Q3 2024 Dyadic International Inc Earnings Call
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Speaker Change: Good evening and welcome to Dyadic International Q3 2024 conference call. 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 call is being recorded today, November 12, 2024. I would now like to turn the call over to Ms. Ping Rawson, Dyadic's Chief Financial Officer. Please go ahead.
Speaker Change: Thank you. Good evening and welcome everyone to Dyadic International's Q3 2024 conference call. I hope you have had an opportunity to review Dyadic's press releases announcing financial results for the quarter ended September 30, 2024.
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 third quarter 2024 business and corporate highlights and provide a commentary on the strategic direction of the business.
Speaker Change: I will follow with a review of our financial results in more detail. 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 poor-looking statements.
Speaker Change: which involve risks and uncertainties, and other factors that could cause dietics' actual results, performance, scientific or otherwise, for achievements to be materially different from those expressed or implied by these forward-looking statements.
Speaker Change: BADIC expressly disclaims any duty to provide updates to its forward-looking statements, whether because of new information, future events, or otherwise.
Speaker Change: Participants are directed to the risk factors set forth in the addicts report filed with the SEC.
Speaker Change: It is now my pleasure to pass the call to our CEO, Mark Emalfarb. Mark?
Mark Emalfarb: Thank you, Ping. Welcome, everyone, and thank you for joining Dyadic's Q3 2024 conference call.
Mark Emalfarb: We are excited to discuss how our business strategy centered on near-term licensing and product candidates has strategically positioned Dyadic to swiftly take advantage of current and upcoming opportunities.
Our dedicated focus on achieving multiple revenue streams.
and significant milestones.
through commercialization of products.
Mark Emalfarb: Technology Licensing, Fully Funded Collaborations, Advancing our Internal and External Pipelines are yielding tangible results.
Mark Emalfarb: These third quarter achievements strongly highlight DIATIC's commitment to harnessing the full potential of our proprietary DAPA-Bis and C1 microbial protein production platforms.
Mark Emalfarb: These innovative technologies are the foundation for driving both immediate and sustainable revenue.
Mark Emalfarb: particularly through the commercialization of alternative proteins targeted for high-value applications such as recombinant human albumin, transferrin, and DNase I.
Mark Emalfarb: At the same time, we're laying the groundwork for substantial mid- and long-term growth in human and animal health markets.
Mark Emalfarb: This dual-track strategy enables Diadic to capitalize on near-term milestones, generating licensed revenue, and achieving significant progress in product development by applying our DaprBest platform to develop and produce enzymes and proteins to help address complex and evolving needs in health, nutrition, and wellness.
such as dairy proteins including alpha-lactalbumin and others.
Mark Emalfarb: Simultaneously, our biopharmaceutical pipeline, powered by our CMWIN platform, holds significant opportunity.
Mark Emalfarb: For example, we are collaborating with Virovax to develop potential vaccines for infectious diseases such as bird flu and mpox.
Mark Emalfarb: Additionally, our collaborations with two of the top 10 pharmaceutical companies.
Mark Emalfarb: and a leading biotech company have yielded progress in producing several commercially relevant proteins such as an antibody targeting digestive health and multiple antigens in large infectious disease markets such as HPV, RSV and HIV.
Mark Emalfarb: due to the many advantages the C1 cell platform offers, such as speed of development and manufacturing, high productivity, cost efficiency, and flexibility of use in diverse applications of vaccines and treatments for infectious and other diseases.
Mark Emalfarb: They can be produced in greater quantities, more affordably, for more patients in developed and developing countries.
Mark Emalfarb: As we continue advancing our efforts across all segments, we remain deeply committed to delivering sustained value to our investors and partners.
Mark Emalfarb: Diadic is poised not only to meet the challenges today but to shape the health, wellness, and nutrition solutions of tomorrow, positioning ourselves as leaders in the global protein production of enzymes, alternative proteins, and biopharmaceutical sectors.
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 third quarter. Joe?
