Good afternoon, ladies and gentlemen, and thank you for holding. Welcome to Dyadic International's First Quarter 2019 Financial Results Conference Call. Now, all participants are in a listen-only mode. My name is Devin, and I will be your conference coordinator for today. As a reminder, please note that this call is being recorded. At this point, I would like to turn the call over to Ping Rawson, Dyadic's Chief Accounting Officer.

Thank you, Devin. Good evening, everyone, and welcome to our first quarter 2019 earnings call. A press release with Dyadic International's first quarter 2019 financial results was issued earlier today. The press release on Form 8-K and Dyadic's quarterly report on Form 10-Q can be found on both SEC and Dyadic's website. On today's call, our President and Chief Executive Officer, Mark Emalfarb; will begin with a review of the business and the corporate accomplishments, in our first quarter of 2019, and continue with a summary of our research and business development efforts. I will follow with a review of our financial results. We'll then provide you with an opportunity to ask questions. Matthew Jones, our Chief Commercial Officer; and Dr. Ronen Tchelet, our Chief Scientific Officer; will also join Mark and I to answer your questions. 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 intent or obligation to update any forward-looking statements except as required by law. For more information about factors that may cause actual results to be materially different from forward-looking statements, please refer to the press release we issued today as well as risks described in our Quarterly Report filed today and in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 27, 2019, particularly in the section titled Risk Factors. This information can be found in our other filings with SEC when available. With that, I'd like to turn the call over to Mark.

Thank you, Ping. Good evening, everyone, and welcome. 2019 is off to an excellent start for Dyadic with many significant accomplishments already achieved this year. To continue to make further progress on multiple fronts, reinforcing the strengths and potential multiple applications of our C1 platform and ultimately driving a long-term shareholder value creation. In the process, we are building awareness and momentum globally within the pharma and biotech industry. In particular, we've announced 3 new partnerships over the past two weeks, this in addition to the two new fully-funded proof-of-concepts research collaborations we signed in the first quarter with two leading pharmaceutical company. Our pipeline continues to be very active and we are exploring numerous potential developments and licensing opportunities. Importantly, with a significant cash position on our balance sheet, we have the financial flexibility to partner with both large and small pharmaceutical and biotechnology companies. Let's now move on to some of these exciting developments. I'll first discuss the Serum Research in commercialization collaboration announced yesterday, then the two new research collaborations with our pharma companies followed by recently announced partnerships, Luina Bio and Alphazyme, LLC; and finally, an update on our ongoing collaborations. Yesterday, we announced an agreement with the Serum Institute of India Private Limited. Our agreement covers a development and potential commercialization of recombinant vaccines and therapeutic proteins using Dyadic's C1 fungal expression system as a commercial production platform for manufacturing the biologic products. We are proud to work with Serum, which has a proven track-record of more than 50 years for developing and delivering cost-effective biologics globally. This collaboration has a potential to further demonstrate C1 as a platform of choice for manufacturing protein-based biologics and vaccines because of it's speed of the development and lowest cost of goods. Under the terms of this collaboration,…

