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Operator
Welcome to Dyadic International's fourth quarter and full year 2020 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, March 30, 2021. I'd now like to turn the call over to Ms. Ping Rawson, Dyadic's Chief Financial Officer. Please go ahead.
Ping Rawson
Thank you, Joe. Good evening, everyone, and welcome to Dyadic International's fourth quarter and full year 2020 financial results conference call. Earlier today, Dyadic issued a press release announcing financial results for the full year ended December 31st, 2020, and the recent company highlights. You may access to our press release and form 10K under the investor section of the company website at dyadic.com. On today's call, our president and CEO, Mark Edenfod, will give a review of our business and corporate accomplishments for the full year 2020, including a brief summary of our research and business development efforts. I will follow with a review of our financial results in more detail. We'll then hold a brief Q&A session. Our senior management team, Matthew Jones and Ronan Shillette, will join Mark and I for the Q&A session. At this time, I'd 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 diabetics' actual results, performance, scientific or otherwise, or achievements to be materially different from those expressed or implied by these forward-looking statements. Diabetic expressly disclaims any duty to provide updates to these formal looking statements, whether as a result of new information, future events, or otherwise. Participants are directed to the risk factors set forth in dyadic reports filed with the ICC. It is now my pleasure to pass the call to our CEO, Mark Unifarb. Mark?
Joe
Thank you, Ping, and welcome, everybody. We are very pleased with the substantial progress made thus far in 2021 and in 2020. 2020 was a year of considerable disruption, suffering, and death worldwide as the coronavirus rapidly spread across the globe and the COVID-19 pandemic has and continues to wreak havoc on humankind. Our hearts go out to those who have continued to suffer from this horrible disease. We've been working tirelessly to identify ways in which to apply our C1 technology to help speed the development, increase availability, and lower the cost of COVID-19 vaccines and treatments to make them affordable and available to everyone on the planet. We and our collaborators work to introduce the C1 technology to the world to enable as many COVID-19 programs as possible. and we are continuing to do so as COVID-19 variants continue to emerge. Due to our success in several animal studies where we rapidly engineered C1 cells have achieved high levels of antigen productivity and have shown to be safe, effective, and protective. Our C1 technology has therefore gained the attention of a growing number of infectious disease and other scientists in industry and government. This momentum has begun to accelerate after our announcement that a proprietary COVID-19 vaccine candidate, DYI-100, is advancing into a first in human phase one clinical trial, which is expected to begin in the second half of 2021. As SARS-CoV-2 continues to mutate into different variants, we've already begun the engineering of novel C1 cell lines to enable the development of next-generation multivalent COVID-19 vaccine candidates. The DYA100 Phase I clinical trial's purpose, among others, is to validate that the C1-produced proteins are safe in humans, which we expect will accelerate the C1 technology platform's adoption and commercialization of recombinant protein vaccines and drugs for human use. There are articles almost every day highlighting that the SARS-CoV-2 mutations like the UK, South African, Brazilian, and now New York, Californian, and other emerging COVID-19 variants in Japan, India, and elsewhere are here to stay. And new COVID-19 variants are expected to appear yearly, which, like the seasonal flu, may require annual or even semi-annual booster shots. Just today, CNBC reported COVID-19 variants could render current COVID-19 vaccines ineffective in a year or less, epidemiologists warn. In addition to validating that C1-produced proteins are safe in humans, DIADC's COVID-19 DYAI-100 vaccine candidate clinical trial will help to serve as a proof of concept for the development of potential next-generation multivalent COVID-19 variant vaccine candidates, including the B.1.1.7 UK variant and others. Because of C1's ability to rapidly develop COVID-19 variant vaccine candidates, coupled with its relative advantages of greater productivity and lower cost, the world is waking up to the fact that these variants are here, they're going to keep coming, and more companies recognize we exist and are expressing interest and potentially using C1 to help solve their manufacturing productivity, speed, and cost concerns. All of these attributes give C1 a tremendous advantage over other vaccine and drug manufacturing platforms. Beyond our COVID-19 initiatives in 2020, we commenced 11 new projects and extended two others, including five new funded collaborations with top pharmaceutical companies to produce therapeutics of commercial interest for human health applications. Since the start of this year, we have entered into two new and three extended programs and are in discussions with others in all sectors of our business, including animal health, non-COVID-19 human health, growth factors, and other potential new biologic product markets, where our C1 technology may have the potential to overcome gene expression challenges, improve performance, as well as to increase yield and lower cost. In animal health, we continue to build a strong foothold in the animal health market. As we previously announced, we have entered into fully funded agreements with all four leading animal health companies, as well as the fifth global animal health company to evaluate C1 for the expression and production of vaccines and therapeutic proteins for animal diseases. We expect candidates expressed using C11 to enter animal trials this year. We are particularly proud of the progress made in our long-standing successful partnership with the European Zoonosis Anticipation Preparative Initiative, SAPI. SAPI is a five-year, 20 million euro initiative that has brought together experts in human and animal health to create new platforms and