Good evening, and welcome to the Dyadic International's Third 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 call is being recorded today, November 8, 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 third quarter 2023 conference call. I hope you have had the opportunity to review Dyadic's press release announcing financial results for the quarter ended September 30, 2023, and the recent company highlights. You may access our release and Form 10-Q under the investors section of the company's website at dyadic.com. On today's call, our President and CEO, Mark Emalfarb, will give a review of our third quarter business and corporate highlights, including a summary of our recent research and 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 on this conference call may be considered a forward-looking statement, which involves risk and uncertainties and other factors that could cause Dyadic's actual results, performance, scientific or otherwise or achievements to be materially different from those expressed or implied by these forward-looking statements. Dyadic expressly disclaims any duty to provide updates to its forward-looking statements, whether because of new information, future events or otherwise. Participants are directed to the risk factors set forth in Dyadic's risk report filed with the SEC. It is now my pleasure to pass the call to our CEO, Mark Emalfarb. Mark?

Thank you, Ping. Hello, everyone, and thank you for joining Dyadic's third quarter 2023 conference call. We've accelerated the momentum seen in the first half of 2023 as our C1 technology continues to garner praise and recognition for its speed and efficiency in the U.S. and internationally from academia, industry and government agencies. We've also gained significant traction with our Dapibus platform, which was launched less than 12 months ago in both the alternative protein and bio-industrial markets. On today's call, Joe and I will discuss our strategic plan for revenue growth, notable technological advances, and recent business development successes we continue to achieve across each of our core markets. We will focus the discussion on not just providing an update on our third quarter scientific and business results, but also expand on our strategy to improve our revenue outlook in the short term and beyond. We are not just excited about our current and future prospects. We believe the success of our corporate strategy is beginning to be realized as evidenced by our September announcement of an agreement inclusive of upfront fees, and positive data from our first in human Phase 1 study, and our recently announced advancements in our own internal recombinant serum albumin projects, which have accelerated opportunities to enter into additional collaborations and partnerships, such as the memorandum of understanding with the Italian government's foundation, Biotecnopolo di Siena, which performs the functions of an anti-pandemic hub with a particular focus on the development and production of vaccines and monoclonal antibodies for the treatment of emerging epidemic and pandemic pathologies, and the recently announced research collaboration with vaccine and immunotherapy center in Massachusetts General Hospital. We believe that we are at or near the precipice of applying our microbial protein production platforms, C1 and Dapibus, to develop…

In the area of therapeutic proteins, we've signed additional fully funded research projects for the development and commercialization of therapeutic antibodies in the third quarter. One such agreement is with a multinational pharmaceutical company to develop multiple C1 cell lines and produce monoclonal antibodies targeting infectious diseases, as well as another fully funded project to develop a C1 cell line for monoclonal antibodies against Filoviruses such as Ebola and Marburg. We have also endeavored to expand our portfolio with potential new commercial products. This quarter, Dyadic entered into a development commercialization agreement with European company, bYoRNA to develop messenger RNAs using our C1 technology. Messenger RNAs help to quickly develop effective COVID-19 vaccine critical for pandemic response. But the therapeutic applications extend beyond infectious disease in areas such as cancer, where mRNAs and coding cancer antigens may help immune cells to strike tumors and substantially extend survival in rare diseases, where RNA-based gene therapy is potentially capable of delivering a healthy copy of the faulty gene to the cell. In this project, we are combining bYoRNA’s novel bioRNA platform with Dyadic's industrially proven C1 protein production platform to provide the pharmaceutical industry with a potentially more cost-efficient platform for manufacturing large quantities of lower-cost messenger RNAs, enabling access to mRNA vaccines and drugs for a broader global population. We've continued our focus on building and sustaining longer-term strategic partnerships with our pharmaceutical partners, such as advancing commercial products and clinical development of human and animal health vaccines with Rubic One Health for the African continent. In the recent production of C1expressed human infectious disease vaccine antigens under CGMP guidelines, as well as other non-GMP products with Epygen in India. We believe the C1 production platform can be a global solution to emerging infectious disease threats and pandemic response, and not…

