Dyadic International Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 9, 2023

There are 7 speakers on the call.

Operator

Evening, and welcome to Dyadic International's Second Quarter 2023 Financial Results Conference Call. Currently, all participants are in a listen only mode. Following management's prepared remarks, there will be a brief question and answer session. As a reminder, this conference call is being recorded today, August 9, 2023. I would now like to turn the call over to Ms.

Operator

Ping Rawson, Dyadic's Chief Financial Officer. Please go ahead.

Speaker 1

Thank you. Good evening, and welcome, everyone, to Dyadic International's Q2 2023 Conference Call. I hope you have had the opportunity to review Dyadic's press release announcing financial results for the quarter ended June 30, 2023 and the recent company highlights. You may access our release and the Form 10 Q under the Investors section of the company's website atdiatic.com. On today's call, our President and CEO, Mark Emalfarb, will give A review of our Q2 business and corporate highlights, including a summary of our recent research and business development efforts.

Speaker 1

Our Chief Business Officer, Joe Hazleton will join Mark for the business update. I will follow with a review of our financial results in more detail. We'll then hold a brief Q and A session. At this time, I would like to inform you that certain commentary made in this conference call Maybe considered forward looking statements, which involve risks and uncertainties and other factors that could cause Dyadic's actual results, Performance, scientific or otherwise, are achievements to be materially different from those expressed or implied by these forward looking statements. Dyadic expressly disclaims any duty to provide updates to its forward looking statements, whether because of new information, future events or otherwise.

Speaker 1

Participants are directed to the risk factors set forth in Dyadic's reports filed with the SEC. It is now my pleasure to pass the call to our CEO, Mark Emefac. Mark?

Speaker 2

Thank you, Ping. Hello, everyone, and thank you for joining Dyadic's Q2 2023 conference call. We've continued the momentum seen in the Q1 of 2023 as our C1 technology continues to garner praise And recognition for its speed and efficiency in the U. S. And internationally for academia, industry and government agencies.

Speaker 2

In addition, our DAPA BIS platform has gained significant traction in both the alternative protein and bio industrial markets. We're delivering multiple new research collaborations and strong revenue growth of 38.5% year over year for the 1st 6 months of this year. On today's call, Joe and I will highlight the significant technological advances And recent business development successes, we have and continue to achieve across each of our core markets. We're excited about our current and future prospects for growth in our revenues, while continuing the ongoing long term collaborations with Janssen, fibroabic, Rubik and others. The continued positive data from our first in human Phase 1 study I recently announced that advancements in our internal serum albumin projects have accelerated the opportunities To enter into additional collaborations and partnerships, like the recently announced 2 Memorandum of Understandings With the Italian government's Fondation Biotechnipolo di Siena, which performs the functions of an anti epidemic hub with a particular focus on the development and production of vaccines and monoclonal antibodies For the treatment of emerging, epidemic, pandemic, pathologies and also Bangladesh's Essential Drugs Company Limited EDCL, a state owned pharmaceutical company under the Ministry of Health and Family Welfare of Bangladesh To facilitate biopharmaceutical research, preclinical development, cGMP production and clinical development for the prevention In control of diseases and improvement of public health programs in Bangladesh.

Speaker 2

We believe we are at or near the precipice of applying both of our microbial protein production platforms, C1 and EPIPIS, To develop antigens, antibodies, enzymes and other proteins across each of our core verticals that we believe will lead to monetization It will significantly increase shareholder value for Dyadic and our collaborators. What makes the C1 filamentous fungal protein production platform Unique versus traditional cell lines currently used to manufacture vaccines and biologic drugs is the ability to produce safe We've repeatedly shown that the C1 platform is up to 300 times more productive than baculovirus insect cells, And no viruses that need to be removed in downstream processing versus either tobacco virus or Chinese hamster ovary CHO cells. Enabling the production and release of recombinant vaccines more rapidly in greater quantities and lower costs than traditional cell lines Currently being used today. These characteristics, coupled with the data from our first in human study of a C1 produced antigen, has led to the increased awareness and interest in our C1 protein production platform for recombinant protein vaccine development And production in human and animal health. Earlier this quarter, we provided an update on the 1st in human Phase 1 trial for DYA-one hundred, The data from this trial is helping to establish a safety record with regulatory agencies for proteins produced from our C1 protein production platform.