technologies that will facilitate a fast coordinated and practical response to new infectious diseases as soon as they emerge. ZAPI selected our C1 technology platform to boost antigens more efficiently that are safe, effective, and protective for both the Schmalenberg and Red Valley fever viruses. Notably, the C1 gene expression platform demonstrated greater productivity and stability than the baculovirus insect cells for both the SPV and RVFV antigens, enabling the ZAPI project to meet its objectives of producing enough low-cause doses with reduced fermentation volume capacity. Additionally, the seawood-produced antigen demonstrated full protection for cattle, sheep, and mice from the SPV virus. We are very pleased with the growing volume of scientific data and the results we achieved in our own internal and externally funded programs last year and in the first quarter of 2021. Based on the growing amount of productivity, safety, and efficacy data generated in our own internal and third-party R&D activities, we are being approached by many companies related to the growing number and type of infectious disease opportunities, both COVID-19 and others. In the non-COVID human health, we're constantly looking for ways to improve our shots on goal for building shareholder value. Beyond our COVID-19 collaborations, an increasing number of global pharmaceutical and biotech companies are selecting our C1 technology for diverse applications in human health. Last month, we established a fully funded collaboration with TurtleTree Scientific to to develop several recombinant protein growth factors which play a critical role in tissue development and healing, including regenerative therapies. Manufacturing human growth factors at large scale and affordable cost has been a major industry challenge. We're excited to apply our C1 technology to overcome this hurdle and a significant new commercial opportunity. We've also expanded our presence in Europe Asia, and India. In addition to our partnership with Meditox in South Korea, we've established a fully funded collaboration with Hangzhou Hangaroo Medicine Company Limited, the largest pharmaceutical company in China by market capitalization. For the development of selected Hangaroo biologic drugs, as well as a non-exclusive research collaboration with Wuxi Biologics, a leading contract development manufacturing organization headquartered in China. From a strategic point of view, we believe these global co-development partnerships have been cornerstone of the company's success to date. The goal is to access commercial opportunities in large and growing human and animal health markets. Importantly, these partnerships also enable us to continually improve and accelerate development of our C1 platform technology. Now that our non-compete with DuPont has expired, we also remain open to exploring new potential commercial opportunities in the industrial biotech markets. In regard to some of our scientific achievements, as for internal development, the company continues to make progress in terms of the stability and productivity of the C1 technology, including through glycoengineering, C1 cells to impart human-like glycan structures and reducing the extracellular protease background by 50-fold. Strives in glycoengineering and non-glycoengineering cell lines should broaden the potential applications of the C1 expression platform for its use in developing and manufacturing vaccines, monoclonal antibodies, and a variety of other therapeutic proteins. In closing, 2020 was marked by many new partnerships and significant progress towards clinical development. We look forward to building on the momentum achieved in 2020 as we work towards advancing our COVID-19 vaccine candidate, DYAI-100, into a phase one clinical trial later this year. We expect our extensive number of collaborations will continue to generate robust scientific data that highlights the broad potential impact of our C1 platform and diverse animal and human health applications. And as always, we will continue to work tirelessly to advance our C1 platform while evaluating other opportunities to maximize its value to meet the global need for rapid, safe, and scalable therapeutics. As recently announced, Patrick Lucey has joined our board of directors. I have known Patrick for over two decades. His extensive experience in the development, adoption, and commercialization of cell lines used in the biopharmaceutical industry will be extremely helpful in guiding our strategic, scientific, and commercialization efforts. We're very excited to have Patrick join DIADC's Board of Directors. Lastly, I want to give special thanks to our employees and partners for their commitment and dedication during these challenging times. I also would like to thank our shareholders and our board members for their continued confidence and support as we work towards bringing more affordable healthcare solutions to a global population. With that, I will turn the call over to Ping for a financial update.
Operator
Ladies and gentlemen, we are experiencing some technical issues with Ms. Rawlson.
Rawlson
We will continue shortly. Mark, can I read the script, or can you?
Joe
Yeah, I can read it in case he doesn't get on. In addition to the financial results we will discuss now, you can find additional information on our Form 10-K, which we filed earlier today. Our cash and cash equivalents were approximately $20.6 million for the year ended at December 31, 2020, compared to $4.8 million at December 31, 2019. The carrying value of investment-grade securities, including accrued interest at December 31, 2020, was approximately $8.6 million compared to $31.2 million in December 31, 2019. Our cash burn for the year ended December 31, 2020, with approximately $6.6 million in line with previous quarters and our expectations. Our research and development revenue for the year ended December 31, 2019, 2020 was approximately $1,602,000 compared to $1,681,000 for the year ended December 31, 2019. We reported a slight decrease in cost of research and development revenue for the year ending December 31, 2020 to approximately $1,425,000 compared to $1,460,000 or $460,000 for the year ending December 31, 2019. We also reported a provision for contract losses of approximately $187,000 for the year ended December 31, 2020. It's a slight decrease in revenue cost.
