Q1 2021 Dyadic International Inc Earnings Call
[music].
Good evening and thank you for holding welcome to Dyadic International's first quarter 2021 financial results conference call.
Currently all participants are in 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 may 13th 2021 I would now like turn the call over to MS. Ping Rossum Biotics Chief Financial Officer. Please go ahead.
Thank you operator, good evening and welcome everyone to the Attic internationals first quarter 2021 financial result conference call.
Earlier today that it issued a press release announcing financial results for the first quarter ended March 31st 2021, and the recent company highlights.
You may access our press release and form 10-Q, and on the investors section of the company's website and that its dotcom.
On today's call on our President and CEO, Mark <unk> will give a review of our business and corporate accomplishments for the first quarter of 2020, one, including a brief summary of our research and business development effort.
I will follow with a review of our financial results in more detail. We will then hold a brief Q&A session. Our senior management team, Matthew Jones, and Rolling and should that will join Mark and I put a question to put a Q&A session.
And this time and let me inform you that certain commentary made on this conference call maybe considered forward looking statements, which involve risks and uncertainties debt and other factors that could cause biotics actual results performance and scientific or otherwise or achievements to be materially differ.
And from those expressed or implied by these forward looking statements.
That expressly disclaims any duty to provide updates to these forward looking statements, whether as a result of new information future events or otherwise.
Participants are directed to the risk factors set forth and Biotics reports filed with the SEC.
It is now my pleasure to pass the call to our CEO Mark <unk> Mark.
Thank you Ping welcome everyone and thank you for joining us.
We have ushered in a new year with substantial progress on our R&D initiatives.
I would like to highlight first some of the exciting progress we've made on developing new COVID-19 vaccine candidates.
We enter into nearly a year and a half since the start of the COVID-19 pandemic.
Yet to coronavirus continues to cause worldwide disruptions and tougher.
Although many countries, including the U S and been able to ramp up its vaccination efforts and it's clear that there is still significant global vaccine inequality.
It's becoming increasingly apparent that there were a critical bottlenecks and the manufacturing and supply change. If these vaccine products that are hindering the average ticket populations.
<unk> and save lives.
And if global efforts to stop the spread of COVID-19 are to be successful and it is clear that there needs to be more efficient affordable and flexible ways to develop and manufacture vaccines and drugs globally.
We believe as do a growing number of scientists.
Our hyper productive C. One protein production platform technology.
And ideally suited to help me to as global demand for Altegrity.
And as such we've been working tirelessly on applying our Seo and technology to speed up the development of new COVID-19 vaccines and it has the potential to be more affordable and accessible.
We were pleased to partner with leading scientists government agencies and pharma companies worldwide to expedite the application of our technology and multiple COVID-19 programs.
We believe our COVID-19 partnerships stem from our success and several animal studies to demonstrate its human cells and engine.
And aired to efficiently and rapidly produce large quantities of safe and effective protein based products.
Our Sars COVID-19 two SRV D vaccine candidate <unk> 100 has been evaluated and 10 animal studies.
Demick industrial and governmental R&D groups globally.
Including the Israeli Institute for biological research and scientists from Zappy.
Based on compelling preclinical data, we are now moving towards and anticipated first in human phase one clinical trial to evaluate its safety and preliminary efficacy.
We've engaged a contract research organization share two O to manage and support its preclinical and clinical development.
Moving D Y AI 100, and did a clinical stage marks a major milestone for the program.
First it's critical to emphasize that the fight against COVID-19 is not over.
But the risk take over 19, maybe come and endemic disease and issues with vaccine distribution and potency and there's still a significant need for next generation vaccines that can bridge this gap for protecting the global population.
And our clinical trial with <unk> 100, and May serve as an important proof of concepts and next generation of COVID-19 vaccine candidate for emerging variance and Furthermore, we believe D Y a 100 has the potential to be more affordable and highly potent and solution to serve this global need.
And although this will be a clinical trial for our COVID-19 vaccine candidate and its value goes well beyond that.
Demonstrating the D Y a 100 can be produced under cgmp conditions and is safe and well tolerated and humans serves as a proof of principle for this human platform itself.
