ended the year with $27 million in revenue. We placed 390 devices during 2020, bringing our installed base to 1,361 units. These new placements included 33 Rebel units placed during its first full year of commercialization. Our devices are now in use across 34 countries, and we have devices placed at 19 of the top 20 pharmaceutical companies. And at the end of 2020, we completed our initial public offering in December, raising approximately $150 million in gross proceeds.

I'd like to take a moment and express my sincere thanks to our amazing team for their hard work and dedication. All of the incredible progress we have made is truly a testament to their collective efforts. I would also like to thank our long-standing investors for their continued support and welcome our new investors. We really look forward to develop meaningful long-term relationships and working with you to grow the company together.

I want to start our call today by giving you a sense of the vision that is driving us at 908 Devices. History has shown us that making technology accessible to broader audiences, open stores for new users and applications, which in turn grows markets and even creates new market opportunities. At 908, our goal is to do exactly that with the analytical capabilities of mass spectrometry. We're using our broad technology platform to break mass spec out of the confines of a centralized laboratory and bring it to the point of need.

Today, mass spec is the gold standard of measurement in labs and serves customers in nearly all markets. It's highly regarded for its ability to provide an exquisite amount of detail across a wide variety of samples from small molecules to large complex proteins. And while it is an extremely powerful analytical tool, conventional mass spec instruments are large, expensive and highly complex.

At 908, we're seeking to reimagine where mass spec technology can be used if it's sufficiently small in size, low in cost and simple to operate. We see a world where the mass spec market really undergoes a transformation similar to what we've all seen happen in the computer industry. From computing power transitioning from the larger centralized supercomputers to distributed desktops, laptops and even the mobile devices.

By democratizing mass spec technology to the point of need, we believe that we'll be able to dramatically accelerate workflows and create new classes of users and applications. We're extending access from the single centralized specialist to the broadest set of customers, those with the samples and the questions that want the answers faster.

We have 3 devices in the market today and -- that are driving us towards this future. ZipChip was our first microfluidic separations-based product we released in 2016, with solutions of plug-and-play, high-resolution separation platform that optimizes mass spec sample analysis. We designed this technology to be compatible with third-party mass spec instruments.

In 2017, we launched MX908. It's become our flagship product and is really the world's first commercial handheld mass spec. It's a truly remarkable device with its size and end-to-end simplicity and battery operation. It's designed for on-scene, high-performance identification of a variety of chemicals such as drugs and explosives. The device has extraordinary sensitivity and is able to detect and identify these materials at trace amounts well below their hazard levels.

In 2019, we launched our latest device, Rebel. Rebel is a desktop device designed for its initial use in bioprocessing. It's a first of its kind combining microfluidics and our microscale mass spec technology. Rebel was specifically designed to characterize the extra seller environment across more than 30 different chemical species and do it fast enough to enable near real-time monitoring and control. We estimate that the total addressable market for our products today is approximately $5 billion across forensics, research and bioprocessing, reaching customers in pharma, biotech and government academia.

Our first established market is in forensics. It's sizable and rapidly growing, and our technology is now becoming an enabler for bioprocessing, where we enable the monitoring control of a sales environment, which is so critical to keeping them alive and happy.

In all our use cases, we're really transforming the time to action, meaning we're working to get an answer faster to the person that has the question when and where they need it. Over the next 5 years, we see this opportunity growing to $22 billion for our handhelds and desktops as we extend into QA/QC and expand our desktop capabilities in research and bioprocess with the emergence of cell therapies.

Looking ahead, increased commercial traction will be driven by 4 key factors: first, growing our sales force; second, increasing the number of new customers; third, driving expansion within existing customers; and finally, continuing to innovate across our platform.

Starting with our sales force. We have direct sales staff in the U.S. and international distribution partners covering over 34 countries. In February, we're excited to announce that -- the addition of Steve Davenport as our new Vice President of Commercial Sales.

Steve is truly industry veteran with more than 30 years of experience, scaling global sales organizations at multiple life science companies. Prior to joining 908, Steve led sales at Sartorius to record levels for the Life Science Research division, where he's responsible for a global organization. Over the course of his career, Steve has developed and managed multiple high-performing global commercial organizations and has had multiple successful market introductions of innovative drug discovery, protein, cell and genetic analysis technologies. We're really excited to have him on board as we work to build a best-in-class sales organization under his leadership. Steve is based in the U.K., which is -- we see as particularly valuable as we continue to expand our sales efforts internationally, especially in Europe.