Joe Hazelton: Thank you, Mark. Our collaborations in alternative proteins and biopharmaceuticals demonstrate the remarkable versatility and scalability of our platforms, underscoring Diatics' ability to deliver consistent, high-quality results across various applications.
Joe Hazelton: Through these partnerships, we're producing recombinant proteins like human serum albumin for cell culture media and alpha-lacta albumin for nutritional uses, meeting critical health and wellness needs and reinforcing dietics market position.
Joe Hazelton: Our platforms also enable efficient production of complex antigens and antibodies essential for developing vaccines and therapeutics for both animal and human health.
Joe Hazelton: These innovations generate immediate and sustained revenue, positioning DADG for substantial future growth as we expand into high-demand and high-value markets.
Joe Hazelton: By diversifying our capabilities and product offerings, we're advancing toward our vision of becoming a leader in alternative protein production and biopharmaceutical manufacturing, creating continued value for our shareholders, partners, and consumers.
Joe Hazelton: In the third quarter, we demonstrated that our strategy of focusing on high value alternative protein products is both viable and achievable in the near term, without the costly and likely development seen with human and animal therapeutics and vaccines.
Joe Hazelton: Within the Alternative Proteins Market, we are refining our approach by targeting three key segments, Life Science, Food and Nutrition, and Industrial Recombinant Proteins and Enzymes.
Joe Hazelton: The majority of these products can be tailored for various markets, with Dyadic's initial life science offerings being research-grade products for non-human research use.
Joe Hazelton: Beyond collaborations such as our recent work on recombinant serum albumin, we are preparing to launch our own research-grade products, including RNAse-free DNase I, which is used in molecular biology.
Joe Hazelton: In June, we announced the development and commercialization partnership with ProLiant Health and Biologics, a leading supplier of purified proteins for diagnostics, nutrition, and cell culture markets.
Joe Hazelton: In the third quarter, DIAC received $1 million in access and milestones fees with an additional $500,000 expected upon reaching a defined productivity threshold from this agreement.
Joe Hazelton: The partnership's initial focus is on the commercialization of recombinant serum albumin, human serum albumin, for diagnostics and other applications.
Joe Hazelton: with the first product anticipated to launch in the first half of 2025. This $6 billion serum albumin market represents a significant opportunity as NIATIC will share in ProLiant's profits from the sale of animal-free recombinant albumin products.
Speaker Change: To broaden Dyadic's strategic focus, we're expanding our portfolio of life science research-grade recombinant products in 2025.
Speaker Change: We have completed the development of DNase I, an RNase-free enzyme with demonstrated analytical comparability to reference standards, obtained a certificate of analysis, and initiated sampling with potential customers.
Speaker Change: We are now finalizing the manufacturing process and expect to begin accepting pre-orders in early 2025.
Speaker Change: Alongside producing DNA SWAN as a product, our business development efforts are actively engaging interested parties for licensing the production strain, creating multiple revenue opportunities from the single product.
Speaker Change: DNase 1 is part of a high-value, high-demand segment of enzymes essential for DNA and RNA manipulation in molecular biology.
Speaker Change: We're expanding our development efforts in this segment beyond DNase I, initially for research-only use, with plans to produce clinical-grade versions for regulated markets in the future.
Speaker Change: We have developed cell lines for four additional products beyond DNAse1 in the research grade segments of DNA and RNA polymerases.
Speaker Change: DNA Ligases and RNase Inhibitor Products, with sampling efforts anticipated by the late fourth quarter 2024 or early first quarter 2025.
Speaker Change: while we finalize comparative analytics and optimize strain productivity and quality.
Speaker Change: By broadening our molecular biology portfolio, Dyadic is positioning itself to penetrate the $900 million DNA-RNA enzymes market.
Speaker Change: Our second primary focus within Life Science Alternative Proteins is on cell culture media, essential for in vitro cell growth across research, nutrition, and pharmaceutical applications.
Speaker Change: These medias supply the nutrients, hormones, and growth factors needed for healthy cell proliferation.
Speaker Change: Recently, we accelerated the development of our recombinant transference strain, achieving higher productivity than initially expected.
