Good evening, ladies and gentlemen, and thank you for holding. Welcome to Dyadic International's First Quarter 2020 Financial Results Conference Call. Currently all participants are in a listen-only mode. My name is Hector, and I will be your conference coordinator 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 Financial Officer. Please go ahead.

Thank you, Hector. Good evening, everyone, and welcome to our first quarter 2020 earnings call. Our press release with Dyadic International's first quarter 2020 financial results was issued earlier today. The press release on Form 8-K and Dyadic's quarterly report on Form 10-Q have been posted to the web CC at Dyadic's website. On today's call, our President and CEO, Mark Emalfarb will give a review of the business and the corporate accomplishments for our first quarter of 2020 including a brief summary of our research and the business development efforts. I will follow with a review of our financial results in more detail. We will then provide you with an opportunity to ask questions. Matthew Jones and Ronen Tchelet will 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 involves 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 Annual Report on Form 10-K for the year ended December 31 2019 and our quarterly report on Form 10-Q for the quarter ended March 31, 2020 particularly in the section titled Risk Factors. This information can be found in our other filings with the SEC when available. With that I'd like to turn the call over to Mark. Mark?

Thank you, Ping. Welcome everyone and thank you for joining us in our 2020 first quarter conference call. I hope that everyone is staying safe and healthy during this challenging time amid the COVID-19 pandemic. We've taken all necessary steps to ensure the safety of our staff and for the most part, they are all telecommuting. I'm pleased to report that COVID-19 has not had a significant impact on our company. In fact to date, the pandemic has provided us with additional opportunities. Tonight, I'll focus my comments on several areas. I will discuss the progress we are making regarding our ongoing partnerships, as well as some new collaboration and other potential collaborations. We will also discuss several notable scientific achievements during the quarter. Finally, I will update you on our initiatives related to the seasonal flu. All of our efforts are increasingly aligned with global health care trends and industry challenges being faced. During the quarter, we increased potential range of commercial opportunities for Dyadic in several areas. In late February, we announced an expansion of our collaboration with Israel Institute for Biological Research, IIBR to support their efforts to combat the coronavirus. We have already received certain gene sequences from the IIBR and have successfully constructed C1 cell lines expressing potential SARS-CoV-2 vaccine candidates. Assuming the IIBR determines one of the C1 expressed SARS-CoV-2 antigens effectively listed COVID-19 neutralizing antibodies. We anticipate the IIBR will quickly start animal trials. The second COVID-19 vaccine opportunity is being pursued in collaboration with scientists from Erasmus Medical Center, Utrecht University and the University of Veterinary Medicine Hannover, TiHo with whom Dyadic previously worked with on EU ZAPI project. I'm happy to share with you that we have developed the potential COVID-19 vaccine candidate which based on preliminary results has demonstrated successful…

Thank you, Mark. Before I discuss our first quarter 2020 results, I'd like to provide you with a few key financial takeaways from the quarter. Dyadic financial position remains solid with approximately $34 million in cash and investment grade securities and no debt. Second, as our pipeline of opportunities has got larger and more diverse, so have our sources of funding. We added two new fully funded research collaborations in the quarter and now have ongoing projects with 12 collaborators and the several of them have more than one project in different phases. As a result, we believe that we are well positioned to execute on our growth strategy, and further build out our presence in addressable markets that we are focused on. I will now discuss our operating results in greater detail. From a liquidity standpoint we ended the first quarter with cash and cash equivalents of approximately $4.7 million at the end of the first quarter compared to $4.8 million at December 31, 2019. The current value of short-term and long-term investment grade securities including accrued interest at March 31, 2020 was approximately $29.3 million compared to $21.2 million at December 31, 2019. From an operations perspective, research and development revenue for the first quarter was $315,000 compared to $403,000 in the first quarter of 2019. We reported $278,000 for the cost of research and development revenue in the first quarter 2020 compared to $328,000 in the same period a year ago. The decreases in revenue and cost of research and development revenue reflects five ongoing research collaborations in the first quarter of 2020 comparing to six research collaborations for the first quarter of 2019. Dyadic's interest income was approximately $168,000 in first quarter 2020 compared to $267,000 for the same period a year ago with the year-over-year…

[Operator Instructions] Your first question comes from the line of Luke Smith with Chapin Davis. Please proceed with your question.

Hi, Mark. I wanted to ask about these new developments in the ZAPI program. You mentioned proposals. Can you elaborate on what this might become?