Thank you, Mark. I'm happy to report that the Phase I trial for DYAI-100 has completed and the process for building the final study report has begun. For background, to establish the 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 of the DYAI-100 COVID-19 recombinant protein, or RBD booster vaccine in 30 healthy adults in South Africa at two different dose levels. Dosing of all patients was completed in late February and the last patient last visit took place in September. The database lock occurred last week and we anticipate providing top-line results in the coming weeks with the final full clinical study report to follow. Day 90 safety data for all patients was presented at the Data Safety Monitoring Board meeting in the second quarter, which found no major vaccine-related safety events at either dose level, and to date there have been no serious adverse events reported. Giving the evolving regulatory and market outlook for COVID, we're in discussions with Rubic One Health, our South African partner, to evaluate the next development phase of a COVID-19 booster vaccine candidate, pending the market conditions. We're continuing to validate the C1 platform to reduce clinical development risk for our partners and adding to our strong repository of safety, efficacy and productivity data regarding the C1 platform across a wide range of vaccines and antibodies. As we enter the fourth quarter, we also wanted to provide greater insight into our strategic planning and execution to improve near-term revenue potential. As Mark discussed earlier, we've made progress advancing our pharmaceutical and non-pharmaceutical microbial platforms across our core verticals in 2023, but like our partners, we are not immune to the current…

Thank you, Joe. We will continue to leverage our decades of commercial scale industrial manufacturing knowledge and experience to accelerate near-term product development opportunities across our core verticals. In parallel, we remain fiscally responsible with our research and development spending, in being strategically focused with our partnerships and collaborations to help fund advancements of our science in critical areas. We continue to believe that our C1 platform is well positioned to be an alternative platform in developing and manufacturing next generation vaccines, antibodies and other therapeutic proteins for public health and future pandemics. We're happy to see C1 is gaining more recognition globally within academia, government and industry. We've refined our strategic plan and begun execution in core areas where our technologies, such as our Dapibus platform, can have the greatest impact, and we're evaluating new opportunities aligned with our verticals and targeted markets of high potential return that are in need of cost-effective solutions, such as alternative proteins. With that, I'd like to turn the call over to our CFO, Ping Rawson, to run through our financials.

Thank you, Mark. Thank you everyone for joining our call today. I will now go over our key financial results for the quarter ended September 30, 2023. You can find additional information in our earnings press release and Form 10-Q, which we filed earlier today. Research and development revenue and the license revenue for the third quarter of 2023 decreased to approximately $397,000 compared to $880,000 for the same period a year ago. Cost of research and development revenue for the quarter decreased to approximately $106,000 compared to $603,000 for the same period a year ago. The decrease in revenue and cost of revenue for the quarter was due to several research projects winding down or on hold as a result of our lab relocation at one of our major contract research organizations. Research and development revenue and the license revenue for the nine months ended September 30, 2023 slightly increased to approximately $2,212,000 compared to $2,187,000 for the same period a year ago. Cost of research and development revenue for the nine months ended September 30, 2023 increased to approximately $1,626,000 compared to $1,419,000 for the same period a year ago. In the third quarter of 2023, we have signed several new research collaborations as we announced. We expect our research revenue will pick up in the fourth quarter and our total revenue for 2023 will be in line with 2022. Research and development expenses for the quarter decreased to approximately $716,000 compared to $744,000 for the same period a year ago. Research and development expenses for the nine months year-to-date decreased to approximately $2,444,000 compared to $3,917,000 for the same period a year ago. The decrease primarily reflected the winding down activity related to the company's phase one clinical trial of DYAI-100's COVID-19 vaccine candidate as patient dosing…

Thank you. [Operator Instructions]. And today's first question comes from John Vandermosten with Zacks. Please go ahead.

Thank you, and good afternoon everyone. I was reading through the Fermbox details and wanted to see if you could give me a better understanding of what the cellulosic enzymes for renewable biofuels is? Is that something like auto fuel or something like that? I just wanted to get a sense of that opportunity and what it might represent.

Yeah. So, l will let Joe speak to some of that, but it's basically similar to what we did before with Evangoa [ph] and DuPont and with Codexys [ph] and Shell. Our non-compete ended a couple of years ago with DuPont, and the market for Cellulosic Sugars seems to be coming back as the cost of oil is going higher and there's a growing demand for enzymes to reduce the cost of digesting the biomass to make fermentable sugars to make renewable fuel, so that's one of the opportunities. One of the other things that we're working on is an enzyme for pulp and paper with a customer that has a market for that, that's looking for a new supplier.