Thank you, Mark. Research and development revenue for the three months ended March 31, 2019 more than doubled to approximately $403,000 comparing to $184,000 for the same period a year ago. The increase in research and development revenue reflects six ongoing research collaborations in 2019, compared to two collaborations in 2018. Cost of research and development revenue for the three months ended March 31, 2019 increased to approximately $328,000 comparing to $147,000 for the same period a year ago. Research and development expenses for the three months ended March 31, 2019 increased to approximately $692,000 compared to $577,000 for the same period a year ago. The changes primarily reflect the cost of additional internal research activities with third-party contract research organizations. Research and development expenses related party for the three months ended March 31, 2019 slightly decreased to approximately $389,000 compared to $393,000 for the same period a year ago. These expenses reflect the research and development cost related to the companies R&D agreement with BDI which started in July 2017. G&A expenses for the three months ended March 31, 2019 increased to approximately $1.4 million compared to $1.3 million for the same period a year ago. The increase primarily reflects increases in share-based compensation expenses related to stock options granted in 2019, as well as various other expenses including those associated with the April uplifting to the NASDAQ. Interest income for the three months ended March 31, 2019 increased 43.5% to approximately $267,000 compared to $186,000 for the same period a year ago. The increase in interest income reflects higher yields on company's investment grade securities which are classified as health to maturity. Net loss for the three months ended March 31, 2019 was approximately $2.2 million or $0.08 per share compared to a net loss of $2 million or $0.07 per share for the same period a year ago. On the balance sheet side, at March 31, 2019 cash and cash equivalents were approximately $4 million compared to $2.4 million at December 31, 2018. The tearing [ph] value of investment-grade securities including accrued interest at March 31, 2019 was $36.1 million compared to $39.1 million at December 31, 2018. With that, Matthew Jones, our Chief Commercial Officer; and Dr. Ronen Tchelet, our Chief Scientific Officer will join Mark and I to answer your questions. Each caller will be allowed one question and one follow-up question to provide all callers an opportunity to participate. If time persists, the operator will allow additional questions from those who have already spoken. Now, I'd like to turn the call back to our operator to take your questions. Stevens [ph]?

[Operator Instructions] Our first question comes from the line of John Vandermosten with Zacks Research. Please proceed with your question.

Good evening, everyone. I'm going to start out with just congratulations on all of the collaborations you have been able to achieve. I guess it's been about three in the last week itself, great to see that. I think you have about maybe 14 over the last year and a half, and I think you outlined what we would expect on some of these from revenues, I guess the Alphazyme [ph] -- that might be something in 2020 but I guess what might we see after that in terms of potential revenues and timelines for other collaborations that you have.

Yes, it's very difficult to predict timelines, because obviously in the pharmaceutical industry the timelines vary. Alphazyme as we mentioned, potentially we could start seeing some royalty revenues next year but we don't expect to see revenues from the other partnerships for several years down the road but how many years that is I can't really judge but we do hope and expect as we'd be able to deliver a license agreement with one of the big pharma companies that would bring with it a ton of cash, upfront.

I don't want to ponder over my second question but do you have a sense of what -- if you look at none of them wearied [ph] on -- one after another, Alphazyme would probably be the first, maybe veterinary be the second or something like that just in terms of what seems a little bit closer in terms of time and what maybe seem a little bit further away?

Well, I think obviously Alphazyme would probably be the first, however, there is a potential to get a license agreement we're seeing now in 2020 with the big pharma company, one in where the people are working with, especially now that we've announced the Serum collaboration, and I think there is a lot of people now paying attention to the fact that there is somebody that's going to bring one or more of these 12 drugs and vaccines to preclinical/clinical stage and commercialization. So I think that's a big milestone for us to have a partner with that strength that experience and I think that's resonating throughout the industry from based on conversations we've had already today. So, it's hard to predict when cash comes in, but as we mentioned, we have $40.1 million in cash on March 31. So, cash isn't our problem. Science and business development deals and creation of value is where our focus is. But we're aiming for much bigger fish in terms of upfront cash and future deals with big pharma companies to give them access.

Sounds good. And another question is just on the number of deals and collaborations that are going on, is there any risk that some of them might overlap where a couple of different collaborators maybe working in a similar area and how do you prevent that from happening?

Well, I don't think currently we have anything overlapping. I mean, Alphazyme are enzymes that are reading and writing DNA with the sequencing of genes and the advances in science, a demand for those enzymes are going to grow and expand and they predict a very rapid growth. In the case of the Luna Bio companion animals, we don't have anyone else currently that we have a license agreement with for companion animals, but potentially there will be some in the future. And I as well, they get expand what they're doing there. In terms of a BDI, again, I don't see the conflicts, there is no conflicts at the moment. VLP Bio, which is at fourth equity position we have as well, again, that could be an animal vaccine space, but currently I don't believe they're more -- they're more towards farm animals, not companion animals. And then in terms of pharmaceuticals, most of the drugs and the products that we're looking at are proprietary to them. And the genes are there genes and different and other genes. For example, these changes from serum, we expect to be new gene not biosimilars, either new products, which will make it easier for us to move forward on those because there's nothing to match exactly. It's on its own performance and safety records.

