BRAIN Biotech AG (BNN.DE) Earnings Call Transcript & Summary

Welcome to BRAIN Biotech's Capital Markets Day 2021. My name is Adriaan Moelker, and I'm the CEO of the company. I'm totally excited about the prospect of BEC, BRAIN Engineered Cas. And today, I'd like to convince you of the same. Why I think it has transformational power, I will explain in more detail later. But BRAIN Biotech AG has many things in its pipeline, in its incubator and BRAIN Engineered Cas is one of them. But it's the 1 incubator program that I believe can totally transform the company. I will tell you why later. To bring Engineered Cas. This goes back to CRISPR Cas invention about a decade ago. The whole biotech industry was really excited and is still excited about the prospects of CRISPR Cas, and that's why BRAIN tried to develop this technology or a similar technology in its own special way, and that's where BRAIN Engineered Cas came from. When I was introduced to the concept, I thought this was great. And I immediately saw the transformational powers of that program. Now let me take you through the incubator of BRAIN first and then explain how BEC will be transformative to our company. So let me take you through the BRAIN biotech incubator and only focus on the larger programs in there because there's many more in there. These are the incubator programs that will be the future growth champions. I'll take you through them one by one in a very brief way. First, Aurase through a company called SolasCure. We have invented Aurase, an enzyme cleaning solution for wounds. So the wounds can be cleaned by the enzyme Aurase. We've spun that out in a company called SolasCure, to commercialize this enzyme. Totally exciting concept for a problem that is very, very big in the world, wound cleaning. Next, Brazzein. This is a protein that can replace sugar in fizzy drinks. We're going to commercialize that with our partner, Roquette. Jointly with our partner, we work with fast-moving consumer goods companies in this space, and we're totally excited about actually reducing the sugar world in fizzy drinks. I'm going to skip BRAIN Engineered Cas, which is we're going to talk about that much more later and focus on Natural Fermented Beverages 2, another program into food ingredients where we're going to work with an ingredient in fizzy drinks with a partner, a partner that I cannot disclose, but again, something to make a step change in food ingredients. Finally, PHA121. This is a bioactive ingredient that we've developed with Pharvaris, our partner. This is an invention coming out of our daughter company, analytical and discovery, and where PHA121 will be treating the disease, hereditary angioedema. This is an orphan disease, but still a very important disease. And we're confident that, that molecule will be able to help many in the hereditary angioedema space. Then on to BRAIN Engineered Cas, the real topic of today. So how will BRAIN Engineered Cas change our lives? How will genome editing change our lives, your lives? There's many different ways in which it can and will change our lives in the years and decades to come. Talk about pharma, diagnostics, alternative proteins, food ingredients, biological production, agriculture, all of these fields will be affected in the next years and decades. BRAIN will work on most of these topics, and not all in the same intensity, of course, but we'll work and assess all of these areas. It is clear that we will differentiate from competition from other technologies in different ways and we will select those niches where we will be more efficient than others. But clearly, on pharma, diagnostics and all these other fields, we're going to have programs to assess the technology and find those partners that will help us be successful. Back to BRAIN Biotech AG and how we're on a journey from the past to the future. First, the name, BRAIN Biotech AG, I have explained in previous sessions, how and why we've changed the name to BRAIN Biotech AG. We think it's more fitting our vision, and we think it's easier for everyone to understand what we're doing, BRAIN Biotech, that's what we do. Second, we came from a history of pioneering bioproducts, but we're going to a future of creating a bio-based future. So instead of just pioneering products, we create a future with our customers, with our partners, for our company and for society, and that totally excites us. I mean we create bio-based future by enabling key technologies, developing novel enzymes, innovating in food, transforming production processes and other things. So that whole journey is an important one that we're on and that we totally believe in. BEC has true transformational potential. And to explain that transformational potential and the size of the potential, I'm going to take you through this slide. So what you see here is the economic potential on the bottom. It goes from good, so everything essentially what we do is good to transformational really, really massive. The readiness level on the left, you see from where we are today to where we need more work. Clearly, on the bottom left, TMS with freedom to operate. Tailor-made solutions with freedom to operate is what we can do today. We can actually do CRISPR-type work for customers optimizing their strains and actually getting technology access fees, service fees for that. We can do it. We are doing it, and it will be important for us to do in the future. A little bit bigger but a little more difficult is actually improving our internally optimized producer strains. These are strains that we use ourselves and that we optimize with our own tools. Again, more economic potential, slightly more difficult to do, but we will be doing it. The third level is to do the same, essentially, as the previous box, but then do it for