Speaker Change: With the Certificate of Analysis completed, we've begun sampling and application testing for lab-grown meat and other markets ahead of schedule.
Speaker Change: This progress has captured the interest of key collaborators in the global cell culture media market, valued at over $4.7 billion in 2023 and expected to grow at a CAGR of 12.5% through 2030.
Speaker Change: This segment remains particularly attractive for a diadic with high-value products like growth factors, transferrin and albumin, comprising over 95% of media costs, with the majority of these products being produced recombinantly.
Speaker Change: To expand our cell culture media portfolio, we're developing human and bovine growth factors for research and food applications. Our third quarter development and testing efforts have led us to initiate sampling of these products to prospective partners exceeding initial timelines.
Speaker Change: Within the food and nutrition vertical of alternative proteins, our efforts in the global animal-free dairy products market, valued at over $26 billion in 2022, are starting to generate revenue.
Speaker Change: Using precision microbial fermentation, we're producing animal-free dairy products in response to shifting consumer preferences and health concerns like lactose intolerance.
Speaker Change: Although production costs remain high for these products, our expertise in large scale, cost-effective, recombinant protein production positions us to potentially overcome these challenges.
Since signing our 2023 agreement to commercialize non-animal dairy-derived enzymes,
Speaker Change: We've received a $600,000 upfront payment and surpassed our first milestone with an additional $425,000 for achieving target yields in the third quarter.
Speaker Change: Our partner aims to launch a non-animal dairy enzyme in the first half of 2025 with development of a second enzyme ongoing.
Speaker Change: Additionally, interest remains strong in our recombinant alpha-lactalbumin product with ongoing negotiations with multiple end product and precision fermentation companies who have received samples.
Speaker Change: We recently finalized the certificate of analysis for bovine alpha-lacta albumin while simultaneously developing a human version of alpha-lacta albumin in the third quarter targeting research-grade applications, expanding the potential value of our alpha-lacta albumin franchise.
Speaker Change: Meanwhile, we're advancing efforts to commercialize recombinant lactoferrin and beta-lactoglobulin with sampling set to begin in the fourth quarter.
Speaker Change: Grounding out our alternative protein segments, we're expanding our pipeline of bio-industrial products with enzymes for industries like nutrition, biofuels, and biorefining.
Speaker Change: In partnership with Firmbox, we developed a cellulosic enzyme for biofuels.
Speaker Change: currently being evaluated by potential customers. Additionally, Dyadic has designed enzymes initially targeted at the pulp and paper sector with promising applications in biogas and biofuel production. We aim to commercialize these products within the next 12 months to drive revenue growth.
Speaker Change: As Mark outlined earlier, our dual strategy emphasizes near-term revenue in alternative protein and builds mid- to long-term value in human and animal pharmaceuticals.
Speaker Change: Following the successful completion of our first in human phase 1 study for a C1 produced protein, we're receiving significant interest from academia, government, industry, and nonprofits.
Speaker Change: Since early this year, we've initiated over 15 fully funded human health vaccine and antibody projects, including partnerships with two top 10 pharmaceutical companies.
Speaker Change: These programs span diverse disease areas, underscoring dietics ability to produce both standard and complex molecules.
Speaker Change: Our C1 platform has successfully expressed multiple infectious disease vaccine antigens including COVID, avian and seasonal influenza, MPOX, HPV, HIV, malaria, RSV, and others.
Speaker Change: We also delivered three monoclonal antibodies for evaluation as neutralizing agents, all of which demonstrated similar activity to those produced in CHO cells in testing by our third-party collaborators.
Speaker Change: The spread of the H5 bird flu has further heightened interest from human and animal health companies. We've partnered with Viravax LLC to develop an adjuvanted avian influenza, or bird flu, ferritin nanoparticle vaccine.
Speaker Change: Preliminary animal studies suggest strong immune responses positioning this vaccine as a potential option for both human and animal applications. We've actively shared these findings at medical conferences and have made a number of presentations to industry, government agencies, and non-profits to support our engagement with interested partners.