We anticipate that by Derisking, our Cmos technology, and demonstrating that the Siem one platform has strong potential to safely produce proteins for use in humans and we can accelerate its adoption use and commercialization, but a biotech and pharmaceutical industry globally for a number of biologic drug and vaccine.
Opportunities.
And as such we look forward to bringing D Y AI and 100 and phase one by the end of the year. Following the completion of our ongoing animal G. L. P toxicology study.
And as Sars COVID-19, two continues to mutate into different variance, where and engineering additional C. One cell lines to producers koby to variant antigen from monovalent and multivalent vaccine candidates.
We have already successfully expressed and south African Brazilian and U K variant and engines at highly productivity levels and stability and.
And we will continue to work towards developing both our BD antigen and potentially full spike protein for additional variance importantly.
Coming increasingly clear and emerging variance are here to stay.
And it is expected the new variants may appear annually.
Similar to a seasonal flu and consequentially potentially require annual even semiannual booster shots.
Multifamily vaccines, we've had the potential to confer a broader efficacy against Sars COVID-19 two brands, maybe and important approach for future efforts and managing COVID-19 and future Pandemics.
Towards this and we have expanded our fully funded vaccine development partnership with <unk> to accelerate the development of multi valent COVID-19 vaccine candidates and our boosters to immunize people against multiple existing or future service coffee to variance.
We were pleased to partner with meritocracy and understands firsthand at sea one maybe the most realistic technology to develop and manufacture affordable multifamily vaccines rapidly and and lower costs and larger volumes.
Yeah.
The transformative potential she wanted to solve key challenges related to manufacturing productivity and speed and cost was highlighted in a recent K O L Fireside chat.
And we're grateful to have the support such as team thought leaders, who can attest the remarkable potential let's see I wanted to provide a game changing advance and global access to the extent and vaccine and drugs from major health challenges, such as COVID-19 and beyond.
I strongly encourage you all to listen in on this panel discussion and by watching the replay webinar, which is available on our website.
In parallel to our COVID-19 initiatives, we remain focused on advancing C. One for a number of other human and animal health applications.
During the first quarter, we were pleased to enter into a fully funded collaboration with total tree scientific to develop a number of recombinant protein growth factors, which may play a critical role and tissue development and healing, including regenerative therapies.
Manufacturing human girl factors, and large scale and and affordable cost.
It has been an industry challenge and.
As such we are excited to apply our Seo and technology to help overcome this hurdle and a significant new commercial opportunity.
Our Seo and technology continues to be sought out by many other pharma and biotech companies looking for a better manufacturing solution.
Ongoing collaborations such as with hang two and grew medicine, the largest pharmaceutical company in China by market cap. We continue to report promising results for biologic drugs of commercial lines and interest.
We are particularly excited about the promising potential of several candidates for bi specific antibodies and all.
And if a significant better benefits over conventional monoclonal antibody therapeutics.
For these bispecific antibodies and other biologic drugs. She won has consistently achieved high productivity levels that support advancing several of these programs towards clinical development.
And for our efforts and animal health, we were pleased with the positive results from animal studies evaluating the safety efficacy and protection Oh C. And one produced antigens are highlighted and Zap. He's final stakeholders meeting in February.
The C. One platform was selected by Zappy to produce recombinant antigens after demonstrating far greater antigen and productivity as well as human cells, and and tech sales and other cell lines and next leading expression platform.
For both Smile and Berg virus S. P V.
Daily fever virus RV F E.
Notably C. One produced S. P V antigen is demonstrated and only hyper productivity.
Drunk protection of cattle sheep and mice from the SPV virus.
During the first quarter Zappy expanded its program with dyadic by providing additional funding to see when research and development efforts as well as you conduct potential additional animal studies using S. P V and our V. F. S antigen is produced from San Juan.
These ongoing animal studies are intended to demonstrate further commercial scale viability and see when produce SPV and our V V antigens.
As part of the expanded program J P is conducting additional studies to further optimize the use of C. One two British recombinant protein sub unit nanoparticle vaccines.
By producing larger quantities and lower cost.
Preliminary results have been very encouraging and supports simo and potential to improve productivity of nanoparticle vaccines.
And additional collaboration with a top animal health company is demonstrating she gets successful production of two different antigens produced from C. One for a potential vaccine for and acute respiratory disease and birds, we expect and in animal Challenge study to evaluate protection provided by these vaccine candidates will enter.