Ping Rawson
Thank you, Mark. This is Ping. I'm back. Sorry about it. This is when you dropped the... You see where I'm at? Yes. The slight decrease is... Yes. Thank you. The slight decrease in revenue and cost of research and development revenue for the year ended December 31st of 2020 reflected a growing number of research collaborations to 14, comparing to 10 collaborations for the year ended December 31st of 2019, but with smaller dollar amounts for each project. Importantly, our fully funded research collaborations continue to provide an additional source of income and particularly offsets our ongoing R&D expenses. This has allowed us to mitigate our cash burn to an extent and to maintain a comfortable position to fund our ongoing business activities. R&D expenses for the year ended December 31, 2020, increased to approximately $3,868,000 compared to $3,000,000 $88,000 for the year ended December 31st, 2019. The increase primarily reflected additional costs of COVID related projects and other internal research projects. There were no R&D expenses related party for the year ended December 31st, 2020, compared to approximately $869,000 for the year ended December 31st, 2019. The decrease was due to the completion of research service agreements with BDI in June 2019. DNA expenses for the year ended December 31, 2020 increased 10.2% to approximately $8,085,000, comparing to $5,520,000 for the year end December 31, 2019. The increase principally reflected increases in non-cash share-based compensation expenses of $397,000. Insurance premiums and other outside services of $216,000. Legal and SEC registration expenses of $193,000. Business development and investor relations costs of $191,000. offset by reductions in executive compensation costs and accrued incentives of $216,000. Street show and travel expenses of $143,000 and other decreases of $73,000. Interest income for the year end December 31, 2020 was approximately $447,000 compared to $985,000 for the year ended December 31st, 2019. The decrease was primarily due to a decrease in interest rates and yield on the company's investment grade securities, which are classified as held to maturity. For the year ended December 31st, 2020, the company also reported an unrealized gain related to its investments in AlphaZine, resulting from the third party capital contribution As of December 31st of 2020, the fair value of the company's investments in AlphaZine was approximately $285,000. Net loss for the year ended December 31st of 2020 was approximately $9.3 million, or $34.34 per share, comparing to a net loss of $8.3 million or $0.31 per share for the year ended December 31, 2019. Looking forward, we expect our total cash burn for 2021 will be in the range of $10 million to $12 million, taking into consideration our Phase I clinical trials and other ongoing internal research projects. We believe we have sufficient funds to provide the working capital needed for our research and operations for the next couple of years. With that, I will now ask the operator to begin our Q&A session. Dr. Roland Chalet and Matthew Jones will be joining 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 permits, The operator will allow additional questions from those who have already spoken. Joe?
Operator
Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from Jason Colbert from Dawson James. Please proceed.
Jason Colbert
Hey, Mark. Hey, Peng. Thank you very much for the update. I want to go after a couple of things. Mark, you talked a little bit about the CoVant variant. Have you seen reason to believe that any of the vaccines are showing resistance to the variants? Because my understanding is that they're all targeting the spike protein. And while I don't want to use the word that it's a conserved region, so far, to the best of my knowledge, we have not seen mutations that are favorable in terms of resistance to the vaccines. Maybe that's inevitable, but I'm asking you and your team scientifically, do you think that could happen or that that is likely to happen?
Joe
Well, you know, I think that the scientists globally, and I think there was a survey today that feel that the mutations of the coronavirus could render current vaccines ineffective within a year. What ineffective means to these experts in 28 countries? You know, I'm not sure, but our scientists from the ZAPI group, scientists we've talked to at Oxford, UCL, and otherwise believe that, you know, it's imminent that we're going to need to have variant vaccines to give full protection, especially in some of these countries that aren't getting fully vaccinated for years.
Jason Colbert
Okay, so what you're saying is that the spike protein... is not a conserved region and therefore like a chain of marbles it can rearrange itself and since all of the vaccines that i'm aware of are targeting that spike protein that you know it's inevitable that we will see some uh escape variants yeah well you're you're seeing escape variants now in south africa and brazil and japan and india no new york to the best of my knowledge we have not seen escape variants in japan south africa or brazil and you know i've been really up to date on this so there have been variants and they have changed the profile but nothing in terms of the ability to render say the mrna vaccines or the jnj vaccine not effective because the region they're targeting in the spike protein so far has not changed to render the vaccine? You know, and that's why it becomes a very important question.
Joe
Well, I think if you look at it, the J&J vaccine, the Novavax vaccines, and some of these other vaccines are certainly less effective on a South African variant. And I'll let Ronan answer the question because he's more technically astute. So, Ronan, are you there?
spk03
Yes. I think that it was very nicely shown that those variants also have a very important mutation on the receptor binding motives. And all of those changes really showed higher affinity binding to the ACE2 receptor. And obviously, I think that shows that there is some benefit by having a different type of antigen so i think in general obviously i think the current vaccination does work on the variants but i think it will take time to understand to which level they can really protect the population and i think the fact that there are still so many infected people around the globe and there are many more variants that are appears by all kinds of mutations. I think the ability to be able to quickly respond to any kind of a new variant, I think is a very important tool. And I think this is what we are aiming to.
Jason Colbert
Good. Good. No, no argument for me about that. And what I'd like to do is if we extend the question a little bit further, I know you're working in Israel, Mark. I know you're working with Zappy. Congratulations on the deal you announced in Korea. Among those deals or others that we're not aware of, are those partners working on different regions so that they could potentially come up with a different vaccine that then incorporates the C1 platform so that you potentially are in a position to offer a new vaccine COVID vaccine, that would not be one that would be resistant to, say, some of the mRNA vaccines that we're seeing today?
Joe
Yeah, the answer is yes. And that's one of, I think, the significant advantages of a recombinant protein production system is that we can produce individual vaccines to different variants, whether it be Brazil, South Africa, UK, etc., And then we could blend those to specific ratios to allow the vaccine to cover more broad protection. And whether that's the full spike or the RBD vaccine or accommodation thereof. But we also could provide those ingredients or the active ingredients to other people to mix and blend in to make their vaccines.
Jason Colbert
Right. So what I'm going after, Mark, here is that, you know, how excited are you with the current partners that you have? that you guys will potentially have a novel beat that the dyadic could be part of a novel vaccine that could emerge. And what's the timing look like, given the fact that you're starting to go into phase one with this first generation vaccine, is it a year? Is it two years? You know, how, how do we get a handle on kind of the timing and catalysts around like COVID related programs?
