Ladies and gentlemen, good evening, and welcome to Dyadic International's Q1 2024 Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded today, May 14, 2024. 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 Q1 2024 Conference Call. All have had the opportunity to review Dyadic's press release on our financial results for the quarter ended March 31, 2024. 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; and our Chief Operating Officer, Joe Hazelton, will give a review of our 2024 business and corporate highlights, including a brief summary of our recent research and the business development efforts. I will follow with a review of our financial results in more detail. We will then hold a brief Q&A session. At this time, I would like to inform you that certain commentary made in this conference call maybe 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 because 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?

Thank you, Ping. Hello, everyone, and thank you for joining Dyadic's Q1 2024 Conference Call. A little over 5 weeks ago on our 2023 year-end conference call, I highlighted how Dyadic is uniquely positioned to rapidly capitalize on the present opportunities and those on the horizon. Over the next 2 years, we anticipate reaching multiple revenue streams and other inflection points through fully funded collaborations and the company's pipeline products to enhance shareholder value. We continue building upon the momentum witnessed in 2023, and we have further accelerated our progress. The acclaim and acknowledgment of our C1 technology for its speed, productivity and low-cost persist both domestically and globally, receiving commendations from academia, industry, government bodies and nonprofit organizations. Additionally, our Dapibus Expression platform has exceeded our initial expectations. Despite launching a little over a year ago, we are beginning to gain substantial traction and generating revenue in both the alternative protein and bioindustrial sectors. In the first quarter, we successfully closed a $6 million convertible note financing without issuing any warrants. And I would again like to extend our gratitude to long-term shareholders for their steadfast support as these funds will fuel the acceleration of our goal to introduce revenue-generating products through targeting both pharmaceutical and nonpharmaceutical sectors. To further support our growth imperatives, in March, we announced changes in leadership roles, both at the board level and management team. Patrick Lucy has assumed the role of Chairman of Dyadic's Board of Directors and Joe Hazelton has expanded his responsibilities as our Chief Operating Officer. With strengthened financial resources, scientific prowess and bolstered leadership, we are well positioned to execute our strategic business objectives. We will continue to leverage our microbial protein production platforms, C1 and Dapibus to craft antigens, antibodies, enzymes and other recombinant proteins pivotal to each…

Thank you, Mark. Dyadic remains truly excited about the uses of its microbial platforms in the alternative protein sector. We believe this sector offers significant promise in terms of high-value markets and near-term revenue. Our gene expression and protein production platforms, including the recently launched Dapibus are tailored to facilitate rapid protein production proof of concept and large-scale manufacturing of enzymes, proteins, metabolites and other biological products. These products span the full spectrum of production grades from research to food grade and ultimately pharmaceutical grade materials. Their applications are diverse and encompass diagnostics, research, nutrition, health and wellness, reflecting the increasing demand in these areas. Diving deeper into our strategic plans to boost near-term revenue, we remain focused and confident that identifying and producing high-value, high-volume recombinant targets that can be rapidly and efficiently commercialized provides the best near-term revenue potential. Recombinant serum albumin serves as the prime illustration of our focus on valuable recombinant products offering diverse commercialization prospects across various market segments in the approximately $6 billion serum albumin market. Pharmaceutical grade serum albumin holds potential as a disease treatment and is integral to vaccine development. Also, it can serve as a carrier protein for therapeutics and a standard reagent for research and development. Recent completion of certificates of analysis for our recombinant human and bovine albumin affirms their analytical equivalents to currently commercialized research grade products. Moreover, we are exploring recombinant bovine albumin's application and cell culture media for cultured meat production. We are now seeing this strategy creating value as evidenced by the recent term sheet we've executed with a global albumin manufacturer and distributor to license, develop and commercialize Dyadic's recombinant serum albumin products. This strategic partnership will potentially enable our recombinant albumin products to enter the market within approximately 12 months. We hope to…

Thank you, Joe. I will now go over our key financial results for the quarter ended March 31, 2024, in more detail. 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 quarter ended March 31, 2024, decreased to approximately $335,000 compared to $934,000 for the same period a year ago. The decrease in research and development revenue was due to the winding down of several large research collaborations conducted in 2023. For the first quarter of 2024, the company's revenue was generated from 10 collaborations compared to 7 collaborations in the same period a year ago. We are experiencing an increasing number of collaborations with smaller dollar amounts for individual contracts. Cost of research and development revenue for the quarter ended March 31, 2024, decreased to approximately $144,000 compared to $727,000 for the same period a year ago. The decrease was due to the same reason for the revenue mentioned earlier. R&D expenses for the quarter of 2024 decreased by 35.5% to approximately $523,000 compared to $811,000 for the same period a year ago. The decrease reflected the winding down of activities related to the company's Phase I clinical trial of DYAI-100 COVID-19 vaccine candidates and a decrease in the amount of ongoing internal research projects. G&A expenses for the first quarter of 2024 increased to approximately $1.789 million compared to $1.480 million for the same period a year ago. The increase was due to increases in business development and investor relations expenses of $138,000, other fees of $99,000, management incentives of $59,000 and other increases offset by decreases in insurance expenses and the legal expenses. Loss from operations for the quarter of 2024 slightly increased to $2.126 million compared to…

[Operator Instructions] Our first question is from the line of John Vandermosten with Zacks.