Our next question comes from the line of Ahu Demir with NOBLE Capital Markets. Proceed with the question.

Good evening. Thanks for taking my question that I need and congratulations from the recent development, great news all along like since the beginning of 2019. So, I have a few questions to Mark or Matthew. My first question is like, what I the terms for the satellite system agreement? Can either type cancel at any time or is it like how long is the agreements for? Like what are just turned? Can you provide some color on that?

Well, I can only provide a color that is public and so, I want to live because you probably won't have as much of a grasp on that. But I'm trying to think what's public, I think we mentioned in the Sarah Mucha 15 years upon commercialization. So, that's many, many years of run. First, you've got to get the drug to market and once the drug is to market and we have 15 years to get royalties on those drugs. So, that that can be quite substantial. Although it's down the road. I'm on the case with Luina Bio, if they produce a product using C1, we're going to get paid royalties. And I think at any given point they could quit the programs and we wouldn't get anything, but that wouldn't be in their advantage. But we'd still, in their case, we have 20% equity in their business too. In fact, getting equity in the business of Alphazyme, BDI, PLP bio and Luina Bio gives you the benefit that no matter what is it, those businesses grow and expand, we would get a big payday someday.

Okay. Thank you. And Mike, next question will be what are the near-term catalysts that we should keep an eye on the like clinical or science front? Are there any presentation that you plan to do a year-end 2018? Are there any value-generating inflection points for us besides the BD activities and all the great progress you're making?

I think the science continues to progress. Of course, we just presented at the PEGS Conference in Boston. They were actually two presentations, one made by Ronan and one made by the VTT scientist. So, we actually get spots there. We'll be making a presentation at BPI East, I know. I think Ron is making some presentations and some scientific presentations as well, depending on patent applications and science. Sometimes we don't present things because we're filing patents on them and we don't want to disclose that. So, it isn't that there aren't scientific advancements being made because they are, but until we file patents on them and sometimes we don't even want to mention what we're doing from a scientific standpoint until they become public, which is like a year and a half later. If you look at the influenza patents that got published in February, that was actually filed a year and a half earlier. But there's no sense in us putting out information. It tells our competitors what we're doing from a business standpoint. So, there will be milestones, some will be reported and some we're going to be kept until they become public sewer patent application, it gets public at some time. For example, like the patent application we filed earlier this year on a potential new product where we will disclose that when we're comfortable that it provides us with the protection that we need.

Understood. Thank you. My next question is for Ping. So, do we expect similar revenue generator than costs of revenues, R&D revenues? Can you provide some guidance on that?

Yes. Thank you, Ahu. I think from a collaboration perspective, as you know, Sanofi, we signed last year is $1 million contract over 10 months; so we recognized about a quarter rabid in last year. So, the rest of them will fall into this, which are publicly discussed. The addition collaboration we signed that we didn't talk about the dollar amounts about with that from way expect as total revenue solely from the collaboration will be more than that last year. As you see, we basically doubled for the first quarter. So we expect a similar trend for the rest of year. Of course, we still have a big pipeline down the road with different stage of negotiation with new collaborations. We hope that some of them will be able to have new collaborations in Q2, Q3 and Q4. In terms of the licensing agreement as Mark mentioned, there's no near-term revenue from cash perspective, but from an accounting perspective, because we're going to record them as an equity investment, our balance sheets, the crowded side that you will see will be a revenue. Of course, that's a licensing revenue, it's going to be recognized over the term of devices. So it's not a cash, if you are looking for the same into you're a model you should have considered that as well.

And I think is Matt can point out, and I'll let him answer, since he's been so kind to stay up late. They're in London. On the vision side, we have multiple big pharma and small biotech companies that we're in discussions with that could bring in more revenue from research and development funding and potential collaboration. So, Matt you can just maybe give a little color on that.

