Q1 2021 Applied DNA Sciences Inc Earnings Call
[music].
Good day and welcome to the applied DNA Sciences.
Second fiscal quarter 2021 financial results call all participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero after today's presentation and there'll be an opportunity to ask questions. Please note. This event is being recorded and I would like to turn the conference of two Sanjay Hurry. Please go ahead.
Yeah.
Thank you Jason Good afternoon, everyone and welcome to applied DNA Its conference call to discuss our second fiscal quarter of 2021 financial results.
And this updates you can access the press release that was issued after market closed today as well and the accompanying slide presentation to this call.
Going to the IR calendar page of our website.
Speaking on the call today are Dr. James Hayward, our CEO and Beth Jantzen our CFO.
Judy Murrah C of O and newly appointed Chief Legal Officer place of Rock will also be available to take your questions on the Q&A portion of the call.
Before we begin please note that some of the information you will hear today during our discussion may consist of forward looking statements I refer you to slide two of the presentation and to the Companys form 10-Q filed today and form 10-K filed on December 17th 'twenty, and 'twenty or important risk factors that could cause the company's actual performance and results of <unk>.
Deferred materially from those expressed or implied and any forward looking statements. We undertake no obligation to update or revise any forward looking statements or other information provided on this call as a result of new information or future results or developments now it's my pleasure to introduce our first speaker on today's call Beth Jantzen. Please go ahead.
Thank you Sanjay good afternoon, everyone and thank you for joining us.
And it will begin this afternoon with the review of our consolidated financial results for the second fiscal quarter of 2021.
Dr. James Hayward, and President and CEO will then update you on developments across our COVID-19, diagnostic and surveillance testing businesses as.
And as well as progress being made and our biotherapeutic and supply chain security markets.
We will then open the call to questions from analysts and investors.
To begin and we are pleased to report significant revenue and the fiscal second quarter, both on a year over year and quarter over quarter basis.
That was driven by the man for linear COVID-19 assay kits and Sip circle pooled COVID-19 surveillance testing service.
Despite the ongoing impact of the pandemic on our supply chain security business.
Starting with the consolidated statement of operations total revenues for the second fiscal quarter of 2021 increased to $2 7 million.
And from 552000 and the prior period this year over year increase of 384 per that percentage is primarily attributable.
Two and increase in service revenue of $1 4 million.
She was associated with the save circle that reflect the full quarter of testing for client secured and the prior quarter.
Second fiscal quarter revenue were up 65% as compared to first fiscal quarter revenues of $1.6 million.
Product revenues increased to 965000 for the second quarter of fiscal 2021.
Compared to 198000, and the same period and the prior fiscal year.
This increase is primarily due to sales of our COVID-19 diagnostic assay kit.
Cost of revenue as a percentage of product revenue and the first quarter felt.
And the second quarter fell to 37 per cent compared to 91 per cent for the prior period.
The year over year improvement is due in part two of shift in product revenue mix as the.
Our assay kit sales out of our out of a higher gross margin.
The decrease is also the result of certain fixed costs that were not fully absorbed but the level of product revenues and the prior period.
As compared to the period, we're reporting today.
Total operating expenses increased 52%.
Or by 1.6 million to $4 6 million and the second quarter as compared to $3 1 million and the prior period.
This increase was driven principally by greater SG&A, and depreciation and amortization amortization expenses.
The increase and DNA relates primarily to equipment purchases to support our safe circle service and to produce our assay kits.
SG&A expenses for the second quarter increased by $1 3 million two of three 6 million from $2 3 million and the prior period.
The increase reflects higher stock based compensation of approximately 422000 and.
And a higher head count at our a D C L. A subsidiary from which I'll state the circle services base.
Of about 315000.
The balance of the increase and SG&A is it true, though to supply purchases to support a D C L as well as to increased legal fees.
R&D expenses increased by 171000 to 874000.
From 703000 over the prior period.
This increase is mainly due to increased purchases relating to our clinical lab build out.
And as well as for the development of our recently announced.
COVID-19 variant mutation panels, the Jim will speak more about.
Net loss for the second quarter narrowed to $1 5 million compared to 3 million in the year ago period.