Speaker 2

We're continuing to expand the traction of the C1 platform And receiving through multiple grant applications submitted in collaboration with U. S. And other scientists globally For a wide variety of infectious disease candidates such as seasonal and pandemic influenza, H5N1 bird flu, Sudan Ebola virus, Marburg virus, RVFV, West Nile virus, Powassan as well as 2nd generation COVID-nineteen vaccine candidates. To ensure semen can produce therapeutic proteins such as infectious disease monoclonal antibodies For the appropriate quality, we've expressed a number of 3rd party monoclonal antibodies or mAbs, which were assayed by multiple independent external parties from Big Smoot Pharma to Biotech to Academia, We reported the neutralizing and binding activity assays demonstrated great similarity between C1 produced mAbs and CHO produced mAbs. The next step was evaluating these proteins in animal studies, where we observed that a C1 produced monoclonal antibody for COVID-nineteen Demonstrated comparability to the comparator, Cho produced monoclonal antibody, but no signs In June 2023, A manuscript was submitted to a peer reviewed scientific journal titled, Filamentous Fungus Produced Human Monoclonal Antibody Provides SARS CoV-two protection in hamster and nonhuman primate models.

Speaker 2

This was done in collaboration Doctor. Albert Osterhaus and several other authors. The manuscript describes the safety and efficacy results With the C1 cell produced monoclonal antibody obtained from studies in hamsters and nonhuman primates. This data is critical for our potential partners as they select cell lines to produce their commercial targets to ensure that their products The quality standards and safety profile required for clinical and regulatory development. DATIC must stay at the forefront of scientific advancement.

Speaker 2

We also have been focusing on designing better performing molecules. We've developed C1 cells to express complex proteins such as conjugating antigens and ferritin nanoparticles. The interest in ferritin based vaccines have been increasing To their safety and ability to enhance immunogenicity, nanoparticle candidates against a wide range Manufacturing challenges related to particle heterogeneity, improper folding of fused antigens, Productivity and costs still need to be overcome, and we feel that the C1 platform is uniquely positioned to address some of these challenges. We are also developing other technologies to increase vaccine efficacy and durability to improve targeting methods and new more powerful adjuvants. We've developed and are testing several antigens with the AMHC targeting system for influenza And COVID-nineteen as well as an antigen that included a trimerization domain.

Speaker 2

With our partner, Varovax, We are evaluating new and improved adjuvants with C1 produced ferritin nanoparticle antigens in relevant disease areas These advancements enable Dyadic's partners with the potential to develop more effective and longer lasting vaccines more affordably. We've continued our focus on building and sustaining longer term strategic partnerships with leading pharmaceutical companies And partners such as Janssen Pharmaceuticals, which continues to show positive results, As well as advancing commercial products and clinical development of human and animal health vaccines with RubicOne Health For the African continent and the recent production of Sealing Expressed Omicron Antigens under cGMP guidelines For potential COVID-nineteen vaccine with Epigen in India. Furthermore, in today's press release, we announced We signed a memorandum of understanding with the Foundation Biotechnipolo di Ciena or FBS. FBS' function is to perform as an anti pandemic hub with a particular focus on the development and production of vaccines and monoclonal antibodies for the treatment of emerging epidemic pandemic pathologies. Scientific development at FBS is led by one of the world's foremost leading experts in vaccine development, Doctor.

Speaker 2

Reno Rapioli. Doctor. Rapioli is known globally for his work in vaccines and immunology. Prior to his role at FVS, Doctor. Rapioli was the Global Head of Vaccines Research for Novartis Vaccines and Diagnostics and most recently served as Chief Scientist And Head of External R and D at the Vaccines Division of GlaxoSmithKline, GSK.

Speaker 2

FBS is prepared and equipped to conduct research and development, clinical study, regulatory approval, Manufacturing and commercialization of vaccines and therapeutic proteins using the company's C1 protein production platform. Discussions are also ongoing with several parties interested in the potential of C1, traditional, developed and developing countries. Our refined human health objectives include a focus on shorter term product commercialization opportunities that have less time, Cost and risk associated with development. We're continuing to improve our capability to have an internal pipeline of proteins and enzymes With commercial proteins and potential across our core verticals, whose utilization is not dependent on lengthy clinical development programs or human trials. This is expected to decrease our timeline to revenue, potential and commercialization opportunities.

