Q3 2021 Dyadic International Inc Earnings Call
[music].
Good evening and welcome to the Dyadic Internationalist third quarter 2021 financial results Conference call. Currently all participants are only listen only mode.
Following managers prepared remarks, there will be a brief question and answer session.
As a reminder, this conference call is being recorded today November 10th 2021.
I'd now like to turn the call over to MS. Ping Ruffin Biotics Chief Financial Officer. Please go ahead Ping.
Thank you.
Good evening and welcome everyone too bad at International third quarter, 20th 21 financial results Conference call.
I Hope you had the opportunity to review Biotics press release announcing financial results for the third quarter ended September 30th 2021, and the reasons company highlights.
You may access our press release and Form 10-Q entered investors session of the company's website and added dotcom.
Today's call, our President and C E O Marc M. A barb will keep ideal off our third quarter of business in Capri highlights, including a brief summary of our research and business is all of them afterwards.
I will follow with the reveal off our financial results in more detail with little den hold a brief Q&A session.
At this time I'd like to inform you that certain commentary made in this conference call maybe consider forward looking statements, which involve risks and uncertainties and other factors that could cause static actual results performance scientific or otherwise or achievements to be materially different from them.
Expressed or implied by bleach forward looking statements.
Static expressly disclaims any duty to provide updates to is forward looking statements, whether as a result of new information future events or otherwise.
Ah This ping Ah directed to the risk factors set forth in diet X reports filed with the S. C C.
It is now my pleasure to pass the call to our C O Mark Emo <expletive> Mark.
Thank you Ping.
Good afternoon, and thank you for joining us today.
Our mission is to transform biomanufacturing to improve how we feed fuel heal the world by utilizing modern biotechnology to revolutionize science Madison Agriculture in engineering.
We are addressing the animal and human health markets by working together with the global scientific community in academia and industry and government to provide a cost effective solution to increase biomanufacturing outputs.
Satisfy the growing demand for protein production and unmet needs for affordable biologic drugs axes, and other biologic prosthetic products and processes that can help address.
And equity in middle and lower income countries.
We are continuing to advance science and business development efforts towards the commercialization of R. C. One protein production platform for use in the human and animal pharmaceutical industries.
2020th was a very productive year, which we announced many new developments and commercial partnerships. In addition to publishing critical proof of concept scientific an animal data.
Further advancing the attributes of R. C. One technology.
2021 has been a continuation of those efforts.
As we continued to advanced towards her first and human clinical trial of our COVID-19 vaccine candidate D Y a I 100.
To validate C. One produce proteins are safe in humans and further accelerate global C. One platform adoption.
The efforts to launch this human protein production platform is with a global effort, which includes important cleverly collaboration relationships in Africa Asia, Europe and the Americas.
It is important to understand that while many people believe COVID-19 will soon be in the rearview mirror. It is still a real problem that will likely require annual vaccinations or periodic boosters to maintain antibody effectiveness.
[noise] many underdeveloped countries are still struggling to produce sufficient quantities had a horrible grosses to protect their citizens.
A key takeaway from my comments today.
Is there a phase one trial is not just about COVID-19 it as a means to an end.
Our main objective is to demonstrate safety and efficacy in humans. So we can pursue all the other indications that are similar platform can be used for.
[noise] Covid just happens to be the current focus.
There are many countries interested in seeing one platform for numerous other applications and vaccines and drugs.
[noise] demonstrating safety in phase one is an important gaming event.
I would like to give you some brief updates on several ongoing collaborations.
The rubric consortium R. C. One technology transfer has commenced and the D Y a 100 and other COVID-19 variant Harvey D's have been delivered in addition, genetic tools. So you want to change and protocols for engineering. She went cells and producing proteins from hotels has also been true.
Hansford.
We are in discussion with Robert regarding where in addition to COVID-19 taken successfully apply the C. One technology for the development and commercialization of several other vaccine candidates.
<unk> International.
Celebrated tech transfer of the D Y I 100 cell line has been completed the manufacturing part of technology training on a C. One production platform is shown initial success.
And a number of the serves Kobe to wherever the variant concern antigens, including the Delta already has been delivered met.
Mary talks.
One platform Tech transfer has been completed and they're developing nanoparticle vaccine candidates for COVID-19 variance.
