Dyadic International Inc

NASDAQ:DYAI

Earnings Call Transcript 2023-Q2

[Operator]

Good evening, and welcome to Dyadic International's Second Quarter 2023 Financial Results Conference Call. Currently, all participants are in a listen-only mode. Following management’s prepared remarks, there will be a brief question-and-answer session. As a reminder, this conference call is being recorded today, August 09, 2023.

I would now like to turn the call over to Ms. Ping Rawson, Dyadic's Chief Financial Officer. Please go ahead.

[Ping Rawson, Chief Financial Officer]

Thank you. Good evening, and welcome, everyone, to Dyadic International's second quarter 2023 conference call. I hope you have had the opportunity to review Dyadic's press release announcing financial results for the quarter ended June 30, 2023, and the recent Company highlights. You may access our release and Form 10-Q under the Investors section of the Company's website at dyadic.com.

On today's call, our President and CEO, Mark Emalfarb, will give a review of our second quarter business and corporate highlights, including a summary of our recent research and business development efforts. Our Chief Business Officer, Joe Hazelton, will join Mark for the business updates. I will follow with a review of our financial results in more detail. We will then hold a brief Q&A session.

At this time, I would like to inform you that certain commentary made in this conference call may be considered forward-looking statements, which involve risks and uncertainties and other factors that could cause Dyadic's actual results, performance, scientific or otherwise or achievements to be materially different from those expressed or implied by these forward-looking statements. Dyadic expressly disclaims any duty to provide updates to its forward-looking statements, whether 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?

[Mark Emalfarb, President and Chief Executive Officer]

Thank you Ping. Hello, everyone, and thank you for joining Dyadic’s second quarter 2023 conference call.

We've continued the momentum seen in the first quarter of 2023 as our C1 technology continues to garner praise and recognition for its speed and efficiency in the U.S. and internationally for academia, industry, and government agencies. In addition, our Dapibus platform has gained significant traction in both the alternative protein and bioindustrial markets. We are delivering multiple new research collaborations and strong revenue growth of 38.5% year-over-year for the first six months of this year. On today's call, Joe and I will highlight the significant technological advances and recent business development successes we have and continue to achieve across each of our core markets. We're excited about our current and future prospects for growth and our revenues while continuing the ongoing long-term collaborations with Janssen, Februaryabic, Rubic, and others.

To continue positive data from our first-in-human phase I study, and I recently announced advancements in our internal theorem albumin projects that have accelerated the opportunities to enter into additional collaborations and partnerships, like the recently announced two memorandum of understandings with the Italian government's Foundation, Biotecnopolo di Siena, which performs the functions of an anti-epidemic hub with a particular focus on the development and production of vaccines and monoclonal antibodies for the treatment of emerging, epidemic, pandemic, pathologies, and also Bangladesh's Essential Drugs Company Limited EDCL, the state-owned pharmaceutical company under the Ministry of Health and Family Welfare of Bangladesh. To facilitate biopharmaceutical research, preclinical development, CGMP production, and clinical development for the prevention and control of diseases and improvement of public health programs in Bangladesh.

We believe we are at or near the precipice of applying both of our microbial protein production platforms, C1 and Dapibus, to develop antigens, antibodies, enzymes, and other proteins across each of our core verticals that we believe will lead to monetization that will significantly increase shareholder value for dietic intercollaborators. What makes the C1 filament and fungal protein production platform unique versus traditional cell lines currently used to manufacture vaccines and biologic drugs, is the ability to produce safe and effective therapies and unparalleled quantities with the speeding costs required for pandemic and global health care needs.

We've repeatedly shown that the C1 platform is up to 300 times more productive than baculovirus-insect cells, which are being used in both human and animal health to produce vaccines. And C1 also is significantly shorter fermentation times and no viruses that need to be removed in downstream processing, versus either the baculovirus or Chinese hamster ovary CHO-cells, enabling the production and release of recombinant vaccines more rapidly in greater quantities than at lower costs than traditional cell lines currently being used today.

These characteristics, coupled with the data from our first in human study of a C1 produced antigen, has led to the increased awareness and interest in our C1 protein production platform for recombinant protein vaccine development and production in human and animal health.

Earlier this quarter, we provided an update on the first in human phase one trial for DYAI-100, a recombinant protein RBD COVID-19 booster vaccine candidate. The data from this trial is helping to establish a safety record with regulatory agencies for proteins produced from our C1 protein production platform. We're continuing to expand the traction of the C1 platform in receiving through multiple grant applications submitted in collaboration with U.S. and other scientists globally for wide variety of infectious disease candidates, such as seasonal and pandemic influenza, H5N1 bird flu, Sudan Ebola virus, Marburg virus, RVFV, West Nile virus, Poison, as well as second generation COVID-19 vaccine candidates.