Joe
Well, keep in mind the first DYA 100 we're going into human beings, first and foremost, to prove safety and initial efficacy, not just for a COVID vaccine, but to demonstrate that proteins, therapeutic proteins and other vaccines for human disease can be produced safely in C1. So that's the primary goal and was always the goal at the beginning. But in addition to that, to your point, we've already started the engineer the UK variant, the South African variant, the South American or Brazilian variant, to have these mixtures of vaccines to actually come up with a unique and novel, better protecting vaccine. And how fast it happens is after we prove safety and preliminary efficacy of the DYA-100 or before that in discussions we're having with pharma and biotech companies, you know, will they join in and speed that development? And that's what we're hoping will happen either before or after we announce the results, which we believe will be safe and show preliminary efficacy. Two more quick questions. One is, I want to keep it short because I know you have other people online.
Jason Colbert
The vaccine economics traditionally haven't been great. And when I look at dyadic, I'm trying to understand what your vaccine economics are because you're not necessarily the originator, right? You're more of the manufacturing partner. Should I be looking at that that way or should I be looking at it a little bit differently?
Joe
In this particular case, we are the originator. We have the gene sequence is ours. The cell line is ours. We're moving it into phase one human trials is ours. So it's an owned vaccine from Dyadic, not just as a cell line provider. All the variants being loaded into C1 for the next multi-broad variants of the multivalent, tetravalent, trivalent vaccine, those are ours. Now, those can be licensed out to other people. But in addition to our own vaccine, we have other, well, other people bringing us gene sequences in addition to this with the second-generation vaccine, which are theirs, which we're helping to enable, and then obviously sharing the rewards of that. And then the case of Meditox, we're partners in that deal, where we shared greatly in the economics. I understand.
Jason Colbert
So two last questions. First of all, in terms of the financial burn guidance, thank you, Ping. Your guidance was exactly – the expense control has been great at the company, and your guidance is right in the middle of my numbers. So that's exactly right. Thank you. But where I get a little bit confused, Mark, when you and I sat down two years ago, And we started thinking about all of the different areas where we could see business. We talked about biogenetics, we talk about traditional pharma products, and of course now vaccines. And we had said that you could see a business development deals and partnerships emerge over the next couple of years from any of those sectors. Today we're very focused on COVID, but should we still be modeling in deals and partnerships in those other areas?
Joe
Absolutely. As we mentioned, we signed deals with five people in pharma last year on collaboration, some of the new deals. As we've mentioned in some of the recent conference presentations, we have a big pharma company that funded research last year that's funding an additional research moving towards oncology and rheumatoid arthritis with two other protein drug candidates that could go to regulatory that could turn into a license agreement. We're in discussions with a lot of different animal and human health companies, in addition to the ones that are already in doing research and development. I think this year you're going to see an accelerated pace of 11, 13, 11 new deals and two or three extensions last year. We're already at the pace of five and it's accelerating right now. And it's mostly non-COVID.
Jason Colbert
Mark, thank you very much. Really, thanks for letting me take up some time with all the questions. Appreciate it.
Joe
Thank you for your help.
Ping Rawson
Thank you, Jason.
Operator
Thank you. Our next question is from John Vandermosten from Zach's Investment Research. Please proceed.
John Vandermosten
Hey, good evening. I wanted to ask about the IND and interaction with the FDA that you're anticipating over the next few months. What do you anticipate some milestones to be in that area, you know, preparing the IND and then ensuring that it gets cleared within a normal time frame.
Joe
Ronen, do you want to pick that up?
spk03
Yeah, so currently we are going for the Sulfur Hygiene. So currently we are going for the toxicology study. that will start soon. And then I think once we get the green light, the next step will be to go for the phase one clinical study. And we are aiming to start it, I think, in August. And I think after that, we should have all the paperwork to submit in order to be able to go for the next clinical studies. Does that answer your questions?
John Vandermosten
Okay. Thank you. Thank you. And then, you know, looking down the road a bit, how far can Dyadic go with DUI AI-100 before you need a partner?
Joe
Well, it's not a question of how far we can go. It's how far we want to go. And I think the point is that we will look for a partner as soon as we show safety and efficacy or preliminary efficacy. But we're also in discussions and talking about partners right now and have been about picking that up. And I think what the main interest is, again, I'm going to repeat, the DYA-100 is to prove safety in human beings, not just for this COVID opportunity, but for virtually hundreds, if not thousands of potential products in the future for human drugs and vaccines. That's the main purpose. The secondary purpose, in addition to that, is to work on the variants, which we've already started to engineer because we believe that we can make variants in larger amounts in a shorter amount of time at less cost to help the world out of this horrific situation it's sitting in. And we believe that recombinant protein-based technologies and our recombinant-based cell line is far more productive than any other cell line that's out there today. As you know, in the ZAPI program and otherwise, we've shown versus insect cells or baculovirus, 300-fold improvement in productivity. We have now demonstrated in cattle, sheep, and mice safety, efficacy, and protection. So if we achieve the goals and objectives of this clinical trial, not only are we going to demonstrate safety in human beings that can be leveraged and accelerate the commercialization efforts for human pharmaceuticals, but potentially we could be the one company that can make the quantities at the cost of under flexible commercial scales for trivalent or tetravalent COVID-19 vaccines on an annual basis, which the world may need, like seasonal flu shots. And if that continues to persist, as many experts basically have predicted, then I think we're in great shape to pick up partners, to pick this up and run with it, and to finance it all the way.
Ping Rawson
Yeah, just to want to add a little bit on Mark's comments, I think from a financial perspective, we are constantly evaluating, you know, our collaborators and partners to either co-develop or have, you know, non-diluted funding. In the case of MediTox, this is a co-developed scenario where MediTox is going to put their own resources and funding into the part of the work that they are doing. So as you As John, you know, we are very careful about our cash and also how we use the money to most economically and making more sense for the shareholders to advance our science, but at the same time, you know, make it more efficient from financial perspective. Sorry about dropping off the call earlier. It's just a typical pandemic situation, working from home, trying to unmute it, but hit the wrong button.