customers in their systems. So we're also going to do that. Next is the agriculture step is working with a partner that we've identified today already to do work in the agriculture space. We're going to get milestones. We're going to get cross-licenses in that exclusive partnership and we will be looking to monetize our investment there. And the biggest transformational power could be in the top level IP holding situation, where we're licensing to the health care and to industry. We would get technology access fees, licenses, and potentially, royalties from that. Needless to say that the further we go up, the more difficult it will be. Later on in these presentations, you will see Lukas Linnig, my CFO, explaining exactly how we intend to do all of these things and all of these boxes. With regard to genome editing, ethics are very, very important. Integrity and compliance are absolutely key to BRAIN Biotech and to my values. So we want to get it right. The guiding principle we're using as we will not judge the technology necessarily but we will focus on the products we can create. Having said that, we're very aware that we need an ethics codex. And for the BEC technology, we're going to define areas and limits where we will deploy the technology. Again, integrity and compliance being so important, we need to have several things in mind. First, we will follow all legal requirements. Second, we will do profound testing and research, logical for a company like BRAIN Biotech. We will keep an active stakeholder dialogue very, very important, what should we focus on and why are we focusing on it. We will educate society on the pros and cons, play an active role through Investor Relations. We'll stay on top of the public debate with regard to the ethics, and we will develop, as I said, our own ethics codex. All key in developing this technology and actually playing the right role in society. Now let me introduce the team that's going to take this transformational power to the market. And transformational power, I say that for a reason, because I believe this initiative, BEC can be so big and can be so exciting that it can really transform BRAIN Biotech AG and everything we do. First, you're going to hear Michael Krohn, my Head of R&D, who totally surprised me when he introduced his concept to me last year, and he excited me about the BEC opportunity. Next, you're going to see Paul Scholz, who is actually the program leader and the inventory, if you like, of many of the things that we're talking about today. And thirdly, my Finance Director or CFO, Lukas Linnig, who is going to take more of a commercial lead into developing this concept and finding a way to monetize this. Because the monetization and the commercialization is going to be critical and the impact that we can achieve with BEC. I'm convinced about the transformational powers of BEC. I hope I have been able to convince you of the same.

Welcome to my session of this Capital Markets Day. My name is Michael Krohn, and I'm heading the R&D here at BRAIN Biotech. And I would like to share with you my thoughts on our new tool, which is necessary to provide applications in the genome editing field. It's my part to explain to you why this could be part of the CRISPR revolution. And I would like to share with you our idea how we can add it to the living for the better. So I would like to share with you what genome editing is and why we are doing this and why it's so exciting. So for those of you not familiar with biotechnology, gene editing and so on, I would like to share some basics with you. So genome editing is about programming cells. So you're dealing with the DNA. And programming is a word kind of borrowed from the IT space. And that's fairly spoken a fair comparison because what you do is instead of you program an IT code like a binary code of on and off, you simply program cells by the 4-letter code of DNA, namely adenine, guanine, cytosine and thymine. So for this programming cells is quite comparable, although the living is far more complex, and it's more demanding than simply coding a program in the IT. So when you look at genome editing from history aspects, so I remember my time in the '80s, we've been glad to deal with DNA and you cut DNA almost only in vitro. Genome editing as a biotech technology where you deal with a genome in a living cell context. So you are able to modulate genes in a living environment. And if you look at history, so this has been developed starting from the '70s, '80s with what I would call ancestors of CRISPR Cas nucleases. And these ancestors can be named with meganucleases, with TALEN with Zink Finger proteins, which is for you just a hint that the journey and the revolution started quite early in the '70s, but really started with the beginning of the Millennium 2000 with the development and the discovery of CRISPR Cas. Two, maybe make it more easy for you to understand what a CRISPR-Cas system really does, I provided this slide for you where I would like to explain the very basic, share with you the principal simplistic explanation what CRISPR-Cas is doing. CRISPR-Cas is, in biotech, dependent on a nuclease. A nuclease is a protein which cuts DNA. In Germany, we like to use the expression gene scissor, which kind of describes what the nuclease is doing. One important thing you always have to remember is to do it at the position where you would like to do it, these nucleases has to be guided, and this task is fulfilled by a small RNA called guide RNA. With a guide RNA loaded on the nuclease, the nuclease scans the genome, identifies a predetermined locus in the genome and cuts it, and leaves the genome with a double-strand break. That's the basic principle of Cas nucleases. When this situation occurs in the genome, there are 2 alternatives