Good evening, and welcome to Dyadic International's First Quarter 2023 Financial Results 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 is being recorded today, May 10, 2023. I would now like to turn the call over to Ms. Ping Rawson, Dyadic's Chief Financial Officer. Please go ahead.

Thank you. Good evening, and welcome, everyone, to Dyadic International's first quarter 2023 conference call. I hope you have had the opportunity to review Dyadic's press release announcing financial results for the quarter ended March 31, 2023, and the recent Company highlights. You may access our press release and Form 10-Q under the Investors section of the Company's website at dyadic.com. On today's call, our President and CEO, Mark Emalfarb, will give a review of our first quarter business and corporate highlights, including a brief summary of our recent research and business development efforts. Our Chief Business Officer, Joe Hazelton, will join Mark for the business updates. I will follow with a review of our financial results in more detail. We will then hold a brief question-and-answer session. At this time, I would like to inform you that certain commentary made in this conference call may be considered forward-looking statements, which involve risks and uncertainties and other factors that could cause Dyadic's actual results, performance, scientific or otherwise or achievements to be materially different from those expressed or implied by these forward-looking statements. Dyadic expressly disclaims any duty to provide updates to its forward-looking statements, whether as a result of new information, future events or otherwise. Participants are directed to the risk factors set forth in Dyadic's reports filed with the SEC. It is now my pleasure to pass the call to our CEO, Mark Emalfarb. Mark?

Hello, everyone, and thank you for joining Dyadic’s first quarter 2023 conference call. We are off to a great start in 2023. Our C1 technology continues to garner praise and recognition for its speed and efficiencies in the U.S. and internationally from academia, industry, and government agencies. We are delivering multiple new research collaborations and strong growth revenue of 50.9% year-over-year for Q1. On today's call, Joe and I will highlight the significant technological advances and recent business development successes we have and continue to achieve across each of our core markets. We are excited about our current and future prospects for growth and our revenues while continuing the ongoing long-term collaborations with Janssen, Phibro/Abic, Rubic and others, while working on bringing in additional collaborations and partnerships like the co-development marketing and commercialization agreement announced earlier this week with Fermbox Bio. The global demand for enzymes and proteins across our core verticals continues to grow exponentially. Our C1 and Dapibus microbial protein production platforms offer differentiating benefits for each of these markets, such as helping overcome gene expression challenges, speed of development, robustness and versatility, higher productivity, lower cost and flexible commercial scale manufacturing among others. We believe we are at or near the precipice of applying C1 and Dapibus to develop enzymes and proteins across our verticals that would lead to monetization that will significantly increase shareholder value for Dyadic and our collaborators. In our full-year 2022 call, I highlighted what makes the C1 filamentous fungal protein production platform unique versus traditional cell lines that are currently used to manufacture vaccines and biologic drugs. In addition, C1 is up to 300x more productive than baculovirus-insect cells, which are being used in both human and animal health to produce vaccines and C1 also has a two or more weeks shorter…

Thank you, Mark. I'm happy to report that the Phase I trial for DYAI-100 is progressing as planned. For background in order to establish a track record of safety in humans for antigens produced from our C1 protein production platform, the ongoing Phase I trial is a randomized, double-blind, placebo-controlled trial to evaluate the safety and immune response of the DYAI-100 COVID-19 recombinant protein or RBD booster vaccine in 30 healthy adults in South Africa. Regulatory approval was received in late 2022, and the first patients were dosed in January of this year. There are eight scheduled patient visits over a six-month period with safety data being collected throughout the trial, and immunogenicity assessments are scheduled on six of the eight visits. Dosing of all patients was completed in late February and to date no serious adverse events and local or systemic events have been reported. Patients completed their first six visits with the remaining two visits taking place at days 90 and 180 from initial dosing. This timing projects the last patient last visit to take place near the end of August with the clinical study report being available in the late third or early fourth quarter. We are currently working with Rubic One Health, our South Africa partner to evaluate the next development phase of the DYAI-100 COVID-19 booster vaccine candidate pending the results of the study as well as the regulatory and market outlook. With the expected full study results later this year, we continue to validate the C1 platform to reduce development risk for our partners. Over the last five years, Dyadic has developed a strong repository of safety, efficacy, and productivity data regarding the C1 protein production system across a wide range of vaccines and antibodies. Dyadic has also developed a suite of genetic tools…