Okay. Is it auto-related, that fuel or is it for some other type of...

Yes. Well of course, it's partly auto-related. Of course, for renewable fuel for cars, like ethanol, for example, but Cellulosic Ethanol not for corn. It's also just Cellulosic Sugars, which we use for fuels and chemicals and for other, obviously, fuels as well.

Okay. Very good. And then as you look at those, the latest three programs that you added, the bYoRNA enzymes and the DoD program, how would you rank those in terms of contribution to your efforts?

Well again, I think I just want to remind people, we get gene sequences from customers, put them in the cells, make proteins, give them back the samples, and the customers move those forward. Of course then, some of these new products we're working on our own as well. But basically, I would say that the Common and Healing Albumin is one of our major focuses, but we picked up new programs in the last quarter for an enzyme for use for biosimilars, which we talked about earlier in the conference call. We picked up three antibodies, three going potentially into the clinic. So we're just doing the preliminary work of taking their genes, creating cell lines, producing proteins, and providing them back, providing they like the quality, the yields, the potential to go into a preclinical and then clinical trials. And the beautiful thing, to be honest, all those three proteins are very targeted proteins on BARDA's hit list. And so, if they go into clinical trials, not only would our customers benefit, but we'll benefit through the exposure that they get from the U.S. government to BARDA and also all over the world. There's some really horrible infectious disease that they are looking for a new product for. So, I don't know if I've answered all your questions, but if I didn't, John, maybe you can ask me which one I missed.

No, I mean, I just was trying to get a sense, so I think you did Mark. Thank you.

Thank you. And ladies and gentlemen, our next question today comes from Paul Rosenbaum with SWR. Please go ahead.

Hey, thanks Mark and the whole team. You've done a wonderful job. I'm very excited about the potential, but as a major shareholder, what I'm concerned about, and I'm sure a lot of other people are, is you've got existing cash that lasts until late 2024. That's technically less than a year. And do you have any capital plan that you can share with the shareholders or are you saying to us that you really don't need to raise any more cash over the next year?

I think what we're saying is, Ping stated earlier, we expect that our existing cash balance will be sufficient to fund operation until late 2024. And that's without getting any other cash in, whether it be highlighted in our actively pursuing near-term product and license opportunities to generate some of that cash. We also believe we will generate revenue in the coming year through not only product and license opportunities, but potential spin-offs of some of the technologies as we advance these products further down the line towards commercialization. And this is in line with our new business strategy, which switches from platform licensing solely to product development to both internal and third-party business partners. And as a management team, we're focused on execution of our strategic plan to ensure we have the right infrastructure and resources to adequately address key business opportunities and to accelerate those in near-term revenue across our curve verticals in the coming year.

So just so I understand this, between your existing cash flow and what you expect to bring in in revenue next year, that you feel that you can go on without raising any additional funds?

Well, what we've said is we have $8.2 million in September 30. We've got another $600,000 that came in. With the burning, we estimated this year $606 million. So that would have, from 9/30 forward, put us in the $8.8 million in cash. And we're looking at all alternatives as to how to bring in cash from either products, licensing, and our other methods, which potentially could even be somewhere down the road of financing.

Thank you. And our next question today comes from Skip Gazzo with [inaudible]. Please go ahead.

Hey, Mark. Hi, team. I think my question just got answered, because I see that you're burning about $500,000 a month negative cash flow and that was my exact question. You got 16 months and you're out of money if you didn't bring in any revenue, so – but I think you just kind of answered that unless you want to go into it a little bit more.

No, I think that we just answered it. But thanks for your question and your support.

Thank you. Ladies and gentlemen, that concludes the question-and-answer session. I'd like to turn the conference back over to Dyadic CEO, Mr. Emalfarb for closing comments.

In 2023, we are seeing the impact of our Phase I human safety trial further validate the C1 platform for pharmaceutical use in human and animal health. We're also beginning to realize the investment in the Dapibus platform and alternative proteins has already led to a revenue event. We remain focused on improving the value of Dyadic for the life science industry, which will in turn improve value for shareholders and improve access to affordable vaccines and therapeutics globally. 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. I want to thank you for joining us in today's 3Q, 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 is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time and have a wonderful evening.