She ate and June of 2021.
A global co development partnerships, such as with Zappy total tree, many talks and others highlighted today drive access to broad commercial opportunities and large and growing human and animal health markets.
Further these partnerships provide robust scientific data and complements complements our internal development efforts.
As our current R&D efforts continued to demonstrate its C. One is the versatility to efficiently and rapidly produce large quantities of more affordable protein based products.
Expect a growing number of companies will seek our C. One platform to address manufacturing challenges to cost effective and flexible scale commercial production.
We believe these clear advantages coupled with the support of a growing number of partners key opinion leaders and subject matter experts will position our C. One protein production platform and.
As a leading solution for more affordable and accessible therapeutics and vaccines worldwide.
Lastly, during the first quarter, we added Patrick Lucy to our board of directors, we look forward to benefiting benefiting from his wealth of experience and development adoption and commercialization of cell lines and the biopharmaceutical industry and we work towards commercializing our Cmos technology.
Looking ahead to the remainder of 2021, we expect to achieve a number of milestones.
Notably our first vaccine candidate D Y AI 100, and we've initiated our animal GOP toxicology study ready last month.
And we look forward to progressing toward first in human phase one trial by the end of the year.
After generating a phase one data, we expect to submit and I M D.
We also expect that our extensive number of collaborations continue to generate robust scientific data and highlights the broad potential impact of our sealing platform and diverse animal and human health applications.
We look forward to updating you on these accomplishments as we can continue to work tirelessly to advance those human platform to meet the global need for rapid safe effective and scalable therapeutics and vaccines and.
As always I want to extend and my thanks to our employees our partners for their commitment and dedication during these challenging times I.
I would also like to thank our shareholders and our board members and their continued confidence and support as we work towards bringing more affordable health care solutions to global population.
With that I will turn the call over to pain for a financial update.
Thank you Mark.
In addition to the financial results I will discuss now you can find additional information in our form 10-Q, which we filed earlier today.
Our cash cash equivalents and the carrying value of investment grade security, including accrued interest well approximately $27.4 million at March 31st 2021, compared to $29 $2 million at December 31st 2020.
Research and development revenue for the quarter ended March 31st 2021 increased to approximately $461000 compared to $315000 for the same period a year ago.
Cost of the research and development revenue for the quarter ended March 31st 2021 increased to approximately $391000 compared to $278000 for the same period a year ago.
The increase in revenue and pass on research and development revenue for the three months ended March 31st 2021, reflecting the increased number of ongoing research collaborations two eight compared to two five collaborations for the same period a year ago.
Yeah.
R&D expenses for the three months and at March 31, 2021 increased to approximately one year on $808000 compared to $755000 from the same period a year ago.
The increase primarily reflected phase one clinical trial costs of the why AI and 100, and COVID-19 vaccine and the amount of $882000 and the additional cost of $159000 related to our other internal research project.
G&A expenses for the three months ended March 31st 2021 decreased <unk>.
6% to approximately $1.554 million compared to 1 million and $653000 for the same period a year ago.
The decrease principally reflected reductions in travel and rent expenses of $65000 insurance and other outside services of $47000. Other decrease of $30000 offset by increased and Eagle expenses of $43000.
Interest income for the three months ended March 31st 2021 was approximately $26000 compared to $168000. What are the same period a year ago.
The decrease was primarily due to the lower balance of held to maturity investment securities and the less reinvestment as a result on the decrease in interest rate.
Net loss for the three months ended March 31st 'twenty, and 'twenty, one with approximately $3 $3 million or 12 cents per share compared to $2 $2 million or eight cents per share for the same period a year ago.
Looking forward, we maintain our guidance for our total cash burn for 2020, one, which we expect it to be in the range of 10 million to $12 million.
Inclusive of the phase one clinical trial and our other ongoing internal research projects. We believe we have sufficient funds to provide the working capital needed for our research and operations for the next couple of years.
With that I will now ask the operator to begin our Q&A session Doctor Rolling Shellac, and Matthew Jones will be Jonny, Martin and I to answer a question each.