Last week, in Europe, we participated in a key industry event, Bioprocessing Summit. We contributed to the gene therapy process development session with our talk on smart data and improved media analytics using our Rebel desktop. In addition, one of our customers and collaborators, Florian Füssl, a scientist at the National Institute for Bioprocessing Research & Training, gave a talk on how ZipChip can be used for the rapid and in-depth characterization of charge variant for a highly heterogeneous and complex antibody used for the treatment of cancer. The charge variant profile of an antibody therapeutic is a critical quality attribute because of the profound effect these variants have on the therapeutic efficacy, potency, stability and regulatory clearance.

We finished the year with 30 employees across sales and marketing. During our IPO, we shared our goal to more than double our sales and marketing organization over the next 12 to 18 months as we broaden and deepen our footprint. As of today, this number has already grown to 40 employees, and we are confident we'll be able to reach our goal of 60 employees by Q1 2022.

Turning to customer traction. In 2020, we made strong inroads with our handheld products, and we generated some exciting momentum with our desktops. As we continue to drive adoption of our devices, we see 2 key tailwinds driving growth in our addressable markets.

First, the opioid crisis is, unfortunately, worsening. New synthetic opioids have emerged that are thousands of times more potent than morphine and hundreds of times more potent than fentanyl, further stressing our communities, frontline workers and first responders. The CDC estimates that the U.S. suffered an almost 17% increase in drug-related deaths from May 2019 to May 2020, in part accelerated by the pandemic. This frightening trend further drives the urgency for the point of need analysis that our MX908 provides.

One of our customers in Ohio is the Ohio Attorney General Bureau of Criminal Investigations and Organized Crime Investigation Commission. Their Executive Director shared that even just a spec of fentanyl can cause an overdose or death and equipping his task force officers with a device that can safely field test and identify deadly narcotics is a life saver.

The MX908 device is doing just that and allowing his task force officers to stay one step ahead of the bad guys as they work to keep drugs out of their communities.

The second tailwind we see is the shifting biologic therapeutic pipeline from traditional mAbs to more complex therapeutic modalities, including bi-, tri-, multispecifics or cell or gene therapies. This is driving an increase in needed characterization capabilities and an increase in the number of tests as global bioprocessing capacity expands to accommodate.

Our desktop devices are used extensively in bioprocess development and biotherapeutic characterization. We're proud that Regeneron used our ZipChip devices as part of their mAb characterization in the rapidly development of their antibody cocktail therapy for COVID-19. ZipChip offers customers the ability to radically reduce the required method, development and analysis time.

Overall, we are very encouraged by the level of new interests we're seeing across our products and platform as we expect these market tailwinds to continue to drive adoption of our products.

Turning to the expansion within our existing customers. We focus onto building upon our track record of leveraging our customers' success in testing, trials and pilots into enterprise-wide adoption of both devices and consumables.

For our handheld device, it's typical for a government organization to conduct a 1-week or longer trial prior to the purchase to test our technology in their real-world setting. A trial generally results in budgeting for a pilot that can range in size from 10 to more than 50 units.

During the pilot, we support our customers closely to ensure their success. Data is compiled throughout to assist our customer and making a larger enterprise-wide justification, purchase and deployment. It's our belief that investment pre- and post-sales with prospects that have the potential for enterprise adoption creates a predictable pipeline of opportunity for devices and enables their entrenchment as they become the organizational standard for our customers.

Enterprise customers can be large government organizations with full fielding potential of more than 1,000 handheld devices. Today, we have approximately 4 accounts and 50 units in active pilot, and additional 11 accounts representing 700-plus units that have begun full deployments across their enterprise.

We are pleased to have nearly doubled the number of accounts in this enterprise adoption stage over Q4. Further, the number of accounts at the top of the sales funnel that we are engaged with in tests and trials has continued to increase nicely and their progression to pilots have anticipated for many over the next 9 to 12 months.