To ensure C1 can produce therapeutic proteins such as infectious disease monoclonal antibodies with the appropriate quality, we've expressed a number of third-party monoclonal antibodies or mAbs, which were assayed by multiple independent external parties, from big [indiscernible] pharma to biotech to academia, a report of the neutralizing and binding activity assays demonstrated great similarity between C1-produced mAbs and CHO-produced mAbs.

The next step was evaluating these proteins in animal studies, where we observed that a C1-produced monoclonal antibody for COVID-19 demonstrated comparability to the comparator CHO-produced monoclonal antibody with no signs of antibody-mediated enhancement in a nonhuman primate study.

In June 2023, a manuscript was submitted to a peer-reviewed scientific journal titled Filamentous Fungus Produced, Human Monoclonal Antibody Provides SARS-CoV-2 Protection in Hamster and Nonhuman Primate Models. This was done in collaboration with Dr. Albert Osterhaus and several other authors. The manuscript describes the safety and efficacy results with a C1 cell-produced monoclonal antibody obtained from studies in hamsters and nonhuman primates.

This data is critical for our potential partners as they select cell lines to produce their commercial targets to ensure that their products have the quality standards and safety profile required for clinical and regulatory development. Data must aid the forefront of scientific advancement. We also have been focusing on designing better performing molecules. We've developed C1 cells to express complex proteins such as conjugating antigens and ferritin nanoparticles. The interest in ferritin-based vaccines have been increasing due to their safety and ability to enhance immunogenicity. Nanoparticle candidates against a wide range of pathogens are now in clinical trials and diseases such as influenza, Epstein-Barr and SARS-CoV-2.

Manufacturing challenges related to particle heterogeneity and proper folding of fused antigens, productivity and costs still need to be overcome and we feel that the C1 platform is uniquely positioned to address some of these challenges. We are also developing other technologies to increase vaccine efficacy and durability to improve targeting methods and new more powerful adjuvants.

We developed and are testing several antigens with the AMHC targeting system, Fluenza and COVID-19 as well as an antigen that included a trimerization domain. With our partner, Verovax, we are evaluating new and improved adjuvants with C1-produced ferritin nanoparticle antigens in relevant disease areas such as COVID-19, pandemic influenza as well as encephalitis and meningitis in animal trials. These advancements enable Dyadic's partners with the potential to develop more effective and longer lasting vaccines across a wide range of infectious and other diseases.

They have the potential to be manufactured using C1 cells rapidly in larger quantities more affordably. We've continued our focus on building and sustaining longer term strategic partnerships with leading pharmaceutical companies and partners such as Janssen Pharmaceuticals which continues to show positive results as well as advancing commercial products and clinical development of human and animal health vaccines with Rubic-1 Health for the African continent and the recent production of C1-expressed Omicron antigens under cGMP guidelines for potential COVID-19 vaccine with Epygen in India.

Furthermore, in today's press release, we announced that we signed a Memorandum of Understanding with the Fondazione Biotecnopolo di Siena or FBS. FBS's function is to perform as an anti-pandemic hub with a particular focus on the development and production of vaccines and monoclonal antibodies for the treatment of emerging epidemic pandemic pathologies. Vaccine development at FBS is led by one of the world's foremost leading experts in vaccine development, Dr. Reno Repioli. Dr. Repioli is known globally for his work in vaccines and immunology. Prior to his role at FBS, Dr. Repioli was the global head of vaccines research for Novartis vaccines and diagnostics and most recently served as the chief scientist and head of external R&D at the Vaccines Division of GlaxoSmithKline, GSK. FBS is prepared and equipped to conduct research and development, clinical study, regulatory approval, manufacturing and commercialization of vaccines and therapeutic proteins using the company's C1 protein production platform.

Discussions are also ongoing with several parties interested in the potential of C1, traditional developed and developing countries.

Our refined human health objectives include a focus on shorter-term product commercialization opportunities that have less time, cost, and risk associated with development. We're continuing to improve our capability to have an internal pipeline of proteins and enzymes with commercial proteins and potential across our core verticals, whose utilization is not dependent on lengthy clinical development programs or human trials. This is expected to decrease our timeline to revenue, potential, and commercialization opportunities. Earlier this week, we provided an update on one of these internal projects, namely the recombinant serum albumin.

The global serum albumin market is an approximate $5.7 billion market growing at over 6% a year due to the increased use across a multitude of markets in human and animal health. In the pharmaceutical segment, serum albumin is not only being developed as a potential treatment for disease, but it's currently used in product development of vaccines as a diagnostic tool and a common reagent in R&D.

