Q2 2024 Dyadic International Inc Earnings Call

Good evening and welcome to the Dyadic International's Q2 2024 conference call.

Operator: Currently, all participants are in a listen-only mode. Following management's prepared remarks, there will be a brief question-and-answer session. As a reminder, this conference is being recorded today, August 13, 2024. I would like to now turn the conference over to Ms. Ping Rawson, Dyadic's Chief Financial Officer. Please go ahead.

Speaker Change: Currently, all participants are in a listen-only mode.

Speaker Change: Following management's prepared remarks, there will be a brief question-and-answer session.

Ping Rawson: As a reminder, this conference is being recorded today, August 13, 2024. I would like to now turn the conference over to Ms. Ping Rawson, Dyadic's Chief Financial Officer. Please go ahead.

Ping Rawson: Thank you. Good evening, and welcome everyone to Dyadic International's Q2 2024 conference call. I hope you have had the opportunity to review Dyadic's price releases announcing financial results for the quarter ended June 30, 2024. You may access our release and Form 10-Q under the Investors section of the company's website at dyadic.com. On today's call, our President and CEO, Mark Emalfarb, and our Chief Operating Officer, Joe Hazelton, will give a review of our second quarter 2024 business and corporate highlights, including a brief summary of our recent research and business development efforts.

Speaker Change: Thank you, good evening, and welcome everyone to Diabetic International's Q2 2024 conference call.

Speaker Change: I hope you have had the opportunity to review Dyad Express releases announcing financial results for the quarter ended June 30, 2024.

Speaker Change: You may access our release and Form 10-Q under the Investors section of the company's website at dyadic.com

Speaker Change: On today's call, our President and CEO, Mark Emalfarb, and our Chief Operating Officer, Joe Hazelton, will give a review of our second quarter 2024 Business and Corporate Highlights, including a brief summary of our recent research and business development efforts.

Speaker Change: I will follow with a review of our financial results in more detail, and our Chairman Patrick Lucey will provide a commentary on the strategic direction of the business at the end of the call.

Ping Rawson: I will follow with a review of our financial results in more detail, and our chairman, Patrick Lucey, will provide a commentary on the strategic direction of the business at the end of the call. We'll then hold a brief question and answer session. At this time, I would like to inform you that certain commentary made in this conference call may be considered forward-looking statements, which involve risks and uncertainties and other factors that could cause Dyadic's actual results, performance, scientific or otherwise, or achievements to be materially different from those expressed or implied by these forward-looking statements. Dyadic expressly disclaims any duty to provide updates to its forward-looking statements, whether because of new information, future events, or

Speaker Change: We will then hold a brief question and answer session.

Speaker Change: At this time, I would like to inform you that certain commentary made in this conference call may be considered forward-looking statements, which involve risks and uncertainties and other factors that could cause diabetics' actual results.

Speaker Change: performance, scientific or otherwise, or achievements to be materially different from those expressed or implied by these poor-looking statements.

Speaker Change: Datix expressly disclaims any duty to provide updates to its forward-looking statements, whether because of new information, future events, or otherwise.

Ping Rawson: Participants are directed to the risk factors set forth in Dyadic's report filed with the FCC. It is now my pleasure to pass the call to our CEO, Mark Emalfarb. Mark. Thank you, Ping.

Mark Emalfarb: Participants are directed to the risk factors set forth in DIADIC's report filed with the SEC. It is now my pleasure to pass the call to our CEO, Mark Emalfarb.

Mark Emalfarb: Mark.

Mark Emalfarb: Welcome everyone and thank you for joining Dyadic's Q2 2024 conference call. We are excited to discuss our business strategy, centered on near-term licensing and product candidates, which is strategically positioned Dyadic to swiftly take advantage of current and upcoming opportunities. Over the next 24 months, we're focusing on achieving multiple revenue streams and significant milestones through the commercialization of products, technology licensing, fully funded collaborations, and advancing our pipeline, all aimed at enhancing shareholder value. Our C1 technology continues to garner widespread recognition of its remarkable speed and productivity, earning accolades not only across the country but around the world.

Mark Emalfarb: Thank you, Ping.

Mark Emalfarb: Welcome everyone and thank you for joining Dyadic's Q2 2024 conference call.

Speaker Change: We are excited to discuss how our business strategy, centered on near-term licensing and product candidates, is strategically positioned at IATIC to swiftly take advantage of current and upcoming opportunities.

Speaker Change: Over the next 24 months we're focusing on achieving multiple revenue streams and significant milestones.

Speaker Change: to the commercialization of products, technology licensing, fully funded collaborations, and advancing our pipeline, all aimed at enhancing shareholder value.

Speaker Change: Our C1 technology continues to garner widespread recognition of its remarkable speed and productivity, earning accolades not only across the country, but around the world.

Mark Emalfarb: Esteemed voices from academia and industry, such as world-renowned vaccinology pioneer Dr. Reno Rapioli, government agencies like the U.S. FDA, BARDA, the NIH, and NIMBLE, nonprofit organizations, and two top 10 pharmaceutical collaborators are recognizing T1's groundbreaking potential. Meanwhile, our Depovis protein expression platform is already gaining significant momentum and, most importantly, generating revenue in the rapidly evolving alternative We are committed to leveraging our microbial protein production platforms, C1 and Apibus, to develop recombinant proteins, enzymes, antigens, and antibodies across our core sectors.

Speaker Change: Esteemed voices from academia and industry, such as world-renowned vaccinology pioneer Dr. Reno Rapioli, government agencies like the US FDA, BARDA, the NIH, and NIMBLE.

Speaker Change: non-profit organizations, and two top ten pharmaceutical collaborators are recognizing T1's groundbreaking potential.

Speaker Change: Meanwhile, our daffodil protein expression platform is already gaining significant momentum and most importantly most importantly generating revenue in the rapid evolving alternative protein in bio-industrial sectors.

Speaker Change: We are committed to leveraging our microbial protein production platforms, C1 and Epibus, to develop recombinant proteins, enzymes, antigens, and antibodies across our core sectors.

Mark Emalfarb: Alternative Proteins, Animal, and Human Health. These efforts are expected to open up new revenue streams, driving substantial value creation for Dyadic and our partners, in both the pharmaceutical and non-pharmaceutical market. I will now turn the call over to our Chief Operating Officer, Joe Hazelton, to provide an update on our business results for the second quarter.

Speaker Change: Alternative Proteins, Animal and Human Health. These efforts are expected to open up new revenue streams, driving substantial value creation for Dyadic and our partners.

Speaker Change: in both the pharmaceutical and non-pharmaceutical markets.

Speaker Change: I will now turn the call over to our Chief Operating Officer, Joe Hazelton, to provide an update on our business results for the second quarter. Joe?

Joseph Hazelton: Thank you, Mark. In the second quarter, our business development efforts in the alternative protein sector are continuing to bear fruit, showcasing the potential of our microbial platform. As part of our strategy to drive near-term revenue, we have concentrated on identifying and producing high-value, high-volume recombinant protein products that can quickly and efficiently be commercialized. Our recently announced partnership for recombinant serum albumin is a prime example, unlocking numerous opportunities within the approximately $6 billion serum albumin market.

Joe Hazelton: Thank you, Mark. In the second quarter, our business development efforts in the alternative protein sector are continuing to bear fruit, showcasing the potential of our microbial platforms.

Unknown Executive: Austin's call. Currently, all participants are in a listen-only mode. Following management's prepared remarks, there will be a brief question and answer session.

Speaker Change: As part of our strategy to drive near-term revenue, we have concentrated on identifying and producing high-value, high-volume recombinant protein products that can quickly and efficiently be commercialized.

Unknown Executive: As a reminder, this conference will be recorded today, August 13, 2024.

Ping Rawson: I would like to now turn the conference over to Ms. Ping Rawson, Diadic Chief Financial Officer. Please go ahead. Thank you for evening, and welcome everyone to Diadic International's Q2 2024 conference call. I hope you have had the opportunity to review Diadic stress releases announcing financial results for the quarter-end of June 30, 2024. You may access our release and form 10Q and are the investors section of the company's website at Diadic.com.

Ping Rawson: On today's call, our president and CEO Mark Emalfarb and our Chief Operating Officer, Joe Hazelton, will give a review of our second quarter 2024 business and corporate highlights, including a brief summary of our recent research and business development efforts. I will follow with a review of our financial results in more detail, and our chairman Patrick Lucy will provide a commentary on the strategic direction of the business at the end of the call.

Speaker Change: Our recently announced partnership for recombinant serum albumin is a prime example unlocking numerous opportunities within the approximately six billion dollar serum albumin market.

Joseph Hazelton: This single product offers diverse commercialization prospects across various segments. For instance, pharmaceutical grade serum albumin has potential as a disease treatment, plays a crucial role in vaccine development, serves as a carrier protein for therapeutics, and is a standard reagent in research and development. Additionally, recombinant albumin is valuable in diagnostics, cell and gene processing, and cell culture media, particularly for growing animal muscle cells for lab-grown meat. The recent completion of Certificates of Analysis for recombinant human and bovine albumin confirms the analytical equivalence to currently commercialized research-grade products, making them potentially viable for commercialization in R&D.