Speaker 2

Earlier this week, we provided an update on one of these internal projects, namely the recombinant serum albumin. The global serum albumin market is an approximate $5,700,000,000 market, growing at over 6% a year due to the increased use across a multitude of markets in human and animal health. In the Pharmaceuticals segment, Ceramalbuin is not only being developed as a potential treatment for disease, but is currently used in product development of vaccines, these and other markets. Dyadic has the potential to produce animal free serum, albumin at competitive pricing due to our highly productive C1 Protecting our technology with a robust IP estate. Earlier this year, Dyadic received a notice of allowance to U.

Speaker 2

S. Patent and Trademark Office For patent application, whose claims cover the development and manufacture of seasonal and pandemic vaccines from the company's C1 protein production platform. This timely patent allowance comes as we announced earlier this year The Dyadic is at the forefront of vaccine development with more than a half dozen animal trials being carried out last year and additional animal trials, and other infectious diseases. There's a global unmet need for more effective and more available flu vaccines. It has been reported that the human seasonal influenza vaccine market alone is currently valued at approximately US8 $1,000,000,000 and expected to grow to over $12,000,000,000 by 2028 with multivalent vaccines leading the market.

Speaker 2

There are many similarities in the needs between the human and animal health market for vaccines and therapeutic proteins. We are leveraging our science across these core verticals. What makes Animal Health an attractive segment for Dyadic Is the margin sensitivity of this market and the significant impact and the outbreak can have on the global supply chain and potentially human health. The recognition, data and scientific advancements we are generating have not only accelerated our efforts in human health, They're translating into increased interest in our other core verticals such as Animal Health as demonstrated today's announcement. We've expanded our collaboration with fibroabric and started another collaboration with a new animal health partner on a fully funded project targeting a livestock and agenda to be produced in the C1 platform.

Speaker 2

This is why we believe the C1 production platform can be a global solution to emerging infectious disease threats and pandemic response in not just humans, but also in animal health. As we mentioned late last year, we announced that we'd achieved a record antigen production level of 10 grams per liter of a livestock antigen, demonstrating that our platforms can produce very large quantities of antigens for infectious disease. In addition to the production of large quantities of antigens, Antibodies and therapeutic proteins. These products can also be made rapidly and at low cost, making C1 A potential pandemic preparedness platform for response or stockpiling. Our 3rd vertical of alternative proteins is yet another area of great excitement for Dyadic and one which we believe also holds near term potential promise in terms of opportunity and revenue.

Speaker 2

Exploiting this segment does not require a significant departure Dyadic is continuing to dedicate resources and support for the existing and future projects Within this rapidly growing market, Dyadic has launched its TAPOVIS platform, a filamentous fungal based Microbial Gene Expression and Protein Production Platform. GAPOVIS is further designed and customized To enable the rapid development and large scale manufacture of low cost enzymes, proteins, metabolites and other biologic products for use in non pharmaceutical applications such as food, nutrition, health and wellness. One area of focus within this segment is the dairy protein and enzyme market. And we announced today initial positive analytical results The successful expression of casein proteins using GAPOBIS, our non pharmaceutical protein production platform. Growing global demand for protein enriched foods is expected to drive casein market growth, while the use of casein This further demonstrates our commitment to developing commercial opportunities that transact more than 1 core vertical.

Speaker 2

I will now turn the call over to our Chief Business Officer, Joe Hazleton, to provide a more detailed update on our Phase 1 trial progress and discuss our business development efforts across our core verticals. Joe?

Speaker 3

Thank you, Mark. I'm happy to report that the Phase 1 trial for DY-one hundred is progressing as planned. For background, to establish a track record of safety in humans for antigens produced To evaluate the safety and immune response of the BYA-one hundred COVID-nineteen recombinant protein booster vaccine In 30 healthy adults in South Africa at 2 different dose levels. There are 8 scheduled patient visits throughout the 180 day trial period With safety data being collected throughout the trial and immunogenicity assessments scheduled on 6 of the 8 visits. Dosing of all patients was completed in late February and we currently project the last patient last visit to take place near the end of August With the clinical study report being available in the late 3rd, early 4th quarter.