occurring. So the one is the double-strand break leads to a dying cell because this cell is no longer able to repair this double-strand break. However, there are organisms which are able to kind of glue these open ends together in an imperfect way, which means, in the end, there is a disruption of the gene, what we call, a disruptive mutation. On the other hand, you have an alternative where you add or you have available in the cell a template with overlapping ends. And with this template, you repair the double strand break. And with that, you can knock in genes, and this is the advantage of doing genome editing in a living organisms. So in the end, you leave the cell either with a disruption or with a change or with the added genes. These mechanisms are called knock-ins or knockouts. You might be interested in who is using this CRISPR-Cas technology and why is it so exciting? So if you look into the literature, scientific literature, meanwhile, there are roughly 10,000 different publications. And this already shows you how important this technology is. If you now look at studies where we compare different biotech companies, almost 85% from roughly 100, 103 companies are using any type of genome editing technology in biotechnology. This shows you how important this is. And why is that the case? Because you have an easy application compared to the history application I mentioned before. It's more cost efficient. You have various applications and you can, what we call, multiplex, so you can in-cell target different positions in genome, and this is called multiplexing, and you can do it at a time. So you don't have to do it subsequently. I guess it's also important to you to know how many CRISPR systems are available at all, currently. So we provided the slide for you here to inform you that there is a curious situation meanwhile. So we have a dominating situation with 2 organizations, namely ERS genomics and Broad in the U.S. and in Europe. And those institutions have the main intellectual property on the market, which is connected to a nucleus, which is called Cas9, as I mentioned already. The further observation you can do with that situation is that they are also only a limited amount of companies claiming to have an independent IP to Cas9. And if you look into that area, in the biotech and medical space, you only identify 2 organizations, namely Inscripta and Benson Hill, who have a known IP space with 2 nucleases called MAD7 and Cms1. So what does it tell you? So it tells you that this is a monopolistic situation on the one hand, and on the other hand, an opportunity for everyone identifying a new Cas nucleas in that market. So this was the situation when we tried to identify a new system. With the initial goal to identify a biotech tool for genome editing, to have freedom to operate for our own work in our labs. So we partnered with a few organizations in the beginning and we used our competencies in different areas to identify and to develop such a tool, namely the competence to do protein engineering. We can identify new proteins from metagenome habitats. That means you sample DNA in the environment and sequence it and analyze it by bioinformatic tools to get a hand on new potential candidates. And we also identified that we, in principle, had no other chance to do that because for us, in the biotech field, the use of the Cas9 licenses were at that time simply too expensive. And so therefore, we developed a new tool or a novel alternative BRAIN Engineered Cas. And it's our firm belief that without having such a tool in the biotech space, you will have to struggle as a biotech company in the future. Also, not only having this to tackle the demands in the future for sustainability and the future developments when it comes to engineering cells, also in the food space, not only in the medical space. The addressable markets with such a tool are really huge. And you may not be surprised to see that our markets, in the first place, our prime markets, are in the biotech space, namely precise fermentation, so where you really identify proteins and express them in a molecular fashion in microbial host. This is already done. But with those -- with the new technology, you can precisely introduce the gene of interest, namely a protein, a food protein for the market. The optimization of bacterial strains is in our DNA at BRAIN. But by unlocking maybe the mode of action, we are still working on that and to facilitate the activity in mammalian cells, we also will be able to address markets like therapeutics, like diagnostics, and with that, also the whole potential of such technology and their space for us in that area, too. I would like to end my presentation with 2 remarks. So I've shown you the addressable markets. So it's not us saying that the CRISPR-Cas genome editing market is until 2025, round about USD 8.2 billion in size. So it's a huge market, and this shows you that there is space for an alternative. What I also would like to share with you is the idea to get an insight in the technology. And to get a fair idea of what the technology is doing with us, with the human mankind and is doing for you as a technology, I would like to ask you to watch the documentary, the Canadian documentary, Human Nature, a CRISPR Revolution. This is a documentary. It's professionally set out. It's a documentary which is looking at consequences and chances of the technology and which is really an introduction also for people not in the professional space. It's a documentary done by Adam Bolt. With this, I would like to thank you for attention here today. And I hope I could convince you that this technology is a fascinating new chance for BRAIN Biotech and to share the thought with us that we can, with that tool, add it to the living for the better.