Speaker Change: This single product offers diverse commercialization prospects across various segments. For instance, pharmaceutical grade serum albumin has potential as a disease treatment, plays a crucial role in vaccine development, serves as a carrier protein for therapeutics, and is a standard reagent in research and development.

Speaker Change: Additionally, recombinant albumin is valuable in diagnostics, cell and gene processing, and cell culture media, particularly for growing animal muscle cells for lab-grown meat.

Speaker Change: The recent completion of certificates of analysis for a recombinant human and bovine albumin confirms the analytical equivalence to currently commercialized research-grade products, making them potentially viable for commercialization in R&D.

Joseph Hazelton: We have also completed third-party testing of recombinant bovine albumin produced through our microbial platforms as a component of cell culture media. The results demonstrated its comparable effectiveness to animal-derived albumin in growing muscle cells for the cultured meat industry, further validating its potential in this rapidly expanding market.

Speaker Change: We have also completed third-party testing of recombinant bovine albumin produced through our microbial platforms as a component of cell culture media.

Ping Rawson: We'll then hold a brief question and answer session. At this time, I would like to inform you that certain commentary made in this conference call may be considered for looking statement, which involves risks and uncertainties and other factors that could cause Diadic's actual results, performance, scientific or otherwise, or achievement to be materially different from those expressed or implied by these for looking statement. Diadic expressly disclaims any duty to provide updates to its for looking statement, whether because of new information, future events, or otherwise.

Speaker Change: The results demonstrated its comparable effectiveness to animal-derived bovine albumin in growing muscle cells for the cultured meat industry, further validating its potential in this rapidly expanding market.

Joseph Hazelton: To unlock the potential of our recombinant albumin products, we have executed a strategic development and commercialization partnership with ProLiant Health and Biologics, a leading supplier of purified protein in the Diagnostic, Nutrition, and Cell Culture Markets with a global customer base. This collaboration will initially focus on bringing recombinant human serum albumin to market, with the first product launch expected in the first half of 2025.

Speaker Change: To unlock the potential of our recombinant albumin products, we have executed a strategic development and commercialization partnership with ProLiant Health and Biologics, a leading supplier of purified proteins for the diagnostic, nutrition, and cell culture markets with a global customer base.

Speaker Change: This collaboration will initially focus on bringing recombinant human serum albumin to market with the first product launch expected in the first half of 2025.

Ping Rawson: Participants are directed to the risk factor set forth in Diadic's report filed with the SEC.

Joseph Hazelton: Under the terms of the agreement, Dyadic will receive a total payment of $1.5 million, and we expect to start receiving recurring revenue in 2025 from our share of the profits generated by ProLiant from the sale of animal-free recombinant albumin products made using Dyadic's Filamentous Fungal Microbial Platform. A portion of the upfront payment will support the technology transfer and commercialization efforts following successful scale-up validation. We've already received a $500,000 payment, and we anticipate the second $500,000 milestone payment in the late third or early fourth quarter following product testing, and expect the final milestone payment upon scale-up validation projected for the fourth quarter of this year.

Speaker Change: Under the terms of the agreement, the addict will receive a total payment of 1.5 million dollars.

Mark Emalfarb: It is now my pleasure to pass the call to our CEO Mark Emalfarb. Mark? Thank you, Ping.

Speaker Change: and we expect to start receiving recurring revenue in 2025 from our share of the profits generated by ProLiant from the sale of animal-free recombinant albumin products made using Dyadic's Filamentous Fungal Microbial Platforms.

Mark Emalfarb: Welcome, everyone, and thank you for joining Diadic's Q2 2024 conference call. We are excited to discuss our business strategy centered on near-term licensing and product candidates, is strategically positioned Diadic to swiftly take advantage of current and upcoming opportunities. Over the next 24 months, we're focusing on achieving multiple revenue streams and significant milestones to the commercialization of products, technology licensing, fully funded collaborations, and advancing our pipeline, all ended enhancing shareholder value. Our C1 technology continues to garner widespread recognition of which remarkable speed and productivity, earning accolades not only across the country, but around the world, esteemed voices from academia and industry such as world-renowned vexanology pioneer, Dr. Reno Repioli, government agencies like the U.S. FDA, part of the NIH and Nimble.

Speaker Change: A portion of the upfront payment will support the technology transfer and commercialization efforts following successful scale-up validation.

Speaker Change: We've already received a $500,000 payment and we anticipate the second $500,000 milestone payment in the late third or early fourth quarter following product testing and expect the final milestone payment upon scale-up validation projected for the fourth quarter of this year.

Joseph Hazelton: We're actively working to accelerate and broaden the scope of commercialization opportunities within the alternative protein sector, particularly for non-food applications. Recently, we completed the development of DNase 1, and the issuance of its certificate of analysis confirms its analytical comparableity to existing commercial products.

Speaker Change: We're actively working to accelerate and broaden the scope of commercialization opportunities within the alternative protein sector, particularly for non-food applications.

Speaker Change: Recently, we completed the development of DNase 1 and the issuance of its Certificate of Analysis confirms its analytical comparability to existing commercial products.

Joseph Hazelton: We've begun sampling this product and are aggressively seeking partners and customers in the global market for DNases, ligases, and RNA polymerase. A market that is valued at over $809 million in 2023 and projected to grow at a CAGR of 10.63% from 2024 to 2030. In addition, we've developed a recombinant transfer and strain at significantly high productivity, sparking interest from the global cell culture media market. The global cell culture media market was valued at $4.73 billion in 2023 and is expected to grow at a compound annual growth rate of 12.54% from 2024 to 2030.

Speaker Change: We've begun sampling this product and are aggressively seeking partners and customers in the global market for DNases, ligases, and RNA polymerases.

Speaker Change: a market that's valued at over $809 million in 2023, projected to grow at a CAGR of 10.63% from 2024 to 2030.

Mark Emalfarb: Non-profit organizations and two top 10 pharmaceutical collaborators are recognizing C1's groundbreaking potential. Meanwhile, our depth of its protein expression platform is already gaining significant momentum and most importantly, most importantly, generating revenue and the rapid evolving alternative protein and bio-industrial sectors. We have committed leveraging our microbial protein production platforms C1 and depth of its to develop recombinant proteins, enzymes, antigens, and antibodies across our core sectors, alternative proteins, and one human health. These efforts are expected to open up new revenue streams, driving substantial value creation for dyadic and our partners in both the pharmaceutical and non-pharmaceutical markets.

Speaker Change: In addition, we've developed a recombinant transference strain at significantly high productivity.

Speaker Change: sparking interest from global cell culture media, the global cell culture media market, which was valued at $4.73 billion in 2023 and is expected to grow at a compound annual growth rate of 12.54% from 2024 to 2030.

Joseph Hazelton: Transferrin is a key component of serum-free cell culture media, with recombinant proteins and growth factors comprising the majority of the cost, over 95% of which are driven by albumin and trans- Notably, more than 70% of the transferrin used in cell culture media today is produced recombinantly, making it a particularly attractive product for Dyadic. Our goal is to expedite the analytical and application testing in the third quarter and to begin sampling as soon as possible.

Speaker Change: Transferrin is a key component of serum-free cell culture media with recombinant proteins and growth factors comprising the majority of the costs.

Speaker Change: over 95% of which are driven by albumin and transferrin.

Speaker Change: Notably, more than 70% of the transfer and use in cell culture media today is produced recombinantly, making it a particularly attractive product for a diabetic.

Joseph Hazelton: I will now turn the call over to our chief operating officer, Joe Hazelton, to provide an update on our business results for the second quarter. Joe. Thank you, Mark. In the second quarter, our business development efforts in the alternative protein sector are continuing to bear fruit, showcasing the potential of our microbial platforms. As part of our strategy to drive near-term revenue, we have concentrated on identifying and producing high value, high volume recombinant protein products that can quickly and efficiently be commercialized.

Speaker Change: Our goal is to expedite the analytical and application testing in the third quarter and to begin sampling as soon as possible.

Joseph Hazelton: In other efforts to expand our presence in cell culture media, we've also begun sampling our partner BifTech's patent-pending, cost-reducing, animal-free growth medium, for which we'll earn a share of their net sales. Outside recombinant cell culture products, we believe recombinant non-animal dairy products offer Dyadic the potential for rapid commercialization opportunities. The global animal-free dairy products market was valued at over $26 billion in 2022 and is projected to reach more than $75 billion by 2030. Today's animal-free dairy products are produced via Precision Microbial Fermentation Technology.

Speaker Change: In other efforts to expand our presence in cell culture media, we've also begun sampling our partner BifTech's patent-pending, cost-reducing, animal-free growth medium for which we'll earn a share of their net sales.

Speaker Change: Outside recombinant cell culture products, we believe recombinant non-animal dairy products offer diadic the potential for rapid commercialization opportunities.

Speaker Change: The global animal-free dairy products market was valued at over 26 billion dollars in 2022 and is projected to reach more than 75 billion by 2032.

Joseph Hazelton: Our recently announced partnership for a combined serum albumin is a prime example on locking numerous opportunities within the approximately $6 billion serum albumin market. This single product offers diverse commercialization prospects across various segments. For instance, pharmaceutical-grade serum albumin has potential as a disease treatment. It is a crucial role in vaccine development, serves as a carrier protein for therapeutics, and is a standard reagent in the research and development. Additionally, recombinant albumin is valuable in diagnostics, celling gene processing, and cell culture media, particularly for growing animal muscle cells for lab-grown meat.