Yes. Welcome. Hi, Mark. I'm happy to speak to that, but what I'll say more generally is that the timing is right for us. We are sitting with decision makers in biotech and Pharma all the time. We are presenting you on a weekly basis to some senior figures here and these companies. And I think we've got their attention. We'll still move a bit slower in the pharmaceutical machines than in some other industry sectors to our experience. But we're learning that and I think what's happening here this quarter is the realization that a lot of hard work from all the team is paying off. Now, that doesn't mean anything other than that a good start. We have a lot more to do. To Mark's point, I think while we haven't disclosed the details of all these discussions, you'll see some of the fruits of that Labor comes through now. And I think the real issues come back to the cost of healthcare and to the inflection point that's around us as an industry around lowering the cost of goods and helping to overcome barriers to entry the companies that have difficult to express genes of interest or proteins, etcetera. And I think what the vaccine programs with Serum is showing is that once we get through those initial feasibility conversation, there are many opportunities for human and animal health for C1 application. So, obviously it's hard to give examples on a public call like this, but needless to say, we are just beginning what we think is the tip of the iceberg.

Our next question comes from the line of Carl [ph] with Northland Securities. Please proceed with your question.

Great, thank you. Congratulations on your progress. I'm considering the number of agreements and collaborations that you've had in the last year in particular in the last few days, few weeks here and the cash that's ultimately going to come from these agreements. What do you anticipate? Any terms of personnel additions to support growth going forward? Thanks.

I think that to be honest with you, we have the personnel because we're working with BTT, which has over 2000 people in the institute and they've got 115 or biotech group. So, from a research perspective we can still handle more, some point that's going to become an issue as we continue to drive to more and more clients into the pipeline. A BDI also has available space to do more R&D. So, because we're using CROs that have decades of experience using fungi and scaling programming, that's kind of why we did it that way. And then from a business development standpoint, certainly we're entertaining that where we're using certain things like agents. For example, I was in India last year with one of the agents that they introduced us to the Syrian people. So, from a marketing side, there's more and more people trying to get in our door to come and join our journey. So, I think we will bring on more people, but we're going to still do it cautiously because I believe we can execute with a small focused team. But obviously, it's paying the price. If you want to time Matt, me, Ronan and Ping are pounding away on the doors here. But we are looking at additional staff, but at the moment I think we'd like to see a few more deals and get one big licensed deal in with an upfront cash payment before we go spending a whole bunch of it.

Our next question comes from the line of Steven Raphael [ph]. Please proceed with your question.

Mark, great job. Everything that you said two and a half years ago that you hope would happen has happened. The uplifting, the stock buyback which was bought about -- the stock's up that 300% from where you bought the stock, the collaboration's in the last few weeks. So, the question I have is what do you hope, what do you think might happen in two and a half years from now?

Well, I mean, that's a pretty big speculation, what could happen in two and a half years now, but quite frankly, it's possibly we won't be here for two and a half years down the road because somebody actually by us. So, it's possible we would end up with licensing 5, 10, 20, more people and spread this -- think about an hour. We got relationship in India. We've got a relationship in Spain. We've got a relationship and Finland maybe relationship in Israel. We have a relationship in Australia. So, this team is actually executing like you said on all cylinders and we're going next week -- Barry Bucklin, one of our board members, Aaron Bose, another one of our board members, Ron en, myself [ph] to spend time at BDI in Spain, where actually Ron is also today to go to VTT and to go into the programs that we have for our collaborators and have had a variety of programs working on for our own. There's a lot of exciting things if we're working on here, Dyadic internally that at some point once we feel comfortable with the technology and the advancements, there's lot of the things you don't know that are going on here. They're just like, these three came out -- they didn't come out of the woodwork. We've been working on some of these things for a long time.

I feel better about the investment today than I did when the stock was $1.40 which is when I started buying the stock. You're really delivering and I appreciate it.