Speaker 3

Patients in both the high and low dose cohorts The Data Safety Monitoring Board evaluated the 29 day data for all patients and found no major vaccine related safety events at either dose level. And to date, there have been no serious and local or systemic adverse events reported. We're currently working with Rubik One Health, our South African partner to evaluate the next development phase of the DY-one hundred COVID-nineteen booster vaccine candidate pending the final results of the study and the market conditions. With the expected results later this year, we continue to validate the C1 platform That's a recombinant vaccine development and production. The C1 platform is ready for full commercialization.

Speaker 3

The increased recognition That the C1 platform is generating coupled with the continued advancement of our scientific data is leading to business opportunities across our core verticals. In addition to the new vaccine project with a top 5 pharmaceutical company in a large infectious disease market, we have expanded our licensing agreement with Rubik One Health going beyond COVID vaccines and encompassing not just human health and therapeutic proteins, but also animal health pharmaceutical products. This provides Rubik the potential for a broader number of commercializable opportunities in multiple product segments. We've also renewed and expanded our research collaboration with UVAX and this collaboration is expected to help UVAX overcome gene expression challenges using the C1 protein production platform for human health. Beyond the acceleration of human health vaccine collaborations, we're seeing increased interest and traction in animal health as well.

Speaker 3

In addition to extending our research collaboration with fibroabic to apply newly developed techniques and methods to further increase expression level of recombinant livestock antigen using C1. The collaboration with fibroabic has also expanded to include the development of additional antigens for use of livestock animal health applications. And in June, we entered another fully funded collaboration with a new animal health company to develop a different antigen for livestock animals. We continue to make great strides in antibodies as well and we believe that the C1 platform is ready for use human trials for monoclonal antibodies, bi- and tri specific antibodies, Fc fusion and other types of therapeutic proteins. The advancement of our antibody development has led to new opportunities and collaborations in human health.

Speaker 3

The MOU we have signed with Italy's Foundation Biotechnipola De Siena to conduct research and development through commercialization activities of vaccines and therapeutic proteins using the C1 platform Provide Thiadac with a strong partnership to advance development of antibodies for infectious disease through human clinical trials. Additionally, our MOU of Bangladesh's Essential Drugs Company Limited has the potential to expand the utilization of the C1 platform to facilitate research and development We are also in late stage discussions with key pharmaceutical partners to develop monoclonal antibodies for a number of infectious and pandemic preparation. While this is encouraging news, development and approval of pharmaceutical products takes years to complete, which also means that we must continue to focus our efforts on commercialization targets that drive revenue in the near term as well. Earlier this year, we revised our research and development approach, focusing mainly on those projects that have potential commercial outcomes. Examples of this revised approach is the previously mentioned Research collaboration with the top 5 pharmaceutical company to express and produce a vaccine antigen from C1 for human health, a Collaboration with a new animal health company to develop a livestock antigen and new collaborations to develop monoclonal antibodies for pandemic threats.

Speaker 3

These agreements differ from our traditional research projects and that they grant an option for a future commercialization license for use in their respective markets. We're leveraging our science across our core verticals as the need for cost effective ways to produce large quantities of recombinant proteins and enzymes exist, not just in human and animal health, but also in the margin sensitive segment of alternative proteins. To support our business development efforts across these core verticals, Thiatic is building a portfolio of proteins and enzymes with commercial potential applicable across these verticals, whose utilization are not solely dependent on lengthy clinical development programs or human trials. Last quarter, we shared the data can express human serum albumin and bovine serum albumin stably and at high levels. These types of products are analytically tested against reference samples to ensure they meet the quality control requirements for potential purchases.

Speaker 3

This is a much shorter and less costly development process than a human vaccine or therapeutic protein. Now, we are one step closer to commercialization An initial independent analytical testing of the company's recombinant bovine albumin demonstrated it is structurally equivalent to commercially available Animal derived bovine albumin and recombinant bovine albumin reference products. This puts us a step closer to commercialization and enables business development discussions with several interested companies as we are currently supplying samples to the market. These and other high value and high cost targets for non pharmaceutical applications Such as the recombinant casein proteins Mark mentioned earlier will require further development to reduce manufacturing costs to satisfy the margin requirements for the alternative protein and food industries, which is where our Adaptiveness platform is rapidly generating increasing market attention. Casein, for example, acts as an excellent emulsifier, stabilizer and thickening agent, making it very valuable for various food products.