Speaker Change: Today's animal-free dairy products are produced via precision microbial fermentation technology.

Joseph Hazelton: The market is driven by evolving consumer preferences and concerns over health issues associated with traditional cow milk, such as lactose intolerance and allergy. Despite the current high cost of animal-free dairy, this obstacle aligns with our expertise in producing large quantities of cost-effective recombinant proteins using our microbial expression platform. We're making steady progress with our partnership to develop non-animal dairy enzymes, which was established less than a year ago. While we encountered a delay in earning the success fee due to a longer-than-expected validation process, we believe we have now met our targets for this project and expect to receive a success fee of $500,000 in the fourth quarter of this year.

Speaker Change: a market driven by evolving consumer preferences and concerns over health issues associated with traditional cow milk such as lactose intolerance and allergies.

Speaker Change: Despite the current high cost of animal-free dairy, this obstacle aligns with our expertise in producing large quantities of cost-effective recombinant proteins using our microbial expression platforms.

Speaker Change: We're making steady progress with our partnership to develop non-animal dairy enzymes, which was established less than a year ago.

Joseph Hazelton: The recent completion of certificates of analysis for a recombinant human and bovine albumin confirms the analytical equivalence to currently commercialized research-grade products, making them potentially viable for commercialization in R&D. We have also completed third-party testing of recombinant bovine albumin produced through our microbial platforms as a component of cell culture media. The results demonstrated its comparable effectiveness to animal derived profile albumin in growing muscle cells for the culture-meat industry, further validating its potential in this rapidly expanding market.

Speaker Change: While we encountered a delay in earning the success fee due to a longer-than-expected validation, we believe we have now met our targets for this project and expect to receive a success fee of $500,000 in the fourth quarter of this year.

Joseph Hazelton: In the second quarter, interest in our non-animal alpha-lacta albumin product resulted in a non-exclusive joint development agreement with a top 10 global dairy company to create a food-grade alpha-lacta albumin product. We're also in active discussions with three other alternative dairy protein companies interested in commercializing this product. To further expand our non-animal dairy pipeline, we plan to begin sampling in the competitive beta-lactoglobulin and lactoferrin markets. Additionally, we are in ongoing discussions to develop a recombinant lactoferrin food grade product with a goal of finalizing a development and commercialization agreement in the third quarter. Over the last year, we have been actively developing several bio-industrial grade enzymes with applications across multiple industries, including nutrition, biofuels, and biorefining.

Speaker Change: In the second quarter, interest in our non-animal alpha-lacta albumin product has resulted in a non-exclusive joint development agreement with a top 10 global dairy company to create a food grade alpha-lacta albumin product.

Speaker Change: We're also in active discussions with three other alternative dairy protein companies interested in commercializing this product.

Joseph Hazelton: To unlock the potential of a recombinant albumin products, we have executed a strategic development and commercialization partnership with ProLiant Health and Biologics, a leading supplier of purified proteins for the diagnostic, nutrition, and cell culture markets with a global customer base. This collaboration will initially focus on bringing recombinant human serum albumin to market with the first product launched expected in the first half of 2025. Under the terms of the agreement, Diatic will receive a total payment of $1.5 million, and we expect to start receiving recurring revenue in 2025 from our share of the products generated by ProLiant from the sale of animal-free recombinant albumin products made using Diatic's filamentous, strong-glomicrobial plant.

Speaker Change: To further expand our non-animal dairy pipeline, we plan to begin sampling in the competitive beta-lactoglobulin and lactoferrin markets.

Speaker Change: We are in ongoing discussions to develop a recombinant lactoferrin food grade product with the goal of finalizing a development and commercialization agreement in the third quarter.

Speaker Change: Over the last year, we have been actively developing several bio-industrial grade enzymes with applications across multiple industries, including nutrition, biofuels, and biorefining.

Joseph Hazelton: In partnership with Firmbox, Dyadic has successfully developed a cellulosic enzyme for the biofuel industry, which is now undergoing testing by potential customers. Additionally, Dyadic has created enzymes initially targeted at the pulp and paper industry, with promising potential for use in the biogas and biofuel sectors. Our goal is to begin commercializing these products within the next 12 months, which we believe will drive revenue growth. While the alternative protein segment is our primary focus for near-term growth and revenue, we remain deeply committed to the long-term potential of animal and human health pharmaceutical segments. The successful completion of our first-in-human Phase I study for a C1-produced protein has generated significant interest from academia, government, industry, and non-profit organizations.

Speaker Change: In a partnership with Firmbox, we have successfully developed a cellulosic enzyme for the biofuel industry, which is now undergoing testing by potential customers.

Speaker Change: Additionally, Dyadic has created enzymes initially targeted at the pulp and paper industry with promising potential for use in the biogas and biofuel sectors as well.

Joseph Hazelton: Performance. A portion of the upfront payment will support the technology transfer and commercialization efforts following successful scale-up validation. We've already received a $500,000 payment and we anticipate the second $500,000 milestone payment in the late third or early fourth quarter following product testing and expect the final milestone payment upon scale-up validation projected for the fourth quarter of this year. We're actively working to accelerate and broaden the scope of commercialization opportunities within the alternative protein sector, particularly for non-food applications.

Speaker Change: Our goal is to begin commercializing these products within the next 12 months, which we believe will drive revenue growth in the future.

Speaker Change: While the alternative protein segment is our primary focus for near-term growth and revenue, we remain deeply committed to the long-term potential of animal and human health pharmaceutical segments.

Speaker Change: The successful completion of our first in human phase one study for a C1 produced protein has generated significant interest from academia, government, industry, and nonprofit organizations.

Joseph Hazelton: Since the beginning of the year, we've initiated over 14 fully funded human health vaccine and antibody projects, including two with top 10 pharmaceutical companies. These third-party funded programs cover a wide range of disease areas and further showcase Dyadic's ability to produce both standard and complex molecules. Our C1 platform has successfully expressed multiple potential infectious disease vaccine antigens, including those for HPV, HIV, several RSV antigens, and Plasmodium Parasi

Joseph Hazelton: Recently, we completed the development of DNA-1 and the issuance of its certificate of analysis confirms its analytical comparability to existing commercial products. We've begun sampling this product in our aggressively-seeking partners and customers in the global market for DNA-6, ligases, and RNA polymerases. A market that's valued it over $809 million in 2020. In 2023, projected to grow at a category of 10.63% from 2024 to 2030. In addition, we've developed a recombinant transfer in strain at significantly high productivity, sparking interest from global cell culture media, the global cell culture media market, which was valued at $4.73 billion in 2023 and is expected to grow at a compound annual growth rate of 12.54% from 2024 to 2020.

Speaker Change: Since the beginning of the year, we've initiated over 14 fully funded human health and human health vaccine and antibody projects, including two with top ten pharmaceutical companies.

Speaker Change: These third-party funded programs cover a wide range of disease areas and further showcase dyadic's ability to produce both standard and complex molecules.

Speaker Change: Our C1 platform has successfully expressed multiple potential infectious disease vaccine antigens, including those for HPV, HIV, several RSV antigens, and plasmodium parasitic diseases.

Joseph Hazelton: Additionally, in the second quarter, Dyadic delivered three successfully expressed monoclonal antibodies, or MABs, for evaluation as neutralizing agents for infectious diseases. Two more MABs are in development, one of which is for a top 10 pharmaceutical. As the H5 bird flu continues to spread globally, affecting wild birds, poultry, and even U.S. dairy cows, there's been a growing interest from Human and Animal Pharmaceutical Companies, especially with the recent human cases reported among U.S. dairy and poultry.

Speaker Change: Additionally, in the second quarter, Dyadic delivered three successfully expressed monoclonal antibodies, or MABs, for evaluation as neutralizing agents for infectious disease.

Speaker Change: with two more MABs in development, one of which is for a top-ten pharmaceutical company.

Joseph Hazelton: Transference is a key component of serum-free cell culture media, with recombinant proteins and growth factors comprising the majority of the cost. Over 95% of which are driven by argument and transfer. Notably, more than 70% of the transfer and use in cell culture media today is produced recombinantly, making it a particularly attractive product for dyadic. Our goal is to expedite the analytical and application testing in the third quarter, and to begin sampling as soon as possible.

Speaker Change: As the H5 bird flu continues to spread globally, affecting wild birds, poultry, and even U.S. dairy cows, there's been a growing interest from human and animal pharmaceutical companies, especially with the recent human cases reported among U.S. dairy and poultry workers.

Joseph Hazelton: In response, Dyadic commissioned an independent vaccine expert to assess its adjuvanted H5 clod 2.3.3.4.B A. ostracon avian influenza, or bird flu, ferritin nanoparticle human vaccine candidate, developed in collaboration with Verivax LLC. The expert assessment provided a positive outlook on the initial animal studies, highlighting both the strength of the C1 vaccine manufacturing platform and the H5 avian influenza or bird flu ferritin nanoparticle vaccine candidate's potential to generate strong neutralizing antibodies for use in humans, as well as possibly in poultry, cattle, and other animals.