Hi. My name is Paul Scholz, and I am the technical lead of the genome editing development at BRAIN. And today, I would like to give you a short overview and some insights into our BRAIN Engineered Cas technology. When we are talking about genome editing, we have a technology that has revolutionized biological and pharmaceutical research over the last years. Because if you know what you're doing, you are able to edit a genome of almost every living organism in a way that's way more fast, efficient and cheap compared to other technologies that have been there already. So as BRAIN, as a wide biotech company, of course, we also have huge interest in genome editing. And during the last years, we have done a lot of experiments and gathered a lot of expertise using these tools. For example, in different bacteria, different fungal system, yeast systems and also mammalian cell lines like cat cells and human cells, for example. What we are able to do with this technology is that we are able to up-regulate and down-regulate genes. We are able to knockout and knock in. We can do multiplex add-ins and use genome-wide libraries. So overall, we have gathered extensive experiments using genome editing tools. But the big downside of these tools is that we are not allowed to use this on a commercial level because of the still ongoing patent war and the complicated IP situation, Michael already discussed in his presentation. Beside from this business-related issues, there are also technical limitations to the classical CRISPR genome editing tools that are available already. For example, if we look at Cas9, which is the most prominent CRISPR Cas nucleas, we have things like on and off target effects, which means that we will generate an unwanted alteration in the genome of the cells that you would like to edit. And if we're thinking, for example, about gene therapy in human cells or in humans, of course, unwanted changes are not acceptable at all. Then we have Cas9 as a protein itself. So it is a very big protein, has a very big size. And this can make it quite hard to deliver the Cas9 protein efficiently into your target cell. Furthermore, the efficiency or variable efficiencies across different organisms, across different cells and also across different loci inside the same cell, which makes it almost impossible to predict the outcome of your experiment prior to your actual experiment. Furthermore, we have things like possible immune reactions because the Cas9 protein was found in an human pathogenic organism. Beside from a lot of these technical limitations, there's also the business side, which is the complicated IP situation with the ongoing patent war and the legal and financial uncertainties for all the users. So for this, we could have a wish list for an alternative Cas protein, a different one, that would bypass all of these limitations. How would this look like? So of course, we would have lower and no off-target effects. We would have an enhanced target specificity. We would have a smaller protein size, which will make it easier to deliver it into cells. It should have a broad application areas, so we should be able to use it in a lot of different cells, an enhanced base for editing, different thumbnail sequence so that -- that would allow us to edit almost every part of the genome. And in total, this protein should have an enhanced CRISPR in vivo efficiency, enhanced specificity and should be easier to deliver into the cells. Beside from this, and this is possibly the most important path for a commercial organization like BRAIN, is the IP situation. Because it would be great to have a legally secure IP situation, which would then generate freedom to operate for BRAIN and its customers and its collaborators. And of course, this would then lead to lower cost, overall. So with all the things that we have discussed on the last 2 slides and all the R&D capabilities that we have inside of BRAIN, we came to the conclusion that we need to do something to bypass the current situation and to screen and develop our own proprietary genome editing tool. So we started with metagenomics. So we went out to fields and to many places, most of them in Germany and tended to different habitats. For example, we went to a pond. We put out a few liters of water or sent out a few liters of water, then isolated all the microorganisms that are inside of these habitats, so inside of the water, isolated the DNA, sequenced DNA, and then were able to evaluate the genomes of all the organisms that are present in these samples. On average, with our new sequencing technologies, so using next-generation sequencing, we are able to identify around about 10,000 different species in every sample and then we are able to evaluate their genomes. So in total, we sampled over 30 different habitats. We generated more than 2,500 giga base pairs, so 1 billion bases in DNA. Just to put this in perspective, this is just plain text files, so no figures, no pictures inside. And this consumes more than 2 terabytes of storage space on our hard disk drives. We have quite diverse habitat. So habitats with different pH levels, different temperature levels, solid and liquid ones, et cetera, et cetera. And in total, in the genome that we were able to evaluate, we found that we are able to identify more than 100 million genes. On top of this, we did functional annotations, so we searched for little amino acid stretches, which are functionally characterized to search for functions related to genome editing tools, like DNA binding domains, DNA targeting domains and so on. Based on these metagenomic samples, we then build up a pipeline to identify novel CRISPR genome editing tools. The first 2 pictures showing here on this slide are showing the parts of the pipeline that we've already discussed, so the metagenome sampling, the microorganism