Net loss for the second and quarter includes a noncash gain of $840000 related to the extinguishment of notes payable associated with the full forgiveness of our P. P P loans.
Net loss per share for the second quarter improved to 21 cents compared to a net loss per share of 79 cents.
For the same period and fiscal 2020, and a higher number of weighted average shares outstanding.
Excluding non cash expenses consolidated adjusted EBITDA improved to a negative $1.5 million for the second quarter compared to a negative $2 6 million and the prior period.
Now turning to our balance sheet, given our enduring commitment to financial strength and liquidity and the purpose of purposeful approach to reducing debt.
Our balance sheet is at its strongest and several years.
This affords us substantial strategic flexibility.
And the capacity to make investments and R&D and commercial initiatives to further enhance our growth profile.
Cash and cash equivalents totaled $13 9 million on March 31st.
This figure includes net proceeds of approximately $13 8 million from a registered direct offering conducted in January.
Our working capital increased by $11 7 million and the in the second fiscal quarter of 2021 to $15 3 million up from the $3 6 million at the end of the first fiscal quarter of 2021.
Accounts receivable stood at $2 2 million at March 31st compared to <unk> 1 million at December 31st 2020 and.
And following the extinguishment of our P. P. P law and we are now debt free.
Our average monthly cash burn rate net of financing and warrant exercised proceeds for the three months ended March 31st 2021 was $1 4 million compared to 893000 per the year ago period.
And increase of 58 per cent.
The increase is primarily due to capital expenditures for our clinical labs subsidiary and purchases of the equipment that underpins the production of our diagnostic assay.
Now that our clinical lab is fully operational we expect our capital expenditures to normalize which coupled with the increased revenue levels compared to the prior fiscal year should result in a trend of lower cash burn and the second half of fiscal 2020 one.
Our cash position on April 30th was approximately $13 4 million.
We believe we have adequate adequate cash to fund operations for at least the next 12 months from today.
Our warrants balance remains unchanged approximately 460000 November 2019 warrants remain outstanding as of May 12, 2021 that carry and exercise price of $5.25.
This concludes my prepared remarks, thank you for joining us today.
I will now turn the call over to Jim for his comments.
Thank you Beth and good afternoon, everyone.
Thank you for joining us on our quarterly call and I Hope you and your families of keeping well.
The seeds of all of our financial performance from the second quarter and and the first half of the year of really were planted one year ago.
With the EUA for linear of COVID-19, 19, assay kit, which we secured and me.
And the launch of Safe Circle surveillance platform and our September quarter.
While pleased with our execution of the commercialization of our of diagnostics to fight Sars COVID-19. Two we are equally pleased with the concurrent execution on our long term goal to establish linear DNA.
And I'd say manufacturing platform.
And the disruptive alternative to today's DNA sourcing standard which is plasmids.
Before I begin and happy to welcome back Clay Schrock.
Because of the applied DNA team Clay previously led our regulatory and like P efforts, both internally and more recently as a valued external counsel his return as the number of the management team highlights our pursuit of highly regulated market with our linear DNA platform that will be.
Greatly informed by his expertise.
COVID-19, well devastating to so many has also triggered change innovation and investment across the biopharmaceutical industry that will have the benefit to society for years to come.
It spurred profound change, allowing a role for many new drug mechanisms to be effective.
Whether it's messenger RNA or lipid nanoparticles or even buying rule of vectors like AAV.
The pandemic has also had the benefit for diagnostic manufacturers with over 300 authorized COVID-19 test currently and the marketplace.
The health Sciences components of our business had been made more relevant part of the pandemic. We see this interest manifested within our linear Rx products and services, where we are seeing greater interest and linear DNA as an alternative to the plasmid based manufacturer of.
Nucleic acid based therapies.
The pandemic also accelerated our own push into the diagnostics field with the development of our assay kit and the launch of our Safe Circle service.
The commercial success of our COVID-19 testing business have shown.
On this slide and the commencement of the first ever clinical trial for of linear DNA based therapeutics linear Rx has brought these health sciences endeavors to the forefront of our business.
As Beth stated our supply chain security business has been negatively impacted by the pandemic.
The brands and their supply chains have been changed by the pandemic and they are moving to emerge from it operationally different from when they entered it.