Speaker 3

In the dairy sector, casein is crucial for cheese production and enhances the texture of dairy products such as yogurt and ice cream. In the pharmaceutical sector, casein is used as a stabilizer and excipient in drug formulations, ensuring controlled release and approved bioavailability of medications and serves as another example of our focus on targets that cut across our core verticals. To maximize Dyadic's potential to commercialize these high value targets, We entered a fully funded co development marketing commercialization agreement with FirmBox Bio to accelerate our ability to exploit the Adaptabas platform And expand Dyadic's non pharmaceutical product offerings for animal free recombinant protein applications such as food, nutrition, wellness and other bioproducts. This partnership will help further improve Adaptive's platform and will also provide Adaptive with an experienced biomanufacturing partner, Have the potential to provide our partners the ability to meet timelines, scale and cost demands for recombinant proteins and enzymes within their respective Pharmaceutical or non pharmaceutical market applications. While the future is bright, we still have work ahead to maximize and monetize the various opportunities that lay before us.

Speaker 3

And Mark and I are working on advising our strategic plan to ensure we have the right infrastructure and resources to adequately address key business opportunities across our core verticals. I will now turn the call back to Mark for some final comments on the Q2. Mark?

Speaker 2

Thank you, Joe. We will continue to leverage our decades of commercial scale industrial knowledge and experience to accelerate the development process across all our core verticals. In parallel, we remain fiscally responsible with our research development spending and being strategically focused With our partnerships and collaborations to help fund advancements of our science in critical areas, we believe that our C1 platform is well positioned to be an alternative platform in developing next generation vaccines, antibodies and other therapeutic proteins for public health in future pandemics. And we are happy to see C1 is gaining more recognition globally within academia, government and industry. We've refined our business development objectives to focus on core areas where our technologies can have the greatest impact, and we're evaluating new opportunities aligned with our verticals in targeted markets of high potential return such as alternative proteins.

Speaker 2

With that, I'd like to turn the call over to our CFO, Ping Rawson to run through our financials.

Speaker 1

Thank you, Mark. Thank you, everyone, for joining our call today. I will now go over our key financial results for the quarter ended June 30, 2023. You can find additional information in our earnings Press release and Form 10 Q, which we filed earlier today. Research and development revenue and the license revenue for the Q2 of The increase is primarily due to higher individual contract amounts on certain research funding compared to the same period a year ago.

Speaker 1

Cost of research and development revenue for the Q2 of 2023 increased to approximately $793,000 compared to $411,000 for the same period a year ago. R and D expenses for the Q2 decreased by 49.9 percent to approximately $918,000 compared to $1,831,000 for the same period a year ago. The decrease in R and D expenses for the quarter ended June 30, 2023 versus the same period in 2022 Was due to the winding down of activities of contract research organization and consultants to manage and support the preclinical And clinical development as well as a decrease in cGMP manufacturing costs as the company completed the dosing of Phase 1 clinical trial of the CY AI-one hundred vaccine candidates in February 2023. G and A expenses for the 2nd quarter decreased by 18.1 percent to approximately $1,403,000 compared to 1,700 and $14,000 for the same period a year ago. The decrease in G and A expenses for the Q2 of 2023 Comparing to the same period in 2022 includes decreases in legal expenses of 103,000 Management incentives of approximately $81,000 business development and Investor Relations expenses of $75,000 Insurance expenses of $37,000 and other decreases of $15,000 Other income for the quarter 6 months ended June 30, 2023, was primarily from the sale of our equity interest in Alphazyme LLC.

Speaker 1

Net loss for the Q2 of 2023 was approximately $2,153,000 or $0.07 per share compared to $3,288,000 or $0.12 per share for the same period a year ago. Net loss for the 6 months ended June 30, 2023 was approximately $3,109,000 or $0.11 per share compared to $5,780,000 or $0.20 per As of June 30, 2023, our cash, Cash equivalents and the carrying value of investment grade securities, including accrued interest, were approximately US10.2 million dollars compared As the company's existing S-three shelf registration will be expired on August 25, 2023, We filed a new registration statement on Form S-three, which contains a base shelf prospectus with the SEC. Meanwhile, we have notified Jefferies to terminate the open market sale agreement with respect to the ATM program effective August 25, 2023. There have been no sales made under the ATM program with Jefferies. The filing of the shelf registration statement is intended to provide us with the greater financial flexibility to access the capital markets in the future should it become in the best interest of our shareholders.