isolation, the DNA isolation and sequencing. And then we set up a proprietary bioinformatics pipeline, so in silico-based pipeline, where we are able to identify novel CRISPR genome editing tool using a computer-based approach. Then we use the sequences that we identified in silico and tested them in the lab and selected the best one. And with those, we did protein engineering on top, meaning that we combine several sequences to add up the positive effects. And then on top of this, we did protein engineering on an in-silico-based manner, so we changed single amino assets with positive effects. In the end, we were able, by doing this to generate 1 sequence with a really high specificity and genome editing activity. And this is our prime candidate at the moment. So this is our BEC protein, so the BRAIN Engineered Cas protein. What is BRAIN Engineered Cas protein? So the BRAIN Engineered Cas protein is a novel Class 2 Engineered Cas protein developed using metagenomics approach and the protein engineering approach on top of this. It is a non-Cas9 and non-Cpf1 protein, so it is not subjected or not affected by the ongoing patent war. It was designed by metagenomics and engineering, so it has no native origin. So you will not be able to find this protein anywhere in nature, and therefore, it should be less immunogenic compared to the classical genome editing tools. Furthermore, we were already able to show that it has a different mode of action compared with Cas9 and Cpf1, and I will show you 2 examples of this on the next slide. What are the strengths of our protein? So we have already done experiments and we're able to prove the activity in various bacteria and fungi and yeast cells. On top of this, we have comparable or even better results when we compare the results to Cas9. We were able to show first activity in plant cells together with our partner and are currently evaluating these results to show that we are able to use the BEC protein for genome editing in plants. At BRAIN, we are currently testing the BEC protein in mammalian cells and mammalian cell lines. And also we are looking at other areas, which are not currently in the main focus of BRAIN, for example, based on this new mode of action, our protein could be very well suited for the diagnostic market or diagnostics applications. So what is activity? To show you what activity and genome editing means, I would like to show you 2 examples. For the first one, we use saccharomyces cerevisiae. Saccharomyces cerevisiae is a yeast strain that is a classical baking yeast, which is also used for brewing, like beer and wine. So quite important strength for biotech applications. And what we did here is that we knocked out a gene of the saccharomyces cerevisiae strain using the Cas9 nuclease and in comparison then to our BEC nuclease. And the special thing about the experiments that we've done here is that we knocked out a gene, the gene is called RDA2, which leads to a change of the phenotype of the organism, which means that the white head gene, so if the gene is still intact, has a white phenotype. And then if we're able to knockout the gene, the phenotype changes from white to red. So it's really easy to monitor if the genome editing has happened or not. The results are shown on the left side. And what you can see is that in the negative control, first with Cas9, you can see a plate full of white colonies. And then when we activate the Cas9, the colonies change from white to red, which shows that we were able to successfully edit the genome off the saccharomyces cerevisiae strain. Then we did the same experiments using our BEC protein. And what we surprisingly could see there is that the results were quite different. So negative controls, similar results, play full of white colonies. Then when we activated BEC protein, we see a huge decrease in the overall cell population. So around about 95% of the cells are just gone, wiped out by BEC protein. But those cells that are able to survive the treatment, they are edited in a highly efficient manner because over 80% of the cells are showing the knockout phenotypes. So there -- the phenotype change from white to red. And if you compare this to the Cas9 experiment, the efficiency is quite comparable. So in both cases, we have round about 80% of edited cells. So different mode of action, different results, but the important part, which is the editing efficiency, is comparable between Cas9 and our BEC protein. For the second example, I would like to show you a different strain, which is an aspergillus niger stream. This is a higher fungal system, which is also a strain that is used in a lot of biotech applications, for example, for protein and enzyme production. And what we did here is that we knocked in a gene. And for this, we also used a special gene. The gene is called GFP, which stands for green fluorescent protein, and it is originally from a jellyfish. The special thing about this gene is that when you illuminate the protein with UV light, then the protein lights up in green. So also here, very easy to detect. If we have the wild-type strain, it doesn't light up. If the GFP protein is inserted into the genome of the aspergillus strain, then we could see a green fluorescence when we put it on a UV table. Results are shown on the left side, and they are quite similar to what we already saw in saccharomyces cerevisiae. So we have a negative control where we have a plate full of colonies. Then when we activate the BEC, we have a huge decrease in the overall cell population and just 3 cells are able to survive the BEC treatment. When we put the plate on UV desk, you can see that specifically, those 3 cells are lighting up. And then if we transfer one of these colonies to a different plate, let it grow for a few days and then put it on a UV desk again, you can see that all the colonies displayed