Yes. So as you know we've worked in the ZAPI program for over five years since 2015 for Zoonoses diseases from animals to humans. In that program we successfully now made the SBV antigen which we reported by 17 times the initial target goal that they actually asked us to hit which was 1780 milligrams per liter versus the 100 milligrams. And we mentioned it also in the past that we made 35 times more in the baculovirus insect cell which is being used for flu block, by Sanofi and Coronavirus vaccine and also Novavax and others. And interesting enough the people from ZAPI have recently reported that they overstated the baculovirus yields and now that shows we hit 300 times more productivity in C1 for the SBV antigen. We've also seen recently in the ZAPI program that they have an IIBR reselling antigen as well. And we now have completely expressed at very stable at high levels, and we're now assessing what that level is. And then along with the receptor binding domain of the SARS-CoV-2 cell protein for Coronavirus we've now made basically three very high yielding stable vaccines using the cell lines. And this would not be possible if we do not knock out those protease and we've been working on and we now have 14x protease stream that we've now got 14 different protease genes and this cell continues to perform at higher and higher levels because when you make a protein, you got to keep it stable. So you can make high levels, perfectly choose it up, has no value. So if it's not for the time and money and energy spent by the VTT scientists [indiscernible] and our staff we wouldn't have this capability today to help make potentially billions of doses of vaccines…

Our next question comes from the line of John Vandermosten with Zacks Investment Research. Please proceed with your question.

Let me start out with a question on the Coronavirus and how maybe it's affected operations. I heard you say earlier Mark that you hadn't seen much of an impact there. And I heard that pretty widely, but I've also seen other commentary, more broadly, that it has affected in some, in some ways, obviously being preclinical this a little bit more helpful than actually having patients in the clinic. But can you comment on that and how that might affect things in areas outside of the Coronavirus?

Well, currently it really hasn't slowed things down really one iota. There's a few people I would say one of our clients we did a collaboration with is waiting for us to deliver them an antibody we produced and we haven’t been able to deliver to them. It's not that it's slowed us down, they shut their lab down. And so they're not ready to accept what we have made. So that would slow that down, but that's the only really affect that we've seen so far to-date. But as we mentioned earlier, it's brought a lot of opportunity for us because of the ability for us to be able to produce large volumes of vaccines in antibody, quicker, cheaper and faster than we think anybody else can do. So we'll see how the rest of the world sort of addresses this issue and how we all start I guess trying to bring the economy back but our goal here is to really help speed the development, lower the cost and provide much greater doses of potential biologics than anyone else and trying to partner and continuing to find new partners and we're in discussions with new partners right now in addition to what we've talked about.

As the Coronavirus impact increased the amount of conversations you've had, I mean, I know a lot of conferences have been cancelled and a lot of networking has slowed down, but have you seen an opposite effect due to the concern over the volumes that are needed in vaccines and treatments.

Well, I think, I think it depends on the party. I mean there is people that we know that are using their own platforms and there's a lot of people that don't have a platform like the Israeli government, they needed our help and they had experience working with us if you remember they produced a enzyme for to help defend against sarin gas and VX gas that we successfully produced higher levels using C1. So they knew the power of C1, the ZAPI gas, they knew the power of C1 from the SBV antigen. You saw that in fact as we mentioned 300 fold better then the baculovirus expression system that was used in ZAPI. That baculovirus system really isn't that efficient compared to what we have. But some people use what they know and other people want to take new technologies on and try to advance I mean, I think if you stay tuned we hope to I think somebody had actually wrote up an article that sort of the pandemic changed everything for C1 or Dyadic and people willing now to take more risk into to really look at things that really have the power and the technology and the speed and the productivity that the world really needs to bring biologics to humankind. And we're seeing that sort of opening up with the FDA, BARDA, [indiscernible] the pharmaceutical companies with biotech companies for the animal health with human health. So I think it's just a matter of time and I think you got to remember, I think people should focus on the end game here. The end game here is, if you think back, there was a company in Holland Crucell, J&J bought them for $2 billion. That was on a per C6 cell line for…

Okay. And also a question on the deliverables or milestones in that, in that second phase of the animal health project that was mentioned in the release. Can you point out any of those to us?

Well, I can't give you the terms and conditions of those things, but as we pointed out, and we have one of these guys it now came up that play, not once, not twice but three times and now we're moving into the second phase on one or two of those programs. And one of them get further even expand to be on that. So, this is one of the top four animal health companies and let's hope that leads into some kind of license with a non-exclusive product exclusive or who knows where it might lead into partnership collaboration so we're actually getting results and people are seeing results and they're coming back, and they’re coming back for more. And not in all cases, because in some cases, people are test-driving the car and they like what they see and just like this one I talked about, they left year and a half, two years ago and now they are back because now they found a use worth. So let's see how it all pans up. We're excited about what we see both in the data and the collaborations, the partnerships, the expanded partnerships and people coming back in the door.

