Q1 2023 Applied DNA Sciences Inc Earnings Call
Good afternoon, and welcome to the applied DNA Sciences' first quarter fiscal 2023 financial results conference call.
All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.
After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.
Please note this event is being recorded.
I would now like to turn the conference over to Sanjay Hurry head of Investor Relations and corporate Communications. Please go ahead.
Thank you Gary Good afternoon, everyone and welcome to Oi DNA as conference call to discuss our first quarter fiscal 2023 financial results.
Can access the press release that was issued after market close today as well as the slide presentation accompanying this call on the Investor Relations section of our corporate website.
Speaking on the call today are Dr. James Hayward, our chairman, President and CEO and Beth Jantzen our CFO .
Judy Murrah, our CEO in place Iraq, our Chief legal officer, and head of business development will also be available to answer questions on the Q&A portion of this call.
Or we begin please note that some of the information you will hear today during our discussion.
The forward looking statements I refer you to slide two of the presentation to our Form 10-Q filed a short while ago for important risk factors that could cause the company's actual performance and results to differ materially from those expressed or implied 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 call speaker on today's call Beth Jantzen. Please go ahead.
Thank you Sanjay.
Nevertheless.
Thank you for joining us.
Let's go first quarter Investor call.
I'll start this afternoon.
With an overview of our results for the quarter ended.
<unk> 30 for 2022.
I will then turn the call over to Dr. James Hayward, our president and CEO .
Who will discuss progress against our strategic initiative.
We will then open the line for questions from our analysts and institutional investors.
Before I begin my review.
And as a reminder, we now report segment data that reflects the results of operations for our three reporting segments.
The executive management team is is this data to manage the company's performance on a segment basis.
SaaS expected future cash flows.
And make more informed decisions about each segment going forward.
We provide this data to investors as a measure of transparency into our management of these segments.
Our three reporting segments are.
[noise] therapeutic DNA production identified as linear RF.
Our majority owned biotherapeutics subsidiary.
M D oar molecular diagnostic testing services.
Which is R E D C L clinical laboratory.
And DNA tagging and security product, which is our supply chain traceability segment.
Yeah.
To begin we are pleased to report a solid start to the fiscal year.
With both sequential and year over year revenue growth.
Our revenue performance in Q1.
This is driven primarily by a D C L and its COVID-19 testing service.
Or theres for linear DNA and deferred cotton tagging revenues also contributed to the quarter's top line performance.
Yes.
Turning to our consolidated results for the quarter.
Total revenue in Q1 was 5.3 million an increase of 26%.
From 4.2 million in the prior fiscal period.
On a sequential basis Q1 revenues increased 48% from $3 6 million.
The 1.1 million increase in Q1 revenue.
Due to an increase in COVID-19 testing revenues associated with a key client.
Notable in Q1's revenues were orders for research and development quantities of linear DNA.
My first time biopharma customers for their M RNA development effort.
As well as a recurring commercial order from an existing biotherapeutic costs right.
The increase in revenues was offset by a decline in product revenues of 310000.
It was primarily attributable to a decrease in sales of our M. D Act test kits and supplies.
Yeah.
Our key COVID-19 testing client is an academic institution.
And as such testing demand is subject to love do this semester breaks and school holidays.
The current quarter fiscal Q2 testing level includes approximately three weeks of winter break during.
During which testing levels reviewed it.
But the start of the spring semester testing levels are ramping up.
Yeah.
Gross profit was 2.4 million or <unk> 45 per cent.
Compared to 1.1 million or 27% in the prior fiscal year period.
The improvement in gross margin was the result of an improved gross margin at a D. C L.
Higher testing levels, coupled with cost management efforts for our testing contract, where we also provide in staff test collection centers were the main contributors to the improved gross profit.
To a lesser extent the improvement in gross margin for the current period.
It was due to the prior fiscal year period, having high COVID-19 positivity rate.
Which resulted in a reduction in pooling side.
That had a negative impact on gross margin due to higher consumable cost per sample.
Our total operating expenses declined by 2.2 million or 38% in Q1.
The $3 6 million.
From $5 8 million in the prior fiscal period.
The decline was primarily primarily attributable to lower stock based compensation expense of $1 6 million.
The balance of the decrease is related to a decrease in bad debt expense of 300000.
For the collection of an outstanding receivable balance that was previously fully reserved for.
Our operating loss for Q1 was $1 2 million.