I see and the urge and we believe our of certainty platform also powered by our linear DNA platform.
Offers the unique multi layered approach to supply chain security to.
And to enable the trust with both brands and consumers seek more intensely than 18 months ago.
I'll focus my remarks today on our strategic and operational execution.
During the quarter to advance our goal of establishing our linear DNA manufacturing platform.
And to offer certain milestones and the second half for the financial year.
Which you can use to benchmark our progress.
Our goal is straightforward.
We want to be a key player and the global alternative to the viral vectors and cause the plasmid manufacturing markets.
And we're valued together in 2020.
As to $2 billion and are expected to grow at a compounded annual growth rate of almost 20% through 2020 eight.
Our strategy is to develop and advance our pipeline of linear DNA based therapeutic candidates the.
The clinical data from which we'll make linear DNA relevant to the broader universe of pre clinical and nucleic acid based therapies being developed.
This simultaneously gives us the path to commercial sales.
As the case with all of our veterinary COVID-19, Canada day trial.
Now as Beth also noted we do have a strong balance sheet and fact, the best and years and that provides us the strategic flexibility to pursue the promise of linear DNA.
We have and continued to make investments in our operations of the payoff from which we expect to see both in the near term and beyond.
Okay.
Our assay kit is the foundation of our COVID-19 testing business.
It serves the power of our safe Circle pool surveillance testing service and it's available for diet.
Diagnostic use.
And clear certified and labs, such as our home.
During the second quarter, we received the third purchase order from our key customer for our assay kit and.
And after quarter and we received the fourth.
To date, we've seen no decrement and testing rights for this customer.
To the contrary of <unk>.
Recent order for commencement related testing has increased the rate of testing.
We are and discussion about of fall semester of return strategy when more students and faculty are expected to be on campus and.
And vigilant about the Zen relevant variance of concern will likely be greater.
They've circle and by extension a D C L a clinical lab.
That's been a stand out performer for the company.
We do not intend to report operating metrics on a per subsidiary basis.
But to offer some important context on this business that is the only two quarters old.
A D C. L was solidly profitable exiting the fiscal second quarter.
Vaccine distribution is an enormous success and the U S.
This accomplishment.
Combined with the adherence to social distancing.
Is driving expectations for an attenuation of testing rates.
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Our strategy differentiates us from the crowd of the companies offering traditional positives negatives testing.
Let me tell you how using the pillars of labs certification the extension of our EUA and the growing impact of the variance.
On Tuesday of this week, we announced adcs and receipt of CLIA certification by the New York State Department of Health Clinical Laboratory evaluation program or club.
For COVID-19 testing using EUA authorizes methods and devices.
No. This is potentially a game changer and development for the clinical lab certainly one.
That has ramifications beyond COVID-19.
ADC is now.
And we're able to serve as the diagnostic laboratory to conduct high throughput diagnostic COVID-19 testing.
Using our assay kit.
Meaning that we can now of attacks testing markets previously unavailable to us.
Such as overflow of diagnostic business from third party and the hospital clinical labs.
And we are in the midst of the hospital environment.
It also means that we can report the individual results from the disambiguation of the positive pool and our surveillance testing.
Now this requires diagnostic testing that we previously outsourced to third party labs.
Now we can capture a greater percentage of the saves circle of economics.
And as we announced just yesterday.
You received a reissued EUA from the FDA.
Expanding the intended use of the linear assay kit.
It would include asymptomatic cereal screening testing now we're really excited about the expanded use of our assay kit and we will provide more details on how and ace and that trick.
Symptomatic.
Cereal screening programs and say that three times and stuff.
And will be implemented a day.
C L.
Our goal has always been to make the testing process as easy as possible for our client service.
Service and turnaround time has been two of our important market differentiators.
With asymptomatic cereal screening.
We are building of testing and workflow where in there is no need for individual testing subjects.
To obtain and individual prescription from their health care provider for testing.
Thereby streamlining their access to testing.
As part of this client centric workflow.
And any necessary prescriptions phrase symptomatic cereal screening testing will be provided by a standing water for a blanket prescription.
Obtained from a health care provider, that's engaged but many of our clinical lab.