Thank you, Joe. We will continue to leverage our decades of commercial scale industrial manufacturing knowledge and experience to accelerate the development process across our core verticals. In parallel, we remain fiscally responsible with our research and development spending and being strategically focused with our partnerships in collaborations to help fund advancements of our science in critical areas. We believe that our C1 platform is well positioned to be an alternative platform in developing next generation vaccines for public health and future pandemics, and we are happy to see C1 is gaining more recognition globally within academia, government and industry. We have refined our business development objectives to focus on core areas where our technologies can have the greatest impact in the shortest amount of time. And we are evaluating new opportunities aligned with our verticals and targeted markets of high potential return such as alternative proteins. With that, I turn the call over to our CFO, Ping Rawson to run through our financials.

Thank you, Mark. Thank you, everyone again for joining our call today. Before I discuss our financial results, I want to comment on our recent change in auditors. On April 10, 2023, we issued an 8-K and announced a change in auditors from Mayer Hoffman McCann P.C. to Crowe LLP. Mayer Hoffman McCann, MHM resigned due to their internal staff resource constraints and their inability to continue to serve their public clients. As I mentioned on the year-end call, there was no disagreement with MHM on any accounting or audit matters. MHM's reports on our financial statements for fiscal year 2022, and the previous years contained clear opinions without any significant deficiencies or material weaknesses on internal controls. As we announced our first quarter financial results today, I am pleased to let you know that we had a smooth transition to our new auditor Crowe, which has an excellent reputation and extensive experience in the biotech industry. I will now comment on our financial results for the quarter ended March 31, 2023. You can find additional information in our earnings press release and Form 10-Q, which we filed earlier today. Our research and development revenue and the license revenue for the quarter ended March 31, 2023 increased to approximately $978,000 compared to $648,000 for the same period a year-ago, which represents an increase of 50.9% year-over-year. Cost of research and development revenue for the quarter increased to approximately $727,000 compared to $405,000 for the same period a year-ago. The increase in revenue and cost of revenue year-over-year represents the increase in licensing revenues and the several larger ongoing research collaborations conducted in 2023. Research and development expenses for the quarter ended March 31, 2023, decreased by 39.6% to approximately $811,000 compared to $1,343,000 for the same period a year- ago.…

Thank you. We will now conduct a question-and-answer session. [Operator Instructions] Our first question comes from John Vandermosten with Zacks. Please proceed.

All right. Thank you, and good afternoon, everyone. I was reading about NIIMBL and it seems like a – it's a good organization to work with. But I'm wondering what's expected after the research work is complete. Does the organization find a commercial partner and pass on the work or what happens to that, I guess IP that's developed?

Yes. So in the case of NIIMBL, it's a National Institute of Innovation, I guess, Manufacturing Biologics here in the U.S. I think there's somewhere around 300 to 400 members, including, I don't know, most of the majority of the big pharma companies. So the data gets shared with those members in posters and presentations. And in fact, I'm going to be making a poster and a presentation at NIIMBL, and I think it's in June, somewhere in the middle of June, sometime this year. I don’t remember June 25, something like that. Where there's an annual meeting every year and a lot of the big pharma customers are there and clients, and we go through the data. So that's what happens with the data. That was more of a funding to demonstrate the power, the yield, the speed at which we could produce. In this particular case, it was a fab, the same fab that Regeneron used in the COVID-19 at a higher level, quicker and faster. And then also NIST antibody they use as a standard to show for quality in terms of productivity and speed. So that's what happens with the NIIMBL program in terms of that. It leverages hopefully into larger deals, higher credibility and more opportunity for us to move the technology forward.