Speaker 1

We reiterate our projection for annual cash burn of 2023 will be in the range of US6 $1,000,000 to US7 $1,000,000 Based on our current plan, we expect that our existing cash balance will be sufficient to fund our operations into mid to late With that, I will now ask the operator to begin our Q and A session. Joe Hazleton will join Mark and I to answer your If time permits, the operator will allow additional questions from those who have already spoken. Operator?

Operator

Thank you. We will now be conducting a question and answer A confirmation tone will indicate your line is in the question queue. First question comes from John Vandermosten with Zacks. Please go ahead.

Speaker 4

Thank you, and good evening, Mark and Joe. Let me start off with a question about the It's Jim Albin in. I mean, that sounds exciting to me as it sounds like it's closer than most of the other assets that you have or arrangements that you have to generating revenues. What remains to be done before that could be product related to that could be sold? And what is the revenue potential there?

Speaker 4

I mean, I know you outlined it's about $5,000,000,000 How would that kind of flow through Dyadic, assuming you're able to sell that?

Speaker 2

And Joe, you want to take that?

Speaker 3

Yes, sure. So John, it's a great question. So there's a couple of steps left For us to fully commercialize and obviously from a licensing standpoint, we're entertaining those options today. But for our product that we would Basically full stability and cGMP requirements that we would need to basically make sure we have a certificate of analysis that performs exactly like what's currently available today. So there's still some development work that does need to be done for us to do it ourselves.

Speaker 3

But from the licensing standpoint, we're actually in those discussions today.

Speaker 4

Great. And I guess, Just the second part of that question was related to the revenue potential. I guess, and what I think the albumin market is pretty diverse. There's a lot of different uses for it, as you guys had mentioned on the call. What seemed to be the most likely And markets for the product that you might produce?

Speaker 3

R and D as well as diagnostics would be the quickest and easiest market Those are the areas because they can be made in a wide range of grades from research grade all the way through cGMP. So it really is a wide range of markets that we can get into. It's just a question of what our potential customers want or what we would potentially want to do ourselves.

Speaker 4

Great. And regarding the Bangladesh collaboration, there is Certainly a vaccine for that. Is that something that they can produce and then you could help them? I'm just wondering, since the need is so tremendous, It seems to me that they might be able to get something approved if they had something, right? I know that the resources there aren't what they are in other countries, What might be done there in terms of taking advantage of potentially more accelerated approval because the need for something is so Dyer.

Speaker 2

Yes. So let me take that call. So I've actually been in contact with Bangladesh on that very issue. I've also been in contact with 1 of the major pharmaceutical companies that produces a dengue vaccine that They have registered but have not registered in the U. S.

Speaker 2

And so there's opportunity to develop a dengue vaccine using C1. But dengue, as you may know, is a very difficult vaccine to not to produce necessarily, but to design. And we've been in discussions for at least a year with certain companies, whether they be in India, not just Bangladesh, In the tropic regions where this is a growing problem. And unfortunately, this problem is probably going to be heading into the U. S.

Speaker 2

As the heat And the temperature is rising up this year. As you can see, temperatures rise dramatically in the United States and there are different Diseases that are popping up here that haven't been here before. So what we've learned from the pandemic is, if we don't control it, it's coming home to roost. And so we've been working with different developers because one of the benefits we have as a platform company and having worldwide access, Whether it be Europe, India, Bangladesh, China, Korea, you name it, Brazil, we're talking to people that have these issues And we're talking about to scientists that have ideas. And as we've talked about earlier, some of those ideas are being turned into research Funded projects here in the U.

Speaker 2

S, for example, bird flu, which as you may remember is somewhere between 20% 30% deadly. So if that hops into the U. S. Or into human beings, we're already getting prepared for that. We've got 2 different bird flu, H5N1, ferritin nanoparticle vaccines in development with Virovax that are now in animal studies.

Speaker 2

So in the next 60 to 90 days, we should get our first readout to find out how well those are doing. And we think with the ferritin nanoparticle, it will induce Higher immunogenic protection, much higher neutralizing antibodies, cellular response and of course can be made Very, very large amount, very low cost. But dengue is something that there's 4 different antigens that go into that Vaccine and they shift. So there's different people with different strategies and we're having those discussions with some of the world's, I would say experts in that space, including conversation with the Bangladeshi government.

Speaker 4

Okay, great. Thanks,

Operator

Your next question comes from Dick Williams with Williams Research Group. Please go ahead.