There are many different grades of albumin and price points across these and other markets. Dyadic has the potential to produce animal-free serum albumin at competitive pricing due to our highly productive C1 and Dapibus microbial platforms using low-cost media. In addition to the clinical data being generated, we are protecting our technology with a robust IP of state. Earlier this year, Dyadic received a notice of allowance from the U.S. Patent and Trademark Office for patent application, whose claims cover the development and manufacture of seasonal and pandemic vaccines from the company's C1 protein production platform.

This timely patent allowance comes as we announce earlier this year that Dyadic is at the forefront of vaccine development, with more than a half-dozen animal trials being carried out last year and additional animal trials, which are ongoing or scheduled, with C1-produced antigens for influenza, for example, H5N1 bird flu, and other infectious diseases.

There's a global unmet need for more effective and more available flu vaccines. It has been reported that the human seasonal influenza vaccine market alone is currently valued at approximately $8 billion and expected to grow to over $12 billion by 2028, with multivalent vaccines leading the market.

There are many similarities in the needs between the human and animal health market for vaccines and therapeutic proteins, and we are leveraging our science across these core verticals. What makes animal health an attractive segment for Dyadic is the margin sensitivity of this market and the significant impact and the outbreak can have on the global supply chain and potentially human health. The recognition, data, and scientific advancements we are generating have not only accelerated our efforts in human health, they're translating an increased interest in our other core verticals such as animal health, as demonstrated today's announcement that we've expanded our collaboration with [indiscernible] and started another collaboration with a new animal health partner on a fully funded project targeting a livestock antigen to be produced in its C1 platform.

This is why we believe the C1 production platform can be a global solution to emerging infectious disease threats, and pandemic response, and not just humans, but also in animal health. As we mentioned late last year, and we announced that we'd achieved a record antigen production level of 10 grams per liter of a livestock antigen, demonstrating that our platforms can produce very large quantities of antigens for infectious disease.

In addition to the production of large quantities of antigens, antibodies, and therapeutic proteins, these products can also be made rapidly and at a low cost. This means C1, a potential pandemic preparedness platform for response or stockpiling.

Our third vertical of alternative proteins is yet another area of great excitement for dyadic and one which we believe also holds near-term potential promise in terms of opportunity and revenue. Exploiting this segment does not require a significant departure from our human and animal health pursuits in terms of technical capability or resource requirements.

Dyadic is continuing to dedicate resources and support for the existing and future projects within this rapidly growing market. Dyadic has launched its Dapibus platform, a filamentous, fungal-based, microbial gene expression and protein production platform. Dapibus is further designed and customized to enable the rapid development and large-scale manufacture of low-cost enzymes, proteins, metabolites, and other biologic products for use in non-pharmaceutical applications, such as food, nutrition, health, and wellness.

One area of focus within this segment is the dairy protein and enzyme market. We announced today initial positive analytical results for the successful expression of casein proteins using Dapibus, our non-pharmaceutical protein production platform. Growing global demand for protein-enriched foods is expected to drive casein market growth, or the use of casein for industrial applications such as plastics, chemicals, and synthetic fibers is driving market expansion. This further demonstrates our commitment to developing commercial opportunities that transect more than one core vertical.

I will now turn the call over to our Chief Business Officer, Joe Hazleton, to provide a more detailed update on our Phase I trial progress and discuss our business development efforts across our core verticals. Joe?

[Joseph Hazelton, Chief Business Officer]

Thank you, Mark. I'm happy to report that the Phase I trial for DYAI-100 is progressing as planned. For background, to establish a track record of safety in humans for antigens produced from our C1 protein production platform, the ongoing Phase I trial is a randomized double-blind placebo-controlled trial to evaluate the safety and immune response of the DYAI-100 COVID-19 and recombinant protein booster vaccine in 30 healthy adults in South Africa at two different dose levels.

There are eight scheduled patient visits throughout the 180-day trial period, with safety data being collected throughout the trial and immunogenicity assessments scheduled on six of the eight visits. Dosing of all patients was completed in late February, and we currently project the last patient last visit to take place near the end of August, with the clinical study report being available in the late third, early fourth quarter. Patients in both the high and low dose cohorts have reached day 90, with all patients in the low dose group reaching day 180 from initial dosing.

Later this quarter, the Data Safety Monitoring Board evaluated the 29-day data for all patients and found no major vaccine-related safety events at either dose level, and to date, there have been no serious and local or systemic adverse events reported. While the primary endpoint is safety, an immune response was produced at both the low and high dose levels.