Today, we're excited to announce that we received a multiyear $25 million order from the U.S. Army. Under this purchase order, we will supply more than 350 additional MX908 devices over the next 2 years. Our technology will provide these users the ability to conduct chemical detection and identification quickly and safely at the point of need. We're excited to be selected by such a large enterprise program focused on next-gen technology and look forward to enabling users to safely accomplish their mission.

With our Rebel desktop, we're starting to see the flywheel begin to turn with customers coming back to buy additional units. Today, more than 6 organizations have purchased multiple units with the largest of these accounts having 6. Approximately 25% of the Rebel installed base is outside North America. We expect such adoption trends to continue units across multiple sites, multiple units within a site and more units internationally.

And finally, we're also focused on continuing to innovate across our product portfolio. Our goal is to build market-leading products that are easy to operate, and our team is constantly working to make things even simpler for our customers. Over the next 12 to 18 months, we expect to see a continued cadence of new capabilities, including analyte panel extensions, new software apps, additional assay kits, accessory modules, third-party hardware and software integrations and other scientific demonstrations of the ultimate reach of the platform.

Looking ahead in 2021, we expect full year 2021 revenue to be in the range of $38 million to $40 million, representing 41% to 49% growth over full year 2020. As we ramp our revenue over the course of the year, we are also focused on continuing to build out our incredible team at 908. People and culture are absolutely the core to innovation. And in addition of Steve Davenport as Vice President of Commercial Sales, we're really delighted to welcome Maura Fitzpatrick as Vice President of Product Management and Marketing, formerly with Waters Corp; and Mike Turner as Vice President and General Counsel, formerly with Goodwin Procter.

In the fall of 2020, we were thrilled to announce the appointment of Kevin Hrusovsky as our Board Chairman. Kevin is currently the CEO of Quanterix and has served on our Board since 2013. His experience as a biotech entrepreneur and health care visionary has been invaluable to us over the past 8 years.

More recently, we also added Jeff George and Fenel Eloi to our Board of Directors. I'm excited by the excellent industry leaders we are bringing around the table and look forward to their continued guidance and partnership. Over the coming months, we're committed to adding additional Board candidates to further strengthen our Board and add increased diversity.

Overall, I'm really encouraged by the adoption we are seeing from customers, the talent we're adding to our team and the progress we're making to realize our vision.

With that, I'll now turn the call over to Joe for more details of our financials and more details of our financial outlook.

Thanks, Kevin. Revenue for the fourth quarter 2020 was $5.7 million, compared to $8.3 million in the prior year period. Total revenue for the full year 2020 was $26.9 million, up 50% from $18 million in 2019.

Product and service revenue for the year was $24.8 million, up 61% from 2019. This increase was largely due to progress on pilots and deployments with the MX908 resulting in an increase of 139 devices, along with revenue from Rebel in its first full year since launch.

License and contract revenue for 2020 was $2.1 million, down 19% over 2019, predominantly driven by timing of deliverables under our current contract with a government customer. License and contract revenue has been helpful in aligning commercially relevant developments. However, we do not expect revenues to be significant on a go-forward basis.

Our installed base grew to 1,361 units in 2020 with 390 devices placed during the year, compared to 248 devices placed in 2019. This increase in placements was driven by continued adoption of our handhelds as well as by growing adoption of Rebel in its first full year of commercialization.

Gross profit was $2.6 million for the fourth quarter of 2020, a 40% decrease from $4.3 million for the prior year period. Gross profit for the full year 2020 was $14.9 million, an 83% increase from $8.1 million for the prior year.

Gross margin was 45% for the fourth quarter 2020, compared to 52% for the prior year period. Gross margin for 2020 was 55% compared to 45% for the prior year. This increase was mainly due to scale and pacing of investments with the COVID uncertainties in 2020.

Total operating expenses for the fourth quarter of 2020 were $6.5 million compared to $4.6 million in 2019. The increase during the quarter was primarily driven by increase in selling and marketing headcount as well as an increase in costs associated with becoming a publicly traded company. Total operating expenses for 2020 were $20.7 million, relatively in line with $20.2 million for operating expenses in 2019.

Net loss for the fourth quarter was $10.2 million, compared to $0.5 million in the fourth quarter of 2019. Net loss attributable to common share -- stockholders for the full year was $12.9 million, compared to $13.5 million in 2019. The net loss in 2020 includes a noncash $6.1 million charge from the revaluation of the preferred stock warrants immediately prior to the closing of our initial public offering. This charge offset the increased gross profit in 2020.