I thought I'd start out with a question on the serum human bovine albumin projects. And trying to find out what some of the -- I guess, the milestones you have to achieve before you can get to sales there? I think, Mark, you mentioned that, that's something that you see -- or Joe, you mentioned that that's something that's about 12 months out. What do you need to get done, especially on the regulatory side, if anything, to have those first sales?

John, thanks for the question. And really, the main obstacle right now is scale up. We need right -- we've done the first analytical testing that is shown, and we have the [ certificate ] of analysis that we are equivalent to the reference compound and at least the research and diagnostics segment. So obviously, for pharmaceutical grade segments, yes, that's a longer time horizon. But in order for us to meet the initial first 12 months for research and diagnostic grade material, it's really about scale up and then obviously fill finish and getting it on to the market. And that's where our collaboration partner, I believe, will significantly increase our ability to accelerate that opportunity.

And I also wanted to understand the financial structure of that. I guess, will there be any kind of milestone amount that is paid upon first sale? And then after that, is there a royalty? Or how is that structured when that starts generating revenue for you?

Well, I think you've been dealing with that intimately. So why don't you add -- look like you have and then I can add some color to it, if I need to.

Sure. So obviously, we will work towards initial milestone payments for obviously the access to the technology and the production strain. But then obviously, we're going to look towards more of a potential revenue share on the back end as well, so we can increase our opportunity to grow as we're able to enter different market segments, whether it be excipient grade, whether it be cell culture media. So we're looking at different financial models and offtakes, but yes, milestones and royalties and things of that nature are obviously part of the discussion.

And just to add a little color, John, to that. We do expect in the term sheet we have executed an upfront payment along with potential milestones and royalties. And I think the important thing here is, we've developed a very productive upstream production of the albumin in both bovine and human serum albumin. And the term sheet partner that we're working with that we hope to finalize an agreement within the not-too-distant future, has a very, very low-cost downstream processing capabilities. So when you marry high-volume low-cost upstream with high-volume low-cost downstream and the fact that they have access to the marketplace. It's a great marriage and a great opportunity for both companies to exploit each other's strengths. So I think you need to keep in mind that when we're targeting these new product opportunities, we're targeting partners that can distribute commercialize and market these products to existing channels.

[Operator Instructions] We have a follow-up question from John Vandermosten with Zacks.

All right. I also wanted to ask about the CSR for DYAI-100. And kind of what regulatory steps you might be doing next with that? I mean I don't know -- I mean, I think, Mark, you had indicated that you're not going to pursue that exact vaccine anymore because it doesn't make sense. But there may be other things that you can do with that maybe on the regulatory side in terms of interacting with the FDA and planning something else. Just wanted to hear what your plans are there, especially with regulatory focus in mind.

Yes. So we've been in contact with certain members of the FDA, including Peter Marks the Head of FDA on several occasions. So we do not plan on moving DYAI-100 forward to COVID-19, booster vaccine. The market acceptance of booster vaccine seems to be short. And we have even better vaccines that we've developed since then for COVID. So if we move forward with anything, it will be with a better performing, more higher efficacy, potentially longer-lasting and maybe a universal potential vaccine, but that won't be funded by us to move that forward. So from a regulatory perspective, the finish of the Phase I now has shown top line results and final results of safety, tolerability and immune response, both in the high and low dose. That's driven excitement and it's driven up markets and has driven up access to these one, if not 2 big pharma companies. We're working with 2 of the top 10, 1 we had already started working with. And I think both of them have come in based on the results that they've seen, and they've heard about from that. So from a regulatory perspective, we hope to potentially move our Bird Flu vaccine that we've developed with ViroVax that not only works in humans as we mentioned, but recently, ViroVax has showed it works on the 3 different variants of viruses that are floating around, including the one in the cattle. So we think that, that potential vaccine, not only can we mass produce it at low cost rapidly, and we've already developed the strain in the cell line. So we're 4 to 6 months ahead. We can address that challenge and make the opportunity both from an animal health and the human health perspective. So there you have the USDA with the…

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

Thank you. The company remains dedicated to driving near-term revenue and growth through innovation and commercialization efforts, expanding the use of the C1 and Dapibus platforms for the production of proteins in our 3 core sectors: Human Health, Animal Health and Alternative Proteins. Once again, I cannot overstate how exciting this time is in Dyadic's history. We are uniquely positioned to rapidly capitalize on the present opportunities in those on the horizon. Thank you for joining us in today's first quarter 2024 conference call. We look forward to keeping you informed about our progress in commercial and scientific endeavors during our next call. Please stay tuned for additional updates from us.

Thank you. The conference of Dyadic International has now concluded. Thank you for your participation. You may now disconnect your lines.