Sorento therapeutics for continuing negotiate the license agreement and the terms, which may be materially different than the terms set forth in the binding term sheet announced in August 11th 2021.
We can never know give no guidance.
When the license agreement will be executed, but in the interim technology transfer to Toronto for D Y I 100 and has to be one platform has been initiated.
This week and Israel, Biotechnology General Israel, a paring pharmaceutical company.
Is carrying out what we anticipate we are successful purification of the D Y I 100, drug substance, which will after being converted into a drug product and after regulatory acceptance may be used in one or more D Y I 100 phase one clinical trials.
A G. L. P. Animal toxicology study has demonstrated preliminary safety profile of R. C. One produced serves Kobe two Arbor day, Vaccinating vaccine candidate the way I 100, sorry.
Turns kobe to virus specific hemoglobin IGD antibodies have been detected and those animals.
We continue to focus on the glycol engineering of C. One sells for their use in producing monoclonal antibodies, which continues to show progress towards both a proof of concept by a molecule novello mab to demonstrate that C. One can be used to manufacture monoclonal and other antibodies multi specifics and other.
Calculated proteins faster at high yields and lower costs.
Now I'd like to provide a brief update on our ongoing efforts using C. One for manufacturing vaccines and drugs for use in animal health.
Cause an Arctic anticipation preparative initiative Zappy was successfully concluded in July of 2021.
The Zappy program validated C. One is the most effective production platform to express SPV and <unk> antigens.
She won't sell express antigens were successfully used to develop recombinant protein political display vaccines.
The C. One produced SPV antigen showed safety efficacy and protection and kill sheep and mice.
In June the Zappy study was published in vaccines, a leading peer reviewed scientific journal.
We're continuing to work with a global animal health company that it conducting poetry animal trials using seen one produced antigens.
Does he want antigens are demonstrating promising efficacy and those studies.
We began a fully funded phase two portion of this project to work on further increasing productivity of one or more of these antigens.
Based on the encouraging rules result to date, we are in discussions to determine how to expand our collaboration for additional potent potential commercial antigens for farm animals.
We are also working with another global animal health company to develop a companion animal antibody.
The inbound interest that we are experienced in applying R. Two plus decades of industrial biotech experience and expertise knowledge and technology and non pharmaceutical markets is accelerating.
These potential markets in conjunction with our current focus of applying C. One in the animal and human health markets underscores the broad potential applications, we are exploring and agricultural cosmetics food, new too neutraceuticals as well as the other markets.
Our growth has been an iterative process is an often is the case the company has not been able to make an announcement or name of collaborating partner. However, we have made every effort to do so where possible.
Based on the collaborations we've announced and the level of new activity. We are working on were clearly executing on our mission and gaining commercial traction Cross life Science industries.
Especially in geographical regions, where vaccine drug distribution and production are lacking and we're flexible easy to use to setup tooling and manufacturing facilities, but smaller physical fit prints are necessary.
We are uniquely positioned to deal with these situations.
We are at a critical point in the company's corporate and operational development lifecycle as our efforts across many initiatives are starting to bear fruit or otherwise nearing two ahead regarding outcomes.
As much as the tension Ron dyadic operating heavy activity has been COVID-19 related as a result of the clear need with a production capabilities of the C. One platform her journey to create a better production technology for vaccines biologics human and animal health started well before the pandemic and our stories.
Not just to play on Covid, but once in a generation technology shift whose benefits could transform global biomanufacturing for decades to come.
We have a clear and strategic operating plan as well as the resources and appropriate capital allocation strategy.
Our focus has been and can be continues to be to expand commercial opportunities of where to apply or seen one technology for human and animal health applications.
Getting the company's proprietary COVID-19 vaccine candidate.
100 D Y 100 into a first and human phase one kernel can trial is a key next step.
I am pleased to welcome Joe Hazelton Tour Executive leadership team.
Joe joined Us as a chief business officer.
He comes to dyadic with over 20 years of portfolio management regulatory oversight and global commercialization experience, including 15 years with Novartis.
Joe joins at a critical point in a commercial development supporting the global commercialization of the company's new and existing business initiatives incur.
Including closing and opportunities business development licensing and regulatory matters.