Speaker Change: In response, Dynek commissioned an independent vaccine expert to assess its adjuvanted H5 Clod 2.3.3.4.B A. ostracon avian influenza, or bird flu, ferritin nanoparticle human vaccine candidate.

Joseph Hazelton: In other efforts to expand our presence in cell culture media, we've also begun sampling our partner BIFTEX patent-pending, cost-reducing animal-free growth medium for which we'll earn a share of their net sales. Outside recombinant cell culture products, we believe recombinant non-animal dairy products offer dyadic the potential for rapid commercialization opportunities. The global animal-free dairy products market was valued at over $26 billion in 2022 and is projected to reach more than $75 billion by 2030.

Speaker Change: developed in collaboration with Veribax LLC.

Speaker Change: The expert assessment provided a positive outlook on the initial animal studies, highlighting both the strength of the C1 vaccine manufacturing platform

Speaker Change: and the H5 avian influenza, or bird flu.

Speaker Change: ferritin nanoparticle vaccine candidates potential to generate strong neutralizing antibodies for use in humans as well as possibly in poultry, cattle, and other animals.

Joseph Hazelton: Earlier in the second quarter, Dyadic and Viravax announced preclinical animal testing for an H5 avian influenza, or bird flu, ferritin nanoparticle vaccine candidate, which demonstrated a robust immune response in rabbits. The potential H5 bird flu recombinant protein human vaccine candidate combines Dyadic's C1 single-step ferritin nanoparticle antigen production with Virabax's novel antigen

Speaker Change: Earlier in the second quarter, Thiatic and Viravax announced preclinical animal testing for H5 avian influenza or bird flu ferritin nanoparticle vaccine candidate, which demonstrated a robust immune response in rabbits.

Joseph Hazelton: Today's animal-free dairy products are produced via precision microbial fermentation technology, a market driven by evolving consumer preferences and concerns over health issues associated with traditional cow milk, such as lactose intolerance and allergies. Despite the current high cost of animal-free dairy, this offschool winds with our expertise in producing large quantities of cost-effective recombinant proteins using our microbial expression platforms. We're making steady progress with our partnership to develop non-animal dairy enzymes which was established less than a year ago.

Speaker Change: The potential H5 bird flu recombinant protein human vaccine candidate combines diadic C1 single-step ferritin nanoparticle antigen production with Virovax's novel antigen and adjuvant.

Joseph Hazelton: This promising candidate has been presented to several government agencies, including BARDA TechWatch, NIH, and the White House Office of Pandemic Preparedness and Response Policy. Two additional U.S. government presentations are currently scheduled for next week. Furthermore, the initial preclinical animal studies indicate that the C1-produced H5 avian influenza, or bird flu, ferritin nanoparticle vaccine candidate generates high levels of neutralizing antibodies against the three primary circulating bird flu viruses.

Speaker Change: This promising candidate has been presented to several government agencies including BARDA Tech Watch, NIH, and the White House Office of Pandemic Preparedness and Response Policy. Two additional U.S. government presentations are currently scheduled for next week.

Joseph Hazelton: While we encounter delay in earning the success we do to a longer than expected validation, we believe we have now met our targets for this project and expect to receive a success fee of $500,000 in the fourth quarter of this year. In the second quarter, interest in our non-animal alpha-lactic albuming product has resulted in a non-exclusive joint development agreement with a top 10 global dairy company to create a food grade alpha-lactic albuming product.

Speaker Change: Furthermore, the initial preclinical animal studies indicate the C1 produced H5 avian influenza or bird flu ferritin nanoparticle vaccine candidate generates high levels of neutralizing antibodies against the three primary circulating bird flu viruses.

Joseph Hazelton: This has increased potential interest in the animal health sector, particularly for use as a vaccine in poultry and cattle to combat the ongoing avian influenza outbreak. We're actively providing samples of the C1 produced bird flu recombinant ferritin nanoparticle vaccine antigen to various human and animal pharmaceutical companies for further evaluation. Alongside the continued progress and expansion of our partnership with FIBRA Animal Health, we're capitalizing on the heightened awareness brought by the bird flu outbreak in the animal health segment by intensifying our business development efforts in animal health, initially focusing on recombinant protein vaccines for pandemic response and preparedness.

Speaker Change: This has increased the potential interest in the animal health sector, particularly for use as a vaccine in poultry and cattle to combat the ongoing avian influenza outbreak.

Joseph Hazelton: We're also in active discussions with three other alternative dairy protein companies interested in commercializing this product. To further expand our non-animal dairy pipeline, we plan to begin sampling in the competitive beta-lactic-lodulent and lacto-fair markets. We are in ongoing discussions to develop a recombinant lacto-fair and food grade product with a goal of finalizing a development in commercialization agreement in the third quarter. Over the last year, we have been actively developing several biodeindustrial-grade enzymes with applications across multiple industries, including nutrition, biofuels, and bio-refining.

Speaker Change: We're actively providing samples of the C1 produced bird flu recombinant ferritin nanoparticle vaccine antigen to various human and animal pharmaceutical companies for further evaluation.

Speaker Change: alongside the continued progress and expansion of our partnership with February Animal Health.

Speaker Change: We're capitalizing on the heightened awareness brought by the bird flu outbreak in the animal health segment by intensifying our business development efforts in animal health, initially focusing on recombinant protein vaccines for pandemic response and preparedness.

Joseph Hazelton: We remain laser-focused on evaluating product opportunities with financial rigor, ensuring we fully capture the value of Dyadic's technology and expertise. We're committed to driving near-term revenue growth in the alternative protein segment while simultaneously building mid- to long-term value in the animal and human health market. With that, I'll turn the call over to our CFO, Ping Rawson, to discuss our financials. Thank you, Joe.

Speaker Change: We remain laser focused on evaluating product opportunities with financial rigor, ensuring we fully capture the value of Dyadic's technology and expertise.

Joseph Hazelton: In a partnership with Firmbox, we have successfully developed a cellulose against enzyme for the biofuel industry, which is now undergoing testing by potential customers. Additionally, Dyadic has created enzymes initially targeted at the pulp and paper industry, with promising potential for use in the biogas and biofuels sectors as well. Our goal is to be in commercializing these products within the next 12 months, which we believe will drive revenue growth in the future.

Speaker Change: We're committed to driving near-term revenue growth in the alternative protein segment while simultaneously building mid- to long-term value in the animal and human health markets.

Ping Rawson: With that, I'll turn the call over to our CFO, Ping Rawson, to cover our financials.

Ping Rawson: Thank you everyone for joining our call today. I will now go over our key financial results for the quarter ended June 30th, 2024 in more detail. You can find additional information in our earnings press release and form 10-Q, which we filed earlier today. Revenue for the quarter ended June 30, 2024, decreased to approximately $386,000 compared to $837,000 for the same period a year ago.

Ping Rawson: Thank you, Joe. Thank you, everyone, for joining our call today. I will now go over our key financial results for the quarter end of the June survey 2024 in more detail.

Joseph Hazelton: While the alternative protein segment is our primary focus for near-term growth and revenue, we remain deeply committed to the long-term potential of animal and human health pharmaceutical segments. The successful completion of our first and human phase I study for a C1-produced protein has generated significant interest from academia, government, industry, and nonprofit organizations. Since the beginning of the year, we've initiated over 14 fully funded human health and human health vaccine and antibody projects, including two with top 10 pharmaceutical companies.

Ping Rawson: You can find additional information in our Earnings Press Release and Form 10-Q, which we filed earlier today.

Ping Rawson: Revenue for the quarter ended June 30, 2024 decreased to approximately $386,000 compared to $837,000 for the same period a year ago.

Ping Rawson: The decrease in revenue was due to the winding down of several large research collaborations conducted in 2023. Cost of research and development revenue for the quarter ended June 30, 2024, decreased to approximately $302,000 compared to $793,000 for the same period a year earlier. The decrease followed the winding down of several large research collaborations. Research and Development Expenses for the quarter ended June 30, 2024 decreased to approximately $516,000 compared to $918,000 for the same period a year ago.

Ping Rawson: The decrease in revenue was due to the winding down of several large research collaborations conducted in 2023.

Joseph Hazelton: These third-party funded programs cover a wide range of disease areas, and further showcased dialectics ability to produce both standard and complex molecules. Our C1 platform has successfully expressed multiple potential infectious disease vaccine antigens, including those for HPV, HIV, several RSV antigens, and Plezmodium Paracetic Diseases. Additionally, in the second quarter, Dietic delivered three successfully expressed monoclonal antibodies or MAVs for evaluation as neutralizing agents for infectious disease with two more MAVs in development, one of which is for a top 10 pharmaceutical company.

Ping Rawson: Cost of research and development revenue for the quarter ended June 30, 2024, decreased to approximately $302,000 compared to $793,000 for the same period a year ago.

Ping Rawson: The decrease followed the winding down of several large research collaborations.

Ping Rawson: Research and development expenses for the quarter ended June 30, 2024 decreased to approximately $516,000 compared to $918,000 for the same period a year ago.

Ping Rawson: The decrease primarily reflected the winding down of activities related to the company's Phase I clinical trial of BYL-100 and several internal research. DNA expenses for the second quarter of 2024 increased to approximately $1,608,000 compared to $1,403,000 for the same period a year ago. The increase was due to increases in share-based compensation expenses of $84,000, legal expenses of $81,000, business development and investor relations expenses of $60,000, and other increases, partially offset by decreases in management incentives of $36,000 and insurance expenses. Loss from operations for the quarter ending June 30, 2024 decreased to $2,043,000 compared to $2,290,000 for the same period a year ago.