This process will definitely be appreciated by our test and customers and we believe that the streamline testing program.
Which can provide individual testing results to seriously tested individuals with or without COVID-19 symptoms.
Is it a compelling offering.
Support the safe opening of the economy.
And to help curb COVID-19 outbreaks and communal locations such as schools businesses and skilled nursing facilities.
Yeah.
Specifically, we are targeting profitable market niches, where the high touch service.
We have brought to the private clients and businesses and in particular to schools is readily applied.
Our sales and marketing efforts.
Have pivoted to summer camps, now that are reopening and the other venues the conserve as the Nexus for vaccinated and under vaccinated populations coming together with increasing frequency.
Yeah.
Within our deep base of schools, we are already part of conversations to extend and testing into the new academic year.
Higher education.
Given the confluence of different age populations with different vaccination rates and.
And the mix of in state and out of the state of students.
Particularly well served to continue testing to mitigate the outbreaks to avoid the second consecutive year of disruption.
And our CLIA certification and also gives us the ability to offer of client the choice between serial diagnostic testing or pooled non diagnostic surveillance testing.
To meet the unique testing requirements of a diverse range of clients and their reopening strategies.
Our approach to the evolving variance is grounded in all of our ability to detect the.
And the Sally and mutations that characterize the variance.
In order to expand our addressable market.
Well the only needs to look back 10, or so weeks to see the rise of variance some of which demonstrate increased and for activity.
And has displaced the wild type virus, and they're driving and infection rates today.
The launch of our S. G. S panel also serves to expand our addressable market for testing and the opportunity for additional revenues.
Yes, just panel and reflects our belief that efficient identification is key.
And limiting the spread of the areas that can potentially render vaccinations and certain therapies and effective.
We believe that our panel currently available as research use only or are you would you argue low solves two issues.
First when used in conjunction with our assay kit the <unk> panel screens for currently seven mutations that comprise of certain variants of concern.
With the additional relevant mutation targets out of it as they arise.
This approach allows the rapid and inexpensive the identification of mutations the.
And are concerning and the clinical community.
Such as those the confer resistance to certain therapies of specific antibodies.
And comparison and yes for the next generation sequencing can take several days to conduct.
Unlikely longer.
Still given the limited capacity available nationally.
This way it can have a clinical impact on the patient's outcome.
The second standard of care for COVID-19 is currently based on positivity and not variance.
Upon confirmation of infection. The patient is typically treated with a monoclonal antibody.
Typically right, there and the emergency room to reduce viral load and improve outcomes, thereby keeping the amount of the hospital.
The F D. A recently signed and the frequency of variance as the primary reason for why the EUA for key for Achy monoclonal antibody.
It was rescinded.
Contained and the Fda's replication letter was the following phrase and I quote. Additionally.
Additionally, there are currently no testing technologies available that enable health care providers to test patients for Sars COVID-19 two viral variants prior to the start of the treatment with monoclonal antibodies.
We believe that our Sds panel and the effect is the tool that F D. A and all health care providers need and this pandemic to ensure the continuing and efficacy of therapies being deployed.
It could be used to identify variants and patients, while they're still and the emergency room.
It can help doctors choose monoclonal antibody cocktail of therapies on the basis of variant identification.
Over the long term, we can envisage use of the panel and this manner to lead to more effective clinical standards of care and to actually lower the monoclonal antibody doses.
And in turn lower the risk for the patient and the costs from the health care system.
Finally, it can help too much convalescent plasma volume variant.
The development and validation of our panel has progressed extremely well.
Through a partnership with North Wilhelm.
We've run over a 1200 clinical positive samples.
The results are quite compelling and.
And they show that our Q PCR based mutation panel.
And of identified clinically relevant mutations that impact and the body treatments and real time.
Furthermore.
We have generated our first and GFS data using our new in house capability.
The result is that we have a great body of data.
The Sds panel works as we expected and we saw 100% concordance of.
So the mutations.
Given these findings we expect to file of pre application for an EUA for our S. G S panel <unk>.
Soon to demonstrate to the FDA.
The tool our country needs is already available and validation well underway.
We believe that the need for testing be it for interactivity of your variant discrimination is still going to persist, especially and the venues I outlined.