Each caller will be allowed one question and one follow up question to provide all callers and the opportunity to participate if time permits the operator will allow additional questions from those who have already spoken on.
Operator back to you.
Thank you if you wish to ask a question. Please press star one on your telephone and wait for your name for the and asked if you wish to cancel your request. Please press star two.
If you're on a speakerphone please pick up on one set to ask a question.
Your first question comes from John Bender, and I stand with Zacks investment Research. Please go ahead.
Alright, good evening, and let me just start off with a question about our vaccines.
Serum Institute as one of the one of the organizations are working with and I'm wondering you know with the crisis and India has there been any further discussions with them to perhaps.
Work on some things to help out with that I mean, I know, there's a very long timeline, but given the severity of the crisis and the need for a lot of vaccine, perhaps that's a weighted to advance the conversation.
Yeah. Thanks, John.
Sam I think he has their hands full on just trying to make the astrazeneca on vaccine.
We are in discussions with other parties and India and other parts of the world to help out and.
We're having those discussions and we hope one or more of those would turn into something.
And and the fruition of moving to see one vaccine and the humans to help and terrific situation and the world facing on a global basis.
Okay and.
And I noticed you guys had expanded the agreement with IV Biologics will that include more equity as part of that and and maybe you can provide a little more detail on on how that will expand as well.
From what you know, but that that's a great idea and I'm a great example of how we take initial proof of concept collaborations and turn them into money.
And a new opportunity because no that's not a.
Fee for stock that's a fully funded program. It is a <unk> antibody and has a potential for infectious disease and different diseases and COVID-19.
I think people are starting to recognize that this one technology platform and addition to obviously potentially helping out and COVID-19.
Can help prepare for a variety of almost unlimited number of infectious disease and treatment. So I.
Hopefully that answers your question and it's a fully funded project and one that we're excited to expand the breadth and scope of our clients. He won for these infectious disease treatment.
Treatments that are going to be needed.
Your next question comes from David Schneider with private Investor.
Okay.
Hi, Thanks for taking my questions I have two the vaccine for birds and this for some.
Disease that affects some pet.
Pet debt.
People have like parents or was it for some burden and the wild.
Hi, David No. It's for animal health, it's for a huge unmet need and it's a vaccine that people have tried to make and the past couldn't make it and affordable price for chickens.
And we think that.
And there's a lot of these things and I'll turn the woods.
Yeah, sorry, yeah, and I think there's more chickens around and our pet parents and so that's very true [laughter] well I think there's I think there's a lot more chicken and a lot more collars and a lot more other animals and there are people. So that's true.
And.
And regarding the COVID-19 vaccine.
You know are the U S taxpayer.
You know paid for well how I view it most of the fixed costs.
And as a COVID-19 vaccine.
You should have all been geared and shares of our Madera and a stock because we basically huh.
You know it came it came out of our our our checking accounts.
But because of this.
This is a little bit sarcastic and she can tell but because their fixed costs have already been paid by the U S taxpayer Hum.
And the economic argument for using C. One has the platform.
For COVID-19 vaccines.
There's a little bit hurt by that.
And because we already paid for the fixed costs. So they can crank out billions of doses as well as the other players that are already out there. So can you just maybe talk about her.
Yeah first of all of the pandemic.
And hopefully will be the last one we ever see but it's not likely.
And some experts and the next are gonna be even let's say, even worse shape and I think there was an article out on.
On a comment made by Scott Gottlieb net mrna vaccines work this time around but they're not going to work for all these different types of infectious disease.
So second of all as a booster shot one of the theories that people are working on now if you've been watching the news and research is what's called a heterologous boost of DNA prime and a protein boost where.
You take somebody's initial vaccine and boosted with a different vaccine.
And I think that plays into our hands, because we have a recombinant protein vaccine that can be either a sub unit vaccine or a nanoparticle potential vaccine. It's more I would take concentrated for the receptor binding domain or neutralizing antibodies.
Yes of course and during their subsidize they've got a lot of money and the bank and the and you know I believe we can produce far more heartland for a much lower cost.
But we're really not aiming at the moment for the U S hasn't and potential boost here and on an annual basis, but also the rest of the world has a crying need we're not paying too.
And the $30 a dose they can't afford it it's not sustainable and America, let alone and Africa, Bangladesh or India or and.