Okay. Thanks, Mark. And also wanted to ask about India and the clinical trials there. I mean, now that you've already done a vaccine trial using C1 in South Africa, does that smooth away. And then where do we – or when do we expect that trial to start based on what you see now and what are the gating or what are the milestones you need to complete before you get to enrolling the first patient?

Well, John, we enrolled lot of patients in final, finished dosing in February remember.

I mean, India. I'm asking about India.

Oh, I thought it was South Africa.

Now that you've done South Africa and kind of have that precedent underway and we kind of understand it, how will that help the – any future vaccine work in India?

Well, I think it helps future vaccine works on a global basis, not just in India where we're having incredible inbound reaches into us from academia, industry and government agencies. I think that the Phase I trial kickoff in the fact that we've had. To-date, no adverse effects has brought the attention of BARDA and the FDA. And I think led to potentially why we were selected as only one of six companies to present in the recombinant protein vaccine, next generation COVID vaccines. So I think it's much broader, wider and deeper than just India. And I think that the whole thing with India is they're working on a bivalent because they came second and the bivalent like Moderna and Pfizer where they had the Wuhan and the Omicron 5, they're working on a Wuhan and Omicron 5 bivalent, so that's a blessing in disguise that they were a little behind us because we're able to pivot with them to move towards that. So it took a little longer and they're moving towards cGMP manufacturing of that product and then getting the [TARK] study started and kicked off to go into human clinical trials. And that's what's happening there in India. And the other thing that's really in that particular case is that factory can do everything from taking the master cell bank, producing cGMP material all the way from drug substance into drug product, and they put it in vials and ready to go. So they can do everything from the beginning to all the way in the end where in the case of the African trial, we made the cGMP material with BTG in Israel, which is part of Ferring Pharmaceuticals, has a drug product and then had to ship it to Holland, where we used a company to put it into the vials as drug product. So this way it's all in one house. It's a simpler process and they've got a lot of experience. They've run multiple cGMP runs both for the Wuhan and now Omicron 5.

But John, to your point, the major benefit we've already received from the African clinical trial in terms of Epygen is the fact that we've already done the cGMP process. So we've already leveraged the key learnings for that transition. So the data that's coming in obviously would be helpful from many different regards to Mark's earlier point, but we've all – we've actually already leveraged the key learnings that we needed to accelerate the program in India.

Great. Yes. I appreciate the extra detail.

And then furthermore, as I mentioned, we're getting inbound traction from not just academia and governmental agencies, but big pharma. We announced today in our press release that we have a collaboration with one of the top five pharmaceutical companies. That's a new project. It's sort of confusing because we had a top five pharmaceutical projects, but it was in animal, it was for animal health. But with big pharma, this one's for human health. And this is a very, very big opportunity in a very, very big market. So unfortunately, we couldn't put out a press release on it because of the relationship and the restriction in our NDA with them. But this is a really, really big opportunity. And if we can succeed and they launch this and move it forward, this is another potential game changer just like Janssen.

Yes. It sounds like they're watching what you're doing with DYAI-100 right now?

Well, I think – John, I think the world's watching what we're doing with DYAI-100. But more importantly, with our C1 protein production platform, with the presentation there was about 400 plus people on the call with the FDA and BARDA, and we're getting a lot of inbound excitement about where we are as people are seeing. If you go to our slide deck, if you guys haven't done that yet, and to our website that's recorded on there, you go to Slide 11, Joe put a slide together that showed the advantage of speed, not just yield, but we can get product produced much faster and much higher yield at much lower cost. So I think, and if you look at all the parameters of what you need, if and when a pandemic would occur, speed, yield, cost, global access, ease the transferability to Joe's point about how we had cGMP in Israel now brought it over to India. So I think we're primed with the recombinant vaccine platform to help the world with public health, which is just traditional vaccines for all kinds of applications. And also potentially to address this pandemic with the next generation, which is what the BARDA and FDA workshop was. In fact, today we got an email that on May 17, they have a follow-up to that where we can ask more questions and get more definitions as to how and when we can apply and what we need to apply for to get potential government grants for that next generation COVID-19 vaccine.