Our efforts in this regard has not wavered and to that and our expansion into genomic surveillance.
And and GFS sequencing.
Offers the opportunity for additional new markets and revenue.
Now longer term.
And we gain additional diagnostic approvals from New York State.
Volume validation and proficiency testing.
Our CLIA certification and broadens the scope of our clinical lab business to include the development and commercialization of our growing portfolio of novel diagnostics and complementary services <unk>.
Including the fields of oncology neurology infectious diseases among others.
The ability to develop laboratory developed tests or L. D Ts.
And then monetize our.
And this is circulating tumor cell platform beyond the arc count current revenue producing collaboration on of pancreatic cancer trial.
You may be aware that our <unk> platform is the novel liquid biopsy platform that uses a patented functional assay to capture live invasive circulating tumor cells and associated lymphocytes.
And it can be identified and expanded for further analysis.
The ability to compile evidence of ICT seat count correlation with cancer disease and therapeutic efficacy.
Could be a significant benefit to oncologists everywhere.
Who would send us samples that we would run at applied DNA is clinical lab.
Now, let's turn to linear Rx.
We are progressing along two of current path.
Now with respect to our supply of DNA to other manufacturers of diagnostics.
We are growing this business out of time, principally through one customer who has expanded its use of linear DNA from one to three diagnostic assays in.
Incorporated into their equipment base of platform.
The first used and the early detection of the liver cancer is already and market.
And the demand is leading to recurrent orders for our DNA.
The other two are and the R&D phase and we believe there of both proceeding along their respective development paths toward commercialization using linear DNA is the functional and DNA and component.
Yeah.
Yeah.
Now with respect to DNA based therapeutics.
We continued to provide linear DNA to companies evaluating and it against the plasmids for their own therapeutic construct.
And at the start of this call I noted that the pandemic has catalog of his interest and deployment.
Skus me of new drug development, and technologies, particularly related to nucleic acid therapies.
To put this into context prior to the pandemic there were very few nucleic acid and best based therapies that had been approved by FDA.
Over the past 15 months.
We witnessed E ways for three nucleic acid based vaccines developed and Trialed.
With hundreds of millions of the vaccinations administered and the U S alone.
As I also noted.
We see this interest manifested at our own linear Rx with more customers and more complex projects.
Coming to us driven by the linear DNA.
And the environment that finds both therapeutic companies and the F. D. A more receptive to novel technologies is an opportune time to further develop and commercialize our unique platform. So the time is now.
Our approach to our linear DNA therapeutic strategy is the first focus on veterinary solutions.
Because they have a lower regulatory thresholds and human therapies, and theoretically and easier path to market.
They require less regulatory work or less expenses.
And for Us more immediately achievable.
The data generated in pursuit of the veterinary vaccine is useful and our eventual pursuit of the human therapy.
Key to this strategy is to seek out sponsorship to.
To help us better manage the regulatory pathway for linear DNA based therapies.
Now we have the therapy in the clinic.
And our linear DNA 19, veterinary vaccine candidate.
And that was first tested and family owned domestic cats.
The immune responses and our cohort have been very robust and in fact beyond our expectations. Following administration of the booster vaccine.
And the next few weeks will provide data on the cellular immunity given prior of preclinical trials that we conducted and mice.
It would strongly suggest response durability.
The current domestic.
Feline.
The trial will continue through September.
When we measure of long term neutralizing antibody titers.
Given the USDA.
The regulatory bodies, the governance veterinary clinical trials.
And their focus on the protection of the agricultural animals, So just mix.
Against Sars COVID-19 two.
Excuse me.
We intend to initiate a minx challenge trial as soon as practicable.
The challenge trial, we will accrue the same data we have reported to date and cats.
However, we now have the basis for our expectations and we will generate this day and mix.
Our main challenge trial will also incorporate dose and response data.
The second half of the Mink trial will includes challenging vaccinated vs unvaccinated mix.
To generate the percent protection data very similar to the data we've all seen for the human vaccines.
If our endpoints are met.
We plan to use these data to approach USDA for conditional licensure of our vaccine candidate for mix.
Should the USDA express interest and the protection of the domestic felines and so it should cats become of viral vector for human transmission.