Compared to an operating loss of $4 7 million in the prior fiscal period.
Given the unrealized change in fair value of the warrant liabilities included in our net loss, we highlight loss from operations to be the best representation of the company's operations.
Net loss for Q1 decreased to $3 8 million or 30 cents per share.
Versus a net loss of $4 7 million or 63 cents per share in the prior period.
Excluding noncash expenses.
Consolidated adjusted EBITDA for Q1 was negative 1.1 million <unk>.
Parents, a negative 2.7 million in a year ago period.
Turning to our balance sheet.
Cash and cash equivalents totaled $12 9 million on December 31st.
As of December 31st accounts receivable stood at $4 1 million.
We expect to collect the bulk of this amount in the current quarter.
For Q1, our average monthly burn stood at 779000.
And was essentially flat with average monthly burn for the prior fiscal period.
Yeah.
Our current wires outstanding balance on December 31st 2022 remains unchanged at $7 3 million.
The share price did not for each warrant exercise prices during the quarter.
Approximately 2.29 of the some of the $7 3 million warrants have exercise prices ranging from $2.80 to $2.84 per weren't sure.
Which if exercised could result in exercise proceeds to the company of approximately $6 3 million.
$5 1 million of these warrants have an exercise price of $4 per why aren't sure.
Just exercise to result in total exercised proceeds of approximately $23 million.
Of the 5.1 million was 2.1 million expire in September 2023.
Which if exercised would total proceeds of $8 $4 million.
Our cash position on January 31st was approximately $10 $8 million.
Before I turn the call over to Jim earlier. This afternoon, the state of New York and the Empire State Development Corporation announced a receipt of an Excelsior jobs program award valued at up to $1.5 million.
The award, which was announced on state of New York website.
Before.
The reward which was announced on the state of New York website could result in refundable tax credits credit for qualifying net new job creation over benefit period of 10 years.
We intend to use the award to support linear DNA platform development path.
For used in the manufacture of nucleic acid based therapies.
Jim's remarks will go into greater detail on progress by this business that business segment and why we're excited about its future prospects.
This concludes my prepared remarks, thank you for joining us today I will now turn the call over to Jim for his comments.
Okay. Thank you Beth.
Good afternoon, everyone and thank you for joining us on our quarterly Investor call.
Our performance in the first quarter was one of improving execution.
At the same time, we achieved progress on strategic initiatives focused on laying the foundation for compelling Biotherapeutics story supported by two P. C are in both businesses with the potential for growth and future cash flows.
On prior quarterly calls I believe.
Jennifer the bio therapeutic application of our P C. Our expertise as the company's chief creator.
Shareholder value.
I've discussed the DNA underpins, most nucleic acid pipelines either in the manufacturer of the therapy.
As in the case with messenger RNA.
Or.
With DNA as the direct therapeutic itself.
The demand for DNA is expected to grow going forward.
And the plasmid D.
DNA, which.
Which is the industry's incumbent DNA production technology suffers from long lead times high complexity.
And the high capital and labor costs as it moves to skill to support the growing number of nucleic acid based therapies under development.
Okay.
Plasmids, DNA scalability and related cost and process issues are negatively impacting developers in real time.
It's common today for a developer to encounter delays for a man you're fracturing slot up to 12 to 18 months out.
A delay of this magnitude for an industry, that's reliant on development milestones and clinical data.
And all of their cash runways prospects for strategic partnerships and paths to commercialization.
The industry requires an alternative to plasmid DNA and it is actively seeking it out.
The industry acknowledges non plasmid DNA has potential for enabling companies across the nucleic acid based therapies sector to simplify and accelerate DNA manufacturing.
The ability to iterate R&D faster by and suit and Symbiotically produce DNA to bring product to the clinic.
And to market faster.
Confers.
Valuable advantage to a sector, where therapy development has historically taken a decade or more.
Considerable cost.
But so much has changed.
Interest from major pharmaceutical players in non plasmid DNA manufacturing is rapidly increasing.
With two enzymatic DNA manufacturing companies being acquired in the last 18 months one by Merck.
And the second last month.
But donna.
In addition, Pfizer less solar Inc. A licensing agreement with a third enzymatic DNA manufacturing company.
Unlike those companies we are a relative newcomer with a differentiated PCR based technology platform that it sells at manufacturing the specific DNA needed to empower next generation mrna workflows.
In light of the favorable macro environment for both enzymatic DNA manufacturing and mrna therapies, we believe the timing is right.