Well, we feel better about where the company is today because the science has advanced dramatically from where we started our journey really in January of 2017 because the first year we weren't working with BTT until really January, 2017 that we got up and running. So, I think the science and the data, which is helping drive these deals when you can make 17 times the antigen and does API program and there were people involved in that program from a commercial academic side and see that data, obviously those people have an interest in potentially working with us. When we show that data to people like Sarah and others coupled with the vaccine data from the Hemagglutinin drop [ph] program that was successful on the science with Sanofi Patch door. As we mentioned, we were very encouraged by the results we're seeing in the Sanofi-Aventis programs. We've delivered to Mitsubishi Tanabe Pharma out protein for them to evaluate, characterize, study and decide whether that drug goes forward. That would be phenomenal if that happens. But in the end, the goal here is to, as Matt points out, put C1 in the hands of the people that can really move this forward and bring affordable healthcare to people. And the Serum relationship, their goal and objective, if you go on their website, and I would suggest anybody on this call do that and study and examine their philosophy is to bring low cost medicines to not only the West but to the third world. But it's countries can't afford biologics today. And so, if a low cost producer sees potential in C1, you can bet the promise is there for us to deliver. And it's really all up to the scientist we've talked about in the past. And Ronan, Kabore [ph], PTT and BDI are all excellent jobs under science. And we're doing it in a methodical way to I think somebody like we're not throwing hail Mary passes, Doug Flutie, we're blocking and tackling and trying to go 10 yards down the road and every once in a while get across the goal line. So, thank you for your compliments and like here we feel more comfortable today than we ever did, whether it was last year or two years ago or five years ago. We think we're better poised now to bring value to our shareholders, which of course, makes us all happy.

Our next question comes from the line of Lee Alper with Hammock Investors. Please proceed with your question.

Hi, Mark. Congratulations. You've done great work this year. But let me ask you a question relating -- If you get one of the big pharmas, what's your best guess on how long would it take for them to use your product to replace something that they're using now?

Only if they're going to make a bio better, for example, it could be three to five years, probably in that timeframe. If they're going to start with a new drug, it's going to take even longer. But I think you have to recognize that probably in some of the big pharma cases for us to hit a payday, the payday comes from up front access fees in cash in that particular case, or it could be multiple non-exclusive licenses from multiple people that way, milestone payments as they move the drugs to preclinical Phase 1, Phase 2, Phase 3. Or it could be like GlycoFi where Merck paid $400 plus million dollars because they wanted to take the technology and bring it in house and control it. So, any of those things or combination of those could happen. And so, we're just advancing science, expanding the breadth and scope of the places we're putting the technology, getting more and more big Pharma, small biotech companies aware of what we're doing, getting them in the door, signing proof of concept research deals that we hope will lead into bigger deals and wider spread and lower cost healthcare and can obviously return on the investment for Dyadic shareholders and the public at large in better health.

I'm showing no further questions at this time, and I would like to turn the call back over to Mr. Emalfarb for closing remarks.

Thank you for your participation in the call. While we were excited about what we've already achieved in 2019, we are working hard to keep the momentum going for the remainder of 2019 and into 2020 and beyond. The number of NDAs or confidentiality agreements are more than 100 and continue to grow, which we anticipate will lead to additional funded research projects, potential license agreements with big pharma, small biotech companies as a variety of other types of opportunities. Looking ahead, we are confident in our ability to generate meaningful scientific results coupled with increasing interest from both biotech and pharmaceutical companies and using our semen technology in various areas of the biopharma industry, which we expect will position us for continued growth in 2019 and beyond. I believe it is fair to say that today we have a clear vision as to where we are headed and what we can achieve. I want to thank this up -- take this opportunity to thank are very hard-working employees and consultants, our dedicated Board of Directors, our research partners and our shareholders for the support and I look forward to seeing you at some of the upcoming industry and investor events we mentioned as well as speaking with you on our second quarter call in August. And hopefully, some of you will see at the annual shareholder meeting here in Jupiter, Florida. Thank you.

This concludes our program for today. You may now disconnect your lines and have a wonderful day.