We would immediately pursue of feline challenge trial.
Beyond the veterinary COVID-19 trial.
We are continuing the preclinical development of our linear DNA platform to optimize its application to humans and therapies.
And on prior Investor calls I've spoken about our CFO of Aro customer base.
That is comprised of the who's who of the pharmaceutical industry.
As these customers succeed and their preclinical work.
They begin to contemplate the human clinic and eventually product launches.
And the sustained deeper commercial relationships with these companies.
We continue.
Phase based approach to F D a.
And CGM me cgmp capacity, that's sufficient to support of deeper commercial interest and our linear DNA as well as our own needs for her veterinary vaccine candidates.
We are aligning our cgmp upgrades to meet customer requirements throughout this year.
Complementing our infrastructure and regulatory work.
We needed to pave our path to market, we will continue progress and our foundational technology.
We have enhanced our production capacity.
And our ability to simultaneously manufacturer and multiple linear DNA constructs.
Now some customers have asked us to develop the capacity to deliver fully formulated therapeutic linear DNA and.
Including the delivery vector.
To that and we are working with and outside the development team.
The design and produce lipid nanoparticles similar to those utilized by the to commercialize the messenger RNA COVID-19 vaccines.
Yes.
And to enhance the studies and provide preliminary proof of concept, we are expanding our cell biology suites to better enable us to quantify transfection and expression.
Of therapeutic linear DNA is after delivery to the nucleus.
And we previously talked about the impact of the pandemic on our supply chain security business.
And within this textiles have been particularly hard hit.
At the same time.
Supply chain security has not been without certain successes.
Year over year revenues from the wellness and dietary supplement and market.
Of this business saw two five fold increase and the fiscal second quarter.
This was driven by and nutrition 'twenty, one and its transition towards certainty platform late last year to secure its entire portfolio of day.
Dietary supplement ingredients.
We are expecting growth in the supplement sector.
In terms of textiles.
We have seen brands use the pandemic time on their development activities to ensure and even stronger and market position coming out of the pandemic.
Their efforts have centered around sustainability brand protection and supply chain traceability.
Within cotton and we anticipate a resumption of tagging and water is coincident with.
With the macroeconomic trends of household goods upgrades.
And the singer our cotton alloy and India is benefiting from a home textiles market and made strong by stay at home orders.
Beyond the home textiles, we continue to investigate the potential for entry into the substantially larger.
Apparel market.
Cotton is also where we can apply our newly acquired and GFS next generation sequencing capability.
And <unk> P. M. Her sued them also known as the upland cotton.
Is the most widely planted species of cotton and the world.
Globally of about 90% of all cotton production is the key.
<unk> of ours that are derived from the species.
As such it is hard to discriminate between upland cotton grown and one part of the world from another.
But the passage of the Weger forced Labor Prevention Act and with the U S customs and border patrol.
Now of holding textile and goods and ports pending verification of provenance.
Suppliers retailers and brands are at the Mercy.
Oh, Xinjiang and cotton the comprises fully 20 per cent of the global cotton supply.
We've initiated and R&D plan that will leverage our deep expertise and cotton Geno typing and next generation sequencing capability.
The support brands seeking to meet these new regulatory requirements.
We have seen this regulatory action drive the significant uptick and interest and our certainty platform from those seeking to mitigate heightened supply chain risk following the passage of the act.
If successful the act could serve to catalyze the adoption of uncertainty more broadly.
Over the course of the pandemic, we have been working a leading supplier.
Two brands, whose products are pervasive in the textile industry, with whom we believe that and imminent new product launch and serves as the bellwether of event for our textiles practice.
And the process, we have eliminated what was previously an obstacle to broader adoption of our certainty platform.
And the ability for brands to do their own DNA testing.
We anticipate announcing additional details about this launch and the next month or so, but I'd like to applaud our textile team for setting us up for what we feel is the market's signaling accomplishment.
And this regard stay tuned.
Laughs.
The award last week by the Defense Logistics agency for counterfeit mitigation.
Continues the contract first awarded to Us in 2014.
The continuity of contracts from DLA reflects the testing and validation of our platform previously conducted improving.