And long term strategic partners.
Assist applied DNA and its broad scale commercialization of the plot for them.
So in my prepared remarks today will focus on why we believe we're in the right place at the right time with the right expertise.
To be integral to the future of nucleic acid based therapies.
Direct alternative to plasmid DNA.
I'll also touch on a D C L. A molecular diagnostics clinical lab in our DNA tagging business also beneficiaries of all our PUC our expertise.
I'll update you on recent developments as we position them for long term profitable growth and positive cash flows.
Our ability to make enzymatic DNA for nucleic acid based therapies is based on very very large scale P. C. R, which is grounded in our 15 years.
Plus of development experience.
Our linear Rx subsidiary produces DNA, enzymatically, which we've branded linear DNA.
We view linear DNA.
<unk> direct alternative to plasmid DNA with improved safety and efficacy and performance all with reduced menu fracturing times.
Since forming <unk>.
Linear Rx four years ago, we've made tremendous strides in developing our linear DNA platform.
DNA is there would it be agnostic.
Therefore, linear DNA is relevance to nucleic acid based therapies is at least equally broad.
And to name just a few of those applications.
M. RNA uses DNA of an in vitro transcription template.
We're in I V T template D.
DNA is used to make the viral vectors that empower gene therapies.
DNA is also used to reprogram cells into car T cells used in the treatment of certain cancers.
Of course, DNA itself can be used as a direct therapeutic agent in the form of DNA vaccines targeting a wide range of indications from infectious disease to cancer.
To date, we have cultivated an enviable roster.
Oh biopharma companies that have used linear DNA for R&D purposes to inform their therapy pipelines and as Beth noted in her remarks.
We acquired a pair of first Sterling haven't linear DNA customers. During the first quarter that are engaged in mrna therapy development.
Given the linear DNA is relevant to nucleic acid based therapies is so broad.
We have carefully examined in the market and have deliberately chosen to focus on two near term opportunities that we believe ball for the nearest term revenues.
And conserve as a jumping off point for applying our platform to the broader genetic medicines opportunities.
I'll spend a few minutes speaking to each in turn.
And they are firstly.
In vitro transcription templates known as I V T tablets, where mrna production.
And DNA therapeutics.
We spent the last 12 months.
On using the linear DNA platform for the enzymatic production of linear DNA I V T mrna templates.
This was not an easy task as conventional P. S yard is not really an option.
Due to the unique.
Homo polymer of sequences that are found in I E T templates.
Specifically, the poly tea in the DNA template.
That is transcribed into poly a in the mrna.
Nevertheless by.
By using the many tools in our particular PCR toolbox.
We overcame these challenges and develop the workflow that utilizes specialized PCR primers in the PCR process.
To achieve highly homogeneous I V T templates.
Thus, creating a differentiated production platform with many advantages over plasmid DNA manufacturing.
Now we launched our I V T template service this past summer.
And the response from industry has been overwhelmingly positive.
Okay.
Our I V T tell flooding workflow as shown in this slide is a simple.
Five step process.
We take our DNA template, which can be a plasmid.
Linear blizzcon or any type of synthetic DNA.
And step two we optimize it for yield and fidelity.
And then it goes through our production platform, which is step three.
This step conducts the amplification of the optimized template by means of our P. C. Our production plot for them.
Which in the case of our current R&D stage company customers produces small scale orders that can be easily scaled up for production for recurring larger orders.
Through this reaction.
We can deliver high quality ends.
Enzymatically produce template.
Complete with lawn and homogeneous poly details.
It then goes through purification and quality control as indicated in step four.
And batch release to the customer with step five.
For customers with existing DNA templates.
This entire process concurrently be completed in under two weeks for a middle of ground scale.
With faster turnaround times.
Scale of part of our platform.
Road map.
Our end products.
As pure.
It only produces the gene of interest and in doing that we eliminated endotoxin risks in the risk of including genes responsible for ampicillin resistance. It.
It is efficient.
You can use less quantity.
Linear DNA to drive similar or higher yields than the equivalent of plasmid DNA.
It offers unparalleled flexibility.
We provide a suite of I V T template modification options for specific performance requirements, such as chemical modifications and the addition of precise probably tease sequences.
These poly T sequences are highly homogeneous in the DNA sequence, including the lengths of these repeat homo polymer sequences all necessary for optimal function.
Yeah.
It is scalable in a facility that is a fraction of the cost in our footprint.
