This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
Operator
and most importantly, in our successful rabbit toxicology study, which showed safety and persistence of antibodies, which were generated from our C1-based BYA100 COVID-19 booster vaccine candidate. You may have also seen in today's press release new data presented at the World Vaccine Congress in Europe by Dr. Albert Osterhaus. He's with the University of Veterinary Medicine in Hanover, Germany, who has been collaborating with DIATIC for over five years. Dr. Osterhaus presented preclinical safety and efficacy data from animal studies, including cancers and non-human primates, demonstrating C1-produced antigens and antibodies are as effective as those produced by common cell lines used for biologic vaccine and drug production platforms, like show cells. Mark will speak to this in greater detail a bit later, but in summary, the data supporting the overall safety profile of C1 cells, as well as their ability to produce proteins that prevent and or treat disease equivalent to, if not better than the most commonly used cell lines in production today. You will also hear Mark speak about C1 continues to demonstrate higher productivity and efficiency, potentially increasing global access and lowering overall manufacturing costs. Dr. Osterhaus' video presentation can be found on the addict's website under our media center in the video gallery. Which brings me to the regulatory approval of our clinical trial application. In addition to establishing a track record of safety in humans for antigens produced from our C1 cells, the phase one trial will be a randomized, double-blind, placebo-controlled trial to evaluate the safety, reactogenicity, which is response to vaccination, and immunogenicity, which is the immune response of the BYA100 COVID-19 recombinant protein RBD booster vaccine in 30 healthy adults in South Africa. Trial preparations are actively underway, with site initiation expected later 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. Timing for the results will depend on many factors, including enrollment, and we will share additional data as it becomes available. A successful outcome to the phase one trial for DLA-100 would bring a new weapon against COVID-19 closer to approval and provide additional safety validation for us and our collaborators, reducing developmental risk for other vaccines for infectious disease and other diseases In addition, progress continues to be made by Epigen Biotech, one of Dyadic's non-exclusive licensees, to advance development, manufacture, and conduct phase one and two clinical trials using Dyadic's C1 protein production platform for their COVID-19 vaccine candidate produced from C1 cells. Our C1 protein expression platform is capable of unparalleled scale and productivity in terms of antigen production and the proteins produced from our C1 platform continue to demonstrate comparable safety and efficacy to antigens produced from traditional cell lines used in animal studies. We expect that the Phase I clinical trial in South Africa and later Phase I trial in India with Epigen will be a pivotal point in the many ongoing discussions we're having with top-tier pharma, biotech, and government agencies globally. We have also presented data that demonstrated that our innovative approaches and designs to C1 produced proteins that generated higher neutralizing antibody activity in preclinical animal studies with the potential to improve vaccines for influenza, COVID-19, and other diseases. An example is our successful production of Wuhan and Omicron ferritin RBD nanoparticle antigens, which may have application as a next generation pan-coronavirus vaccine candidate. Similarly, last quarter, we discussed how our efforts in expressing the neuraminidase antigen, which has broad potential use in the development of better seasonal and pandemic flu vaccines, has historically been difficult to produce reliably at high yields and with the right biological activities. The addition of meraminidase to standard flu vaccines can enhance the immune response to provide even greater protection to patients. Our current expression level of 800 milligrams per liter in 168 hours had generated interest with academia, government agencies, and large pharmaceutical and biotech companies within the human vaccine industry. Our high-level expression of ferritin GRBD nail particle antigens from C1 cells for use in developing potentially better performing COVID vaccines, the potential for neuraminidase in combination with previously expressed hemagglutinin or HA, which has a potential to play an important role in providing broader influenza vaccine-induced protection. And the safety data we expect to generate from upcoming DOA100 phase one trial are just a few examples of the many opportunities we believe will accelerate the adoption of the C1 platform. Mark will now discuss our progress in life sciences. Mark?