Given the evolving regulatory and market outlook for COVID, we're currently working through the G1 Health, our South African partner to evaluate the next development phase of the DYAI-100 COVID-19 booster vaccine candidate, pending the final results of the study and the market conditions. With the expected results later this year, we continue to validate the C1 platform to reduce clinical development risk for our partners, and adding to our stronger repository of safety, efficacy, and productivity data regarding the C1 protein production system across a wide range of vaccines and antibodies.

For the human and animal health markets, the overall result is that through a competent vaccine development and production, the C1 platform is ready for full commercialization. The increased recognition that the C1 platform is generating, coupled with the continued advancement of our scientific data is leading to business opportunities across our core verticals.

In addition to the new vaccine project with the top five pharmaceutical companies and a large infectious disease market, we have expanded our licensing agreement with Rubic One Health going beyond COVID vaccines and accomplishing not just human health and therapeutic proteins, but also animal health pharmaceutical products. This provides Rubic the potential for a broader number of commercializable opportunities in multiple product segments.

We've also renewed and expanded our research collaboration with UVACs, and this collaboration is expected to help UVACs overcome gene expression challenges using the C1 protein production platform for human health. Beyond the acceleration of human health vaccine collaborations, we're seeing increased interest and traction in animal health as well. In addition to extending our research collaboration with Phibro/Abic to apply newly developed techniques and methods to further increase the expression level of recombinant livestock antigen using C1, the collaboration with Phibro/Abic has also expanded to include the development of additional antigens for use in livestock animal health applications. And in June, we entered another fully funded collaboration with a new animal health company to develop a different antigen for livestock animals.

We continue to make great strides in antibodies as well, and we believe that the C1 platform is ready for use in human trials for monoclonal antibodies, biotribe-specific antibodies, FD fusion, and other types of therapeutic proteins. The advancement of our antibody development has led to new opportunities and collaborations in human health. The MoU we have signed with Italy's Fondazione Biotecnopolo di Siena to conduct research and development through commercialization activities of vaccines and therapeutic proteins using the C1 platform provides that with a strong partnership to advance development of antibodies for infectious disease through human clinical trials.

Additionally, our MoU, Bangladesh's Essential Drugs Company Limited has the potential to expand the utilization of the C1 platform to facilitate research and development through clinical trials for the prevention and control of diseases and improvement of public health programs in Bangladesh and other countries.

We are also in late-stage discussions with key pharmaceutical partners to develop monoclonal antibodies for a number of infectious and pandemic preparation. While this is encouraging news, development and approval of pharmaceutical products takes years to complete, which also means that we must continue to focus our efforts on commercialization targets that drive revenue in the near term as well.

Earlier this year, we revised our research and development approach, focusing mainly on those projects that have potential commercial outcomes. Examples of this revised approach is the previously mentioned research collaboration with a top five pharmaceutical company to express and produce a vaccine antigen from C1 for human health, the collaboration with a new animal health company to develop a livestock antigen, and new collaborations to develop monoclonal antibodies for pandemic threats.

These agreements differ from our traditional research projects in that they grant an option for a future commercialization license for use in their respective markets. We're leveraging our science across our core verticals as the need for cost-effective ways to produce large quantities of recombinant proteins and enzymes exist, not just in human and animal health, but also in the margin-sensitive segment of alternative proteins.

To support our business development efforts across these core verticals, the attic is building a portfolio of proteins and enzymes with commercial potential applicable across these verticals whose utilization are not solely dependent on lengthy clinical development programs or human trials.

Last quarter, we shared the attic and expressed human serum albumin and bovine serum albumin stably and at high levels. These types of products are analytically tested against reference samples to ensure they meet the quality control requirements for potential purchases. This is a much shorter and less costly development process than a human vaccine or therapeutic protein. Now, we are one step closer to commercialization as initial independent analytical testing of the company's recombinant bovine albumin demonstrated in the structurally equivalent to commercially available animal-derived bovine albumin and recombinant bovine albumin reference products. This puts us a step closer to commercialization and enables business development discussions with several interested companies as we are currently supplying samples to the market. These and other high-value and high-cost targets for non-pharmaceutical applications such as the recombinant casing proteins Mark mentioned earlier will require further development to reduce manufacturing costs to satisfy the margin requirements for the alternative protein in food industries, which is where our adaptivist platform is rapidly generating increasing market attention.

One, for example, acts as an excellent emulsifier stabilizer and thickening agent, making it very valuable for various food products. In the dairy sector, casing is crucial for cheese production and enhances the texture of dairy products such as yogurt and ice cream. In the pharmaceutical sector, casing is used as a stabilizer and a recipient in drug formulations ensuring controlled release and approved bioavailability of medications and serves as another example of a focus on targets that cut across our core verticals.