Joe
I think, John, yeah. So, John, I think it's important, you know, if you remember Dr. Yang from Meditox, as you pointed out, they started working with us in July of 2020, and that was after they basically evaluated CHO cells and insect cells and they saw the remarkable versatility and hyperproductivity of C1 with their own hands. And we would have transferred them the technology, and they've grown it up, and they've reproduced the productivity in their own tanks. And so as he pointed out, the fungi-derived C1 expression system, in his mind, is the most realistic technology to develop and manufacture multivalent or trivalent or tetravalent vaccines for these COVID-19 variants. If people are struggling today to produce one protein, one single vaccine based on one protein, how are they going to do three or four in an economically viable manner at affordable cost in the volumes the world needs? So we're hoping that this puts us in even a better position this year than we were last year because of the variants and the need. Because if you realize, seasonal flu vaccines are comprised of four different proteins. So we're going to need potentially tetravalent or quadrivalent or trivalent vaccines on potentially an annual basis. And if that's the case, I believe we can make more for less at flexible commercial scales with the technology to be tech-transferred and grown in single-use or stainless steel standard microbial fermenters that are basically available on every continent in multiple countries. So I think we're sitting pretty, and that's why we're going forward, DYA 100, It's approved as safety, preliminary efficacy, and we're already engineering the variants, and we think we're in a great position to help the world, help our shareholders create significant value, and together we can help eradicate this horrific disease.
Rawlson
Great. Thanks for taking the questions, you guys.
Operator
Thank you. Our next question is from Skip Gozzo, Clooney Road Rental. Please proceed.
Skip Gozzo
Hey, Mark. How you doing? Good, Skip. How about you? Good. So, Mark, I want to kind of piggyback off of what Dawson James was talking about. What's the fellow's name there?
Joe
Jason Colbert.
Skip Gozzo
Yeah, Jason. So, you mentioned to him that This vaccine that we're working on, the COVID vaccine, that we have to get through preliminary to make sure that we're safe. You've already gone through animal trials. You have every reason to think that it should be safe when it goes into human trials based on past experience of what you've done. Now, this has been a long road. You've got You sold out the industrial side at the end of 2016 or June of 2016. Here we are almost five years later, and we still don't have any income, right? We've been advancing the technology for the last five years when you got that $75 million. And we're at the point right now, I'm going to try to dummy this down so that you don't have to be a scientist to understand these phone calls. I've been an investor in this company for a long time. So let's just say we're baking bread, and the bread that we want to make is whatever. There's only a few ingredients, three, four, five ingredients, water, sugar, the dough, et cetera, but not a lot of ingredients. I'm assuming these COVID vaccines that are out right now have a lot of different ingredients in it. Is that right or not right?
Joe
Well, they have a number of different components that make up the vaccine candidate that ultimately became the product. And DYA-100 is on the same parallel path. It's comprised of different components that make up the actual vaccine in addition to the protein that we produced from C1.
Skip Gozzo
Okay, is it the same amount of components, or is it much less because of the C1 technology is my question?
Joe
Yeah, well, it's actually less, not because of the C1 technology. It's because we think keeping it simple allows us to produce an effective product. safe vaccine that can be made in billions of doses more quickly and more cheaply using standard manufacturing facilities all over the globe. But it contains an adjuvant, which basically helps boost hemogenicity and other components to make it stable.
Skip Gozzo
Okay. So in the last five years, when you got that money and you started focusing on on the pharmaceutical side in 2016 is when you started moving towards pharmaceutical and got out of the industrial side. You have, I'm assuming that this technology has advanced tremendously with the amount of money that you have spent in the last five years. And that's why you're at the point right now to where you're saying, you know what, we're gonna take 12 million, 10 or $12 million, and we're gonna get this into humans and make sure it's safe. And once we get it into humans, I'm just trying to make this as simple as possible. And once we get this into humans and we know it's safe, now we're going to get people's attention, partners that can come in with a lot of money and start manufacturing either partnerships. I don't see you dyadic doing this alone. That's you guys are in a royalty business. You're not in the manufacturing business and going to be spending hundreds of millions of dollars developing a vaccine. which is what most people think was what it cost and probably what these two vaccines cost by Moderna and Pfizer, right?
Joe
Yeah, I think what you have to realize to your question, over the last four plus years, because by the time we transferred the technology to DuPont and got started with the genetic engineering and the synthetic biology, just as an example, if we didn't knock out these protease genes where we've knocked out 14 of them in C1, We would not be making these vaccines at the levels we're making them at with the stability that we have. So the investment in the platform has paid off in spades, not only for dyadic and shareholders by making what we believe is the most productive recombinant protein subunit vaccine manufacturing platform on the planet. It's paying off for human beings potentially and potentially used not only for this pandemic, but future pandemics and the variants, but also to your point, for hundreds potentially, if not more, of vaccines and drugs once we prove safety in human beings. And when this whole thing started, it wasn't to take our own vaccine and make it on our own, but to partner it out to your point. But we wanted to start out, this is the quickest, easiest, least expensive way for us to get into human beings and improve safety. And guess what? We're going to do that. And when we do that, to your point, we believe, although we have multiple conversations, multiple collaborations already, more coming, that that accelerator will expand dramatically. And we're seeing that now. And basically what we're doing is, is every day it seems like we're on phone calls, two or three calls, discussing either science, business development, collaborations, potential licenses on animal health, human health, and COVID-19 vaccines and antibodies and other treatments. Because it's a platform.