Albert Osterhaus
Thank you, Joe. As Joe mentioned, in today's press release, we highlighted several areas of scientific and regulatory advancement. When we undertake a project, it is with a specific objective to either further the scientific advancement or enhance the breadth and scope of where we and our collaborators may be able to apply the technologies being developed, such as our C1 protein production platform. These projects and collaborations helps to validate the application of C1 as a differentiated biomanufacturing platform for the prevention and treatment of infectious and other diseases such as rabies, oncology, arthritis, and diabetes. For example, data presented recently by Dr. Albert Osterhaus from the University of Veterinary Medicine in Hanover for a C1 produced COVID-19 monoclonal antibody, MAB, in a challenge study with the SARS-CoV-2 Delta virus on nonhuman primates. This demonstrated potential high protection and preventative effects. He also presented preclinical safety and efficacy data from animal studies, including hamsters and non-human primates, demonstrating C1-produced antigens and antibodies are as effective as those produced by reference platforms like ChoCells. To further accelerate the adoption of our platform for the prevention and treatment of infectious and other diseases, Research and development is ongoing with various collaborators in key therapeutic areas, where the strength of our experience and our technologies coincide. In addition to the successful high-level expression of ferritin-GRBD nanoparticle antigens from C1 cells for use in pan-coronavirus applications, we also have collaborators who are conducting animal trials on mono- and multivalent RBD-based blended COVID-19 vaccines for potential next-generation pan-coronavirus vaccine candidates that may provide broader protection and longer-lasting prevention against a wide variety of coronaviruses and what is currently available on the market. Beyond our continuing work in COVID vaccines, we believe that our neuraminidase and hemagglutinin influenza antigens will anchor and further support our business development opportunities in infectious disease. In collaboration with Oswald University, we have additional animal trials that are ongoing with C1-produced HA and COVID-19 antigens for potential more effective influenza and or combined influenza coronavirus vaccine. There are other preclinical animal studies that are also ongoing, including C1-produced antigens being evaluated for intranasal and oral applications. Now just a few words on the key life science growth market in therapeutic proteins. Therapeutic protein drugs in the market was valued at over $280 billion in 2020 and is estimated to reach over $560 billion by 2030. These drugs have already shown to have the potential to significantly improve human health and are used to treat a variety of diseases such as cancer, immunological, hormonal, genetic, infectious diseases, and others. Global demand for therapeutic proteins is growing at unprecedented levels due to the rising prevalence and diagnosis of chronic and infectious diseases, and that demand has been further accelerated by the COVID-19 pandemic and rising concerns for twin or even triple concurrent pandemics with other infectious diseases such as influenza. As we saw with COVID, the supply of therapeutic proteins during heightened demand was hampered due to the high cost and timelines required for developing and manufacturing protein-based therapeutics like monoclonal antibodies. Beyond cost and timing, there is also a clear need for more productive manufacturing platforms that will be able to meet this growing demand in the timeframe needed by patients all over the world. As Joe discussed, our progress on vaccines combined with the various preclinical animal models tested and impending Phase I trial that we expect will allow us to demonstrate to big pharma, biotech companies, government, and academia globally the safety profile for recombinant antigens produced using our C1 platform for the commercial production of recombinant vaccines and antibodies. We are now generating data to support our science regarding the therapeutic proteins. While we're excited about the rapid advancements in our technologies to improve the productivity for our therapeutic proteins, we're equally focused on the quality aspects of our monoclonal antibodies. In the second quarter, we announced the dosing and completed for a fully funded non-human primate study of a C1-produced COVID-19 monoclonal antibody. This monoclonal antibody, 87G7, which is developed by the EU's EpiScientists, already demonstrated broad neutralization protection against