To maximize Dyadic's potential to commercialize these high-value targets, we entered a fully funded co-development marketing commercialization grant with Firmbox Bio to accelerate our ability to exploit the adaptivist platform and expand Dyadic's non-pharmaceutical product offerings for animal-free recombinant protein applications such as food, nutrition, wellness, and other bioproducts. This partnership will help further improve the Dapibus platform and will also provide.

Dyadic with an experienced biomanufacturing partner which can be leveraged for future products. We believe this could be an accelerator for Dyadic as both our C1 and Dapibus microbial cell lines have the potential to provide our partners the ability to meet timelines, scale, and cost demands for recombinant proteins and enzymes within their respective pharmaceutical or non-pharmaceutical market applications.

While the future is bright, we still have work ahead to maximize and monetize the various opportunities that lay before us. And Mark and I are working on advising our strategic plan to ensure we have the right infrastructure and resources to adequately address key business opportunities across our curve articles.

I will now turn the call back to Mark for some final comments on the second quarter. Mark?

[Mark Emalfarb, President and Chief Executive Officer]

Thank you, Joe. We will continue to leverage our decades of commercial scale industrial manufacturing knowledge and experience to accelerate the development process across all our core verticals. In parallel, we remain fiscally responsible with our research development spending and being strategically focused with our partnerships and collaborations to help fund advancements of our science in critical areas.

We believe that our C1 platform is well positioned to be an alternative platform in developing next generation vaccines, antibodies, and other therapeutic proteins for public health and future pandemics. And we are happy to see C1 is gaining more recognition globally with an academia, government, and industry. We've refined our business development objectives to focus on core areas where our technologies can have the greatest impact, and we're evaluating new opportunities aligned with our verticals and targeted markets of high potential return, such as alternative proteins.

With that, I'd like to turn the call over to our CFO, Ping Rawson, to run through our financials.

[Ping Rawson, Chief Financial Officer]

Thank you, Mark. Thank you, everyone, for joining our call today. I will now go over our key financial results for the quarter ended at June 30, 2023. You can find additional information in our earnings press release and form 10-Q, which we filed earlier today. Research and development revenue and the license revenue for the second quarter of 2023 increased to approximately $837,000 compared to $659,000 for the same period a year ago. The increase is primarily due to higher individual contract amounts on certain research funding compared to the same period a year ago. Cost of research and development revenue for the second quarter of 2023 increased to approximately $793,000, compared to $411,000 for the same period a year ago.

R&D expenses for the second quarter decreased by 49.9% to approximately $918,000, compared to $1.831 million for the same period a year ago. The decrease in R&D expenses for the quarter ended at June 30, 2023 versus the same period in 2022 was due to the winding down of activities of contract research organization and consultants to manage and support the preclinical and clinical development, as well as a decrease in cGMP manufacturing costs as the company completed the dosing of phase one clinical trial of its DYAI-100 vaccine candidates in February 2023.

G&A expenses for the second quarter decreased by 18.1% to approximately $1,403,000, compared to $1,714,000 for the same period a year ago. The decrease in G&A expenses for the second quarter of 2023 compared to the same period in 2022 includes decreases in legal expenses of $103,000, management incentives of approximately $81,000, business development and investor relations expenses of $75,000, insurance expenses of $37,000, and other decreases of $15,000. Other income for the quarter and six months ended at June 30, 2023 was primarily from the sale of our equity interest in Alphazyme, LLC. Net loss for the second quarter of 2023 was approximately $2,153,000, or seven cents per share, compared to $3,288,000 or a $0.12 per share for the same period a year ago.

Net loss for the six months ended June 30, 2023 was approximately $3,109,000 or $0.11 per share compared to $5,780,000 or $0.20 per share for the same period a year ago. As of June 30, 2023, our cash, cash equivalent and the carrying value of investment-grade securities, including accrued interest, were approximately $10.2 million U.S. dollars compared to $12.7 million U.S. dollars as of December 31st, 2022.

As the company's existing S3 shelf registration will be expired on August 25, 2023, we filed a new registration statement on form S3, which contains a base shelf prospectus with the SEC. Meanwhile, we have notified the Jeffries to terminate the open market sale agreement with respect to the ATN program, effective August 25, 2023. There had been no sales made under the ATN program with Jeffries.

The filing of the shelf registration statement is intended to provide us with the greater financial flexibility to access the capital markets in the future, should it become in the best interest of our shareholders. We reiterate our projection for annual cash burn of 2023 will be in the range of $6 million to $7 million US dollars. Based on our current plan, we expect that our existing cash balance will be sufficient to fund our operations into mid to late 2024.