Ping Rawson: The decrease primarily reflected the winding down of activities related to the company's Phase I clinical trial of BYL-100 and several internal research projects.

Joseph Hazelton: As the H5 word flu continues to spread globally, affecting wild birds, poultry, and even US dairy cows, there's been a growing interest from human and animal pharmaceutical companies, especially with the recent human cases reported among US dairy and poultry workers. In response, Dietic commissioned an independent vaccine expert to assess its adjuvenated H5 quad, 2.3, 0.3, 0.4, 0.B, A Ostracon, Avian Influenza, or bird flu, Ferton Nanoparticle Human Vaccine Candidate, developed in collaboration with VeraVax LLC.

Ping Rawson: DNA expenses for the second quarter of 2024 increased to approximately $1,608,000 compared to $1,403,000 for the same period a year ago.

Ping Rawson: The increase was due to increases in share-based compensation expenses of $84,000, legal expenses of $81,000, business development and investor relations expenses of $60,000, and other increases.

Joseph Hazelton: The expert assessment provided a positive outlook on the initial animal studies highlighting both the strength of the C1 vaccine manufacturing platform and the H5 Avian Influenza or bird flu, Ferton Nanoparticle Vaccine Candidate's potential to generate strong neutralizing antibodies for use of humans, as well as possibly poultry, cattle, and other animals. Animals. Earlier in the second quarter, Dyadic and VeraVax announced pre-clinical animal testing for H5, AB and influenza, or bird flu, Fairton Nano Particle Vaccine Candidate, which demonstrated a robust immune response in rabbits.

Ping Rawson: Partially offset by decreases in management incentives of $36,000 and insurance expenses.

Ping Rawson: Loss from operations for the quarter ending June 30, 2024 decreased to $2,043,000 compared to $2,290,000 for the same period a year ago.

Ping Rawson: Matt Loss for the quarter ended June 30, 2024 was approximately $2,045,000 or $0.07 per share compared to a net loss of $2,153,000 or $0.07 per share for the same period a year ago. On March 8, 2024, the company issued an aggregate principal amount of 6,008,000,000 senior secured convertible promissory notes due March 8, 2027 in the private place. The convertible notes have a conversion price of $1.79 with no words. During the second quarter, $400,000 of the notes were converted into the company's common shares.

Matt: Matt Loss for the quarter ended June 30, 2024 was approximately $2,045,000 or 7 cents per share.

Joseph Hazelton: The potential H5 bird flu, recombinant protein human vaccine candidate, combines Dyadic C1 single-step, Fairton Nano Particle Indigent Production with VeraVax's novel antigen and adjuvant. This promising candidate has been presented to several government agencies, including Partitech Watch, NIH, and the White House Office of Pandemic Preparedness and Response Policy. Two additional US government presentations are currently scheduled for next week. Furthermore, the initial pre-clinical animal studies indicate the C1 produced H5, AB and influenza, or bird flu, Fairton Nano Particle Vaccine Candidate, generates high levels of neutralizing antibodies against the three primary circulating bird flu viruses.

Matt: compared to a net loss of $2,153,000 or $0.07 per share for the same period a year ago.

Matt: On March 8, 2024, the company issued an aggregate principal amount of 6,008,000,000 senior secured convertible promissory notes due March 8, 2027, in the private placement.

Speaker Change: The convertible notes have a conversion price of $1.79 with no warrants. During the second quarter, $400,000 of the notes were converted into the company's common share.

Ping Rawson: As of June 30, 2024, we have cash and investment grade securities, including accrued interest of $10.1 million compared to $7.3 million as of December 31, 2023. In July, the company received an initial payment of $500,000 pursuant to our license and development agreement with Perlion. We expect our cash burn for the second half of 2024 will be approximately $3 million.

Speaker Change: As of June 30, 2024, we have cash and investment-grade securities including accrued interest of $10.1 million compared to $7.3 million as of December 31, 2023.

Joseph Hazelton: This has increased the potential interest in the animal health sector, particularly for use as a vaccine and poultry and cattle to combat the ongoing AB and influenza outbreak, or actively providing samples of the C1 produced bird flu, recombinant Fairton Nano Particle Vaccine Indigent to various human and animal pharmaceutical companies for further evaluation. Alongside the continued progress and expansion of our partnership with February Animal Health, we're capitalizing on the heightened awareness brought by the bird flu outbreak in the animal health segment by intensifying our business development efforts in animal health, initially focusing on recombinant protein vaccines for a pandemic response and preparedness.

Speaker Change: In July, the company received an initial payment of $500,000 pursuant to our License and Development Agreement with Perlis.

Speaker Change: We expect our cash burn for the second half of 2024 will be approximately $3 million.

Patrick Lucey: I will now turn the call over to Dyadic Chairman Patrick Lucey for closing remarks. Patrick. Thank you, Ping. First, I would like to thank you all for joining the call today and your continued support of Dyadic. Several months ago, we redefined the Dyadic corporate strategy to focus on opportunities to deploy the Dyadic C1 and Dapobis platform protein production technologies to generate significant near-term revenue and near-term recurring revenue, while also advancing our efforts in mid- to long-term value creation.

Patrick Lucey: I will now turn the call over to DIADC Chairman Patrick Lucey for closing remarks.

Joseph Hazelton: We remain laser focused on evaluating product opportunities with financial rigor, ensuring we fully capture the value of the addict's technology and expertise. We're in the alternative protein segment, while simultaneously building mid to long-term value in the animal and human health markets.

Patrick Lucey: Thank you.

Patrick Lucey: Thank you, Ping. First, I would like to thank you all for joining the call today and your continued support of Dyadic.

Patrick Lucey: Several months ago we redefined the dyadic corporate strategy to focus on opportunities to deploy the dyadic C1 and Dapibus platform protein production technologies.

Ping Rawson: With that, I'll turn the call over to our CFL King Rosson to cover our front angels. Thank you, Bill. Thank you, everyone, for joining our call today.

Patrick Lucey: to generate significant near-term revenue and near-term recurring revenue while also advancing our efforts in mid to long-term value creation.

Patrick Lucey: This strategy is focused on three distinct market sectors, including alternative proteins, animal health, and human health. In today's call, you heard that strategy playing out with executed agreements and significant activity in each of the sectors, with a particular emphasis on the alternative protein sector. The transaction with ProLiant is a great example of that focus. We believe the Avian Influenza vaccine candidate presents Dyadic with a significant opportunity.

Patrick Lucey: This strategy is focused on three distinct market sectors, including alternative proteins, animal health, and human health.

Ping Rawson: I will now go over our key financial results for the quarter-end of the June 30, 2024, in more detail. You can find additional information in our early press release and form 10Q, which we filed earlier today. Readying for the quarter ended the June 30, 2024 decrease to approximately $386,000 compared to $837,000 for the same period a year ago. The decrease in revenue was due to the winding down of several large research collaborations conducted in 2023.

Patrick Lucey: In today's call you've heard that strategy playing out with executed agreements and significant activity in each of the sectors with a particular emphasis on the alternative protein sector. The transaction with ProLiant is a great example of that focus.

Patrick Lucey: We believe the Avian Influenza vaccine candidate presents Dyadic with a significant opportunity. We are currently seeking pathways to advance the candidate through non-dilutive approaches. We will continue to update investors on progress in the coming months.

Operator: We are currently seeking pathways to advance the candidate through non-dilutive approaches. We will continue to update investors on progress in the coming months. I'm extremely pleased with our management team and our board for their focus and commitment to our company strategy and look forward to announcing additional transactions in the future. Our CEO, Mark Emalfarb, and our management team will respond to your questions. Each caller will be allowed one question and one follow-up question to provide all callers an opportunity to participate. If time permits, the operator will allow additional questions from those who have already spoken. Operator?

Ping Rawson: Cost of research and development revenue for the quarter ended the June 30, 2024 decrease to approximately $300,000 in $2,000 compared to $793,000 for the same period a year ago. The decrease followed the winding down of several large research collaborations. Research and development expenses for the quarter ended June 30, 2024 decrease to approximately $516,000 compared to $918,000 for the same period a year.

Patrick Lucey: I am extremely pleased with our management team and our board for their focus and commitment to our company's strategy and look forward to announcing additional transactions in the future.

Speaker Change: With that, I will ask the operator to begin our Q&A session. Our CEO, Mark Emalfarb, and our management team will respond to your questions.

Speaker Change: Each caller will be allowed one question and one follow-up question to provide all callers an opportunity to participate. If time permits, the operator will allow additional questions from those who have already spoken. Operator?

Operator: Thank you. We will now conduct a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Speaker Change: Thank you. We will now conduct a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Ping Rawson: Global. The decrease primarily reflected the winding down of activities related to the confidence-based one clinical trial of the YL-100 and several internal research projects. The unique sense for the second quarter of 2024 increased to approximately $1,600 and $8,000 compared to $1,400 and $3,000 for the same period a year ago. The increase was due to increases in share-based compensation expenses of $84,000, diesel expenses of $81,000, business development, and investment relations expenses of $60,000 and other increases.