Speaker Change: To address the mpox, formerly monkeypox, outbreak that was recently declared a public health emergency of international concern by the W.H.O.,
Speaker Change: We again partnered with Virabax LLC, achieving a four and a half gram per liter productivity in seven days of our Mpox ferritin nanoparticle vaccine antigen, with Virabax targeting preclinical studies for the Mpox vaccine later this quarter.
Speaker Change: Multiple applications for grant funding from leading non-governmental organizations in collaboration with the Fundacion Biotecnopola de Siena and others for a variety of vaccine antigens and antibodies have been submitted to help advance our efforts in the human health segment.
Speaker Change: Finally, the animal health segment continues to advance with key partners, including FibroAnimal Health.
Speaker Change: In light of the bird flu outbreak, we've intensified business development efforts focused on recombinant vaccines for pandemic preparedness, including our collaborations with the C1-produced H5 bird flu ferritin antiparticle antigen that's being evaluated for potential use in poultry and cattle vaccines.
Speaker Change: We remain focused on financially disciplined product opportunities, fully leveraging Dyadic's technology and expertise. Our entire team is committed to driving near-term revenue growth in alternative proteins while building sustained value in animal and human health markets.
Speaker Change: With that, I'll now turn it over to our CFO, Ping Rawson, to cover our financials.
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 ended September 30, 2024 in more detail.
Ping Rawson: You can find additional information in our earnings price releases and Form 10-Q, which we filed earlier today.
Ping Rawson: Revenue for the quarter ended September 30, 2024, increased to approximately $1,958,000 compared to $397,000 for the same period a year ago.
Ping Rawson: The increase is driven by the license revenue of $1 million from Perlinde and the success fee of $425,000 from Intime.
Ping Rawson: Cost of Revenue and Development Revenue for the quarter ended September 30, 2024 increased to approximately $396,000 compared to $106,000 for the same period a year ago.
Ping Rawson: Research and development expenses for the third quarter of 2024 decreased to approximately $460,000 compared to $716,000 for the same period a year ago.
Ping Rawson: The decrease reflected the winding down of activities related to the company's Phase 1 clinical trial of BYAR100 vaccine candidates completed in February 2023 and a decrease in the amount of ongoing internal research projects.
Ping Rawson: G&A expenses for the third quarter of 2024 increased by 1.2% to $1,298,000 compared to $1,282,000 for the same period a year ago.
Ping Rawson: The increase reflected increases in business development and investor relations expenses of $52,000 and other increases of $24,000.
Ping Rawson: offset by decreases in management incentives of $38,000 and accounting and legal expenses of $22,000.
Ping Rawson: Loss from operations for the third quarter of 2024 decreased to $203,000 compared to $1,720,000 for the same period a year ago.
Ping Rawson: The decrease in loss from operations was largely due to the licensing revenue of $1,000,000 received from the Perlins Agreement and the milestone payments of $425,000 from the Enzyme Agreement, as we mentioned earlier.
Ping Rawson: That loss for the three months ended September 30, 2024 was $203,000 or one cent per share compared to $1,614,000 or six cents per share for the same period a year ago.
Ping Rawson: As of September 30, 2024, we have cash and investment-grade securities of $10 million compared to $7.3 million as of December 31, 2023.
Ping Rawson: As we mentioned earlier, the company received a total of $1,425,000 licensing and milestone fees just this quarter alone.
Ping Rawson: With that, we expect our total cash burn for 2024 will be decreased significantly to approximately $4.7 million.
Ping Rawson: With that, I will now ask the operator to begin our Q&A session, after which Mark Emalfarb will provide closing comments.
Operator.
Speaker Change: Thank you, we will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Speaker Change: You may press star 2 if you would like to remove your questions from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. As a reminder, please restrict yourself to one question and one follow-up. One moment please while we poll for questions.
Speaker Change: The first question comes from the line of John Vandermosen with Zax. Please go ahead.