With that, I will now ask the operator to begin our Q&A session. Joe Hazleton will draw 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. Operators?

[Operator]

Thank you, we will now be conducting a question and answer session. [Operator Instructions] First question comes from John Vandermosten with Zacks. Please go ahead.

[John Vandermosten, Zacks]

Thank you and good evening, Mark, Tim and Joe. Let me start off with a question about the chair, Malvin, and I mean, that sounds exciting to me as it sounds like it's closer than most of the other assets that you have or arrangements that you have to generating revenues. What remains to be done before that could be, product related, that could be sold and what is the revenue potential there? I mean, I know you outlined this about $5 billion in market size. How would that kind of flow through dyadic assuming we're able to sell that?

[Mark Emalfarb, President and Chief Executive Officer]

And Joe, you want to take that?

[Joseph Hazelton, Chief Business Officer]

Yes. Sure. So, John, that is a great question. So, there's a couple of steps left for us to fully commercialize and obviously from a licensing standpoint we're entertaining those options today. But for a product that we would potentially look to market ourselves, there's still application testing and then making sure that we have, basically full stability and cGMP requirements that we would need to basically make sure we have a certificate of analysis that performs exactly like what's currently available today. So, there's still some development work that does need to be done for us to do it ourselves, but from the licensing standpoint we're actually in those discussions today.

[John Vandermosten, Zacks]

Great. And I guess just the second part of that question was related to the revenue potential. I guess, in what, I think the albumin market is pretty diverse. There's a lot of different uses for it. As you guys had mentioned on the call, what seems to be the most likely in markets for the product that we might produce?

[Joseph Hazelton, Chief Business Officer]

R&D as well as diagnostics would be the quickest and easiest market to penetrate. There obviously there's use in alternative proteins, there's use in other markets, but for excipients, drug formulation, drug development, diagnostics, those are the areas because they can be made in a wide range of grades from research grade all the way through cGMP. So it really is a wide range of markets that we can, get into. It's just a question of what our potential customers want or what we would potentially want to do ourselves.

[John Vandermosten, Zacks]

Great. And regarding the Bangladesh collaboration, there's a serious outbreak of dengue fever, I believe there, and along with that a serious need for treatment. And I don't think there's necessarily a vaccine for that. Is that something that they can produce and that you could help them? I'm just wondering, since the need is so tremendous, it seems to me that they might be able to get something approved if they had something, right? I know that the resources there aren't what they are in other countries, but what might be done there in terms of taking advantage of, potentially a more accelerated approval because the need for something is so dire?

[Mark Emalfarb, President and Chief Executive Officer]

Yes, so let me take that call. So, I've actually been in contact with Bangladesh on that very issue. I've also been in contact with one of the major pharmaceutical companies that produces a dengue vaccine that, they have registered but have not registered in the U.S. And so there's an opportunity to develop a dengue vaccine using C1, but dengue, as you may know, it's a very difficult vaccine to produce, not to produce necessarily, but to design. And we've been in discussions for at least a year with certain companies, whether they be in India, not just Bangladesh, in the tropic regions where this is a growing problem.

And unfortunately, this problem is probably going to be heading into the U.S. as the heat and the temperatures rise. And of this year, as you can see, temperatures rise dramatically in the United States. And there are different diseases that are popping up here that haven't been here before. So what we've learned from the pandemic is if we don't control it, it's coming home to roost. And so we've been working with different developers because one of the benefits we have as a platform company in having worldwide access, whether it be Europe, India, Bangladesh, China, Korea, you name it, Brazil, we're talking to people that have these issues and we're talking to scientists that have ideas.

And as we've talked about earlier, some of those ideas are being turned into research funded projects here in the U.S. For example, bird flu, which as you may remember, is somewhere between 20% and 30% deadly. So if that hops into the U.S. or into human beings we're already getting prepared for that.

We've got two different bird flu, H5N1, ferritin nanoparticle vaccines in development with ferrovax that are now in animal studies. So in the next 60 to 90 days, we should get our first readout to find out how well those are doing. And we think with the ferritin nanoparticle, it'll induce higher immunogenic protection, much higher neutralizing antibodies, cellular response, and of course, can be made very, very large amounts, very low cost. But Dengue is something that, there's four different antigens that go into that vaccine and they shift.

So there's different people with different strategies and we're having those discussions with some of the world, I would say, experts in that space, including conversation with the Bangladeshi government.

[John Vandermosten, Zacks]

Okay, great. Thanks, Mark.