Skip Gozzo
So it's almost like you're building a 50-story building and you're finally getting to the top floor. And now... These apartments or whatever it is are starting to – now you're going to reap the benefits. All the hard work has been done over these last five years. You made your investment. You got efficient on your technology through your partners and all these different scientists on every partner that comes in. And now you're getting to the point where you're getting to be able to cross the finish line is what it sounds like in layman terms, simple layman terms.
Joe
I think if you think about Elon Musk and Tesla, how many naysayers there were, right? We saw the future. We believed that biomanufacturing was inefficient, too slow, too costly. The existing technologies that people are using are ineffective and too costly. So we looked at, we had a way from the industrial business that we had spent two and a half decades and hundreds of millions of dollars were spent by us and our collaborators and licensees. We felt and have now demonstrated with data, a significant amount of data, safety, efficacy, potency in animals, and now we're moving towards humans. And as I mentioned, we believe from a recombinant protein production system, we have the most efficient way to develop and produce recombinant vaccines than any other cell line or any other technology on the planet. And that in the end drives significant value in COVID and otherwise.
Ping Rawson
I know you like simple examples where I can, the example analogy I usually use is comparing the Microsoft operating system versus Apple. You know, people, how long it takes people to switch from and to realize the benefits of Apple system and the virus spray. I think that that's kind of what we are doing to introduce C1 system as a new operating system for the biotech industry. And the more people realize the benefit of this, and the more people doing more test drive, like Mark's example, the more people will know this technology. And that's how we increase the awareness of it. And that's what we have been doing in the past four plus years since the DuPont transaction, where I think we did quite a a lot of achievements are just from the collaborations and also the comments from the ZAPI conference, as you see, this is from the, you know, the top-notch scientists, their compliments and their comments on C1 technology. So to convince and to show people the benefits, you know, and convince them to switch from Microsoft to the Apple computer is a process. At the same time, it takes some leadership and also vision for people to use it. But at the end of, you know, maybe some people just don't like Apple computer. Like, you know, for me, I will never use Excel spreadsheets from Apple. It's just no way to do all what I want to do. So just give you that example and I hope that will help you to understand what we are trying to do here and that the, um,
Joe
Well, and I think to skip the pandemic, put us on the radar screen of more people than we ever would have imagined. So it brought the attention to the inefficiencies of the current manufacturing processes. Virtually every day, somebody's writing an article about one or more of these companies failing to meet the manufacturing quantities that they promised. And the technologies that people are using are failing in some ways. And we believe that our technology can solve the problem better, more efficiently at a lower cost, and can be used locally for people to manufacture their own vaccines for the next pandemic of the variants. And that's what we're doing. We're looking to partner out this technology for animal health, human health, vaccines, COVID vaccines, COVID antibodies, other treatments, all biologics. And we're getting more and more attention because the results, and Pink pointed out, You watch those presentations from Zappy, the five-year recap of eight hours of videos and 14 presentations where they basically talk about, in part of there, that if nothing else came out of Zappy in five years, C1 was fantastic. And if nothing else happened, that was a phenomenal thing. And those are from some of the best independent third-party infectious disease coronavirus scientists on the planet. And so we didn't pay them to do that. They came up on their own conclusion because they tried it and they felt it. So when they see it firsthand, just like the Israelis and now like the Koreans, this is the most realistic way to develop recombinant protein antigens for the COVID-19 variants and other protein antigens for traditional vaccines and drugs.
Skip Gozzo
So once we know that it's safe in humans, which we're going to know in about six months, then that is a big part of the equation. Is that correct?
Joe
That's why we're doing it. It's a stepping stone to exploding the adoption and use of a new platform. But even despite not having that data, more and more pharma companies, biotech companies, animal health companies, governmental agencies are still excited about C1 and already funding research, expecting that those results are going to be positive, and we will show safety. There's no reason that we know of that C1 won't be safe. In fact, probably the pedigree of the C1 cell line is far safer than E. coli, which is used to make drugs, because there you have endotoxins that you have to remove, and we don't have those in the first place in C1. We don't have viruses like the CHO cells. So we believe all the animal data, all the clinical data we've had so far preclinical, All the other data from the grass toxicity pathogenic studies show us that we should be safe in human beings and we intend on demonstrating that and then obviously using that as an accelerating tool to expand the breadth and scope and depth of where we can apply this on human health, animal health, and for infectious disease, COVID and otherwise.
Skip Gozzo
So in six months,
Joe
Skip, I think we should let someone else ask some questions if there's anyone else on the line.
Skip Gozzo
Let me just finish up with this. So when we finish human to get through the first part to find out whether C1 is safe, at that point, you're thinking that that's when the big pharmaceuticals could come to you and say, hey, listen, we're ready to rock and roll with you. We'll put up the money and do whatever or go into a partnership or whatever. Is that when you're expecting some income is the question that I'm getting to?
Joe
Well, hopefully we're expecting income even before that because some pharmaceutical companies are already in the door. As we mentioned, one's already heading potentially towards a later stage, not clinical trial, but in our development phase, for potential late-stage preclinical for oncology and rheumatoid arthritis, and those could go to regulatory, and so they're going to need a license to do that. And so we're also in discussion with a variety of other pharma companies and animal health companies that may jump even before that. So, you know, some people have vision. They see the future, and they want to get ahead of it. Some people want to wait. It may be too late.