John Vandermosen: Thank you and good evening. I'd like to understand about how the regulatory requirements work for some of these research grade recombinant proteins. You mentioned several certificates of analysis, and I guess is that the only regulatory hurdle you have to pass?
to be able to tell the...
https://www.youtube.com or www.facebook.com
Joe Hazelton: Technically, it's, John, and sorry, this is Joe, a great question.
Speaker Change: No, it's not the only hurdle, it's the manufacturing must be done at an ISO certified facility as well.
Speaker Change: So there's no, I guess the easiest way to think about it, there's no regulatory review done by a regulatory agency that's going to need to be done to launch these products.
Speaker Change: It mainly has to do with ensuring that your product specs for QA and QC meet the required levels for ISO. That's it.
Speaker Change: Okay, and I heard you mentioned several of these certificates of analysis. Could you remind me again how many you have? I think you said, well, I'll just let you say it. I heard probably at least three, I think, right?
Speaker Change: You're exactly right. We have three. DNA swan, a bovine transferent, and a bovine alpha-lactalbumin. All three have certificates of analysis with comparative analytics to currently available and commercialized research-grade products.
Speaker Change: So basically, we look, act, and perform the same as what's currently available on the market, which is obviously what we need to be able to launch.
Speaker Change: And Joe, those are in addition to the two albumin, the albumin as well, right?
Joe Hazelton: Yes, through the broad agreement, we did, before the agreement was signed, we did have a certificate of analysis for the bovine and the human albumin as well.
Great, all right. Thanks, Mark. Thanks, Jim.
The End
Speaker Change: Thank you. A reminder to all the participants that you may press star and 1 to ask a question.
and Mark Emalfarb. Thank you.
Speaker Change: The next question comes from the line of John Vandermosen with Zax. Please go ahead.
Great, thanks again.
Speaker Change: and there's no real big advantage to being a larger producer of these. Is that correct? And just help me understand how the process works to produce these research grade products.
Joe Hazelton: It honestly, John, this is Joe again, and thanks for the question. It honestly differs by the market. So there are high-value, high-volume markets, like serum albumin, that are both not only high-priced, but also you need, you know, probably
you know, metric tons of this stuff per year.
Joe Hazelton: There are other products like DNA swan used in vaccine production of mRNA vaccines.
Joe Hazelton: that aren't necessarily needed in the same quantities, but they're also toxic to most cell lines.
Joe Hazelton: So they're extremely difficult to produce in large quantities. You're talking, you know, producing in milligrams versus grams, but you're right. The utilization of those is much lower. The key is how do you improve your margins in those markets? If you can't do it from an upstream and a downstream standpoint, it's very difficult.
Joe Hazelton: to try to make money in these segments, where we have the advantages we're able to produce at higher levels and with lower upstream costs, in some cases lower downstream costs, than some of the currently used cell lines like E. coli and
Baclovirus, sorry.
Joe Hazelton: So that's kind of the advantage that we have. Being able to produce even small batches at lower costs provides you much more margin flexibility.
Speaker Change: And if I can add a solid, John, to that. Maybe, you know, as Joe points out and we've pointed out in the past, you know, dyadic does the exact same thing.
Speaker Change: Every time we take a gene sequence, whether it's for ourselves, for our own product pipeline, for DNA's one of these enzymes that Joe's been talking about.
Speaker Change: but also whether it be albumin or transferrin or other products or it's an antigen or an antibody.
Speaker Change: You know, our scientists are trained to insert these genes into these cells, whether it's staphylococcus for the...
non-pharmaceutical proteins or C1 from pharmaceutical proteins.
Speaker Change: to just produce large amounts of volumes in terms of yield. Now, as Joe pointed out, you don't need large yields.
Speaker Change: for some of these, you know, like smaller volume items like DNase I.
but our yields are still significantly higher than the competition.
Speaker Change: so they give us an advantage in those cases. So it's all about productivity.
Speaker Change: And of course, some markets you don't need as high productivity as others, you know, the industrial enzyme business. And we've developed this after three decades, for high productivity, for speed, for durability, robustness and versatility. And that's now coming out here in spades.