[Operator]

[Operator Instructions] Your next question comes from Dick Williams with Williams Research Group. Please go ahead.

[Dick Williams, Williams Research Group]

Hi, Mark. Hi, Joe. I just have a color type of question for you, Mark. In terms of the BARDA situation and funding of grants that they're in process of doing through the summer months for smaller grants, I don't know what they consider to be smaller grants, but then very large grants. Starting, I guess it's September 25th-ish. So we, I presume, have started or have submitted small grants for whatever you thought were appropriate to develop.

So the question is, have we done anything in that area and what would we expect a timeframe to know what the government is going to do and who they're going to give these grants to? And then, secondarily, do we expect to participate in the larger grants that they'll be giving out after September 25th if you can give color on that?

[Mark Emalfarb, President and Chief Executive Officer]

Yes. First of all, we have submitted the smaller grants, one or two, maybe three of those in combination with different universities and scientists here in the U.S. for BARDA on that program which is the Advanced COVID-19, but also for other diseases as well. And then we're also in discussions with BARDA and FDA and others on how we can participate potentially in larger grants, as you pointed out, whether those are actually going to come September 25 or I think that's the state you have to file by September 25. Not actually going to be announced by then. But there is a lot of funding and there's actually BARDA reaching out to certain people and telling them to, well, get a hold of us. So stay tuned and we'll see what happens with some of those conversations we have ongoing.

[Dick Williams, Williams Research Group]

Okay. Is there any approximate timeline when they're finished with this program that they're doing and all of these grants are handed out? When we talk about larger grants, in our arena, a larger grant may be a $20 million grant. And of course, in that arena, they've been giving out billion-dollar grants. So when do you think this whole area is going to conclude and we'll know if we're a player in it and we've got grants or we're not a player in it? Any ideas for their timing?

[Mark Emalfarb, President and Chief Executive Officer]

I don't think they've given us any specific timing ideas, but it's kind of like you pointed out, it's a rolling program. And so we can potentially be in the first wave, second wave, third wave, fourth wave. But we're in discussions with both BARDA and FDA. We're in discussions with people that are applying for some of those grants that maybe potentially want to use C1 to produce their vaccine. So you've got to remember our function in rolling that is to reduce the antigens in larger amounts at low cost rapidly and get the platform used as broadly as possible.

All the other funding is going to be going virtually to other people. So whether we get it direct or we participate in it, it's virtually the same thing. Ultimately, a commercial product that gets to the clinic will have to be paying us access fees, milestones, and royalties on our C1 technology.

Whether that be potential bird flu, dengue, a COVID-19 vaccine, a monoclonal antibody, for things like Marburg Ebola or other things. So there's a variety of things that we're working with and in discussions with on a variety of fronts with Big Pharma, small biotech, FDA, BARDA, et cetera. And including, obviously, the new relationship we just announced that Joe and I talked about in Italy. And the gentleman there is world-renowned and they're funded by the Italian government for pandemic preparedness for vaccines and antibodies.

In that case, we're actually going to be enabling with the technology to develop these things in-house that they can move forward in the pre-clinical studies, hopefully up through phase 2B where then they can out-license those to big pharmaceutical companies.

[Operator]

Next question, Robert Smith, the Center for Performance. Please go ahead.

[Robert Smith, Center for Performance Investing]

Hi, good afternoon, everyone. Thanks for taking my question. So, Mark, Joe, could you speak to the current state of the Janssen arrangement and what's been happening there? Thanks.

[Mark Emalfarb, President and Chief Executive Officer]

Yes. I mean, we're moving and advancing forward with Janssen. We're working on two different proteins. One's a monoclonal antibody and one's a bi-specific. I can't actually tell you what the disease state is because that's confidential. And we've made very good progress and we're in discussions with Janssen to potentially accelerate that program and even provide more resources so that we can get that done sooner and potentially aid our milestones faster and then they can get the platform embedded into Janssen sooner.

[Robert Smith, Center for Performance Investing]

So, I guess the key word is patience, but does the months go into quarters and years? I mean, what is your first shot at really some substantial breakthrough as far as a production item? What's your best guess?

[Mark Emalfarb, President and Chief Executive Officer]

Well, first of all, I think we've had a substantial breakthrough that made your milestone. We're a human being showing safety and immunogenicity with an antigen for the first time produced from C1. That's a gate-opening item for big pharma, for governments, academia. It's driving more and more input, driving more and more program opportunities. So I think we've already hit one of those points. Now, the question is how are we going to monetize that? Yes, that's exactly what I meant. Yes, what you have to recognize is, to be honest with you, we've excelled on the science.