We ended 2020 with approximately $159 million in cash, cash equivalents and marketable securities. This includes approximately $139 million in net proceeds from our IPO in December of 2020. We also had $15 million of debt outstanding as of December 31, 2020.

Looking ahead in 2021, as Kevin mentioned, we expect revenue to be in the range of $38 million to $40 million, representing 45% growth over full year 2020 at the midpoint of the range. This outlook includes revenue that we expect to recognize from our multiyear U.S. Army purchase order, which Kevin mentioned earlier in his remarks. We expect revenue for 2021 to be more heavily weighted to the back half of the year as we progress opportunities with handheld customers from pilots to enterprise deployments and ramp our commercial team focused on desktops. We are also committed to continuing to invest across our business to realize the massive opportunity in front of us. With the capital raised from our IPO, we are scaling our organization and investing in our technology platform to lay a strong foundation for long-term growth.

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

Thanks, Joe. We started 908 with the 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. And this vision remains clear today. Our team is focused on executing in 2021 and driving a drumbeat-like cadence of momentum across our customers, sales channel and platform. We look forward to updating you on our future progress.

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

(Operator Instructions) Our first question comes from Puneet Souda with SVB Leerink.

All right. Great, Kevin, and congrats on the first quarter. First question on the U.S. Army release this morning. Could you elaborate a bit more on that $25 million contract? How should we think about the placements here in 2021? What sort of cadence we should expect for the MX908 devices?

And how should we be viewing this in the light of the full year guide, which is $38 million to $40 million, consensus is at $39 million. None of that has changed. So I think you said that this contract is new, but is -- and is reflected in the guide. So wondering if there is some conservatism in the guide or anything else that we need to be accounting for? Because if we look at the Rebel side of the business, clearly, a very innovative instrument and a really strong ramp emerging there with the commercial sales force, too. So just wondering on the Army contract, like how should we think about the cadence and the guide itself?

Yes. Thanks, Puneet, for the question. Yes, we're super excited that the Army has chosen to adopt the MX in a big way and start to roll it out as the next-gen technology solution for them for trace detection. And as we've talked in the past, we really view the sales progression of our handheld devices is going through a tests and trials to pilot and then to full enterprise rollout.

And you should view the U.S. Army news this morning as one of those larger enterprise accounts that's now pushing it out through their organization. And as of the end of last year, we've got about 4 accounts that are in that pilot stage, and we've got about 11 accounts that are in that enterprise-level stage, of which there's about 700 units thereabout that are represented.

I would say that our guidance that we've provided really anticipates the timing of this purchase order because, as we said before, that, that sales process of tests and trials to pilot to enterprise gives us very good visibility into the progression because we're working with the customers hand-in-hand to ensure their success and ensure they've got justification for an enterprise-level rollout. And then -- with that said, really, at this time, we're anticipating the first shipment to go here as part of our 2021 guidance, with the majority of it to come over the course of 2022.

Got it.

And maybe to -- no, I was just going to add there on the U.S. Army opportunity. With competitive dynamics, we won't be providing, sensitivity and privacy, any specifics on the timing. We are excited to have it in hand and to realize the shipments over the next 2 years. A portion of that $25 million is service revenue. So about -- if you think about that $25 million, about 75% is related to product revenue to be realized in our existing guidance for 2021, and then spill over into 2022.

Okay. That's very helpful. And then on Rebel, Kevin, this is such an important growth driver for you in a very large bioprocessing market. And truly, when we look at it, I mean, this is a groundbreaking innovation. I mean myself having seen and purchased and operated many of these mass specs in my own lab days, I can say that this surely doesn't look like a mass spec, doesn't operate like a mass spec, but it delivers more than a mass spec in the PD labs.

So given the powerful innovation that you have here, and I appreciate this is -- you had the first year of launch, though, that was COVID impacted. Maybe just walk us through the expectations for Rebel placements this year that you were expecting in terms of the commercial front you're expanding, marketing efforts that you're expanding, how should we think about placements this year and the potential improvements on pull-through?

And on those 2 points, Joe, if you could provide the current placements and the Rebel placements in the quarter and current pull-through where you're at with Rebel?