Omicron BA1 and BA2 and all other earlier variants of concern in hamsters. In today's release, we highlighted Dr. Osterhaus's recent presentation at the World Vaccine Congress Europe in Barcelona, where he presented some preliminary results from the non-human primate challenge study with the SARS-CoV-2 Delta virus that demonstrated protection equally as important is that the C1 produced COVID-19 monopole antibody was as effective as a comparator antibody produced in the mammalian cells reference platform. The importance of this data as they were obtaining safety and efficacy of the C1 produced therapeutic protein in a non-human primate study that demonstrates C1 produced proteins are safe and just as effective as those produced in today's commonly used platforms. This provides further validation of the C1 platform beyond high productivity and efficiency. This is a fully funded initiative with one of our third party collaborators, and this non-human primate study is anticipated to lead to a funded GLP toxicology study and potentially CGMP manufacturing of drug substance in a phase one clinical trial, this time demonstrating safety for therapeutic protein from a C1 manufactured cell. Establishing safety and efficacy through these phase one trials for vaccines and potentially monoclonal antibodies is a key gating item for big pharma, biotech, and government agencies. And we expect this to accelerate the use of our C1 platform to produce safe and effective vaccines and therapeutic proteins. While we still have work to do, the interest we are generating in therapeutic proteins, the knowledge we are gaining, as well as our collaborators are gaining such knowledge, are rapidly expanding interest, not only in the Villamab, but also many areas which our C1 platform can be applied for rapid development and production of large quantities of antibodies across large and mid-sized pharmaceutical companies in both human and animal health. Our collaboration with Janssen to develop C1 cell lines to produce targeted therapeutic protein candidates demonstrates our ability to attract the attention of large pharmaceutical partners. Progress is ongoing and on time, and we anticipate it will lead to development milestones and eventually commercial revenues generated from one or more of the chance and targeted proteins. With regard to animal health and the expanding opportunity for business development that exists within this core vertical, we are leveraging our scientific innovation and new designs in animal health to enhance the potential for monetization with this core vertical. You may have noted in today's press release that we successfully expressed a recombinant livestock antigen at titers up to 10 grams per liter in seven days, which is significantly higher than has traditionally been produced with the reference platforms. Gel will provide more color on dietics efforts in this market.
Joe
Thank you, Mark.
Operator
As you noted, we are leveraging our science to support verticals, and there are many similarities and needs between the human and animal health markets for vaccines and therapeutic proteins, which makes the animal health an attractive segment for dietics. The global animal health vaccines market is an estimated $15 billion market for blind spot vaccines, making up just over $8 billion. And we're just at productivity levels that have the potential to increase production and lower costs in a very margin-sensitive segment of the animal vaccine market. And we're just beginning to penetrate this segment. These scientific advancements are driving further development of our expanded research projects in animal health for the development of animal vaccines for livestock, a new proof of concept project for a top animal health company for the treatment of a targeted companion animal disease, and the initiation of two additional recombinant protein projects to support vaccine research and development. As in the human health market, the increase in the prevalence and diagnosis of chronic and infectious disease has significantly driven demand for therapeutic proteins within the animal health sector, specifically companion animals. The global companion animal and animal antibody market was over $680 million and growing in 2021. And we are currently in discussions with several of the partners for therapeutic proteins for livestock and companion animals. Our focus is the acceptance of E1 protein platform, which we believe can serve as an accelerator to drug and vaccine development and commercialization by shortening the time from preclinical to phased trials, increasing productivity, and improving cost efficiencies within animal health. Mark, back to you.