And at a fraction of the footprint.
Plasmid DNA facility.
In addition by providing an IV T template that is already linear in form.
We estimate that our linear DNA I V T templates cut eliminated about 35% of the process steps required by conventional plasmid DNA based mrna production workflows.
Moreover, unlike plasmids DNA templates that require extensive restriction enzymes to linearize the DNA, our linear template has no such requirement.
Thus eliminating expensive input materials from an RNA manufacturing workflow.
The combination of all of these advantages forms a compelling use case for our customers.
Now our second term focus.
His own DNA therapeutics, and veterinary biologics within this field.
The veterinary market is now beginning to grow based on advances in human therapies.
Veterinary biologics market goes through U S. The U S. D. A N has a lower regulatory threshold by a conditional approval.
<unk> offers a path to commercial.
<unk>.
At a substantially lower cost compared to a D. A.
The veterinary market is also a greenfield for nucleic acid based therapies and conserve as a proving ground for.
Linear DNA is eventual application to human health.
Now in the past year, we've demonstrated that linear DNA can be used as a direct therapeutic.
With this capacity established our first entre.
Is with a direct therapeutic targeting the veterinary immuno oncology market.
There are currently no veterinary lymphoma immunotherapy treatments being marketed.
But we've taken a derisked approach by in licensing.
Our canine lymphoma immuno therapy.
From a close partner.
Whose data from a plasmid DNA version of this therapy.
Showed a threefold increase in treated dogs survival times.
Now these data are compelling however.
U S D. A decline their request for conditional approval based in part.
On those therapies use of plasmid DNA.
Given the host of drawbacks associated with plasmids antibiotic resistance the origin of replication cheap among them.
USDA did not want this therapy used on companion animals.
Our partner also faced manufacturing challenges due to their therapies plasmid DNA.
And adenovirus composition.
Our linear DNA versions of the same therapy has demonstrated a similar immune response.
Smid version of the therapy, but incurs none of the plasma drawbacks.
Linear DNA is well suited for the economics of veterinary biologics, because we can manufacture DNA cost effectively.
We're also investigating the use of off patent inexpensive lipid nano particles or L. M P's.
As the delivery mechanism for lymphoma therapy.
This would give us an integrated offering across the veterinary cancer, if there would be value chain.
We have concluded our initial screening studies on numerous LNP formulations that have resulted in promising results in vitro.
In addition, early studies have shown that the LNP linear DNA compositions are highly stable at four degrees Celsius, which gives us a large commercial advantage over the L. M. P M. Our RNA formulations that require an extremely cold.
Shane.
We plan to share an important findings in the coming months.
Our plan is to now take our most promising LNP formulation into animal studies.
To arrive at a final formulation once complete.
We will use the optimized L. M P linear DNA formulation to empower our canine lymphoma immuno therapy.
And seek U S conditional approval by a small canine clinical trial.
Upon conditional approval there is a well established commercial path.
Out licensing licensing the therapeutic to an animal health company that would secure a final regulatory approval.
And take the product to Congress.
So we're looking ahead.
Where are we today.
Linear DNA really stands at an inflection point.
We have proven the platform to be an attractive and viable alternative to plasmid DNA.
We've cultivated a marquee biopharma customer base.
We are constantly optimizing and improving our workflows supporting genetic medicines.
The gating factor for us.
That's never been the ability to produce DNA at scale.
Instead.
It's been the ability to make linear DNA, a cgmp grade required to take a customer's therapy into the.
The clinic and in fact, it's really been a question of funding.
Our capital raise this past August served as the funding basis for establishing a small scale cgmp production capacity by the end of this calendar year.
This capacity was.
Task to the manufacturer of DNA products to support customers from early stage drug discovery through late phase clinical trials subject to the necessary regulatory approvals.
Now our timeline to cgmp is an altered.
In recent weeks, we've been offered space adjacent to our corporate footprint that is already fit for purpose.
Purpose.
We have opportunistically secure this space that who those smaller than the standalone space than initially planned.
It is more cost efficient and adequately sized to manufacturers cgmp grade M.
RNA based starting materials.
At quantities necessary to support early and mid stage clinical applications.
We expect to have the space, but we've allocated in.
Ready for cgmp production of I'd be T templates by calendar year end.
We expect to complete this space without the need for additional Capex realm.
Relative to our allocation for fiscal 'twenty three.
We expect this new space post spoons or need for Standalone capacity by 12 to 24 months.