A variety of other countries in South America.
Your next question comes from John <unk> with Zacks investment Research. Please go ahead.
Alright, Thank you again so.
So and the press release, you mentioned the University of Oslo, and fluids of study and I was looking at that comparison that that was and the a slide deck and and.
What's behind I guess the.
Better performance of C. One versus backlog virus I mean is it is it is it.
Better purity isn't more consistent output is it maybe like oscillation or some other characteristic of what you know what's the driver there for the better efficacy.
Well you know, we don't know exactly what the driver is we think it might be to constellation's unique advantages and a more human like structure.
Although the guy can produce from C. One however, it's not exactly human but close enough that you gave me and the immunogenicity benefit but.
But we don't know that we just know this is the second time around.
And as you know we we already proved once we can make hemagglutinin and at very very low cost.
And even more effective.
And actually in that case with Sanofi, we use and one third of the amount and you had a better result, and their mice trials.
So and it looks like as a potential producer of a flu vaccine.
And again like all other vaccines that we've seen so far safe protective effective low cost. So again you know you can maybe you can combine the COVID-19 vaccines, where the flu vaccine is one of the approaches people are discussing and doing so.
The good news is it works and we can make a lot of it.
And it's it and that and that test and it did better obviously on another question on kind of a bigger picture question on on vaccine production.
I think I've heard anecdotally I can't cite any sources, but that is kind of squeezed out other other production or other things. Although you know we have enough vaccine here and the U S and.
And any evidence of that that you've seen where production of.
COVID-19 vaccine has taken up so much resources that you know, we're not getting other things that we need.
Yeah, I think during the K O L. One of the scientists had mentioned and that's a that's one of the problems are people are focusing on producing COVID-19, vaccines and Lou or potentially other vaccines that could actually impact human health for for decades to come so again, and the and what we really need and a more efficient.
To produce proteins, whether that's a recombinant vaccine for infectious disease or other treatments and we believe it's C. One is more horsepower, it's more productive with gross fast and it can be scaled quickly and can be grown using single use or stainless steel bioreactors the raw materials to use this.
There are not bottleneck because they're available locally.
And there are they're cheap there are abundant.
And you know the one thing that you can remember when we designed the D Y AI and 100 vaccine we had a goal in mind and goal in mind. There was they have safety efficacy and protection, but also to be able to produce.
Millions of doses of vaccines. So we chose the raw materials very carefully we could've chose other adjuvant and but we chose and Alan because it's been around for decades, and it's proven it's safe and the first time, we go into human beings. We wanted to make sure that we got safety and preliminary efficacy because that's the goal of that.
Phase one trial was always the goal. It was the first thing we wanted and obviously, we can launch and help and we should be able to do and we hope to be able to it and opportunity.
Is is COVID-19 vaccines for dinner and larger volume more affordably for other populations.
Critical need.
And of course for the booster shots, but the primary goal here is to prove safety and efficacy of this platform, which we believe is you can open up the doors, even wider and.
And we're currently inundated with opportunity and it's been a you know hoping to flow opened the floodgates, even further and wider and deeper once we show safety and efficacy.
And this first phase one clinical trial or even potentially in the middle of it and when we start getting the preliminary data.
Okay, Great. That's that's all from me thanks.
Okay.
Your next question comes from really all day with Hammock investors. Please go ahead.
Yes.
Mark what happened to the program with Frederick Lab, and then I have a follow up.
Yeah, well again, which we've mentioned in the past and we made a product. We were successful on expressing was he won we sampled them and they've put in and freezer and are concentrating and other things and.
And what happened to it we don't know it's like a black box.
So.
Now Unfortunately, we have no idea what they've done with it and we're actually trying to find out what they've done with it but I think they're more focused on getting out more vaccines.
The ones that exist today and tomorrow.
Tomorrow, but I think the good news is they've seen the power of C and one firsthand.
Okay, and also have you applied to BARDA or warped screen or any money.
Well, we have obviously spoken of BARDA and works Pete and I, you know I can't really getting to know the intimate discussions but.
And of course, they are fully aware and in fact, you know and we've actually been told by them and the past hey, they understand the power of the speed and the cost advantages, but and we're a small biotech company versus a politically and big boys and.
