Axial S-1 Club — 908 Devices. More well thought out work can be found…
Tags: Venture Capital, Biotechnology, Investing, Healthcare, Medicine

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908 Devices was founded in 2012 and develops and sells a suite of handheld and desktop mass spectrometry devices. The premise of the business is to bring mass spec to point-of-care settings in healthcare, R&D, biomanufacturing, and forensics. The company is centered around two products: (1) MX908, a handheld device for rapid analysis of samples and (2) Rebel, a desktop device focused on biomanufacturing. The company recently filed their S-1 and is working toward scaling their business model to bring mass spec from the mainframe era to mobile.

Highlights

908’s product line is centered around MX908 (~$20K each) which focuses on the new mass spec handheld market and Rebel (~$128K) focusing on the desktop market. The technology the company has developed is meant to unlock mass spec use cases from the centralized laboratory to the bench/point-of-care setting The market story for 908 is bringing mass spec from the mainframe era to the mobile era. Conventional mass specs cost up to $1M and require a dedicated individual to operate and maintain the device. These requirements have limited the use cases of metabolomics across healthcare and industrials. With its MX908 product line, 908 is focused on “democratizing” mass spec. 908 is relying on a razor-and-blade business model similar to Illumina and 10X Genomics. As more of its MX908 and Rebel devices are installed, the company will be able to sell more microfluidic chips (ZipChip) required for sample analysis.

Team

The company is led by Kevin Knopp (CEO) who co-founded the company. Before 908, Kevin co-founded Ahura Scientific in 2002 to develop handheld spectrometers. Ahura was acquired by Thermo Fisher when Kevin was a VP focusing on portable devices. 908’s CTO and Co-Founder is Christopher Brown who previously was working on Apple in their health division. Christopher also worked at Thermo Fisher after Ahura was acquired where he was a director of product development and engineering.

Investors

The cap table is highlighted by ARCH Venture Parnter’s long-term involvement in the business as well as Northpond Ventures coming in for later financing rounds. Kevin (CEO) and Christopher (CTO) own a good amount of equity at this point: over 6% each.

Technology

908’s technology is based on microfluidics for sample preparation integrated with nanoscale electrospray ionization all on one chip. With the following advantages:

Extractions and concentrations according to various chemical/physical features of the sample Capillary electrophoresis (CE) on the chip for improved sample separations, which reduces the time for sample prep from hours to minutes Controlled nanoliter injections These 3 parts are integrated with nanoscale electrospray ionization

This High-Pressure Mass Spec (HPMS) platform allows the company to develop handheld devices for metabolomics. Another important part of 908’s technology is its focus on miniaturization, and in particular reducing the weight of the vacuum system from 100s of pounds in desktop devices to less than a pound for their handheld device. Given that mass spec is the gold standard for many lab analyses, bringing this method into an individual’s hands has the potential to unlock new applications: faster iteration times in biomanufacturing, on-demand forensics, faster enzymatic development.

908’s product line is centered around MX908 (~$20K each) which focuses on the new mass spec handheld market and Rebel (~$128K) focusing on the desktop market. The technology the company has developed is meant to unlock mass spec use cases from the centralized laboratory to the bench/point-of-care setting.

Market

The market story for 908 is bringing mass spec from the mainframe era to the mobile era. Conventional mass specs cost up to $1M and require a dedicated individual to operate and maintain the device. These requirements have limited the use cases of metabolomics across healthcare and industrials. With its MX908 product line, 908 is focused on “democratizing” mass spec.

The overall size of the mass spec market according to 908 is $4.8B with the handheld market representing $1.8B and is mostly concentrated in forensic applications. Over the next 5 years, the company is projecting the market expanding to $22B with new handheld applications around quality control mostly in biopharma emerging.

Business model

908 is relying on a razor-and-blade business model similar to Illumina and 10X Genomics. As more of its MX908 and Rebel devices are installed, the company will be able to sell more microfluidic chips (ZipChip) required for sample analysis.

Right now, 908 has over 300 customers with 18 of the top 20 biopharma companies along with the US Army, Marines, and the Department of Homeland Security. 908’s customers have purchased over 1,200 devices with over 4,600 current users. With a wide installation base, 908 will not only capture market share but build a moat through their business model — ZipChips have a low cost-of-goods (COG) and are essential for users to use 908’s devices. If 908 can scale their business, number of devices sold and user base, the company can become a standard in mass spec similar to Illumina in sequencing.

Valuation

The company’s valuation is mainly driven by the installation base. 908 is not profitable, but the business model suggests that the company will get into the green once they acquire a large enough user base that continually buys ZipChips.

908’s microfluidic technology has built a mass spec instrument approximately a thousand times smaller than conventional devices. This reduces the COGs for their chip versus competitors; as a result, the company’s strategy is to get their devices in the hands of as many people as possible and make most of their profits from the consumable. Given the potential mass spec and the market size, 908 has the potential to build an enduring business. However, the competition is fierce with incumbents like Thermo Fisher that already have customer distribution. 908’s revenue is growing and will likely accelerate with a wider installation base.

Mention highlights in the S-1