<unk> experience is critically important as we continue to pursue cutting edge science in order to further the application of R. C. One protein expression and manufacturing platform.
I previously mentioned that are noncompete agreement with Dupont outside of license Sciences has expired, allowing dyadic to explore additional new business development activity going forward.
R. C. One production platform is a culmination of more than 20 years of ongoing research development evolution, and ultimately cross application of proven industrial scale enzymes and protein production and broad ranging industries such as Biofuels.
Dyadic development advances have transformed the scalability production efficiency as well as the manufacturing footprint needed for those industries to reliably produce enzymes and proteins and industrial scale.
We have an enormous number of opportunities to monetize R. C. One platform technology for the benefit of shareholders.
Management is committed to focusing on those present, the best opportunity to maximize our limited resources.
We've done it before and we're working toward doing it again.
I will now turn the call over to Ping for financial update Thank you Mark.
In addition to the financial results I'll be discussing now you can also find additional information in our Form 10-Q, which we filed earlier today.
Our cash cash equivalents and a caring valley of investment grade securities, including interest with $22.8 million as of September 30th 2021, compared to 29 point too. Many U S dollars as of December 31st 2020.
Research and development revenue for the three months ended September 30th 2021 increased to approximately $693000 compared to $416000 for that same period a year ago.
Cost of the research Upstander Depaolo revenue for the three months ended September 30th 2021 increased to approximately $393000 compared to $267000 for the same period a year ago.
The increase in revenue and cost of research and development revenue was due to higher revenue and cost amount for individual projects, including zappy compared to the same period.
Though.
R&D expenses for the three months ended September 30th 2021 increased to approximately $1.902 million or.
Compare them to $986000 for the same period, a year ago. They increased primarily reflected the phase one clinical trial cost of D Y a while hundreds or COVID-19 vaccine candidates in the amount of $1.208 million offset by a decrease.
Of $292000, we needed to our other internal research projects.
TNA expenses for the three months ended September 30th 2021 increased by 3% to approximately $1.693 million compared to $1.643 million for the same period a year ago that.
The increase.
Separately reflected the increase in payroll and the share based compensation will be at eight o'clock.
Cost of $86000 and insurance expenses up $65000 offset by reductions in business development and Investor relations cost of $79000 and other decreases of $22000.
Increased income for three months and it's September 30th 2021 was approximately $3000 compared to $77000 for the same period a year ago.
The decrease was primarily due to the lower balance of how to maturity Securities and lastly last night due to the decrease in interest rate.
Other income for the three months ended September 30th 2021 was approximately $1.606 million compared to zero in the same period.
A year ago, the increase was due to the sale of our PDI equity interest in July 2021.
Net loss for the three months ended September 30.
2021 was approximately $1.715 million or six cents per share compared to $2.499 million are nice to share for the same period a year ago.
With that I will now ask the operator typically are Q&A session. Each call. There will be allowed one question and one follow up question to provide all callers and opportunity to participate in.
If time permits the operator will allow additional questions from Dallas, who have already spoken.
Operator.
Thank you one option Duck your question and answer session, if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your lines and the question queue. You May press star two if you'd like to move your question from the queue for participant choosing speaker equipment, it may be necessary to pick up your handset.
Before pressing star one one moment. Please while we poll for questions. Our first question today is coming from John Bender motion from Zach providers their lives.
Hi, Mark Ping and welcome aboard to Joe.
Let me just start out with a question and also mark Thanks for the update on all the active programs good to hear other coming along do you have a process in place to keep up and meet with all the partner collaborators on a regular basis.
Yes, yes, we do we actually in the R&D.
Hercules every month or every 45 days, depending on the progress of it projects.
We have now it's a zoom meeting, but actually ronen for the first time since Covid was actually and firmly that BTT. This week with one of our collaborators.
Okay, great Great I guess, how many active collaborators do you estimate we have right now I think I have a list of about 40.
About 40 different entities.
Entities that you work with how many of those could we consider to be active.
Well.
John I think of that you know like a mark mentioned earlier a lot of them. We can't really publicly talk about that and are there a lot of wild stabs you know the one that you have on the list are very accurate accurate in terms of the wife statue, we have already announced like a desk quarter, we actually signed to audition.