Yes. Sure. I'll start there, Puneet. Yes, Rebel is absolutely a very exciting product for us. It's not your father's mass spectrometer, as you described there. It's an innovative little desktop device. And it is exciting for us because we really kind of watch that flywheel effect begin to turn here as we get those customers that are coming back for multiple units.

And at year-end, we had 6 organizations that got multiple units, with the largest account having 6. That's up from about 3 that we reported, 3 accounts having multiple units in September -- the end of September. So that's exciting for us.

And we see that we're just scratching the surface internationally. We've got about 25% of those that are outside North America now. And we're really working to drive that adoption broadly. As you said, really, we're investing heavily in the commercial organization. We've reported about Steve Davenport joining the team, but then expanding across geographies. And that's driving units across multiple sites and many units within sites, and then, definitely, more internationally as we push through that. Joe?

And on placements, Puneet, we had 15 new placements in Q4. That brings us to 33 for the year and 46 from inception or launch in Q4 2019 on utilization or pull-through, Rebel. We are still early stages, but we are seeing that approximately 1 kit per month for our active users. And we're continuing to monitor and learn from our customers' use cases as we get units being utilized, up and running, in the customer hands. So no change in utilization to where we've been thinking, at least over the short term, which is about that 1 kit per month that we communicated around the IPO.

Okay, great. And the last one, if I could just squeeze in. In terms of the commercial organization at 40 today, that's great to see the progress there. But how should we think about further expansion through the year? I think you pointed to second quarter next year, you would expect to reach 60. But if the -- is the organization ready to expand beyond that, if needed, maybe just help us understand? And it's great to see the addition of Steve to the team.

Yes. For sure, it is absolutely a top priority for us. With the use of proceeds, as we've discussed before, we do see a very large market opportunity and are having this great early success with the Rebel replacement. So investing in the commercial channels in the U.S. and internationally is so critically important for our handhelds, but in particular, for our desktop products.

So yes, at the end of the year, we had about 30 people in sales and marketing. And today, we've got about 40 people in sales and marketing. 50% of those are really quota-carrying field sales staff that are out selling and interacting with the customer each day.

Yes, we are working to grow that and get to a goal of 60 employees about this time next year that are in the sales and marketing side. As you know, you have to work across the top of the funnel and building it from the marketing perspective and getting our name out there and then driving it all the way through and then to closing with those field teams.

So -- yes, it's something we're continuing to monitor that right level of investment, the right numbers, and we'll certainly invest more heavily there if deemed. But right now, we're really on track and confident that we'll hit that goal of 60 by this time next year.

Okay. That's great. And congrats on a strong first quarter.

Our next question comes from Doug Schenkel with Cowen.

My first couple of questions are on guidance. In terms of components of guidance, any chance you'd be willing to share anything in terms of placement expectations, maybe delineating by specific products or growth in pull-through, anything like that? And if not, meaning if you don't want to get that granular, could you at least speak qualitatively on expected growth by product line? Meaning if you're guiding overall revenue growth in 2021 to the mid- to high 40s, do you expect that to be more weighted towards instruments or consumables? However, you want to frame it would be helpful.

Sure. I'll give you some color, and Kevin can fill in some of the pieces, Doug. But -- yes, at this point, we won't be guiding to the number for our annual installed base. That said, I think if we kind of work through the math and the revenue range that we provided, you'd see that we begin to approach about 2,000 units by year-end.

From a consideration of handheld and desktop perspective, we see both as key growth drivers here in 2021, handhelds with deployments like the U.S. Army that we just talked to and others in the pipeline, but also Rebel, with its opportunity not only for new device placements but the building recurring revenue opportunity as we build the installed base and get an increase in our active user base.

That's great, Joe. And then on -- very quick on pacing. I know you talked in your prepared remarks about this being a pretty back-end loaded year. I think The Street is assuming like 10% to 11% of sales in Q1, with 70% of sales in the second half. That's obviously consistent with your qualitative remarks. Is that too much? Or is that about right, at least as we sit here at the end of Q1?

I think that's about right, especially related to kind of the first half, back half split. We do expect the revenues, as we've discussed, to be heavily weighted to the back half of the year, which were aligned with some of those historical trends on our government year-end spending in pharma and to your push.