While allowing us to pilot our manufacturing processes that will be integral to expanding our production roadmap.
In addition to meeting current demand.
We believe bringing to market cgmp product as soon as possible, we'll facilitate the opportunity to secure strategic partners, who are seeking and zoonotic DNA production to inform their therapy pipelines.
In addition, we are not standing still on the development of our platform and we're focusing on two platform improvements.
First we're currently working to increase our platform manufacturing speed by leveraging one of P. C ours biggest advantages do.
The ability to use de novo synthesize DNA as a starting material.
This would enable us to go from digital DNA sequence.
See you then an email.
Two milligrams or grounds of DNA in a very short period of time.
This is made possible by the fact that our PCR based platform does not require a plasmid DNA template.
Leveraging the unique power of P. C. Our our goal is a completely plows smid free high speed I V T template production workflow capable.
Of going from digital DNA sequences to large quantities of I V T template in only 14 days.
We are currently working with our input materials partners and believe that this goal is achievable.
Second and again, leveraging the unique attributes of P. C R.
We are also investigating the use of chemically modified I V T templates.
<unk> P C R.
Enable a next generation of RNA polymerase.
To increase I V T yields and reduce double stranded RNA production.
Data from our early studies with a partner company that had been very promising with large increases in RNA yield.
And decreased double stranded RNA production as compared to conventional IV T.
And we look forward to providing more information on these exciting improvements in the near future.
Now, let me update you on our activities in the D. C. L. A in our DNA tagging business before opening the call to questions.
Okay.
We have successfully completed our clinical validation and data analysis for our pharmacogenomics or P. G X.
Testing panel and have secured partners to enable an end to end order to result workflow.
We plan to file our validation package with the New York State Department of Health.
In the near future for approval.
As a laboratory developed test.
Approval will allow us to initiate a P. G X testing service here in New York.
Allow us to receive samples collected nationally from states that conform to new York's clinical laboratory evaluation program or club.
We believe we have set up our P. G X service for success for two primary reasons.
First we've taken a differentiated approach to this testing service our business model.
It's predicated on servicing enterprise scale customers similar to what we did in our Covid testing model.
Which worked very well.
Under this model, we contract with large organizations to analyze their populations.
Conferring a benefit to both the enterprise and the constitutively individuals.
This model allows us to charge a single entity for testing.
Thus, eliminating the need to seek out reimbursement on an individual patient basis, simplifying our services and removing the need to.
Employ a large billing and reimbursement department such as you would find at a typical clinical Ah.
Second we've been speaking with prospective customers in the marketplace for many months to cultivate interest in our service their feedback.
It has helped us shape, our commercial strategy.
We're targeting regional health systems, and large self insured entities in the New York operating area.
Enterprises, where the return on investment of PGS testing is not only measured in its clinical utilities and improve patient outcomes and improve standards of care.
But also its economic value in terms of cost savings to the enterprise customer by reducing direct and indirect health a health care costs for the overall population.
I also note that unlike COVID-19 testing, where turnaround times are measured in hours PGS testing has no such imperative.
With this.
Without this constraint.
We can move to commercialize the panel nationally from our laboratory here at Stony Brook.
We anticipate the state's review of our validation package will take several months and are targeting a service launch shortly thereafter.
Based on feedback from our prospective customers it is likely that a commercial scale testing contract.
We will be preceded by a soft launch to ensure optimized workflow for any customer specific processes.
The prospective customers. We are currently speaking to represent individual cohorts of over 50000 potential patients samples each.
Our submission to the state for approval comes on the heels of an unexpected cessation of the COVID-19 or rather of an expected cessation of the COVID-19 public health emergency buzzer button administration this coming may.
P. G X testing compared with COVID-19 will rollout at much lower testing levels.
But with a higher than anticipated gross margin per test.
At this time COVID-19 testing customers have not indicated.
They will respond to the end of the public health emergency.
Finally, as for our supply chain Traceability segment, we are heartened to see that.
The recently enacted federal omnibus spending bill includes funds that support a sizeable increase in customs and border protection personnel.
And for the development of technology. The agency uses to support forced labor enforcement efforts.
As you will recall C. B P recognizes I used the topic of abundance testing and DNA tagging as two technologies that are able to deliver a compliance with the weak or forced labor Protection Act.
In total the Bill provides $101 million to support efforts to prevent imports of goods produced with forced labor in fiscal 'twenty three.