No two new collaborations, which we can only give you the general description I'll be organization, we can't really named them, but one of them is our academia like institution, which we have been in touch with them for a long time and the other one is our industry partner.
That shall we are exploring potential up opportunities to for a different industry.
And to kind of reinforce the statement that we made in prior calls we do expect still to announce that human pharmaceutical collaboration between now and the end of the year with a big pharma company.
Okay.
The follow up question, just all about cash bird I think the latest update ahead on your guidance there was $10 million to $12 million. This year does that still sell like it's in the right range.
Yes, I think so I think is still in the in the bulk range in the obviously, we still have several months, depending on how things calling waste a phase one clinical trial, we are constantly assessing the different locations in terms of the.
Phase one clinical trial, given a lot of countries. They don't really have any.
Covid.
So if any longer for example in the U S. So we definitely have to.
Look at it possibilities to reduce the cost, but that's still in the ballpark.
Okay. Thank you.
Okay.
That your next question today is coming from Lewis chicken from a private investor Your line does not lie.
Hi, Mark how are Ya.
Hello Hello.
Hello.
Hi, Yeah, I, just got a I have one question the and I know you can't talk about Toronto very much but you have about two years with a cash and I think people were excited about sorento, because they were gonna come out with something like $40 million in cash and stock in the New York could another 34 million over time and now that seems to be in jeopardy. You know I don't know, where it's gonna turn out, but let's say it doesn't.
Work out and you can't you can't come to Cook closer with them, what do you do to replace that money.
Well first of all obviously were first and foremost trying to do collaborations with big pharma and other companies, which we did in the industrial biotech space before if you remember with shell and BSF Avenzoar bioenergy, we did nonexclusive licenses deals and we get upfront cash.
And then milestones please would have come in so we've always been prior to Toronto and during the same time frame now and going forward pursuing those same types of opportunities to bring a non dilutive cash with upfront access fees milestones and royalties.
So that's the primary reason goals and objectives and then of course.
If need be we could go back to the market. So we have plenty of cash to upgrade to business.
We have more than enough cash to be comfortably finished a phase one clinical trial on our own without any help from sorrento.
And we're pursuing that it is if we said earlier. The main goal here is to get preliminary safety and efficacy data to open the doors up to get some of that cash.
Accelerate the access fees from Big pharma biotech companies are we expect.
Okay.
If I could do a follow up on the sort of the same kind of idea of what you're talking about matters that you're talking about with sorento, not one single matter, but youre floral matters.
And then I guess the issue is it sounds like you have met all the requirements of the term sheet.
So it means that they have not met the requirements of the term she does that an accurate statement.
I really can't comment about that because we're in discussions and negotiations and.
You know you can speculate.
But we believe that we actually met.
Actually all the things that we're supposed to have done, but you know, let's let's see where it all goes and hopefully we can come together and do what we intended to do in the first place.
Is to launch products, one product, but abuse of their platform for Corona viruses, not just serves kobe too, but corona viruses today and in the future potentially potent therapeutics as well as in vaccines to bring affordable health care to a global population.
So that's our goal.
And I hope that's still their goal and objective as well.
Thank you Mark Virginia.
Thank you for next question today is coming from Robert Smith from Center for performance addressing your line is my life.
Thanks.
Mark could you give me an idea of what the Jones first what is what is he going to be doing first so to speak.
Yeah, well, it's very complex question, but first and foremost he is going to be getting his arms around what we do here dyadic in terms of technology.
The business development the different market opportunities that are expanding as we as we mentioned were being approached by multiple other industries to apply our technology and our expertise and our knowledge.
Including an industrial biotech so we're gonna be evaluating in addition to Adam on human health of if and where to apply our energy and our technologies to expand the market opportunities, especially in particular some of those are more near term cash generating opportunities.
So that's really what it has me doing as long and as well working with myself and Matt and others on the business development efforts.
Oh, Yeah real businesses.
Two large comments that one of the other things of course, that's cool that's around two as mentioned by Louis by Louis earlier, but one needs is cool too also is that we all taking alright poetry product into man in the phase one study.
Soon we plan that not only to open up doors to a range of other.
Human and animal health conversations, particularly figure that whole sense with big pharma royalty safety data, so bringing that to them and <unk> <unk> a great. Many other opportunities that we are as a small company in discussions around walls to rent and other things of course, all hitting some headlines that's not distracting us from.