If we look back at 2020, it was the exception with the deployment of some handhelds in Q2 2019 -- or 2020, where we accelerated the shipment due to COVID uncertainties. We would expect to return to more traditional trends, which is in those percents that you described.

Okay. And obviously, given it's late March, if it was going to be drastically different from that, this would probably be a good opportunity to clean that up, and you have pretty good visibility. So that's helpful.

I guess my last one is just a follow-up on some of the comments on the sales force expansion and plans for further expansion. In terms of incentive structure, are there any changes contemplated? And I guess, really specifically, what I'm trying to get at is, are the new hires prioritizing Rebel, for example? Or is the incentive structure and the motivation structure much the same as it's always been?

Yes. Yes, Doug, so we really think of the sales in both government sales to government customers and into our commercial customers. And we do have a sales team that focuses on our government customers, which is primarily, of course, our handheld devices, and then we have a sales team that's focused more on our desktop devices. And so in that way, we see that we can maintain focus and build and realize the potential of both product lines, if you will, on the handhelds and the desktops.

In the case of our desktop, our commercial reps out there, they're compensated on the ZipChip as well as the Rebel, and then on the recurring. And they have bookings targets for both devices and that recurring revenue.

As you know, Rebel is our most exciting desktop that we've got out there, and it's very critical for us in the bioprocessing area. But we love ZipChip, too, because of its strategic importance, and it's really -- it gives us that purview into future market potentials. And as you might recall, ZipChip application is what borne our product called Rebel. But -- so we do have 2 teams focused appropriately on handhelds and desktops.

And presumably, the hiring, given -- again, you're enthused about all your products, but in terms of just building up of what you've described on the Rebel side and ZipChip, presumably, a lot of the hiring is tilted to that side. Is that a fair assumption?

Yes. That is absolutely fair. Our handheld devices were launched a couple of years earlier than our Rebel, and it has a more mature and that was a second-generation device. And so it's a more mature sales organization on that side. So that's why we've been investing more heavily on the commercial sales organization with Steve Davenport and the rest there.

Our next question comes from Brian Weinstein with William Blair.

So recognizing that we're still a bit early in the development around Rebel, I still would like to kind of dig in a little bit here because the biggest question that we get is around that TAM expansion and everything that you guys are looking at there and what you've outlined.

So can you be a little bit more specific about that TAM expansion? And what specifically you need to add to the system in terms of analytical capabilities in order to unlock that? And how should we be thinking about the timing of some of those additions and keeping tabs on that?

Yes. For sure. Yes, the Rebel is very exciting for us. It's largely going into the process development labs today, which we see as a sizable opportunity, and we really see that, that grows further as we take the device and connect it more intimately to the bioreactors, particularly in these labs, the smaller volume bioreactors, and that comes through an online connection of the Rebel to a bioreactor, and we are working on that. As we've mentioned in the past, that's plumbing, but it's sophisticated plumbing. And it will take us 3, 4 years to be getting to that point. But we see a lot of opportunity within our hands today as well as more incremental improvement.

So I would say over that next 12 to 18 months, you should see really a continued progression of the Rebel product, including analyte panel expansion and new software applications that come out, new assay kits that go with it. We've talked before that we've been really focused on mammalian cell culture processes, but we also see opportunity in synthetic biology and other cell-based products there, clean meat markets and the like.

So I think what you should expect to see from us is really a -- while we work on that larger online connectivity that will take a number of years to get there in full relation and connection to the bioreactor as we've talked, you should see that kind of continued cadence of these kits and chips and software and assays to go with it and build out the TAM.

Great. And we spent a lot of time on the call talking about sales force and the numbers there, but I'm wondering if we can spend a little bit of time just on the marketing side. So what are some of the specific initiatives that you guys are deploying this year to really drive awareness of the product. So it's more than just putting feet on the ground, right? So what are the specific programs that you have in place and the things that you're doing to really drive awareness of the products more so on the commercial side than on the handheld side?

Yes, absolutely. You're right. There is feet on The Street, but then there's also getting your name out there and getting the product understood and valued and realized that it's in the marketplace. And we did announce that we added Maura Fitzpatrick, who is now running our marketing product management side, formerly with Waters. So she's adding a lot of horsepower and really driving that top-of-the-funnel activities.