Albert Osterhaus
Thank you, Joe. Alternative proteins. This core vertical is home to our nutrition and wellness initiatives and partnerships. driven by our fully funded joint development agreement with our global food ingredients collaborator. Diatica is dedicating resources and support for existing projects within this rapidly growing market. Diatica has launched its Tap-a-Bus platform, a filamentous fungal-based microbial gene expression and protein production platform, which is further designed and customized to enable the rapid development and large-scale manufacture of low-cost enzymes, proteins, metabolites, and other biological products for use in non-pharmaceutical applications within our alternative protein core vertical. Alternative proteins is another core vertical where we are able to leverage the advancement, innovation, and advantages of the dyadic technologies across a broad and growing market opportunity. As with vaccines and biologics, there is a clear market opportunity in need for alternative proteins. in both human and animal health and nutritional segments. The animal alternative protein market that includes livestock and companion animals is a $9 billion market and growing. The human alternative market is a $7 billion market, currently driven by plant-based proteins and now further being accelerated by the introduction of cultured or lab-grown meats. It is still a smaller scale and yet over $1 billion was invested. in this market in 2021. There's a common shared need across the diverse alternative protein segment for the rapid production of high quality yet affordable recombinant proteins and enzymes. To further accelerate our opportunity within this core vertical, I'm very excited that we have initiated an animal-free recombinant serum albumin and other projects to support the DAPA bus platform to meet the growing demand and unmet needs of alternative proteins in emerging markets, such as cultured meat. These projects can also provide us with additional revenue, generating opportunities as serum albumin, as application in research and product development. This will be a key area of focus for Dyadic, as we believe our dapavis microbial cell line provides our partners the ability to meet scale and cost demands for recombinant proteins and enzymes. within the respective alternative protein markets. In addition, we are actively seeking partnerships and collaborations for non-animal food proteins, nutraceuticals, and metabolites. Hopefully, what Joe and I have been able to share with you today is how Dyadic is working to expand and accelerate our monetizable opportunities across our core business segments through focusing our business development efforts on those business segments that are scientific advancements had the greatest ability to drive results. We are continuing to leverage the learnings of C1 and commercial-scale industrial manufacturing to accelerate that development process. In parallel, we remain fiscally responsible in our R&D, partnerships, and collaborations to fund advancements of our science in critical areas. The result is that C1 is much further along in its lifecycle development for life sciences than the industrial show cell line was within the same timeframe and fraction of the cost with equally high prospects for success. The result of our focus is being realized as Dyadic is gaining industry recognition globally to further develop the platform for human and animal health organizations. With that, I would like to turn the call over to our CFO, Ping Rawson, to run through our financials.
Joe
Thank you, Mark. In addition to the financial results that I'll be discussing now, You can find additional information in our Form 10-Q, which we filed earlier today. Research and development revenue and the license revenue for the third quarter of 2022 increased to approximately $880,000, compared to $693,000 for the same period a year ago. Research and development revenue and the license revenue for the nine months ended September 30, 2022, increased to approximately $2,187,000, comparing to $2,091,000 for the same period a year ago. Cost of research and development revenue for the third quarter increased to approximately $603,000, comparing to $393,000 for the same period a year ago. Cost of research and development revenue for the nine months ended September 30, 2022 decreased to approximately $1,419,000 compared to $1,613,000 for the same period a year ago. Research and development expenses for the third quarter decreased to approximately $744,000 compared to $1,902,000 for the same period a year ago. Research and development expenses for the nine months ended September 30, 2022 decreased to approximately $3,917,000 compared to $5,919,000 for the same period a year ago. The decrease in research and development expenses was due to the winding down of activities of contract research organization and pharmaceutical quality and regulatory consultants to manage and support the preclinical and clinical development, as well as a decrease in CGMP manufacturing costs as the company moves toward its anticipated phase one clinical trial of its EYA100 RBD COVID-19 booster vaccine candidate. G&A expenses for the third quarter decreased to approximately $1,383,000 compared to $1,693,000 for the same period a year ago. G&A expenses for the nine months ended September 30, 2022 decreased to approximately $4,763,000 compared to $4,994,000 for the same period a year ago. Net loss for the third quarter was approximately $1,809,000 or $0.06 per share compared to $1,715,000 or $0.06 per share for the same period a year ago. Net loss for the nine months ended September 30, 2022 was approximately $7,589,000 or $0.27 per share comparing to $8,856,000, or 32 cents per share for the same period a year ago. Our cash, cash equivalents and the carrying value of investment-grade securities as of September 30, 2022, including accrued interest, were approximately 14.2 million U.S. dollars, comparing to 20.4 million U.S. dollars on December 31, 2021. Based on our current plans, the company's cash burn for 2022 will be much lower than the original estimated range of $10 to $11 million that was announced in March this year. We reiterate our expectation that our existing cash, cash equivalents, and investment-grade securities will be sufficient to fund our Phase I clinical trials of the YAI-100 and our operating expenses into 2024. With that, I will now ask the operator to begin our Q&A session. 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.