are showing this green phenotype, and this shows that we were able to edit the genome of the aspergillus niger strain. Here, we have an even higher editing efficiency compared with the saccharomyces cerevisiae strain of more than 90%. And this is also better than the results that we were able to achieve with Cas9, where normally we have editing efficiencies between 70% to 80%. So in total, what we could show with these examples is that our BEC protein is a highly efficient genome editing tool that is comparable or even better than Cas9 and it can be used in a variety of different organisms. Where are we using the BEC protein at the moment at BRAIN? First of all, we are already using it in our TMS business, which means that we are using it together with our partners or our collaborators or our customers in several projects. Big advantage of our technology is that we have the big USP of freedom to operate. So we are allowed to use this technology in comparison to all the other CRISPR Cas genome editing tools on the market. We're also using it in our incubator pipeline, so in our internal projects, for example, in strain development projects. We're also, of course, have freedom to operate types of [indiscernible] technology. Then we're working together with our exclusive partner in plant cells where we already were able to show that BEC protein is active in plant cells. And currently, we are evaluating the genome editing activity and efficiency in those plant cells. And then we would like to also give sublicenses together with our partner to other agriculture companies. At BRAIN, we are currently focusing on mammalian cells, mainly, which means that we are working on different cell lines, human cell lines, and the experiments are still ongoing to prove the activity and the genome editing and specificity of our BEC protein in human cell lines, and we are expecting results by 2022. It takes a little bit of time because human cells are the most complicated ones to work with, and yes, we are working on them already. Most of these experiments are done by BRAIN, but some of the minor projects are already outsourced to our partners where we are working in close collaboration to improve the activity in the mammalian cells. Besides from this main focus areas, we're also doing several others studies in parallel. For example, we are elucidating the mode of action, so how our protein is actually working. We are working on R&P system. So we would like to produce the protein and then work with the protein directly. We are doing in vitro studies, multiplexing studies. And also, we are working in different organisms or alternative organisms because we would like to have a broad application space for our genome editing tool to work with it in a lot of different organisms. But also, we have more. So even though BEC is our main focus at the moment, and it's the prime candidates that we are working on, we have found a lot of more sequences in our metagenomics treasure box because there's not just one sequence inside. There are hundreds of million sequences inside, and we were able, by bioinformatics, to identify already around about 2,000 Class 2 CRISPR nucleases. But we were not able to screen them properly yet but we will do so in the future. And we have already selected 15 candidates out of these sequences that could have a huge potential for BRAIN and have already submitted an IP application to protect the sequences and are currently developing and testing their activity. Furthermore, we are in speaking terms with additional partners to explore and exploit these metagenomic treasure boxes. And we would like to do this together with a partner to accelerate a detailed screening, so the timing. We would like to share costs with our partners. We would like to gain additional application knowhow from our partners. And in the end, of course, we would like to have a faster path to the market. Last but not least, all this research that we are doing and all the monetizations that we are planning is backed up by an IP strategy. So what we already have is that we have several single patent applications that we have applied to secure our BEC protein and some sequences around it. We will back this up by additional application IPs in application areas where we have the most interest in. And of course, during this, all this research and development we have done, we've gathered a lot of knowledge about our BEC protein and some of this we'll keep it as a trade secret inside of BRAIN, and this will never go public. What we want to achieve there or what we would like to gain there is that we would like to have a broad application space for the protection of our sequences and then backed up by the additional application IP. We would like to have a fast international reach and a unique position for BRAIN with the USP of our sequence for us and our partners and collaborators. Last but not least, of course, what could be the commercial impact of this. First of all, big selling point is freedom to operate. So we are the only ones that are allowed to work with this protein. So we could use this in our TMS business, but also in our internal projects and our collaboration projects. And then, of course, we are able to monetize this by the generation of revenue, for example, by Tech Access Fee license, royalties -- license revenues, royalty potential, and in the end, also potential to spin this out as a NewCo to mainly focus on the development and for the application fields for our BRAIN Engineered Cas protein. And with this, I would like to close my part of the presentation. Thank you for your interest in the more scientific part on our BEC technology. And I would like to hand over to my colleague, Lukas, who will give you a more business and commercialization focus inside and what we are planning for the next few years.