So in that regard, yes, we are working and really amping up our activities with key opinion leaders and working with people on various publications, trade journal publications. We announced that just last week in Europe, we had some good publications or talks, I should say, at the European Bioprocessing Summit. One of our staff is also doing the West Coast Bioprocessing Conference this week. So lot of activity, I'd say, at that top of the funnel, a lot of initiatives in getting the word out, working with customers, increasing the publications and trade journals and the like. So I think you can continue to see that as we move forward.

All right. And then next one for me. With the new administration now, are you seeing any changes or expecting any changes, either positive or negative, to the funding environment as it relates to your handheld capabilities and opportunities?

On the handheld side, as you mentioned in the -- some of the remarks earlier, unfortunately, a major driver for that is the fentanyl crisis, the fentanyl epidemic. And that continues to grow, particularly here as everyone's been in lockdown for over a year.

So while state budgets and federal budgets certainly have to deal with the priorities of COVID, there still remains a focus that we see in fighting that fentanyl fight and crisis. And so we're not anticipating any significant change on that side to the negative. And as you know, there has been motions out of the administration to further invest in technologies and in science to get at some of our health care needs, and we expect that to be favorable over time.

The next question comes from Dan Arias with Stifel.

Kevin, maybe just a couple of questions on the Rebel. Are there any trends that you're seeing amongst users there that sort of have one type of therapeutic category likely to drive a higher level of pull-through than the others? Just trying to get a sense for whether -- when you look at what's going on, at least in the first year anyways, we should think about the consumables opportunity being higher if we stumble upon a CAR-T lab versus a monoclonal lab that might be put to like instrument work?

Yes, yes, yes. So today -- that's a great question. I mean, today, our technology, the Rebel is being adopted across labs that are handling a lot of different modalities of therapeutics. But as you know, the pipeline is really shifting. The biologics pipeline is really shifting towards cell therapies and/or more complex monoclonal antibodies, bispecifics, trispecifics, et cetera.

And so as we see that, those folks in the process development labs are having to kind of put all their horsepower on developing those processes. So we do see that as an early trend that people are adopting for some of those more novel modalities, where they're definitely looking for these insights. So over time, that may prove out to be differentiated. I'd say today, it's early days. So we're kind of seeing that pull-through that Joe has been talking about the kind of a kit a month really across the board. And I don't think we could slice it and dice it very accurately for you at this time to the therapeutic modality.

Okay. But maybe along those lines, if I think about the customer that has the 6 Rebel units, is there anything that's going on there that is beyond 1 kit per month per instrument in any period that kind of says, all right, once you embed it further into a lab or a process that leads to higher utilization, I mean, I know it's early, maybe it's too early to make that call, but I'm just curious about how usage ramp might evolve there?

Yes, great question. And I think we will continue to learn as we deploy not only single units at sites but 2 units at a site or across different organizations. And we are seeing some of the usage cases, I think, through whether they're -- we call them continuous mode or they're utilizing it on a routine basis or more of an on-demand or project basis. So we get excited at more of those continuous opportunities.

And we're continuing to monitor and then have our customer be our best advocate in that area. So it's a little early stage to try to make a specific assessment on that one customer that's just kind of coming up to speed and getting active. We consider our customers, especially on the desktop side as once they're active and up and running. So we're starting to see that and should learn over the coming months, and especially, here in 2021, on the opportunity on a pull-through for that customer and others as they have one in multiple units.

Yes. Okay. And then, Joe, apologies if I missed it in your prepared remarks, but what kind of gross margin assumption are you making for 2021, given where you're finishing the year here? And is there a pacing consideration that we should think about over the course of the quarters?

Sure. Yes. So from a gross margin perspective for 2020, we were at 55%, which was up with volume. And as we think about going forward, kind of being in that mid-50s is probably reasonable. As I look back over the trends for the year, really volume within individual quarters drove a range in 2020 anywhere from the mid-40s to low-60s. So a big piece is being able to scale and drive the opportunity. But as we look to continue to invest in our infrastructure and our operations, as a whole, I think being in that mid-50s for 2021 is not unreasonable.

And ladies and gentlemen, there are no further questions at this time. And since there are no further questions, this also does conclude today's presentation. You may now disconnect, and have a wonderful day.