We've exceeded even our own expectations of the transformation of the technology, the C1 technology for pharmaceutical use in recombinant protein vaccines for light-years ahead of people like Novorex and Sanofi's Beclovirus-Erinsexcel platforms. So now the question is, now that we're in human beings getting data, and by the end of the last quarter of this year, we should have the final report and the final data complete.

And right now, people are seeing the data within the industry, the 29-day data. We have 90-day data coming up soon. I mean, we're already through 180 days with patients on a low dose and almost any day in the high dose. So, the safety of the platform is being proven for the first time ever.

So, now it's going to be who wants to step up and get their hands on this for what rights, what access, what fields, what applications, what areas, in addition to the many things we already have going on all over the world. So, if you think about it, between [Rena Repioli], which if you look him up, and his now, let's say, helping us join, not just for his own use, but to approach the industry in general to solve the problem of human health and human equity, because there is no human health and equity outside the, let's say, the developed countries.

And so, we're getting the people in the world that are the experts who've taken things through the clinic multiple times with Big Pharma now, jumping in and saying we want to help, and including some of the major pharmaceutical companies we're in discussions with, like the top five pharma companies we're working on a vaccine with, that they're fully funded. That could be the major breakthrough, because if we can develop that and show that that is functionally equal or better and can be do faster in larger amounts at lower cost, as Joe pointed out earlier, there's a commercialization back into that already baked into the agreement. So, that might be the first one that cracks the egg open, but there's a variety of other ones that can happen in between.

[Operator]

Next question, Tony Bowers with Intro Act. Please go ahead.

[Tony Bowers, Intro Act]

Hi, Mark. I think with COVID now, not so much in the news. I mean, that was a huge distraction, but a lot of pharma companies got very fat and happy because of the money they made on that program. You've talked to people for a lot of years about the advantages of C1. Do you think that there's urgency or complacency versus a year or so ago, and is there funding? And do you think that it's going to be overseas where somebody gets ahead of the pack and then everybody else has to get on board? So whether it's the South Africans or the Italians, somebody will move, show that they believe, show that there's economic advantages, and then the rest of the industry will wake up. Is that how you see this playing?

[Mark Emalfarb, President and Chief Executive Officer]

Yes. But I don't think it's just economic advantage. I think it's life and death. I think that the people who are missing here, it's quite frankly, I won't tell you who, but I had a call this week with a Zoom call with five or six people, senior people at one of the big, let's say, biopharmaceutical supply houses, and they said the thing that they're like shaking their heads, saying this is just incredible what we've accomplished to date with the science, and we're talking to them about helping expand the market access. We need, obviously, the horsepower of one of these big players to come in and help us accelerate adoption and use. And we have that now with the Fondazione Biotecnopolo in Italy, that Memorandum of Understanding, and we're in discussions and contracts have been shared back and forth on drafts, providing we get that sign, which we're pretty confident we will.

That group and that gentleman, he has contacts into everybody. I'm not going to name names, you can go from the top to the bottom and everywhere in between in every country, virtually on the planet, and he has to reach into there. So he's going to bring industrial credibility because he wants to do the same thing we do. He wants to make sure people have access. It's affordable. This technology can be used in countries for distribution. You don't need the cold chain storage. You can produce it at a price so you cannot bankrupt the countries by doing it.

And so I think we've got a lot of momentum going. We've got momentum with the FDA, with BARDA, we've got in Europe, in Bangladesh, in India. So I'm not quite sure. There's a few other continents, South America we're working on. That might be the last frontier, I don't know. But there's things happening everywhere. And I would say that we're excited about where we are. We're excited about where we're going. But we're more excited about what we have. And the next step is perfecting the antibody program because the vaccine platform, as Joe pointed out, it's primetime ready to go and it's being applied.

[Operator]

Thank you. I will now turn the call over to Dyadic CEO, Mr. Emalfarb for closing remarks.

[Mark Emalfarb, President and Chief Executive Officer]

Thank you, Stacey. In 2023, we're seeing the impact of our Phase 1 further validate the C1 platform for pharmaceutical use and human and animal health. We're also beginning to realize the investment in the depth of this platform and alternative proteins. We remain focused on improving the value of Dyadic for the life science industry, which will in turn improve value for shareholders and improve access to affordable vaccines and therapeutics globally. We refined our focus and revised our business strategies to exploit existing and new commercialization opportunities in the near term while enabling us to fulfill our mission as a global biotechnology company to improve the way we feed, fuel and heal the world.

I want to thank you for joining us in today's Q2 2023 conference call and we look forward to keeping you updated as we advance our commercial and scientific initiatives on the next call. And I would say please keep an eye out for other periodic updates.

[Operator]

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