Operator: You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for our first question. The first question comes from John Vandermosten with SACS. Please proceed. Thank you. Congratulations on the new Alpha Lactalbumin deal. I had a couple questions about that. I guess, first of all, what's the size of that market? And who are the customers for the product? Joe, do you want to answer that?

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for our first question.

Speaker Change: The first question comes from John Vandermosen with Zacks. Please proceed.

John Vandermosen: Thank you. Congratulations on the new Alpha Lactalbumin deal. I had a couple of questions on that. I guess, first of all, what's the size of that market and who are the customers for the product?

Joseph Hazelton: Sure, and John, thanks for the question. The market for alpha-lacto-albean protein is approximately a 700 million dollar market, and that includes milk-derived products. The recombinant segment is smaller. I don't have a great number for that for you, but I would say it's probably in that 30 to 40 million dollar range currently.

Ping Rawson: Partially upset by decreases in management incentives of $36,000 and insurance expenses. Laws from operations for the quarter-ended June 30, 2024 decreased to $2,000,000, $43,000 compared to $2,000,000, $290,000 for the same period a year ago. Matt Laws for the quarter-ended June 30, 2024 was approximately $2,000,000, $45,000 or $7,000 per share compared to a net loss of $2,153,000 or $7,000 per share for the same period a year ago.

John Vandermosen: Hi Joe, you want to answer that?

Joe Hazelton: Sure, and John, thanks for the question. The market, the alpha-lacto-albumin market, is approximately a 700 million dollar market, and that includes milk derived products. The recombinant segment

Joe Hazelton: is smaller. I don't have a great number for that for you, but I would say it's probably in that 30 to 40 million dollar range currently. It's obviously expanding as people are looking into producing this recombinantly, similar to what they've done for HMOs and other products in this space.

Joseph Hazelton: It's obviously expanding as people are looking into producing it recombinantly, similar to what they've done for HMOs and other products in this space. So with that being said, that's the essential market potential. The customers are, you know, everything from the large dairy companies like Danone and Nestle to just about, well, and also a lot of the newer companies in precision fermentation. So, you know, we have obviously multiple opportunities, but it's essentially the food grade dairy companies that we're looking at. Okay, and I guess that would be Dapobis, right? This is the Dapobis plant.

Joe Hazelton: So, with that being said, that's the central market potential. The customers are, you know, everything from the large dairy companies like the Danone's, Nestle, to just about, well, and also a lot of the newer companies.

Ping Rawson: On March 8, 2024, the confident issues and the aggregate principal amounts of $6,000,000 of 8 percent, senior secured a convertible commentary note due March 8, 2027 in the private placement. The convertible note has a conversion price of $1,790 with no worth. During the second quarter, $400,000 of the notes were converted into the company's common share. As of June 30, 2024, we have cash and investment-grade securities, including accrued interest of $10,000,000 compared to $7,000,000 as of December 31, 2023. In July, the company received an initial payment of $500,000,000, pursuant to our license and development agreement with Perline.

Speaker Change: in precision fermentation. So, you know, we have obviously multiple opportunities, but it's essentially the food grade dairy companies that we're looking at.

Speaker Change: Okay, and I guess that would be Dapobis, right? This is the Dapobis.

Joseph Hazelton: You're correct. Okay, and then just another question on that same subject: is there a clear pathway here to revenues outlined in the JDA with the dairy company, kind of as you have with the other albumin deal with ProLiant? Yes. Based obviously on the performance of the strain and hitting certain commercial targets, there are milestones and royalty payments associated with the development. Great. Thanks, Joe.

Speaker Change: and others. So, thank you very much. Thank you.

Speaker Change: Expression system. You're correct. Okay, and then just another question on that same theme. Is there a clear pathway here to revenues outlined in the JDA with the dairy company, kind of as you have with the other albumin deal with ProLiant?

Speaker Change: Yes, based obviously on the performance of the strain and hitting certain commercial targets, there are milestones and royalty payments associated with the development.

Joe Hazelton: Okay, great. Thanks, Joe.

Joseph Hazelton: Joe, I think maybe you can expand on the transferring opportunity as well because I think that's a huge opportunity for us and I think explaining that a little bit would be helpful. Sure, Mark. The transfer opportunity is similar to that of alpha-lactalbumin in that it's a very high-growth market for recombinant products given that it's a very high price point. So the average cost of a kilogram of transferrin is roughly $400,000 to $500,000.

Joe Hazelton: Joe, I think maybe you can expand on the transfer and opportunity as well because I think that's

Ping Rawson: We expect our cash firm, for the second half of 2024, will be approximately $3,000,000.

Speaker Change: a huge opportunity for us, and I think explaining that a little bit would be helpful.

Patrick Lucy: I will now turn the call over to Diadic Chairman Patrick Lucy for holding you on. Patrick. Thank you, Ping.

Mark Emalfarb: Sure, Mark. The transfer and opportunity is similar to that of alpha-lactalbumin in that it's a

Joe Hazelton: Very high growth market for recombinant products given that it's a very high price point So the average cost of a kilogram of transfer is roughly four to five hundred thousand dollars

Patrick Lucy: First, I would like to thank you all for joining the call today and your continued support of Diadic. Several months ago, we redefined the Diadic corporate strategy to focus on opportunities to deploy the Diadic C1 and Dapobus platform protein production technologies to generate significant near-term revenue and near-term recurring revenue, while also advancing our efforts in mid to long-term value creation. This strategy is focused on three distinct market sectors, including alternative proteins, animal health, and human health.

Patrick Lucy: In today's call, you've heard that strategy playing out with executed agreements and significant activity in each of the sectors, with a particular emphasis on the alternative protein sector. The transaction with ProLiant is a great example of that focus. Davis. We believe the avian influenza vaccine candidate presents dyadic with a significant opportunity when we are currently seeking pathways to advance the candidate through non-dilutive approaches. We will continue to update investors on progress in the coming months and extremely pleased with our management team and our board for their focus and commitment to our company strategy and look forward to announcing additional transactions in the future.

Joseph Hazelton: That's obviously animal derived. Recombinant production is increasing, but it's a tricky component to produce. So being able to produce it at the titers that we are today, we believe that we can significantly reduce that cost. And as I mentioned in the portion of the call, the majority of cell culture media costs, and that's the media that you grow not just animal muscle cells, but it's also used to grow CHO cells for the production of other monoclonal antibodies and other pharmaceutical agents. Any cell culture media component can grow basically mammalian cells.

Speaker Change: That's obviously, you know, animal-derived. Recombinant production is increasing, but it's a tricky component to produce. So being able to produce it at the titers that we are today, we believe that we can significantly reduce that cost. And as I mentioned in the portion of the call,

Speaker Change: The majority of cell culture media costs, and that's the media that you grow, not just animal muscle cells, but it's also used to grow CHO cells for production of other monoclonal antibodies and other pharmaceutical agents, any cell culture media component.

Joseph Hazelton: So it has multiple uses, and multiple offtakes across the segments. The difference is that albumin and transferrin make up 95% of the cost of cell culture media. So if you look at, let's just say, a liter of media that you use to grow either animal muscle cells for lab-grown meat, or you would use it to grow CHO cells for making a monoclonal antibody, 95% of those costs are from albumin and transferrin. And the remainder is from growth factors and some other high-value targets in there as well, which we're looking at. But that's the particular opportunity with transferrin.

Speaker Change: can grow basically mammalian cells. So it has multiple uses, multiple offtakes across the segments.

Speaker Change: The difference is that albumin and transferrin make up 95% of the cost of cell culture media. So if you look at, let's just say, a liter of media that you use to grow either animal muscle cells for lab-grown meat,

Speaker Change: or you'd use it to grow show cells for making a monoclonal.

Speaker Change: Ninety-five percent of those costs.

Speaker Change: are from albumin and transferrin, and the remainder is from growth factors and some other high-value targets in there as well, which we're looking at. But that's the particular opportunity with transferrin, and given in that space.

Unknown Executive: With that, I will ask the operator to begin our Q&A session.

Unknown Executive: Our CEO, Mark Emalfarb, and our management team will respond to your questions. Each caller will be allowed one question and one follow-up question to provide all colors and opportunity to participate. If time permits, the operator will allow additional questions from those of you from those who have already spoken. Operator? Thank you.

Joseph Hazelton: And given in that space, 70% of the utilization today is already recombinant, and it's looking to increase. Because again, it's one of those markets where it's an extremely expensive product to derive naturally, because there's not a lot of it in basically mammalian blood. So it's much easier to produce recombinantly and potentially more regulatory acceptable as well. So I do believe that it's a significant opportunity that's already generating interest. And obviously, we have continued development we need to, Brett. Thanks for the extra power. Thank you once again. To ask a question at this time, please press star 1 on your telephone keypad. Is there anything you want to add?

Speaker Change: 70% of the utilization today is already recombinant and it's looking to increase because again It's one of those markets where it's an extremely expensive product to drive naturally because there's not a lot of it in Basically, you know a million blood so it's much easier to produce for competently and potentially more regulatory acceptable as well so I do believe that's a Significant opportunity that's already generating interest and obviously we have continued development. We need to do

Unknown Executive: We will now conduct a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two. If you would like to remove your question from the queue, for participants using speak equipment, it may be necessary to pick up your handset before presence of star keys. One moment while we pull for our first question.