Skip Gozzo
And that's when the royalties could start, right? the upfront access cash like we saw on the industrial side up front cash payments milestones and royalties so you're still on the royalty part right you're not going to be you're not going to be funding this yourself to come up with the vaccine you're going to be getting a partner after you get through the initial phase of human trials is is my point that's the point and you point to 10 to 12 million dollars is not about
Joe
The funding for the COVID phase one, that's the total spending burned for the year. That's just part of it. And that's a small part of it. We're not burning a lot of money to do this trial. We're investing money that's going to accelerate the development and increase the shareholder value of the technology.
Operator
So maybe we can get the next question if there is someone there. Yes, thank you. Our next question is from Dick Williams from Williams Resource Group. Please proceed.
Dick Williams
Hello, Mark. The next question, I've been patiently waiting for you. I have two kind of short questions. The one thing is in relation to the new vaccine, the DIA-100, And you've kind of sold all of the aspects and merits of why that is so terrific and the C1 platform is so terrific. So in getting some color on the filing, you're going to have to file an IND with the FDA when you're finished doing the things that Ronan said and mentioned. At that juncture, you're ready to file the IND to get approval for the trial. At that juncture, have you thought about the ability to file for breakthrough designation in this filing? You've already given all the answers that I was going to try to throw in as to why you should with C1 and the fact that it's totally atypical towards the other drugs and everything else developed. Number one, the platform and everything that goes with it. And most especially... Throwing in another advantage that's very very major at least in today's day and age and that's to be able to scale up production at low cost To get this into the hands of billions of people worldwide So combining that aspect of it as well as all the things you brought to for that heretofore have not been done by anybody filing for an IND for drugs and This is the very first time we should qualify for breakthrough designation. Have you given thought to that or reviewed that?
Joe
Of course we have, and of course we're going to take the quickest path forward, but Dyadic itself is not going to run Phase II and Phase III clinical trials. That will be a partner. or it will be a partnership or a collaboration like MediTox where we're a co-developer, but they're going to be doing the financing and move it forward at their dime and or financing they arrange for as well. And we're going to share in the commercialization profits of that product. And if those products come to market, we could decide to expand the Southeast Asian license if they take that at the time. into further opportunities, or we could take that technology and bridge it and run it in other markets as well. So we have a lot of different angles in getting the job done. But first and foremost, we're focused on getting the human trial up, in, proven, and then we're already working on the variants so we can quickly slip those in, modify it, make a better vaccine with broader coverage, as Jason was talking about, And we're wondering, and we don't know if and how the FDA will react, but how these mRNA vaccines are going to make tetravalent or quadrivalent vaccines, because that's going to require them to put three or four genes in a vector that goes into your body and asking your body to do three or four things at once instead of one thing. So we think that as a recombinant protein production system, and we believe we have the most efficient, effective one, And it's not just about large scale production, because we can make massive amounts, even in small fermenters, because of the productivity. So it can be made regionally. So we believe that recombinant proteins are going to be a big, let's say, help in combating these COVID variants, because we can make numbers of them and we can blend them off to specific ratios so that the FDA knows exactly what's going in. and what proportion each time. And we think that the cost and the yield that we can do that at, to your point, that we're in actually better shape, as I mentioned earlier, this year than we are really last year, because now people know we exist. There's a new problem. It exists. These variants, if they don't go away, they're going to be around a long time, potentially year after year. And then he who can make more for less with broader protection wins the race. And we're like the tortoise. We're not going to burn out on the way up.
Dick Williams
Okay, last question. In terms of where we are today in the marketplace, and obviously for some reason we don't seem to get the same recognition from the financial community that we have gotten and are continuing to get in the medical community and scientific community. How are we doing in stepping up to additional analytical type coverage where the story will get broader reach into the financial markets? Any comments on that?
Joe
Yeah. Ping, do you want to comment about that first and I can follow up? So it's not just me answering these questions.
Ping Rawson
Sure. I think, you know, it takes time and effort to get attention from the investment community. I think we are putting a lot of efforts in doing that. And we also engage the different, you know, investor relations firm to help us to, again, the awareness of it. I think it also takes time and effort. And you guys know that we are running very lean and efficient in terms of our management team, you know, Just with all the business side ongoing, it takes a lot of time, of Mark's time. And also, you know, Ronan and Matthew used to be on the road all the time. You know, this year we actually had the benefit of, you know, working from home to have those online virtual calls. But sometimes, you know, I think it takes people several calls for them to understand our business. to really understand what is C1 and what C1 can accomplish. Just like, you know, a lot of long-term investors on the call, including Skip and some other, you know, people I can recognize their name, it takes a while for them to truly understand our business and the business strategy and business model that we are having. So I think we are working on that, and we will get there.
Joe
Well, Ping, I think one of the things that's really exciting and we're seeing growing demand and interest from the analysts and the banks. The banks have always been excited, but the analysts now are digging in and starting to have conversations with us much deeper to think about whether they want to launch coverage or not, in addition to Zach and Jason Colbert, who we're thankful are doing coverage. But there are a variety of other analysts that are involved in the space that recognize the science and the technology and the significant advances we've made on both, and the business development efforts and the expanding partnerships and collaborations like MediTox and others. So I would say stay tuned, that we hope to get broader coverage by more analysts that have a deeper understanding of what we're doing, and it can help us gain the exposure on Wall Street. But to be honest with you, the exposure we need, we're getting because the pandemic brought us to the forefront, and it brought the problem to the forefront of biomanufacturing. And so as Ping pointed out, some people are never going to change from Microsoft to Apple, but the market is so big, if only a few change, it's a huge win for Dyatik and C1. And then more and more people, just like I said with Elon Musk, there were no believers, but guess what? All the manufacturers are now making electric cars. So we believe in time, C1 will become embedded in laboratories all over the globe for really good reasons. Enablement, high productivity, low cost, and flexibility. And across hundreds if not thousands of opportunities outside of COVID, let alone COVID or other infectious disease. And I say stay tuned because the infectious disease people and the scientists The scientists that we talked to at ucl at Oxford at utrecht at tiho these guys are our biggest supporters, because they've seen firsthand. The power and not pull it caught up in the politics, they want to do the right thing for the right reasons and that's us. and see ones there to do the right things for the right reasons and the largest productivity or lowest cost and flexible commercial scales and, in the end. that's going to win out. So we need to be patient, and we don't need to be the hare, we need to be the tortoise, because we're not going to burn out on the way up.