That's on top of the $51 million at C. B P received for forced labor enforcement in fiscal 'twenty two.
The increase in funding dovetails with the volume of goods and anticipated scale.
Titians of compliance at C. B C expects in fiscal 'twenty three is it enforces the week or forced Labor Protection Act.
During the first quarter, we added several new customers for certainty I sit topic analysis testing, which serves as a complementary diagnostic too.
Two tagging for customers in our cotton pipeline.
So I've provided a lot of commentary today and look let me offer a brief recap.
Our linear DNA sits at the intersection of the expansion of nucleic acid based therapies and the industry's movement toward enzymatic DNA manufacturing platforms that are faster.
It's complex to operate.
And less investment intensive.
We are maintaining our timeline to cgmp, but now with the deployment of a more cost efficient space.
So it was to capitalize on interests from customers bought one development partners and.
And even strategic partners.
At a D C. L. R. P. G X platform is incredibly well positioned to leverage the population health platform. We built during the pandemic to propel this subsidiary into the genetic testing market place of the future.
P. G X is anticipated to be realized at a higher margin and lower testing volumes.
And finally.
The omnibus spending bill put some real teeth behind implementation and compliance with the weak or forced Labor Protection Act.
More customers and border protection stuff means more capacity to interrogate shipments, which increases the value proposition of our certainty platform.
Now before I open the call to questions on behalf of applied DNA. Its board of directors, the executive management and staff I'd like to think of and our whole goal and the.
Empire State development team.
For their award under the Excelsior jobs program and the support from our county in town governments.
In the context of my prepared remarks. This afternoon on the opportunities we are pursuing in the life Sciences sector. This award is timely.
And will help us achieve our goals here on long Island in New York and to the benefit of all.
This concludes my prepared remarks, operator, please open the call to questions.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If you were using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Yeah.
Our first question is from Jason Mccarthy with Maxim Group. Please go ahead.
Hey, James Thanks for taking the questions can you talk a little bit about you had mentioned.
Earlier in your remarks that there were two.
Linear or enzymatic based.
Based DNA manufacturing groups that were required by Madonna just recently in January and then won by.
By Merck and Pfizer did something with touch light.
Can you talk a little bit about what those those acquisitions or licensing agreements bring to those companies in light of all the things going on with mrna and how does applied DNA.
Kind of a measure up to those those types of groups.
Sure Great question.
So first of all it makes clear that the manufacturing environment for mrna.
It's a dynamic one.
And is in the midst of change Pfizer had announced the.
They would prefer to walk away from plasma based operations.
They licensed in a kind of try it and see license.
With a touch light in the U K.
Which uses a rolling circle platform.
That requires additional enzymes and purification and cost compared to our own.
And we'll have to see how that evaluation goes.
Madonna acquired a Japanese company.
Company.
The.
Uh huh.
It is not as well known in the U S.
But.
We'll have to see how their evaluation turns out.
We feel that by comparison, our technology is much more flexible.
Much simpler.
And we feel we're on the path to very shorten development times.
Greater efficiencies and manufacture.
The fact that we are.
Just about the only company lost on the dance floor.
Uh huh.
Puts us I think in a strong position.
Because we have big plans.
And who execute on them, we're going to need partners.
And I think this will allow us to attract a.
Partners over the.
Coming a year or two.
Well, that's an interesting point.
If if if if most darrin it took our zero in and Pfizer is doing its thing a touch light I don't I forgot who Merck.
Picked up and when that was but.
If applied or linear Rx has is kind of the only game less.
Left in town, how can you leverage that youre, saying through partnerships because everybody else is nowhere to go right. If there's nobody else in this space doing enzymatic DNA amplification.
So we're looking at opportunities for JBT.
To improve our enzymes for example.
To accelerate our workflow.
Given the number of nucleic acid therapies.
The U S pipeline.
Speed and efficiency are going to be critical and we think we can speak to those key issues.
How many of your customers are our auxiliary phrase or more of your customers new customers that are coming on board for the linear DNA.
Skewed towards the mrna or RNA space, given all the momentum we've seen.
Around that category.
Yeah, absolutely I think that will begin to diversify over time.
And I think the nearly 5000 of these therapies that are heading towards clinical trials will begin to whittle down.
And the other applications.
<unk> will become clearer and clearer and.
You know as we gain experience.
With the use of linear DNA, not just as a template for our mrna.
What does the direct therapeutic.