Speaker Change: And of course, in the last seven years, where we've modified C1.
Speaker Change: to knock out proteases in glycoengineering. It just opens up the windows of opportunities.
Speaker Change: and just many directions, but we're doing the same thing every time. We're just taking this hyperproductive cell line with the genetic tools and the scientific prowess to modify them to produce proteins, no matter what the application is.
Okay and one last question for me if I can.
Speaker Change: and maybe this is for you Joe, can you help me understand more about the market I guess between recombinant product and then you know product from you know animal product for transferrin and alpha-lactalbumin?
Joe Hazelton: I hate to give this answer because I hate it when people do it to me, but it honestly depends on the market. So like alphalact albumin, the current market is dominated by animal derived.
If you're looking in the food space.
Joe Hazelton: That's a space that we'll have to do, I don't want to say significant, we will have to improve the productivity of the cell line to be able to attempt to get to the margins that you can get with a bovine produced.
Joe Hazelton: However, alpha-lactalbumin, both human and bovine, as a research-grade material, our current yields put us in the price range or put us in the potential to produce at the price range or lower than how it's being produced today.
Joe Hazelton: So, I know it's not a great answer, but it really does depend on the segments you're looking at. Obviously, food has a much lower margin than anything in the research or the pharma space.
Joe Hazelton: but at the same point in time, you know, it still is the same thing. You need to have the right potential to decrease margins in these markets.
Joe Hazelton: In the research-grade space, you have a little more wiggle room because the products like growth factors.
Joe Hazelton: I mean, people spend millions of dollars for, you know, probably two or three grams of this stuff.
Joe Hazelton: So there are segments where you're right, you don't have to produce much and obviously you don't even have to sell it that much of a discount to make a huge impact, you know, for your customers.
Joe Hazelton: And they're not just used for food. Cell culture media products are used to grow cho cells and other cells that are made to make human and animal therapeutics. So that's why they're extremely valuable, because those are highly regulated and you have to make them at CGMP, which again drives up your costs. So.
Joe Hazelton: Anything we can do to lower the cost of those products in the given markets, that's really the name of the game here. But like I said, it's really a market-driven, which is why we're targeting very specific markets where we feel we have a competitive advantage because of our sell line.
Okay and then in just in the on the
Joe Hazelton: My sense is that it would be, you know, they prefer recombinant just because it has fewer contaminants in it.
Speaker Change: Is that right? I mean, are there any other considerations there? And is that a correct assumption on my part?
Speaker Change: I tell you, you're still going to hate me because, honestly, it depends on the application, but yes, it drives me nuts when people do that to me, so I apologize, but it honestly does, depending on what you're using it for, but you're absolutely right. The advantages of recombinant, for the most part, are hopefully an easier regulatory pathway, because you don't have as much potential for contaminates or viruses that you do from animal sources. At the same point in time, I'm not going to tell you that there aren't some uses for animal dry products, because there are, and in some cases, they do work better.
Speaker Change: Those are becoming more and more limited simply because of the technology is obviously improving and the quality of the products producer commonly is improving as well. But you are seeing a growth in that sector due to the fact that people do want to move away from animal derived proteins, especially in the, the.
Speaker Change: The production of therapeutics. So, when you're looking at producing vaccines or vaccines, the.
Speaker Change: Vaccine production usually uses like human serum albumin to stabilize the vaccine. They want to get away from using actual serum from humans. They want to use something that's more reliable, more stable, and more consistent. And that's where the recombinant products give you that advantage.
Speaker Change: Great. Thanks, Jeff. Thanks for letting me explore some of those names. Appreciate it.
Speaker Change: Thank you. Next question comes from the line of Robert Hoffman with Princeton Opportunity Management. Please go ahead.
Robert Hoffman: Thanks for taking the question. I'm going to piggyback on that a little bit. You guys have talked about some of the addressable markets that you have.
Robert Hoffman: but then obviously some are more amenable to your technology, whether it's because you can create a better margin. So I guess this is a two-part question.