Mark
Thank you.
Lewis Titterton
At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star and then one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star keys.
Mark
One moment, please, while we poll for questions.
Lewis Titterton
The first question comes from John VanderMosten from ZEX-SCR. Please proceed with your question, John.
John VanderMosten
Hello, Ping, Mark, Joe. How are you guys doing? Let me start out with a question on the scientific conferences that have recently Mark, I think you attended several of those. When you're going to those, what are some of the trends that you've heard in the industry that might be favorable or maybe even unfavorable? And then also, does it give you a chance when you're there to talk with potential companies or individuals who might be interested in C1?
Albert Osterhaus
Yeah, so to second half of your question, which is the easiest one to answer, is obviously I've met with numerous big pharma companies scientists, business development people that are key to big pharma and getting doors open to further collaborations and licensing agreements. And I would say that the level of interest in C1 on the recombinant vaccine platform has been elevated to, I think, significant levels and many of the fronts between several of the top 10 pharmaceutical companies, including different divisions and companies we work with, like Janssen, What we're working with currently, the therapeutic side, but also the vaccine side has expressed extreme interest. I'm going to get into more details for that because of confidentiality. But I can go on and on. At least five out of top 10 pharmaceutical companies have had recent discussions at some of those conferences. In terms of the trends, it's crystal clear that the world has been in turmoil in terms of having access and affordability and health equity. and whether that actually plays out in the real world over time. But I can tell you that people are starting to recognize and realize that there's a need outside of the West and in more foreign countries for not only vaccines, but treatments not just for COVID-19, but for cancer, rheumatoid arthritis, for diabetes, all kinds of other diseases. So I think, quite frankly, that these conferences are much more important to us for the long term in developing strategic relationships, scientific collaborations, and putting us on higher and higher levels within these companies to getting deals done than going to investor conferences.
Joe
Right.
John VanderMosten
Okay. And that kind of leads me to my next question, which is, you know, one of the areas that might be of interest to you. I think the NIH did some work on this monoclonal antibody that would treat malaria fairly successfully. I don't know if you've seen that or not, but is that something that you might pursue? I'm not sure who owns the MAB, but, you know, I mean, it seems like, you know, with your relationships in Africa and just the prevalence of malaria in Africa, that might be something that we'd be interested in. Does that sound like something, you know, something similar to that or that in particular came up, you know, would you jump on that to try to, you know, see if you could work something out?
Albert Osterhaus
Well, we certainly would jump on it. The question is, who's going to fund it? And so the issue there is I've already reached out to that individual scientist. I think his name was Bob Seder from that paper you're talking about. But, you know, the Rubik Consortium is not just interested in COVID-19. In fact, their main interest is in other varieties and types of antibodies, vaccines for both animal and humans, including HIV and malaria, as well as others.
Joe
And they're not alone. Right. Right. Exactly. All right. Well, thank you, Mark. Appreciate that. Oh, thank you.
Mark
Thank you.
Lewis Titterton
Ladies and gentlemen, just another reminder, if you'd like to ask a question, please press star and then 1. If you'd like to ask a question, please press star and then 1. We will pause to see if there are further questions.
Mark
The next question comes from Lewis Titterton, who is a private investor.
Lewis Titterton
Please proceed with your question, Lewis.
Lewis
Thank you. Hi, Mark. Congratulations on a number of things. Number one, getting your burn down and getting your revenues up. That's absolutely terrific. It gives you a much longer runway. Congratulations on all the good scientific work you're doing. I have a pretty simple question. You've talked about Janssen and J&J and what's going on there. It's been about a year, I think, roughly a year since you announced that collaboration. Can you give us a little more color on the timing of this stuff so we can see when we can expect, you know, some results that we can look at?