Our next question comes from the line of Jason Kolbert with Dawson James. Please proceed with your question.

I just want to ask a couple of questions. I understand everything you just said, Mark, but I think what's critical for me and for our investors is to understand what the probability of success is that the C1 platform get specified into a vaccine. It's a very unique time given the need for COVID and the ability of not just the U.S. government but governments around the world to spend capital. And my concern is that when I look at some of the vaccine approaches that I think are viable, which is not just a plasmid based RNA sequence but really a whole virus sequence, it's going to require an expression platform like C1. My problem is that if you are not already specified very early in on the process J&J is clearly making progress. Then C1 misses that both now, it's early days to say that anybody has missed anything but we know there are a couple of front-runners the Oxford program the J&J program. I don't believe the [Turner] program is out in the lead. What I want to know from you is where is IIBR, where is SAVI, where is the India Serum Institute of the existing partners who is out there in the lead where they're willing to commit to using the C1 platform early enough in the vaccine expression development. So that it could become part of a novel Coronavirus vaccine or I really should say China Wuhan virus vaccine.

Well, I think, let's start with the IIBR as I mentioned, we have now delivered them C1 cell lines expressing potential first COVID to vaccine candidate. And so now they're going to grow them up in the IIBR in Israel there. They are there, they are in their hands. They're going to test the protein against lipids COVID-19 neutralizing antibodies and if they see that it neutralizing the antibodies as they expect and we anticipate that it would jump quickly into animal trials. So we are early on there, in fact from our understanding the other expression system that they were using produce such de minimis amount that if we show this response of the neutralizing the antibodies. It will be in the lead. And so, we think that that's a great opportunity for us. And we think - they have the motivation and the incentive and the capital to move that forward.

Well my point is that Mark excuse me I want interrupt my point is that J&J and Moderna and others Oxford very soon are in man. So what I'm trying to understand is if Israel gets there in a year. I don't know that becomes viable. So I'm trying to understand among partners and the people you're talking to what do you think, do you think IIBR is the most promising candidate?

Well, I think that they are further along and with what we're doing with C1. But there is other candidates started with other things and we're talking to about and they're starting to recognize that they have limitations in productivity, but they are testing the candidates out and they seem to be willing to actually take a couple steps back. And run in parallel - that we’ll see.

Well you and I both knows that Sanofi, you’ve demonstrated viability to Sanofi and we know that Sanofi is committing a lot of time and resources, along with the collaboration with Regeneron to this. So are they working with you closely on the C1 platform on the early efforts that they're working towards.

No, we're not working with Sanofi on the coronavirus. We want to make that clear that we're using the flu block baculovirus program for the recombinant approach which we believe is certainly viable, but nowhere near press.

Yes, but my point is that they're familiar, Mark. My point is that they are familiar with your platform and technology and they are working on COVID even if they're not working on it with you. So why not make sure that they’re - whatever they're doing in COVID is going to leverage the C1 platform know?

Of course where we try to make sure of that we've shared with them certain data that they should be salivating at the mouth to take advantage of, but I can't control it to know if we decided to do in that particular case. Okay if they are trying to do something else.

Mark, let me just change gears with you then when we look outside of COVID. What are the other most exciting areas where you're in talks and is it in biotech, is it in Industrial Chemicals where might we see the next monetization partnership event. Can you just give me an industry idea where you see the most promising talks going?

We have human health and we have Animal Health both. We’re dealing with top 10 players in the pharmaceutical human side and we're dealing with the top three to top four players in animal health side already. And we're in discussions with others and one of them is - and the third program.

Okay and you think you're in a position to realize a monetization event with them this year?

We're in a position of course to realize that this year obviously he is going to make a decision sometime in the next few months. And then of course animal health company not only one of them. There is three top four we're working with potentially can make decisions this year as well. And there is other things we have going on

Okay.

WuXi's is another one.

Yes, I'm not so excited about WuXi Mark thanks.

Your next question comes from the line of Ahu Demir with Noble Capital. Please proceed with your question.

Hello team, thanks for taking my question. I apologies if my questions are asked because I had to dial-in a little late. So my first question is that, what is the collaborative research agreements with Sanofi e where is it at, when you suppose to have the meeting and when is the decision suppose to be made on their front?