Hi. My name is Lukas Linnig. Many of you will know me. I'm the CFO of BRAIN Biotech AG. And today, I'm here to tell you about a project which is truly transformational potential for BRAIN. You've heard the presentations from Michael and Paul already. And you might be wondering now: great technology, exciting, but how do you want to make money with that? And I'm here to tell you today what we think and what our thought process is of how we may make money with the technology. You might also be wondering why you're seeing me and not Adriaan here today. When Adriaan and I sat together, some time ago, when it was clear that this project has such a large potential for BRAIN, we sat together and discussed our priorities. And as Adriaan has vast experience in the field of enzymes, we decided that he would be the one focusing mainly on the BioIndustrial segment, while as I would be focusing much more on the CRISPR, on our BEC topic. And as per today, I am spending roughly 50% of my time only with this project, thinking and discussing with partners how to commercialize the technology. For today, I have 3 goals. First, I want to guide you through our thought process on how we intend to make money with the technology. Second, I want to update you on where we are and what our next steps are in terms of commercialization but also in terms of organizational change. And last but not least, I want to excite you. I want to excite you as much as I'm excited. Let me tell you, this project is the most exciting thing I've been working on in my whole life. And this is particularly true because this project has such massive economic and ecological transformational potential. But without further ado, let me jump into my presentation. When I started this project, I thought about how do we commercialize this? This is a platform technology. So I started off with talking to a lot of people. A lot of different people that either knew more than me or had an interest in using a genome editing tool or that were just interesting multipliers to talk to, to involve and to discuss with. And from all these discussions, I gained a lot. I gained new ideas on projects, new ways to commercialize the technology, our new partners, just a lot of new stuff all the time. And many of these things are very interesting, and we are still in negotiation phases or discussing with partners how to make business out of it. But after some time, and when reflecting on the progress, I felt that we also needed a little bit more structure. That's an approach next to the opportunistic play. We also needed a more structural approach to look at this field. And with that, we wanted to create a dual lesson that we could, on the one hand, have opportunistic discussions with potential partners, while as, on the other hand, we would also follow a clear process on how to commercialize the technology. And we have defined 5 questions, and we have put them in 2 categories. First category, where to play? Second category, how to win? And our 5 questions are relatively simple: which part of the value chain should BRAIN be focusing on? What are the use cases that we can address? What are the strategic considerations along the value chain? Which use cases shall we prioritize? And what are other budget timing, and generally, other constraints that we need to take into account? And all of these things we looked at and we are looking at in the light to maximize our stakeholder value. And in my today's presentation, I will guide you through these 5 questions and try to shed a little bit more light on how we are thinking about these things. So let's jump right into it. We're starting with the value chain. And this is actually not as easy as you might think. When we started thinking about entering this market or when we saw that we had a technology and thought about how do we commercialize that on top of our own use, it was not really clear where to go. And -- so we decided that we would look at a lot of different companies. And what we did, we did a market study, looked at well over 100 companies and some of the outputs you have seen in the presentation from Michael earlier already. And we have identified what their business models are and where they play along the value chain. And we have identified 6 important steps in the value chain, which are often a little bit fuzzy, but there are some clear distinctions. And I want to guide you through these categories and let you know where we intend to play, and we are playing today already. Starting at the top, the top level IP holder. This category refers to players which have their own independent IP. Independent, in this case, refers to IP, which is not dependent on other technologies. Or to put it differently, independent technology has freedom to operate and is not dependent on other technologies or IP. This is the first category. And up until today, there is not too many players out there that have independent IP. We, however, are really pleased that we are expecting to have FTO, freedom to operate, which would also put us into that category of a top-level IP holder having own independent IP. The next category is R&D genome editing technology. This might sound a little artificial, but what we mean with that is producers or companies that invent dependent IP, often also known as application IP. You have the base technology, but having the base technology doesn't mean that you can use it in all organisms. So what we do and what others do is they come up with application IP. And this application IP is then used to make the original technology active in specific organisms. And there's important strategic considerations to be considered here. First, if others file dependent IP based on our technology, they might potentially limit us in using our own technology in the fields that they filed application IP. However, on the other hand, additional application IP also increases the usability of the technology because it makes it easier to use and more applicable in more fields. So our strategy here is pretty simple. First, we put a lot of effort and resources on filing our own dependent IP to increase the broadness of the technology. This is especially true for organisms that we, at BRAIN, work a lot with, in wide biotech. And some of these organisms you've heard about today from Michael and Paul. The other strategy we are pursuing is to work with partners, to work on co-developments that enable us to increase our IP position, while it's making sure we are not getting blocked and the penetration of our technology is enabled by more application IP. The next category are the genome editing service providers. Pretty simple, these are companies that do genome editing on demand. And this is what you can also see in our business model, which we call, We CRISPR for You. So we are obviously playing a role in that category as well. The next category are the adjacent service providers. And you can think of them as, for example, companies that provide consumables to apply CRISPR. One example here is the providing of kits or reagents to do the experiments in the lab, which