Can you give us an idea of
If you add them all together, you know,
What is the...
Robert Hoffman: reasonable addressable market for you, meaning, you know, if the market is, you know, a billion and you think you can get 10% and it's 100 million, you know, can you give us a sense of what you think is a reasonable expectation of the addressable market and then
Robert Hoffman: On the assumption that you'll be getting royalties, are they going to be consistent across all those? Is it going to be in the 5% range? Any clarity you can give us on what the royalty rate might be would be helpful.
and Mark Emalfarb. Thank you.
Mark Emalfarb: Mark, do you want me to go? Well, I think, yeah, you go first and if I have to add a little color, I will. Okay.
Speaker Change: Robert, first of all, thanks for the question and nice to meet you.
Speaker Change: I'll start with the royalty rate. That does vary. It varies by segment, application, and product, so it's not a consistent, you know, 3% or 5% or 10% across the board. It will vary depending on the value of the product and the value that we play in the production as well.
Speaker Change: for total addressable market. Again, I'm going to give you the answer that I hate. It does, it varies by market.
Speaker Change: Cell Culture Media Products, the segment that we're currently targeting in alternative proteins for life sciences.
Speaker Change: That's about a 4.7 billion dollar market, around 60-70% of the agents used, so growth factors, transfer, and albumin, around 60-70% of the cell culture media agents today are recombinantly produced.
Speaker Change: So, you know, obviously you're looking at a big chunk of that four point seven billion dollars being an addressable segment for prominent products that we produce similar in the one space as well. That that roughly that that whole DNA is RNA inhibitor products.
That's an almost a billion dollar segment.
Speaker Change: Roughly half of that today is recombinant. There are some chemical ways to produce these products that are in some cases less expensive as well.
Speaker Change: But that's, again, you're looking at, you know, half a billion dollars as a potential addressable market for the products that we're looking at targeting in this segment. So, you're absolutely right. In food, it's probably a little bit less. So, in, let's just say, alphalactalbumin.
Speaker Change: about 10% of the current alpha-lactalbumin used today as recombinant and honestly that's simply because it's too expensive to produce and compete with a
Animal Derived Version
Speaker Change: In the research space though, it is, we're actually able to compete about
Speaker Change: 70% of the utilization of alpha-lactalbumin in the research space is recombinantly produced. So that's why I'm saying I always hate to do that, but it does depend on the market and obviously the product.
And you are, I know that's very helpful.
Speaker Change: Thankfully there's such a thing as a transcript because I couldn't write that fast.
Speaker Change: So I can go back and look at that. And yes, nice to meet you, Joe.
In terms of royalty, does that
Speaker Change: Is that a good assessment of what the range might be, depending on the different products?
Speaker Change: I think that's probably non-public information, but you can say that certainly some of those could be in the range, depending on what the application is, as Joe pointed out, and what our contribution is.
Speaker Change: But in some cases, it's also not a royalty, it's a profiteering.
Okay, so we're percentage of the profits
Speaker Change: and those numbers could be in those ranges or higher or lower, right?
Speaker Change: Well, as long as you profit, you can hope it's a little higher, yeah. Yep.
Speaker Change: So, you know, it just changes depending on the need, how much, let's say,
Unknown Executive, Joseph Hazelton
Speaker Change: So it's going to have to be some alternative to bovine albumin if they're actually able to sort of break the cost barrier of making cultured meat affordable. Am I right, Joe?
Joe Hazelton: Yes, like fetal bovine serum is basically what they use to as the albumin source for cultured meat.
Joe Hazelton: Unfortunately, you can't produce enough calves or young cows to get that much blood to supply the market. Because in a typical 20,000 liter bioreactor that they use to manufacture the end product or to grow the actual muscle cells.
Joe Hazelton: You're looking at about 75% of that tank needs to be filled with albumin.
Joe Hazelton: So, they just, there will not be enough to support that market from an animal derived source. So, they will have to, obviously, I'm looking at serum free alternatives, but when they say serum free, they actually mean recombinant serum, so they're still using it just hopefully in lesser quantities and not animal derived. So, there's definitely, you know, opportunity within that segment, but that one needs some help as well.