That firm that remains the efficacious and its counterfeit mitigation role with the federal government to this day.
So with that I would like to ask the operator to open the call to questions. As a reminder, both Judy and clay ore available to offer additional color or clarification on your question.
We will now begin the question and answer session.
To ask a question you May Press Star then one on your Touchtone phone.
And if youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press star and two.
At this time, we will pause momentarily to assemble the roster.
Our first question comes from Jonathan Aschoff from Roth Capital Partners. Please go ahead.
Thank you guys and congrats on the progress and my first question is what is your sense of the commercial appetite and thus the partnership potential for I think vaccine.
Without the vaccine and the.
The industry can't return to.
And to its prior status.
So it's the only way for the industry.
And to come back.
And we think that as the nearest term and greatest opportunity.
The the USDA is not currently accepting applications for domestic free lines.
But we hope that they revisit that issue as we've laid the laid really the groundwork and domestic cash.
I note also the sorry, the similarity of the clinical picture and attracted minx ferrets and humans and.
And the effect of the efficient replication of Sars COVID-19 T and the makeup of the respiratory tract and makes them highly suitable model for evaluating human vaccine candidates.
So I think the pivot to link is perfectly timed and well suited for our future.
The relatively near term revenue opportunities can you update us on the cannabis tagging and the invasive CTC programs and I'm sorry, if I missed this I missed some of the call.
And you didn't Miss I didn't really speak to the kind of this issue today, we see a tremendous amount of interest and some very creative business approaches.
It's still very much in the industry and flux.
But it's definitely moving forward state of the state.
Made kind of is legal.
And we think that we'll have opportunities both at the level of state governments.
And of the corporations, who are developing the products. So we are very excited about cannabis tagging.
And then the I the invasive CTC and it seems to be a little more under your control I would.
And.
Yes, yeah, and the obtaining the CLIA certification will be a big help so right now our ICT.
Businesses based on the on argue old platform of research use only.
But in that context, we're working with the oncologist and working with time pharmaceutics.
The phase III clinical trial on the stage four pancreatic cancer patients and.
And we're excited about that study and the yielding good data. We've learned we can develop organize from these patient cell cultures and.
And that may be and opportunity for precision medicine and the future.
And with the CLIA certification, we hope to develop of lab developed tests that we can get approved by New York State Department of Health.
And I think that the oncologists would be very interest and the utility of the assay.
Thanks.
Did you guys give any update to 2021 revenue you know, what the CLIA certification and and being able to test the asymptomatic patients.
No we've not provided any guidance at this stage Jonathan.
Okay. Thank you very much and Youre welcome. Thank you.
And again, if you have a question. Please press Star then one.
Our next question comes from Anthony Vendetti from Maxim Group. Please go ahead.
Thanks.
Jim you mentioned on the linear DNA platform you have to.
And the R&D stage to working with some of these large pharmaceutical companies and then you have one.
That's that's moving forward I was wondering if you could without giving their names, but just quantify the opportunity.
What this could mean, both from a from a business standpoint, and then potentially from a from a revenue standpoint down the road.
Sure.
Well for the and.
Initial commercial effort that's already in the marketplace.
And that client who's ordering grams of DNA.
And that the leach quarter.
And we have steadily delivered high performing product.
And that's really led them to develop two more.
For a and <unk>.
Equipment platform, that's already being deployed all over the world.
And.
So I think it's likely that those two and development will also succeed in the marketplace and that's just a reflection of a single customer and.
Well that was our first customer and the sale of DNA to diagnostics.
It parallels our development and the sale of DNA for therapeutics for which we have dozens of customers.
So on the therapeutic side you have dozens of potential customers at this point of we have dozens that we're working with and a C. R. O modality, a couple of which are really on the verge of.
The becoming CMO customers and they are part of the reason part of the drive to ensure we are of cgmp capability.
Primed and ready to produce the product that they would need for higher animal studies or for the first human clinical <unk>.
Okay, Great and then just shifting gears you said.
You anticipated pickup and and the and cotton as is.
Things return to normal.
And.
Do you have a timeframe, where you think that that could start to pick up as that day.
Is that this quarter or is that is that towards the end of this year or is that more of of 2022 fiscal 2022 situation for you.