Got it. Thank you, Mark.

[Operator Instructions] Our next question comes from [Dick Williams with Williams Resource]. Please proceed.

Terrific job. We've had a lot of calls together with a lot of the people who have been stockholders of this company and some of them were underwhelming. And this one was particularly very overwhelming. So Mark, I have a question for you regarding BARDA. Can you hear me?

Yes. I can hear you.

Okay. There's a data that I'm a little confused. The 17th date was the data that I presumed was for the submission of grants to BARDA based on the $5 billion budget that has recently been created for the future pandemics. So are we applying to them for a grant, several grants in terms of partners singly by ourself? Can you give some color on that part of the deal forgetting the workshop per se? But the grant in BARDA with the funding that's available and also if you have any color as to when, since it's a due date of the 17th or 16th of the month, when would they be in a position to give out the grants and advise who they're giving them to?

First of all, they've extended the 17th to 26th. And so by doing that a week earlier on the 17th, they're trying to like what questions people like us may have about submittals that we intend on submitting, in some cases, we may have already submitted one of those applications in conjunction with other partners. And then there's another even bigger opportunity, which is another BARDA call that is not due for several months. It's a deeper, longer potential for greater funding than they what you call now that make 26 application. So BARDA, we don't know if and when we're going to get a grant from them. But what we do know is, we were put on center stage because they see what we have and the capabilities of what we have. And I think they're going to try to work with us, try to fit a square peg and a square hole of where we can bring the greatest help to the U.S. government in the world at large. Maybe Joe, you want to add something to that I don't know?

No. I think, but Dick, to your point, obviously we are looking to submit multiple applications. But to Mark's point, the two different processes, the May date is more for an accelerator project to accelerate early stage development. The September date for BARDA, that actually has the larger grants associated with it, or for products that are a little further along in development that actually have Phase I data associated with it and those that are looking to fund all the way potentially into Phase II or IIb. So those are just some of the highlights that we'll be obviously trying to get some of that funding if we can in conjunction with some of our partners or even on our own if we're able to. So appreciate the question.

Okay, guys. That's all I had. Thanks.

Our next question comes again from John Vandermosten with Zacks. Please proceed.

Thanks again. And you had that additional work with Rubic. Are there any milestones there that are associated with that if you meet what you're targeting milestones payment, I mean?

Yes. John, great question. There are commercialization milestones and obviously royalty payments associated with this contract as well for both human and animal health.

Maybe give a little color on the animal health part of the deal and why that's important.

Oh, why it's important. I mean, obviously in Africa there's very few, actually there's only one major pharmaceutical partner that's manufacturing vaccines in Africa. Most of their animal vaccines are imported, which is leading to very low vaccination rates among their livestock. So it's a very big need in Africa, specifically South Africa. And it's one that has actually caught the attention of SAHPRA. So it's a good partnership between obviously, SAHPRA and Rubic, but it's one where we think we can actually drive a significant amount of benefit for the – obviously the entire continent. So it's also a shorter developmental timeline, shorter development cycle and shorter clinical trial program when you're looking at animal vaccines and they've identified five targets that they're going to be looking for.

Okay. Thank you, Joe.

There are no further questions. I will now turn the call over to Dyadic CEO, Mr. Emalfarb for closing comments.

Thank you. 2023 is off to a great start for Dyadic. We are focused on improving the value of Dyadic for the life science industry, which will in turn improve value for our shareholders. And we are improving access to affordable vaccines and therapeutics globally. And we've refined our focus and revised our business strategies to exploit existing and new commercialization opportunities in the near-term, while enabling us to fulfill our mission as a global biotechnology company to improve the way we feed, fuel, and heal the world. Thank you for joining us in today's Q1 2023 conference call, and we look forward to keeping you updated as we advance our commercial and scientific initiatives on the next call. Please keep an eye out for our other periodic updates.

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