The job at hand, which is to make sure that we are able to commercialize C. One and a range of different the two calls and they chose gonna help us do that.
Yeah, and then my follow up is about this big Pharma company that you mentioned so could you give us any any this will call at all and then what is the right to your body or.
Well I would say just stay tuned because we're you know we're we're still in discussions and hopefully we're nearing the term to put that ink.
Paper and get that done, but I think most importantly is it's not only about.
You know pier R&D, but it's a support and the size and the potential breath and scope of where they can turn out to be so I'd just say, let's stay tuned.
Okay and the next the month and a half that's the hopefully August.
[laughter] between now and the end of the year.
Bringing across the goal line, but you never know, but sure we fear we feel pretty good about it and.
They're a great partner and I think that everybody will recognize.
It's the name brand company that can really make a difference.
Oh Clark.
Alright critics question is coming from Stephen Raphael, a private investor your lines is not a lot.
Hi, Mark.
Hi, Steven.
Somebody already asked the question I was gonna ask which is.
It was about the sorento's deal, but tangential to that.
You say, you're you're comfortable with your cash position I'm not.
You say that you can always go to the market to raise money.
The stock has no <unk>.
I doubt very much you could sell five to 10 million shares even at this level, which is which which has its we handle.
So.
Make me more comfortable please.
We we've had multiple institutional investors offering to come in and buy stock in big chunks in the past and I think that's actually the opportunities even greater today, so I'm not really worried about raising the cash obviously you know that we don't want to raise the cash and take collusion if we don't have to and.
And so I'm not really worried about getting our hands on cash I'm worrying about running a business advancing that technology, expanding the opportunities getting into human being showing preliminary safety and efficacy, which will lead to more opportunities to increase shareholder value and hopefully do we need the cash to do it at a higher law.
More than we are today.
Well My view my view is it the opportunities that you're explaining are so great.
It doesn't make a difference whether you sell stock.
At $3 a share with.
Four five or $8 for sure, but again my concern is your bleeding 10 million $10 million a year 10 $12 million a year you got $21 million. So that's two years, that's a pretty short fuse.
So I'm just.
Giving you my opinion.
Hi.
If I may I may Mark just added a small comment to that if I may just to stay even though it's not yeah I think.
I would say two things one is that if you look at any biotech we were full of opportunity would not choose contingent on one deal or with one company or or wants a therapeutic area that we're fairly agnostic actually to where we can applaud technology too. So there there is a wider net good way.
Costing definitely one comment most by text as you know Stephen burn cash much more steeply than the lead up are described here were quite castle, they're very careful about the part of the work with now with all Covid opportunity. It's an inflection point like we will be able to have in mind first demand proof of concept safety data.
<unk> G O P study.
What we're saying is that we believe that is a very important step forgot. It because we then have overcome what we believe in what we've been told by a loaded industrial industrial leaders from former particularly from former I've got being a very important thing to go and show and do and say, we very very thoughtfully very carefully what we partners.
Uhm to get to that point, which will which were heading towards pricey. So that's one of the number of different tasks that we we believe it is very important now obviously, it's hard and it's cool to promise you what number that equates T. Dot clearly, it's gonna be a very important step for us. We're also in conjunction to that still looking too.
Sign other kinds of deals marks or sorry, 221. This side of Christmas week with the bright confident in the end, but there are others to leave off the ceiling very aggressively. So I think you'll put on cash is not is understood glass, we'd recognize that but there are many things and apply for them to give us confidence in saying that this is a great platform that will take you to.
Two two great partners.
That correct question today is coming from <expletive> Williams from Williams Research Group your wife is not alive.
Hi, Mark.
Most of the questions that I hadn't thought I had I've already been taken care of by the other gentleman who were on but there's just one area. It's it's really a color question.
In terms of fries are coming out of course, that's what hit a lot of the smaller biotech so hard working on COVID-19, including US I think we got caught up in that as well.
One thing is kind of a little ridiculous in relation to fries or is there a pill.
Has to be accompanied by another H I V pill, which I haven't seen any of the media and I'm not sure that the markets are totally aware of that but in any event.