Dick Williams
Okay, Mark. Thank you.
Rawlson
Keep up the great work.
Operator
Thank you. Our next question is from Lee Alper from Hemmick Investors. Please proceed.
spk02
Hi, Mark. Congratulations on the progress you've been making. But can we step back a little bit from COVID and talk about animal health and some of the other things like Sanofi? I mean, you've been telling us that, you know, we've been waiting for them to make a decision for quite a long time. I mean, what's going on with the program with them and also with the animal health people?
Joe
Yeah, so Sanofi, we talked about before, they're trying to find some protein that that fits exactly for C1 and something that, as I mentioned before, they're one of the Microsoft people that are having a difficult time switching to Apple. It isn't that they don't know we have a more powerful way to make proteins. It's they want to find one virtually that they can't make efficiently and effectively in their existing technologies and use that to sort of pave the way. On the animal health side, if you have been watching or paying attention to the Zappy podcast, data that they've generated for the SPV antigen, they not only showed the hyperproductivity, the 300-fold higher productivity than the insect cells or baculovirus, but they showed now safety, efficacy, and potency in sheep, cattle, and mice. And now they're doing even further trials with that more animal studies on both SPV and the Rift Valley fever virus. We're also involved with some of the top animal health companies, and some of those programs are moving forward as well. So I would say stay tuned, and hopefully some of those will head into their own commercial animal trials moving towards commercialization.
spk02
But what's it going to take to get one across the line and give you some money up front and work a deal?
Joe
Well, I mean, we're working on it every day, and I can tell you that, you know, we're busy every day with calls with some of them and existing research, new ones coming in, new discussions about potential licenses with one or more of them. And so it's a work in progress. What's it going to take? Certainly the data is there on the vaccine side. It's compelling, and I think it probably, as I mentioned, We believe, and I think if you talk to the scientists from ZAPI and other people firsthand at IIBR, that we have the most productive way to make pre-competent antigens. On the antibody side, it's still a cake being baked. We're making progress. We haven't achieved everything we wanted to do there, but we've made a significant, let's say, inroads into getting where we want to go. We've got high productivity on certain of those molecules. We've got stability on certain of those. And we've done glycoengineering. Now we're putting all those pieces back together. So we have the tires, we have the engine, and we have the chassis. And we're building it so that it all runs, when you put it in the race, it actually runs smoothly, efficiently, produces the protein you want with the right properties and the right quantities and the right quality. And that's on the MAB side. So there's a variety of different uses and applications. We're prime time on recombinant vaccines, and we're being developed and put together all the pieces of the C1 MAB production system in terms of productivity, quality, stability, and glycoengineering.
Operator
Thank you. Our next question is from Robert Smith from Center of Performance Investment. Please proceed.
Robert Smith
Hi. Thank you, Mark. It's been a long time here. Thanks for standing by and accepting my call. So, Mark, I just want to circle back for a moment and look at the timeline for the clinical trial. So here we are at the end of March, the end of Q1. You said you're going to go into the clinic in the second half of the year. So that's anywhere from July 1 to December 31st. Can you give me an idea of what's going to impact when you're going to enter the clinical trial in the second half?
Joe
Yeah, I think Ronan mentioned earlier we expect to start the TOC study next month, and we expect to start the clinical trial, Phase I clinical trial, sometime at the end of August.
Robert Smith
Okay.
Joe
I didn't hear that. That's a little more zeroed in for you.
Robert Smith
Yeah, that's good. Thanks, that's what I was waiting for, and thanks for taking the time.
Joe
Look, we would start the clinical trial last year if we had the data. But what we did, if you remember, we ran multiple animal studies all over the globe with multiple parties, academics, pharmaceutical biotech companies, governmental agencies, to get a good feel for the performance, the efficacy, the safety in animals. And then we put all that together, made a decision, how to put what we think is a slam dunk in terms of safety. Because the most important thing we've got to prove first is safety of a protein produced from C1 in human beings. And that's the overriding factor of our clinical trial.
Robert Smith
So if you get in there by August 1st, how long will the trial last?
Joe
I don't know how long it lasts, but we'll get a good readout, I'm sure, by the end of the year on the safety, if not right towards the first 2022. But I think by the end of the year, we'll have a good readout on the safety and hopefully we'll be able to report something to you there.
Robert Smith
Great. Thanks again. Great. Good luck.
Rawlson
Thank you.
Operator
There are no further questions. I will now turn the call back over to Dyadex CEO, Mr. Emil Farb.
Joe
Thank you again to everyone for joining us in the call. We're pleased you could join us to hear our achievements over 2020, what we've started to achieve in 2021. We look forward to the continued advancement of our innovative C1 platform, the business development efforts, maturing into bigger, broader deals, and keeping you updated on our progress along the way.
Operator
Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.
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