Yes we just answered that question in the last conversation, but we're within a few months as Sanofi making decision. We've had numerous conversations with them - yes not only did we share data with them from their own programs we shared data with them on other programs that we've had that we can, we're able to do that blindly that should then different results. In addition to the exciting results we had with them, we've recently had more so sometime this quarter and next we're going to expect an answer.

Okay I see. And as I guess did things slowdown on the partnership front, what are the expectations going forward. I'm pretty sure you're in talks with many pharma and biotech and how are the conversations? Do you think there will be more partnership in the coming quarters?

Yes, we mentioned that we expect more conversations and more partnerships this year. In this quarter, we expect to have at least one or two more.

Okay and my last question?

Maybe even expand the ones we have like we just did with the animal health company.

Okay. And the last question would be on the data front, when do you expect to have any data disclosures any meetings, virtual or not, when do we expect to see any type of data on the website?

Well, number one, we're expecting soon the paper from ZAPI animal health. The data was very good. It showed excellent safety and efficacy. We obviously talked about the yield we blew it through the roof. Right in here, but actually ZAPI went back and re-calibrated their expression from baculovirus. And instead of 30 to 50 milligrams per liter they only got 6. And we got 780 or 300 times more when we thought it was 35 times more and we are way - we underestimated based on the initial data so data is coming all the time. In February we made a presentation at PEGS so there's a lot of conference is coming up, some are virtual I don't know if any be actually in person. But the data is coming, irrespective of the conference we'll put it out when we have data that we feel is important.

Any of any of them would generate value that you expect of the catalysts, and you know the timeline can we get them?

It all generate value I think I think you missed the whole first part of the conversation that if we didn't.

Yes I thought they will bring the report like company. Sorry I dialed in a little late, my apologies on that?

Yes, well we already talked about the fact that by knocking out protease genes and we're at a 14x protease has allowed us to make the first CoV-2 protein for the IIBR and in the collaboration already with the former ZAPI scientists. We expect they will do the same thing with the UfoVax high levels of stable protein. We've done the same thing with the WuXi vaccine recently, as well in ZAPI. We did it in the SBV and ZAPI earlier so from a standpoint of a vaccine platform for animal and human health the data is phenomenal it’s outstanding so of course it’s creating value. What do you think is leading to the Animal Health guys is coming to the table and stepping in. They are recognizing things that they couldn't do before no just about low cost about enablement, but taking things as they've tried to do that they fail because of productivity. They couldn’t make it cheap enough to launch it, you need to make very low cost vaccine for some of these things like chicken and pigs and cow - so with the glycoengineering that's creating value.

I was thinking you’re highlighting the future ones not the past ones Mark like any other catalysts that's coming that you will have a data readouts and that will generate value for you?

Well, we just talked about, we just made would you probably missed the vaccine candidate of our own and for the Israelis for the coronavirus that recent. So we think that's creating a huge value huge opportunity. It said in another demonstration the platforms power, stability and productivity. But yes, the glycoengineering so there's a lot of things, partnerships with Sanofi. Sanofi is seeing data that could create huge value that's the data and the value of the partnership is based on data. So of course there is more things, we’re going to glycoengineered two more strains like the ones we have even better, apply to low protease activity did glycoengineering strains we match them up with productivity and as we talked about earlier, which you missed I guess as well. Crucell sold their business to J&J for $2 billion once it on a PER C6 cell line for vaccines just on having the cell line. GlycoFi got $420 million to Merck so we have multiple ways to sell the cell line we want to license for partner it. So yes there is a lot of value we're creating and its coming in right now.

Your next question comes from the line of David Schneider, Private Investor. Please proceed with your question.

Dave you’re there.

David Schneider, your line is now live. Your next question comes from the line of Robert Smith with Center Performance Investing. Please proceed with your question.

Thanks for taking my questions. So Mark, I'm just going to try and direct this from a different angle. So your quarter - you’re saying during the quarter we moved into the second Phase of II of our initial projects with one of our Animal Health collateralized. So can you give me some color as to what was Phase I what is Phase II and how many phases are there?

Right, well, maybe I can let Ron and answer that question since he is on the line dealing with these people day-to-day. I think I can. But Ron do you want to answer those? Thank you.

Yes sure, so yes I'm sorry for the confusion because ultimately people are using Phase I and II on their clinical trials and we are using on the first level of development of the C1 cell lines. So, what we call, Phase I is the first stage when we express the protein of interest. And after that when we - if I annualize the productivity and the quality than will both sides decide whether we go to Phase II. And in Phase II usually we either increase the productivity or we see some issue with the quality we work on improving the quality. And I think usually we have two phases.