And I think they chose to give the money to the big boys and.
Think about what we're going to do and the future, but one of those programs and we talked about the one with a high day biologics is actually being sponsored by the U S government.
So we're seeing more and more interest from the U S government, whether it be the N. A H R D O D or DARPA or HHS and potentially even Barbara BARDA.
So hopefully they'll be more funding coming but we don't know.
Your next question comes from <expletive> Williams with Williams resource Great. Please go on.
Hi, Mark.
Hey, <expletive>.
Obviously looking at the landscape of all the things that you're doing and everything connected to say one and then there's a myriad of opportunities obviously significant opportunities assuming efficacy and safety and again you have a.
Pretty good inkling of that at some point to maybe to the middle of the phase one trial or even sooner.
Can we be unrealistic and thinking that.
And that we could have a a license agreement with a big pharma or a biotech by the end of this year.
On the answer to that is yes, and the answer is whether it be COVID-19 related and animal health related pharmaceutical related cooled fact related or all of the above.
Are any of those things could happen by the end of the year and he will who will find out and see but they're all possibilities of course and the one thing you got to realize is if this disease sticks around and people need boost.
You know we're there.
So once we prove safety and efficacy and you got to realize we ran over a dozen animal studies cattle sheep mice and then of course, all the animal studies last year and the with the COVID-19 Derby D. C. When produced vaccine candidate.
So we're in the middle of our toxicology study today. It was reported that three of the three shots from the mail have already been given.
Two shots on the female so on the next two to three weeks, we should have a good indication, but so far it looks as expected and safe.
So we don't expect any issue with safety and and all the animal studies weaker we did or.
The majority of them, we elicited significant neutralizing antibody. So we expect to see high levels of neutralizing antibodies and we expect to see safety, but our fingers crossed that we saw on the animals will be that way and the humans. So.
Okay. That's all I had.
Yes.
Thanks.
Once again, if you wish to ask a question. Please press star one on your telephone and wait for your name to be announced.
And we'll just pause for a moment to allow question I saw on to the queue.
Okay.
Your next question comes from Skip Gaza with Clooney Road L. P. Please go ahead.
Hey, Mark This question is for you.
So the stock is down 60% and the last year.
You haven't really made any significant money since 2016 on your.
Sale.
The on the street is betting that you're going to run out of money you have roughly two and a half years at the rate you're at your burn rate.
So.
Tell me.
If I said to you okay.
You got two and a half years Where's your money coming from what are you going to start making some money. We talk about all these collaborations and nobody's paying for anything and they're paying for the collaboration but they're not giving you upfront.
Upfront fees or obviously, you haven't gotten any royalties because you haven't created and they think so how are you going to make money.
Okay.
Yeah. Thanks, Kipp. So first of all we've given guidance of between 10 and $12 million burn for 2020 one.
So we still have at least two years cash runway as of today.
Significant portion of our R&D is covered by third party collaborations and we're very prudent with the amount of internal R&D programs and we approve.
Based on the scientific progress demonstrated results, increasing and acceptability of our seem on program and platforms and the large number of ongoing collaborations. We currently have and progress let alone the ones that were on the drawing board, we expect to begin and successfully licensing C. One during this two year time frame for potentially up.
On cash milestones and royalties and if you remember from our industrial biotech business Dupont are not demand shell and bingo Psf and others, we received over 30 million or 32 or $33 million and upfront cash for non exclusive license agreements and.
And then we of course milestone funding for example on the case and BSF $2 million and then of course, when the products were going to come to commercialization and we would get royalties. So we expect something similar here with higher magnitudes.
We expect to get upfront cash payments milestones and royalties and that's how we expect to generate cash flow and income. During this two year time frame and and obviously hopefully sometime before the end of this year.
Yeah and no further questions I will now turn the call average biotic CEO and Mr. Anil THAAD.
Yeah.
Oh lets see there are no further questions. So I wanted to thank everybody again to.
And to joining us on the call and.
We are pleased you could join us to hear our progress over the first quarter. We're excited about where we are and we're excited and even more where we're going and.
And we look forward to keeping you updated on our progress along the way.
The conference has now concluded. Thank you for attending today's presentation. You may disconnect your lines at this time.
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