Speaker 5

Hi, Mark. Hi, Joe. I just have a color type of question for you, Mark. In terms of the BARDA situation and funding of grants that they're in process of doing through the summer months For smaller grants, I don't know what they consider to be smaller grants, but then very large grants Starting, I guess, it's September 25 ish. So we, I presume, have started or have Have we done anything in that area?

Speaker 5

And what would we expect the timeframe to know what the government going to do and who they're going to give these grants to? And then secondarily, do we expect to participate in the larger grants So that they'll be giving out after September 25th, if you can give color on that.

Speaker 2

Yes. First of all, we have submitted the smaller grants, 1 or 2, maybe 3 of those in combination with different universities and scientists Here in the U. S. For BARDA on that program, which is the advanced COVID-nineteen, but also for other diseases as well. And we're also in discussions with BARDA and FDA and others on how we can participate potentially in larger grants, As you pointed out, whether those are actually going to come September 25th, or I think that's the date you have to file by September 25th, Not actually going to be announced by then.

Speaker 2

But there is a lot of funding and there's actually BARDA reaching out to certain people and telling them to get a hold of us. So stay tuned and we'll see what happens with some of those conversations we have ongoing.

Speaker 5

Okay. Is there any approximate timeline when they're finished with this program that they're doing And all of these grants are handed out. I mean, when you we talk about larger grants in our arena, a larger grant may be a $20,000,000 grant. And of course, in that arena, they've been giving out $1,000,000,000 grant. So when do you think this So, Ares going to conclude and we'll know if we're a player in it and we've got the grants or we're not a player in it.

Speaker 5

Any ideas to their timing?

Speaker 2

I don't think they've given us any specific timing ideas, but it's kind of like you pointed out, it's a rolling program. And so we can potentially be in the 1st wave, 2nd wave, 3rd wave, 4th wave. But we're in discussions with both BARDA and FDA. So you can remember, our function and role in that is to produce the antigens in large amounts at low cost rapidly And get the platform used as broadly as possible. All the other funding is going to be going virtually to other people.

Speaker 2

So whether we get it direct While we participate in it, it's virtually the same thing. Ultimately, a commercial product that gets to the clinic will have to be paying us Access fees, milestones and royalties on that on our C1 technology. So whether that be potential bird flu, dengue, A COVID-nineteen vaccine, monoclonal antibody for things like Marburg, Ebola or other things. So there's a variety of things that we're working with and in discussions with on a variety of fronts with big pharma, small biotech, FDA, BARDA, etcetera, and including obviously the new relationship we just announced Joe and I talked about in Italy and the gentleman there is world renowned and they're Funded by the Italian government for pandemic preparedness for vaccines and antibodies. In that case, we're actually going to be enabling with the technology To develop these things in house that they can move forward in the preclinical clinical studies, hopefully up to Phase 2b

Operator

Please go ahead.

Speaker 6

Hi, good afternoon, everyone. Thanks for taking my questions. So Mark and Joe, could you speak to the Turning fate of the Janssen arrangement and what's been happening there? Thanks. Yes.

Speaker 2

I mean, we're moving and advancing forward with Janssen. We're working on 2 different proteins. One is a monoclonal antibody and one is bispecific. I can't actually tell you what the disease state is because that's confidential. And we've made very good progress, and we're in discussions with Janssen to potentially accelerate that program and even provide More resources so that we can get that done sooner and potentially hit our milestones faster and then they can get the platform embedded into Janssen sooner.

Speaker 6

So the I guess the keyword is Patience, but as the months go into quarters and years, I mean, what is the your first shot at really some Substantial breakthrough as far as the production item. What's your best guess?

Speaker 2

Well, first of all, I think we've had a substantial breakthrough and major milestone where a human being showing safety And immunogenicity with an antigen for the first time produced from C1, that's a gate opening item for big pharma, For governments, academia, it's driving more and more input, driving more and more program opportunities. So I think we've already hit one of those points. Now the question is, how are we going to monetize that? Yes. That's

Speaker 6

exactly what I'm asking you.

Speaker 2

Yes. What you have to recognize is, to be honest with you, we've excelled on the science. We've exceeded even our own expectations Of the transformation of the technology, the C1 technology for pharmaceutical use in recombinant protein vaccines, We're light years ahead of people like Novavax and Sanofi's Beclavirus or in sick cell platforms. So now the question is, now that we're human beings getting data and by the end of the last quarter this year, we should have the final report And the final data is complete. And right now, people are seeing the data within the industry, the 29 day data.