And then what happens?

And that stage, yes.

Yes I can jump in what happens then is they look at it and if they have a, it's becomes commercially viable. Then it can take it into either optimizing the fermentation process further to get yields higher, lower their cost and simultaneously start doing animal trials.

Okay so before the animal trials I mean, is there a timeline going from Phase II to Phase III?

What do you mean by timeline? I mean once we're done with the Phase II theoretically they can go right into an animal study.

Okay - so going from Phase I to Phase II?

Yes Phase I typically takes from four to six months Phase II then would take somewhere between let's say three to four months, maybe five months. And then thereafter raises if they like what they see and start doing animal studies.

Okay, thanks I'm grateful for that. And with respect to the Sanofi collaboration or what have you might - label you want to put on that. So what are the next steps you say you have the work before them, you expecting them to come back to you. What will they say - what are the possibilities they will say to you?

Well first of all, just you know we spent a year taking seven different teams and expressing those and we express all of them. As I mentioned, and more than half of the met or exceeded the targets that they gave us - as the expressing targets, they wanted to see okay. So in addition to the expression levels the quality, the stability, the characteristics and a lot of different things that we explained in earlier in the conversation. And so a lot of those things were like in progress being done and developed. So they saw the data that's done, they did their own analytics in the labs, characterize the proteins that we gave them. And in addition to the work that they funded, we had other programs going on that we funded or that we could you blindly to show them additional data. For example on this SARS-CoV-2 receptor binding domain that we made from the spike protein they've seen that data. They recognize they and others recognize that we can make more of that quicker, faster and cheaper. They've either moved on with their own technology, feel more comfortable on those, but the data shows them for future products and projects. What else we can do, the breadth and scope and the depth of what the platform can do and it's getting bigger, broader, and deeper. So we share other things with besides what they just saw on their own to glycoengineering, the strains wanted glycoengineered because it was too early. So we've now showed them some data from other products. We've been able to show blindly, so what we expect from them is them to come back to us and hopefully to do an expanded R&D program. Take a license from one of the products potentially a license for the platform or the sky is limit. We don't know we're not part of their in-house discussions.

If you shown them this data, how could they not move forward on something that's really current?

I don't know how they can or can’t do things and what political decisions people make in big pharma.

I mean it's?

They can try the data, you can look - at the data and realize that we can make more quicker cheaper and more stable. I mean if you look at ZAPI program versus that, but what decisions. They make, they make for different regions. I mean one of the things is we haven't been in man, yet one of the things we're hoping with the coronavirus is it C1 now has a drug potentially they get demand sooner and overcome the hurdle of hey, have you ever gone to a clinical trial with a protein in humans. We haven't done that yet, so for standpoint, they might have thought. Well, it's a safer better do something else not that we expect a problem from that C1 system because it's grass it's been to mice, cattle others animal studies, it's very safe and effective in fact compared to ecoli, ecoli has endotoxin we have to get rid of, we don't have those in the first place. Nothing to get rid of, they viruses we don't have any viruses.

Wouldn’t you at least run a parallel effort?

If it was me I would do that yes I would expect they would do it or they should do it.

All right and then further when you speak of primary and secondary metabolites these are such broad categories can you narrow it down in any way when you use those terms?

Yes it will become clearer one with these patents become issued from the public, and you'll see what we're doing as we mentioned before we really aren't in the business of exposing our competitors to overdoing.

And when do you think you'll have that patents?

Well, I think we said. The first one that we had will come out probably sometime this fall probably August or September because it will be the 18-month timeframe when you filed the first provisional the other one. We just filed. So that's, if unless we talk about it was we might with the 18 months from virtually a few weeks ago.

Thanks so much and wish as well for us and all humanity thanks.

Thanks.

I am showing no further questions at this time and we'll now turn the call back to Mr. Emalfarb for closing comments.

Thank you, Victor underpinning the many accomplishments we have discussed today is a highly collaborative and coordinated effort both among our employees, our contract research organizations, our partners. I want to thank them all for their extraordinary efforts during these difficult times. Our goal remains to cost effectively enable the development and manufacture of biopharmaceuticals. Thereby making medications more affordable and accessible globally to all we believe that our industrial proven C1 gene expression platform which is faster and more efficient than any of the other platforms including baculovirus will help us achieve our goals. Along with the efforts expanding a number of our partners programs. Thank you everyone for dialing in today, we appreciate your ongoing support and, Stay safe.