And I would assume that
You can go ahead, Mark.
Well, I think it's important.
You know when we chose
ProLiant, and they chose us.
It's because we have this
Joe Hazelton: very, very high yield upstream in fermentation. And they have a very low cost downstream. But they also have market access because they've been dealing in this industry for many, many, many years. I think they're either the second or third largest fetal bovine albumin supplier in the world.
Joe Hazelton: So they have market access, which we wouldn't have had and had to develop. They have a downstream processing, which is an expensive part of the whole process that's cost advantageous, and we have the high upstream. So it's a marriage made in heaven to some degree, and that's how we look at it.
Speaker Change: I can't remember if all of these are exclusive relationships, but on the assumption that some might not be, do you think there's a...
Speaker Change: Do you think that, you know, once you get adopted by Producer A, that Producers B, C, D, and E will follow, or is it?
Speaker Change: Do you have exclusives so A will either win or not win?
Thank you.
Speaker Change: Well, I think it's both. I think we can have an exclusive where we believe we have the right partner and committed to work together to
Unknown Executive, Joseph Hazelton
Speaker Change: Reliant in the deal we made because of the stature and their breadth and scope and depth.
Speaker Change: Unknown Executive, Joseph Hazelton, Mark Emalfarb, Unknown Executive, Joseph Hazelton, Unknown
Mark Emalfarb: Yeah, I mean honestly, I think you hit it Mark. I think obviously it's
Mark Emalfarb: Our preference would be to have as many opportunities with the same product as possible, doing it non-exclusively, that obviously we think is a great strategy. But there are potential opportunities, and just like in the pharmaceutical space, you know, if you're going to hitch a wagon to a pharmaceutical company, you want them to be the market leader in the specific area you're going into.
Mark Emalfarb: So, you know, we obviously try to do what's best for the organization and drive the most value for us.
Speaker Change: All right, and the thing is, Robert, some of these products we're working on, potentially like DNS1, we're planning on doing both, keeping it and licensing it, and selling it as a product. Now that may change if somebody wants to offer us, you know, an amount of money that we can't afford to turn down.
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Thank you.
Thanks for providing the extra information, I appreciate it.
Speaker Change: Thank you. There are no further questions. I will now turn the call over to Diadex CEO, Mr. Emalfarb.
Mark Emalfarb: Yeah, I want to thank everyone for joining in tonight. This is a very exciting time for Dyadic.
Mark Emalfarb: in our history. We've transitioned back into what we call the non-pharmaceutical industry for the last couple of years, and we've made tremendous progress with the transfer in the albumin and the DNase I was very, very, very quick.
Mark Emalfarb: back entry into the market. You remember, we had a long history of developing products and enzymes at the huge scale, low cost, but people like Shell and BSF and then ultimately DuPont paid us 75 million dollars.
Mark Emalfarb: So, in 2024, we refined our corporate strategy to leverage DIAC C1 and DAPOBIS protein production platforms with a focus on driving near-term recurring revenue while building sustainable mid- to long-term value.
Mark Emalfarb: Our approach centers on three key markets, Alternative Proteins, Animal Health, and Human Health.
Mark Emalfarb: We're also pursuing opportunities with our Avian Influenza and MPOX candidates.
Actively seeking non-dilutive pathways to advanced development.
Mark Emalfarb: We'll keep you updated on our progress in the months ahead.
Speaker Change: As Joe mentioned, Dyadic is deeply committed to generating near-term revenue and growth through innovative solutions and accelerated commercialization.
Speaker Change: by expanding our C1 and DAPABIS platforms across alternative proteins, animal health, and human health, we are at an exciting juncture, uniquely positioned to capitalize on current and emerging opportunities.
Speaker Change: I want to thank you for joining today's third quarter 2024 conference call, and we look forward to sharing more updates on our commercial and scientific milestones in the coming months. Stay tuned for more from Dyatica.
Speaker Change: Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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