Speaker Change: Thanks for the extra power.

Speaker Change: Thank you once again. To ask a question at this time, please press star 1 on your telephone keypad.

Joseph Hazelton: Oh, we're waiting to see if anyone else is coming in. Nope, I think I've covered it in the remarks. We do have a follow-up from John Van Bosterman with SACS, please proceed. Thanks.

Speaker Change: Is there anything you want to add or are we waiting to see if anyone else is coming in?

John Vandermosten: The first question comes on the new Alfa Lacta Albumin deal. I had a couple of questions on that. I guess, first of all, what is the size of that market and who are the customers for the product? Do you want to answer that? Sure, and John, thanks for the question. The Alfa Lacta Album market is approximately a $700 million market and that includes milk derived products. The recombinant segment is smaller. I don't have a great number for that for you, but I would say it's probably in that $30 to $40 million range currently.

Speaker Change: Nope, I think I've covered it in the remarks.

Speaker Change: We do have a follow-up from John Van Mosterman with SACS. Please proceed.

Mark Emalfarb: I have a bigger picture question for you on C1. As we look at how the expression system has evolved over time, how has it changed over the last five years? That's a good question. It's changed, I guess, from darkness to light, or Nike Today.

Speaker Change: I have a bigger picture question for you on C1. As we look at how the expression system has evolved over time, how has it changed over the last five years?

Speaker Change: That's a good question. It's changed from, I guess, from darkness to light.

Mark Emalfarb: And what I mean by that is, you know, when we transitioned the C1 cell line from the industrial sector into biopharmaceuticals, there was a lot of work we had to do to make it so that it not only produced a lot of something, but it produced in a stable form. And as you know, we've knocked out a total of now 14 or 15 different genes expressing proteases, in addition to other background proteins, so we can produce high levels of low-cost proteins that are stable.

Speaker Change: again, thank you so much all friends thank you for attending.

Speaker Change: Night and day.

Speaker Change: And what I mean by that is, you know, when we transitioned the C1 cell line from the industrial sector

John Vandermosten: It's obviously expanding as people are looking into producing this recombinantly similar to what they've done for HMOs and other products in the space. With that being said, that's the central market potential. The customers are everything from the large dairy companies like the Dan Owens, Nestle, and also a lot of the newer companies in precision fermentation. We have obviously multiple opportunities, but it's essentially the food-grade dairy companies that we're looking at. I guess that would be dappabas, right? This is the dappabas. Yes. You're correct. And then just another question on that same theme.

Speaker Change: and the biopharmaceuticals.

Speaker Change: There was a lot of work we had to do to make it so that it not only produced a lot of something, but it produced it in a stable form. And as you know, we've knocked out a total now of 14 or 15 different genes with proteases in addition to other background proteins, so that we can produce high levels of low-cost proteins that are stable.

Mark Emalfarb: And then, most importantly, although we had certain animal data prior to doing all that, we've expanded the animal data from rats to lambs to chickens to all kinds of other things, hamsters. But most importantly, with the DY100 SARS-CoV-2 RBD booster phase one trial, we've now demonstrated for the first time ever a protein produced from our C1 cell line. And for that matter, filamentous fungal cells can be used safely and induce an immune response. And we did that both at high and low doses, and we got good neutralizing antibodies and cellular immunity.

Speaker Change: And then, most importantly, although we had certain animal data prior to doing all that, we've expanded the animal data from rats to lambs to chickens to...

Speaker Change: all kinds of other things, hamsters, but most importantly, with the DY-100...

Speaker Change: SARS-CoV-2 RBD booster

Speaker Change: Phase 1 trial we've now demonstrated for the first time ever.

Mark Emalfarb: Is there a clear pathway here to revenues outlined in the JDA with the dairy company kind of as you have with the other Albumin deal with Proliant? Yes, the base, obviously, on the performance of the strain and hitting certain commercial targets. There are milestones and royalty payments associated with the development. Joe, I think maybe you can expand on the transfer and opportunity as well, because I think that's a huge opportunity for us, and I think it's explaining that a little bit would be helpful.

Speaker Change: a protein produced from our C1 cell line and for that matter filamentous fungal cells can be used safely and induce an immune response.

Speaker Change: And we did that both at the high and low dose. And we got good neutralizing antibodies and cellular immunity.

Mark Emalfarb: So that has opened up the doors very wide, and it seems to be growing even wider as we develop more and more antigens for the vaccine. So from our recombinant protein vaccine platform, we believe that we have the most efficient, fastest way to make the largest quantity at the lowest cost. Antigens for vaccines that can be released sooner. Because, in the end, we don't have viruses to remove like toe cells, antiviral clearance, or the baclovirus cells.

Speaker Change: So that has opened up the doors very wide, and it seems to be growing even wider as we develop more and more antigens for the vaccine. So from a recombinant protein vaccine platform, we believe that we have the most efficient, fastest way to make the largest quantity, lowest cost.

Speaker Change: Antigens for vaccines that can be released sooner because in the end we don't have viruses to remove like toe cells, antiviral clearance, or the baculovirus cells. So it's not only faster, quicker, and cheaper, but you can release it sooner.

Mark Emalfarb: Sure, Mark. The transfer and opportunity is similar to that of Alphalakta Albumen in that it's a very high growth market for recombinant products given that it's a very high price point. So the average cost of a kilogram of transfer and is roughly four to five hundred thousand dollars. That's obviously, you know, animal derived recombinant production is increasing, but it's a tricky, tricky component to produce. So being able to produce it at the titers that we are today, we believe that we can significantly reduce that cost.

Mark Emalfarb: So it's not only faster, quicker, and cheaper, but you can release it sooner. So we believe we're going to transform the recombinant protein production of antigens for human and animal health. So hopefully that gives you an idea of the tremendous progress we have made and now the validation, as we've talked about from academia, industry, government, nonprofits, you name it, and virtually on every continent on this planet, we're starting to get recognition, we're getting more and more credibility, the technology is getting more broadly applicable, and as Joe pointed out, we've produced things like HPV, which as you know is a massive market opportunity and sales Great, thanks for that. Thanks for the summary. Do you have time for one more from me?

Speaker Change: So we believe we're going to transform recombinant protein production of antigens for human and animal health.

Speaker Change: So hopefully that gives you an idea of the tremendous progress we have made.

Speaker Change: and now the validation, as we've talked about, from academia, industry, government, non-profits.

Speaker Change: you name it.

Speaker Change: and virtually on every continent.

Speaker Change: on this planet. We're starting to get recognition. We're getting more and more credibility. The technology is getting more broadly applicable. And as Joe pointed out, we've produced things like HPV, which, as you know, is a massive market opportunity and sales today into billions and billions of dollars.

Mark Emalfarb: And as I mentioned in the portion of the call, the majority of cell culture media costs, and that's the media that you grow, not just the animal muscle cells, but it's also used to grow, you chose cells for production of other monoclonal antibodies and other pharmaceutical agents. And you know, any cell culture media component can, you know, grow basically my million cells. So it has multiple uses, multiple off takes across the segments.

Joe Hazelton: We've also produced multiple versions of an RSV antigen and a variety of others as well.

Mark Emalfarb: I don't want to use up all my questions. Yeah, no, we're happy to answer any questions you provide information that's helpful. Yeah, so just one other thing on ProLiant, and Joe and I had a chance to talk about this before, but I don't know if I asked this question about just the relative margin on the C1 produced product versus what ProLiant's already doing right now, the animal-based albumin. Do you get a sense of what the relative attractiveness is of the recombinant C1 versus their product right now in Well, the answer is that, just to clarify, they're making bovine albumin, not human albumin right now. Okay, okay.

Speaker Change: Great, thanks for the summary. Do you have time for one more from me? I don't wanna use up all my questions.

Mark Emalfarb: The difference is, is that Albumen and transfer and make up 95% of the cost of cell culture media. So if you look at, let's just say, a leader of media that you used to grow either animal muscle cells for leftover meat. Or you'd use it to grow, you know, show cells for making a monoclonal 95% of those costs are from Albumen and transfer and the remainder are from growth factors and some other high value targets in there as well, which we're looking at.

Speaker Change: Yeah, no, we're happy to answer any questions you provide information that's helpful.

Speaker Change: Yeah, so just one other thing on ProLiance, and Joe and I had a chance to talk about this before, but

Speaker Change: I don't know if I asked this question about just the relative margin on the C1 produced product versus what ProLiant's already doing right now with the animal-based albumin. Do you get a sense of what the relative attractiveness is of the recombinant C1 versus...

Mark Emalfarb: But that's the particular opportunity with transfer and given in that space, 70% of the utilization today is already recombinant and it's looking to increase. Because again, it's one of those markets where it's an extremely expensive product to drive naturally because there's not a lot of it in, in basically, you know, a million blood. So it's much easier to produce recombinantly and potentially more regularly, acceptable as well. So I do believe that's a significant opportunity that's already generating interest and obviously we have continued development we need to do.

Speaker Change: They're a product right now in terms of margins.

Speaker Change: Well, the important thing to answer is that, just to clarify, they're making bovine album and not human album right now.