Not for sanding, the sorento situation, and how that evolves and whether you're close it and where we go after how do you view the market opportunity now with Pfizer, let's assume they're they're gonna be the kingpin for awhile and I don't know, they're talking 4 billion copies next year.
Or the vaccine so how do we fit in with the market opportunity for us assuming that that continues to be successful.
Yeah, well I I can't really comment about Pfizer's pill.
And that's in after treatment I mean, we actually had a phone call today with a major pharmaceutical company, Matt and I were.
With a gentleman said really the problem here is to get the entire global population vaccinated so that in fact.
Spreading the disease, because even the vaccinated are spreading the disease today.
So it's nice to advisor has a pill taken potentially help save lives and that's great and as a human being we are happy about that.
But the goal here is to stop it from happening in the first place and again in our case, it's not about COVID-19, it by getting any human beings, showing safety and efficacy and launching a platform that's going to transform and Revolutionise biomanufacturing. So.
So we believe in the long run we will have one off not pay most efficient way to make recombinant protein vaccines antibodies and other therapeutic drugs and.
And if we just make one of those in conjunction with a partner let alone on our own or if our COVID-19 vaccine gets launched in India or in Africa or in Southeast Asia.
That it is a remarkable achievement, but more importantly will bring in more than enough cash to solve Steve question. Her for all of our shareholders, but most importantly bring accessible affordable health care to the world. So it's a win win win situation.
And just to add on Mark's comments, you know we are a platform company C. One itself is expression platform. It's had multiple years as you know so we are now at the lack of markets issue for us to take off a market for us to attack I think of Covid N. D Y 100, it's happened to be the first the product.
We are having which we all know the first job is the hardest to write once we got that first one we opened the door I think the market is going to be widely open for us. So back to the strategy, we have getting D Y N 100 into human is the key for us at.
The core and the objective for the business for this year next year and from there you know other marquez as we are.
Going to the different strategies and finding the right partners I think it.
We'll add more access into our portfolio.
And <expletive> as we mentioned earlier in the call I bet, we're working on five different infectious disease targets. In addition to COVID-19.
<unk> antibiotics and vaccines and is more coming where women approached by worldwide players big and small pay or evaluating now more seriously as seen one platform for recombinant antigen because of the proof of concept and Zappy and and all the other animal studies, we've carrying on over the last.
Here on four different continents.
So we have not only have the advancement of C. One as a platform. We've also picked up the knowledge and experience. So we didn't have about taking antigen forward into a phase one clinical trials so to be honest with you even learned a lot. We've got more experience. We've got the infrastructure. So if you come to us as a small biotech.
We can actually take ear Jean put it into ours. He won't sell create a stable cell line and a very rapid timeframe. They can produce large quantities of your antigen can protect against certain diseases. We can then have their relationships that would've been developed zapping otherwise conduct animal studies on behalf of though.
Clients and then we can launch it into a starting to do CMC or cgmp manufacturing with the partners. We've developed so we've broken infrastructure and then some of the money going towards getting the proof of safety and efficacy of seeing one of the platform. We now also have a platform that's far beyond.
Just becoming a cell line provider, we can do it on our own for different add to change their to have an antibody therapeutics are doing on behalf of companies and we think we can do it more rapidly and more affordably. So let's just get into humans proved safety and efficacy and we'll let the chips fall where they may.
Okay terrific. Thanks for the car.
Alright, thank you.
We reshape our question and answer session I'd like to turn the floor back over to the Attic C. E O. Mr. Animal farm. Please go ahead.
I want to thank you for joining tonight's call as we close out fiscal 2021, we've put in motion many of the critical components needed to enable an application and the initiation of first in human trials in 2022 for D Y 100, and potentially other products.
Strategic planning for 2022 has begun and we look forward to delivering on our objectives.
The multiple shots on goal and we have created enhances the likelihood that our commercial reality will be realized sooner than later.
R. C. One production platform has the potential to liberate all segments of the global population at risk or who have been disenfranchised and the vaccine in drug production and distribution cycle.
<unk> G O P toxicology data soon to be published in the upcoming anticipated D Y 100 phase one clinical trial, where even more optimistic Ford we can accomplish in 2022 and beyond.
Thank you again, and we look forward to keeping you updated on our progress along the way and we'll see you on the next call.
Back to the conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.
[noise].