And the timing can be a little difficult to estimate the ginning season for cotton really doesn't begin and October until October and it begins in earnest really at the end of the calendar year.
So we have seen orders before as early as June but there's.
There's no telling really.
And our estimation.
Is that the kind of and <unk>.
<unk> pressure, that's developed and consumers and their purchasing of cotton products.
Is that this the.
This customer of this client.
Is growing their cotton business quite well and so we're hopeful that there and needs will be strong.
Okay great.
Bob.
Jump back into queue. Thank you.
Okay. Thanks, so much.
Again, if you of a question. Please press Star then one.
Our next question comes from J Rogers from Rogers Investor. Please go ahead.
Yes.
The last 10 years to the.
And then the total believer and your company.
Mr Hayward.
How do you see the next year.
And your mind versus the last two of them.
Yeah.
This definitely feels like a transitional year I mean, it has been already.
And such a short time.
We spawned a brand new business very relevant to our core capability that is PCR.
And do use PCR is the diagnostic tool, we've achieved certification and the most difficult state and the union to do so.
And we've built the business out of it and.
So I think there's opportunity there and it's perfectly matched with our therapeutic capabilities. So when you combine the ability to do diagnostics and the ability to develop therapeutics.
You have and the same location.
The ability to steadily improve your approach to that therapeutic.
So I think we're in great shape for rapid change and we've captured the attention of.
Of the biotech marketplace with our linear DNA platform more and more of those big.
Big players understand the value proposition, we offered them originally two years ago, which is gradually becoming more and more of the simple.
Thank you.
You're welcome Thank you Jay.
Again, if you of a question. Please press Star then one.
Yeah.
Our next question comes from Anthony Vendetti from Maxim Group. Please go ahead.
Yeah, just a quick follow up on the supplement side of the business Jim.
Nutrition and 'twenty, one can you talk a little bit more about.
That opportunity.
What was that the.
Magnitude for what that could mean.
Is it early and in terms of that market opportunity or Quebec develop into a syndicate of significant market for you over time.
Sure well Judy Murrah, our of Cielo has been spearheading this business and I pass the question to her okay. Thank you.
Anthony of the nutrition and 21 and.
The opportunity that we have is.
Really the beginning.
It has established a case study and validation of our.
Tagging technology for in the tagging and in managing their contract compliance with their customers how much of their ingredients being put into the products as well as our IP protection.
And the value proposition for them is very strong and they're very vocal about it and we'll be able to use that into other markets.
Alright and to other customers within that segment.
And just like we were talking about Homegoods the.
The pandemic has spawned the consumer interest and health and wellness.
So the dietary supplement business itself and seeing a pretty high growth rate.
Okay, Great and then.
That seems like a.
The good market opportunity because the rate.
A couple of and supplement business isn't isn't.
He is and FDA regulated so there's there's.
Obviously plenty of instances.
That I've come across and I am sure.
You have as well where.
A particular supplement says it has X amount of this.
Supplement or or this.
Chemical compound and mineral and and it really doesn't right. So this is.
Yeah.
The ability to tag and and and and make sure that it is it.
It is adhering to compliance and so forth it seems like a perfect match for what for what applied DNA could do.
It is and our molecular tag has certain.
Benefits that other <unk>.
Technologies of that sort of whether there UV based or other competitive things just can't do.
So we have very high resolution testing and.
And the legal forensic testing labs.
Or you know to help with to help put some teeth behind it. The other thing is it's a nice use case to help to establish tagging and the pharmaceutical area as well that's the only just like when hospitals of step.
The way of the market.
So we can use this as well.
Okay, Great. That's helpful. Thank you very much.
Yeah.
There are no more questions and the queue. This concludes our question and answer session I would like to turn the conference back over to Dr. James Hayward for any closing remarks.
Okay. Thank you very much.
So our remarks today serve to highlight our focus on executing on the diverse opportunities that are ahead of us.
We've had strong topline growth and.
And by demonstrating disciplined investment and our operations.
We have the foundation for continued execution and the second half of the year.
We have the financial means enhanced management depth.
And the singular focus to turn the promise of linear DNA into reality.
You all and stay safe.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
And.
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