Joseph Hazelton: There's a whole market opportunity for something on the human side, but Joe, you can go forward. No, actually, that's exactly what I was going to say that it's an expanding customer market for them because they don't have a well; they don't have a recombinant product today. And they don't have human serum albumin; they only work in the bovine protein space at the current time. So this is a nice expansion. The use case, though, for human serum albumin and bovine albumin in certain instances is the same for things like cell culture or medical device coding.

Speaker Change: So this is a whole new market opportunity for something on the human side, but Joe, you can go forward.

Speaker Change: No, actually that's exactly what I was going to say. It's an expanding customer market for them because they don't have a, well they don't have recombinant product today and they don't have human serum out and they only work in the bovine protein space.

Joe Hazelton: at the current time, so this is a nice expansion. The use case, though, for human serum albumin and bovine albumin in certain instances is the same.

Mark Emalfarb: Fred, thanks for the extra color. Thank you once again to ask a question at this time, please press star one on your telephone keypad. Is there anything you want to add to her of awaiting to see if anyone else is coming in? Nope, I think I've covered it in the remarks.

Joseph Hazelton: Those are things that you could potentially use other products for depending on what the need of the application is. There'd be certain reasons why you'd want to use human versus bovine and vice versa. A lot of it is driven by cost. But you know, as far as margin attainment is concerned, I really don't want to speak for them.

Joe Hazelton: for things like cell culture or medical device coding. Those are things that you could potentially use on the product depending on what the need of the application is. There'd be certain reasons why you'd want to use human versus bovine and vice versa. A lot of it is driven by cost, but as far as the margin attainment.

John Vandermosten: We do have a follow-up from John Van Boesterman with Zachs, please proceed. Thanks. You know, I'm kind of a bigger picture question for you on C1.

Joseph Hazelton: But obviously, we want to look to be able to provide a cost-effective product to the market in terms of recombinant human serum albumin for any application. And obviously, there's room for improvement in the price points in that space. But I don't want to, you know, predict, you know, obviously what the potential margins for them could potentially be or what they're shooting at at the current time.

Speaker Change: You know, I really don't want to speak for them, but obviously we want to look to be able to provide a cost-effective product to the market in terms of a recombinant human serum albumin for any application, and obviously there's room for improvement in the price points in that space, but I don't want to, you know, predict, you know, obviously what the potential margins for them, you know, could potentially be or what they're shooting at at the current time.

Mark Emalfarb: You know, as we look at kind of how the how the expression system is evolved over time, how was the change over the last five years? That's a good question. It's changed from, I guess, from darkness to light or night to night to day. And what I mean by that is when we transitioned the C1 cell line from the industrial sector into biopharmaceuticals, it was a lot of work we had to do to make it so that it not only produced a lot of something, but it produced in a stable form.

Joseph Hazelton: And just to add, John, to that, you know, keep in mind, with the strength of our upstream processing, the line also brings in the strength of downstream processing in terms of scale and cost. And, of course, they have access to the market because they've been selling in this market for years. So we have immediate market access to them.

Speaker Change: And just to add, John, to that, you know, keep in mind with the strength of our upstream processing, Reliant also brings in the strength of downstream processing in terms of scale and cost.

John Vandermosen: And of course, they have access to the market because they've been selling in this market for years. So we have immediate market access to them.

Mark Emalfarb: And as you know, it knocked out total amount of 14 or 15 different genes with proteases in addition to the other background proteins. So we can produce high levels of low-cost proteins that are stable, and then most importantly, although we had certain animal data prior to doing all of that, we've expanded the animal data from rats to lambs to chickens to all kinds of other the hamsters, but most importantly, with the DY100 SARS-CoV-2 RBD booster phase 1 trial, we've not demonstrated for the first time ever a protein produced from our C1 cell line and for that matter, filamentous fungal cells can be used safely and induced in immune response.

Operator: Once again, to ask a question, press 1 on your telephone keypad. There are no further questions in queue at this time. I would like to turn the call back over to Dyadic CEO, Mr. Mark Emfarb. Please proceed. Thank you.

John Vandermosen: Great, thank you.

Speaker Change: Once again, to ask a question, star 1 on your telephone keypad.

Speaker Change: There are no further questions in queue at this time. I would like to turn the call back over to Dyadic CEO, Mr. Mark Emfarb. Please proceed.

Mark Emalfarb: As Pat and Joe have indicated, Dyadic is fully committed to driving near-term revenue and growth by pushing the boundaries of innovation and accelerating commercialization. We are expanding the use of our C1 and Apovis microbial protein production platforms across our three core sectors: Alternative Proteins in Animal and Human Health.

Speaker Change: Thank you. As Pat and Joe have indicated, Dyatik is fully committed to driving near-term revenue and growth by pushing the boundaries of innovation and accelerating commercialization.

Speaker Change: We are expanding the use of our C1 and Apavis microbial protein production platforms across our three core sectors.

Operator: This is an incredibly exciting time in dyadic history, and I believe we are uniquely positioned to swiftly capitalize on both current and emerging opportunities. I want to thank you for joining us on today's second quarter 2024 conference call. We look forward to updating you on our continued commercial and scientific progress during our next call. Stay tuned for more exciting developments from Dyadic. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time. [music]

Speaker Change: Alternative Proteins in Animal and Human Health.

Speaker Change: This is an incredibly exciting time in dyadic history, and I believe we are uniquely positioned to swiftly capitalize on both current and emerging opportunities.

Mark Emalfarb: And we did that both at the high-end low dose and we got good neutralizing antibodies and cellular immunity. So that is opened up the doors very wide and it seems to be growing even wider as we develop more and more antigens for the vaccine. So when we're common in protein vaccine platform, we believe that we have the most efficient fastest way to make the largest quantity of lowest cost antigens for vaccines that can be released sooner.

Speaker Change: I want to thank you for joining us on today's second quarter 2024 conference call. We look forward to updating you on our continued commercial and scientific progress during our next call. Stay tuned for more exciting developments from Dyadic.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.

Mark Emalfarb: It goes on the end, we don't have viruses that are removed like co-cells and the viral clearance or the back of our cells, so it's not only faster, quicker and cheaper, but you can release it sooner. So we believe we're going to transform our common protein production of antigens for human and animal health. So hopefully that gives you an idea of the tremendous progress we have made and now the validation, as we've talked about, from academia industry, government, nonprofits, you name it and virtually on every continent on this planet, or we're starting to get recognition, we're getting more and more credibility to technologies getting more broadly applicable and as Joe pointed out, we've produced things like HPV, which as you know is a massive market opportunity and sales today in the billions and billions of dollars. We've also produced multiple versions of an RSV antigen and a variety of others as well.

Mark Emalfarb: Great, thanks for the thanks for the summary. Do you have time for one more from me? I don't know. Yeah, so just one of the things I'm pro-liant and Joe and I had a chance to talk about this before, but I don't know if I asked this question about just the relative margin on the C1 produced product versus what pro-lion is already doing right now, the animal-based albumin. Do you get a sense of what the relative attractiveness is of the common C1 versus their product right now in terms of margins?

Mark Emalfarb: Well, before you answer that, just to clarify, there may be bovine albumin, not human albumin right now. So this is a whole lot of opportunity for some on the human side, but Joe, you can go forward. No, actually that's exactly what I was going to say. It's an expanding customer market for them because they don't have a, well, they don't have recombinant product today and they don't have human serum albumin. They only work in the bovine protein space at the current time.

Speaker Change: [inaudible]

Mark Emalfarb: So this is a nice expansion. The use case, though, for human serum albumin and bovine albumin, certain instances are the same for things like cell culture or medical device coding. Those are things that you could potentially use other product depending on what the need of the application is. There'd be certain reasons why you'd want to use human versus bovine and vice versa. A lot of is driven by cost, but as far as the margin attainment, I really don't want to speak for them, but obviously we want to look to be able to provide a cost-effective product to the market in terms of a recombinant human serum albumin for any application.

Mark Emalfarb: Obviously there's room for improvement in the price points in that space, but I don't want to predict what the potential margins for them could potentially be or what they're shooting at at the current time. John. And just to add, John, to that, you know, keep in mind with the strength of our upstream processing, the line also brings in the strength of downstream processing, in terms of scale and cost. And of course, they have access to the market, because they've been selling it as market for years, so we have a needy market access to them.

Unknown Executive: Great, thank you. Once again, to ask a question, it's star one on your telephone keypad. There are no further questions in queue at this time.

Mark Emalfarb: I would like to turn the call back over to Dyadic CEO, Mr. Mark Emfarr, please proceed. Thank you. As Pat and Joe have indicated, Dyadic is fully committed to driving near-term revenue and growth by pushing the boundaries of innovation and accelerating commercialization. We are expanding the use of our C1 and F of this microbial protein production platforms across our three core sectors, alternative proteins and animal and human health. This is an incredibly exciting time in Dyadic history, and I believe we're uniquely positioned to swiftly capitalize on both current and emerging opportunities.

Mark Emalfarb: I want to thank you for joining us on today's second quarter, 2024 conference call. We look forward to updating you on our continued commercial and scientific progress during our next call. Stay tuned for more exciting developments from Dyadic.

Unknown Executive: The conference has now concluded. Thank you for attending today's presentation.

Unknown Executive: You may now disconnect your lines at this time.