<unk> itself.
Linear DNA is much more stable in messenger RNA and it's much easier to manufacture.
The key issue will be proving too with D. A.
The integration does not take place in all of our evidence so far is that.
It does not.
So I think that our opportunities on the backend.
Growing our I V T business will be for direct use of linear DNA as well.
Okay, just jumping over to the canine linear immune therapy opportunity you had said your.
Moving to a relatively soon I think into a small animal studies to finalize your formulation can you just help us understand a little bit about one the timeline to get there.
And two what is the development path for canine.
Immune therapy as one small trial enough or do you need to go through several phases like you wouldn't human development.
Sure Clay, if you'd like to speak to the issue of the time frame in the size of the trial necessary to.
To get preliminary approval from U S D a.
But it's a simple trial and its really life extension.
You know when it comes to <unk>.
<unk> dogs.
Many of them get lymphoma.
And there.
Their prognosis typically is measured in months.
And so I think impacting that prognosis with a longer.
The lifetime.
Will be.
The hallmark of success for the therapy.
Thanks, Dan Hey, Jason Yeah. So it is going through USDA right. So it's not going through FDA.
[laughter] veterinary biologics most of the data points, we have for trial size and trial time are coming out of the.
Pocket on Cogs going through.
No your chemotherapy those getting approval are quite small trial sizes wallet or 50 in terms that they came on in rolled and it seems that the endpoints are not that high it's.
It really just increasing the life expectancy.
We've seen from USDA for conditional approval right. So we're not going for full approval. Our goal here is conditional approval.
We've been <unk>.
Probably 'twenty and again that endpoint is pretty permit there. So we think it's that.
It's a very reachable endpoint with the product that we're looking to develop and then once we get that conditional approval, we would attack offline.
Who on the farm the larger pharma side.
<unk> has the most attractive veterinary arms.
In their portfolio that you.
Might look towards for a potential partnering for something like this for Pfizer was and then they want I'm not sure if they're still in the vet space.
Yeah, I mean, Jim I don't know, how you feel but right.
Right now the plan is to really target. The next generation chemotherapy drug companies in the veterinary space frankly, it's been a couple of new approvals in the chemo space for canine lymphoma in this therapy Act as a companion therapy to those.
The loss of choice for us.
To run those in our trial and then eat Alabama.
Okay.
Yeah, that's exactly it.
This is a companion approach to increase the efficacy of chemotherapy for which there are I believe right now two in the market.
Okay great.
Thank you I'll jump back in the queue.
Okay. Thanks.
The next question is from <unk> Chen with H C. Wainwright. Please go ahead.
Thank you for taking my question.
Could you comment on when the current contract with the big customer for Covid, 19 tests and whether the customer well.
Renew that contract.
Depending.
The government official emergency status for coffee. Thank you.
Sure I can tell you that the customer has given us no commentary about the.
Their plans are after the summer, but I can tell you that they have been remarkably conservative in terms of the care of their population and they've shown their willingness.
To go to great to do so.
Okay.
So with respect to our PGS testing.
So you mentioned that you bought.
Finally, a malocclusion package with New York State Department House.
How much revenue should we expect to see.
Later, this fiscal year coming from P. J X X.
I see.
Panel.
Yes, so PGS testing.
Has the capacity.
Two roughly.
Replace our Covid testing one to one.
Okay.
Function of.
What capacity, we built two but hum.
Increasing scale is relatively simple, it's just a matter of more equipment.
Okay.
Yeah.
Oh.
When do you when would you feel comfortable to provide some topline guidance could it happen later this fiscal year.
It really won't be a function of it depending on whether we get the P G assets up and running and have.
Our progress on the C. J M P and L Rx front, but.
In that timeframe or soon thereafter.
We will need contracts that give us the ability to forecast.
Okay. So the package finding is is it going to occur in the current quarter or in the first half of this calendar year.
Well, we'll be filing in the current quarter.
Are you comfortable with that.
Our clinical validation.
Wound up in December we've pulled the data package together.
Good.
In the process of finalizing the package.
Got it.
Okay, great. Thank you.
Welcome.
Again, if you have a question. Please press Star then one please standby as we poll for questions.
Showing no further questions. This concludes our question and answer session I would like to turn the conference back over to Dr. Hayward for any closing remarks.
Yes, we'd like to thank you all for participating in today's dialogue and we look forward to speaking with you again at the end of the current quarter. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
Yeah.
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