Speaker 2

We have 90 day data coming up soon. I mean, we're already through 180 days with patients on a low dose and almost any day in the high dose. So the safety of the platform is being proven for the first time ever. So now it's going to be who wants to step up and get their hands on this For what rights, what access, what fields, what applications, what areas, in addition to The many things we really have going on all over the world. So if you think about it between Rina Repayoli, which if you look him up, and he's now, let's say, helping us join not just for his own use, But to approach the industry in general to solve the problem of human health or human equity because there is no human health and equity outside the, let's say, the developed countries.

Speaker 2

And so we're getting the people in the world that are the experts who've taken things through the clinic multiple times with big pharma now jumping in and saying we want to help and including some of the major pharmaceutical companies we're in discussions with, Like the top 5 pharma company we're working on a vaccine with, if they're fully funded, that could be the major breakthrough because if we can develop that and show that that It's functionally equal or better and can produce faster and larger amounts at lower cost. As Joe pointed out earlier, there's a commercial assay Commercialization back into that already baked into the agreement. So that might be the first one That cracks the egg open, but there's a variety of other ones that could happen in between.

Operator

Next question, Tony Bowers with IntraAct. Please go ahead.

Speaker 5

Hi, Mark. I think With COVID now not so much in the news, I mean, that was a huge distraction, but a lot of pharma companies got very fat and happy off of The money they made on that program. You've talked to people for a lot of years about the advantages of C1. Do you think that There's urgency or complacency versus a year or so ago. And is there funding?

Speaker 5

And Do you think that it's going to be overseas where somebody gets ahead of the pack and then everybody else has To get on board. So whether it's the South Africans or the Italians, somebody will move, show that they believe,

Speaker 2

Yes, but I don't think it's just economic advantage. I think it's life and death. I think that the people are missing here is quite frankly, I won't tell you who, but I had a call This week with a Zoom call with 5 or 6 people, senior people at one of the big, let's say, biopharmaceutical supply houses, And they said the thing that they're like shaking their heads saying, this is just incredible what we've accomplished to date with the science. And we're talking to them about helping To expand the market access, we need obviously the horsepower of one of the big players to come in and help us accelerate adoption and use. And we have that now with the foundation of Biotechna Polo in Italy, that memorandum of understanding and we're in discussions and Contracts have been shared back and forth on drafts, providing we get that signed, which we're pretty confident we will.

Speaker 2

That group and that gentleman, He has contacts into everybody. I'm not going to name names, but you can go from the top to the bottom and everywhere in between in every country Virtually on the planet and he has to reach into there. So he's going to bring industrial credibility because he wants to do the same thing we do. He wants to make sure people have access. It's affordable.

Speaker 2

This technology can be used in countries for distribution. You don't need the Co chain storage, you can produce it at a price that actually you can not bankrupt the countries by doing it. And so I think we've got a lot of momentum going. We've got momentum with the FDA, with BARDA, we've got in Europe, In Bangladesh and India, so I'm not quite sure. There's a few other continents where South America we're working on.

Speaker 2

That might be the last frontier, I don't know. But there's things happening everywhere. And I would say that We're excited about where we are. We're excited about where we're going, but we're more excited about what we have. And the next step is Perfecting the antibody program because the vaccine platform, as Joe pointed out, it's prime time ready to go and it's being applied.

Operator

Thank you. I will now turn the call over to Dyadic's CEO, Mr. Emil Farr for closing remarks.

Speaker 2

Thank you, Stacy. In 2023, we're seeing the impact of our Phase 1 further validate The C1 platform for pharmaceutical use in human and animal health. We're also beginning to realize the investment and the DAPA BIS platform and alternative proteins. We remain focused on improving the value of Dyadic for the life science industry, which will in turn improve value for shareholders and improve access to affordable vaccines and therapeutics globally. We've refined our focus and revised our business strategies to exploit existing and new commercialization opportunities in the near term, while enabling us to fulfill our mission as a global biotechnology company to improve the way we feed, fuel and heal the world.

Speaker 2

I want to thank you for joining us on today's Q2 2023 conference call, and we look forward to keeping you updated

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

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Earnings Conference Call
Dyadic International Q2 2023
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