Albert Osterhaus
Yeah, so I think it's been about nine months since we've started the actual project with Janssen. And we're talking about Janssen on the therapeutic side, not the vaccine side, which I intimate it as, you know, something else that we're working on as well. So we've improved the yield of all the proteins in this project fairly significantly. So from the science perspective, the R&D teams of Janssen and Dyattic are working well together. And the progress made so far in these projects is advancing towards reaching the milestones outlined in our agreement with Janssen, including the multiple seven-figure potential milestones, eventual payments of up to nine figures per each product if the volumes of these product projections are reached. So I think it's going very well. And, you know, it's very difficult with these big pharmaceutical companies because of the difference between what's going on with the science and the business development. And those timelines sort of have to come together. But it's first reaching these scientific milestones and achievements that we're hitting that leads to those milestones and the bigger payments that we're all looking for. So Janssen, we have a very strong relationship with them on the scientific side. We certainly met with them at BPI East as John Vandermost was talking about these conferences. We met with their business development guy that we actually made the deal with. So they're all over it. They're watching, and hopefully they're expanding to actually do more things in different sides of their business. It may surprise all of us it's becoming even faster.
Lewis
Thank you. That's very useful. I appreciate it. Do you think that within the next 12 months we'll start seeing them? If I remember correctly, they were going to pay us $5 million for each one. There were two things we were working on. They were going to pay us $5 million on each one. Where would that sit?
Albert Osterhaus
Well, I'm not quite sure what you mean by where it would sit.
Lewis
The point I'm getting at is when would we expect to see the $5 million on each of these products?
Albert Osterhaus
Yeah, I mean, honestly, we can't give you a projected time loan timeline. But if you remember, you know, they gave us $500,000 cash up front. They're funding up to $1.6 million in R&D revenue. And then let's talk about, to your point, upon exercise of an option, we'd receive a mid-seven figure for, you know, an additional non-exclusive target. And then another mid-seven figure for bringing the technology in for a technology transfer. And then single-digit seven-figures for doing technology transfer, the first project going in. Then, of course, up to nine-figure payments over time on the back end as they achieve certain productivity goals and sales on the products produced. But we don't expect that the technology is going to end with a few different proteins. We expect that hopefully they'll adopt it and bring it in, in addition to the incredible opportunity we're talking about here. that this can just be leveraged into more and more opportunities within both sides of their, you know, business both on the recombinant protein side and potentially on the, let's say the recombinant protein vaccine side.
Joe
Okay. Thank you very much. I appreciate it. No problem. Thank you.
Lewis Titterton
Thank you. There are no further questions. I'll now turn the call over to Dyatic's CEO, Mr. Emil Fox, for closing remarks.
Mark
Thank you, sir.
Albert Osterhaus
We are proud of our scientific advancements and achievements in 2022. Most significantly, the Dyatic has received regulatory approval to initiate a Phase I clinical trial to demonstrate clinical safety and antibody response in humans for the DYE-100 COVID-19 our common protein RBD booster vaccine candidate. We believe this first in human safety data for a C1 produced protein from the C1 platform, in addition to the continued advances in productivity, quality, and efficiency, will help to accelerate the adoption and use of the C1 protein production platform within the human pharmaceutical industry to the benefit of patients across the globe. We're not only focused on improving the value of dyadic for the life science industry, which will in turn improve value for shareholders, but will also improve access to affordable vaccines and therapeutics for populations in developed and emerging nations. Our reorganization of our infrastructure and focus strategy has prepared dyadic for exploiting existing and new commercialization opportunities to enable us to fulfill our mission as a global biotechnology company in order to improve the way we feed, fuel, and heal the world. Thank you once again for joining us on today's Q3 2022 conference call, and we look forward to keeping you updated as we advance our commercial and scientific initiatives across the companies and our collaborators' programs. We also look forward to seeing you on the next call, and I hope you keep an eye out for our periodic updates.
Mark
Thank you very much, sir. This conference has now concluded.
Lewis Titterton
Thank you for attending today's presentation, and you may now disconnect your lines at this time.
Disclaimer