many companies buy -- do not have to do everything in-house. And then there are 2 categories. One is called CRISPR-enabled products and CRISPR-included products. And even though sometimes the differentiation is difficult, there is an important difference to be considered. CRISPR-enabled products are products, which have been created using CRISPR. CRISPR-included products include CRISPR in the final product. Two examples, a CRISPR-enabled product could be a host strain. A host strain, for example, aspergillus, that has been mentioned before, which is one important host strain which we use to produce enzymes. An example for a CRISPR-included product could be a treatment for, for example, a somatic treatment for curing leukemia using CRISPR. And the differentiation here is important because it has a different hurdle to get these products to the market. And what we are focusing on at this point in the first place is using CRISPR to enable -- to create new products. So where we are today is rather building up CRISPR-enabled products. If we look overall where we stand, we see ourselves well positioned and hopefully soon with granted IP as a top-level IP holder. We also see ourselves strong in the field of R&D genome-editing technology, i.e., creating dependent IP. We see ourselves as a provider of genome editing service. And we are having started first developments ourselves using CRISPR, but we are looking at more projects to conduct in the future. Overall, we see that we are well positioned with our technology, in terms of freedom to operate, costs, efficacy and also our different mode of action. After having looked at the value chain, let's have a quick look at the market or more specifically the use cases, which we can address. And what you see here--and by the way, this is a chart you've seen from Michael earlier already--are different markets, different use cases, which we could look at. And what we have done, we have assessed our technology for the different markets and the different needs in the market, how well suited our technology is and how applicable it is in the end because the applicability, in the end, creates a use case and a USP, which we can sell to commercialize the technology. So now we have looked at the value chain, and we have looked at use cases. So we decided where to play. Now the game is how to win. This is the big question. And we have run several analyzes to look at this question. And one of those analyzes I want to show you today. We've done a matrix ranking endogenous and Exogenous factors on the graph to look at how well the technology works and what potential business models for us could be. There's important categories. Looking at endogenous factors first. There's the BEC product fit. A very important category. I referred back to how well is the technology suited for specific applications. This is where this comes into play. We -- in this category, we look at how well does the technology work in a specific application or market? And how much competitive edge, how much USP can we provide? The next question, looking at endogenous factors is also really important. How good is the fit with our strategy and capabilities? And this is particularly important because I talked about the vast opportunities that we have. And out there, there's a lot of rabbit holes. And we need to make sure we are digging in the right rabbit holes. And to decide what we are going to look at, we need to base that on our strength. We need to base that on what we are good at. And in order to do that, we, for example, also decided that some things we would probably not do in-house but we would do with partners. Looking at things like optimize algae, optimize plants, these kinds of things, we are not professionals in. This is not our core expertise. So we would rather be focusing on what we are really good at. The exogenous factors are also really important, though they are a little bit different because we can't influence them that much. Some of these are market opportunity, the competition intensity, the time to market, the customer unmet need, but also and not to be forgotten, the investment required, as you all know, we are, to some extent, also limited in terms of what we can invest, and the money we invest, we need to invest wisely. But before we jump into the graph, and I know that you're probably all excited already, let's look at our options. What can we actually do? And we have tried to form a couple of categories of ways we could commercialize the technology. And -- on the one hand, we have doing it ourselves, doing it in-house. That could mean doing it with our current business, that could mean acquiring a company to do something. That could also mean signing up for partnerships. And in all these scenarios, we, of course, have the highest economic potential, which sounds great. On the other hand, we also have the highest risk. And not to be forgotten, we also have a big risk of not being focused. And not being focused is, from my point of view, one very, very dangerous thing which we should at all cost avoid. So let's look at the other extreme. License out. I mean the CFO heart inside me is, of course, joyful when I hear, we just give away the technology and then we wait and then we get royalties at some point. This sounds great, right? No cost for us, perfect. However, and this is something that is also important, we need to look at it to maximize our stakeholder value, and in this case, particularly the shareholder value. So what we need to be looking at is how ready is the technology in different fields. And in some fields, we are pretty well advanced. Looking at fields like fungi, yeasts or bacteria, we are doing pretty good already. However, these fields, we would more likely do ourselves because they are what we are really good at. And when we look at the parts where we are not that good at, which we are more likely to out-license, there is still some work to be done. Looking, for example, at mammalian cells or other topics. And then we have something in the middle, and that is joint ventures or spin-offs, and this can also be really, really interesting for us. And we have seen in SolasCure that this can be a really strong model for BRAIN. On the other hand -- and that is really important to consider. You need to have the right team, and you need to have the right application. So just spinning out for the sake of spinning something out is not worth it. You need the right team and you need the right idea, and then this can work really well. But I haven't told you the best thing yet. The best thing is that we have this decision not only once but multiple times, many times. We can choose on our business model, depending on each and every application or a market we are looking at. So it will not be that we decide to do everything on ourselves or to license everything out or to do just one spin-out. No. It will be a scenario where we will do some spin-outs in this area where we might be looking at licensing for other areas and where we might decide to do some stuff ourselves. So that is, I think, a very strong message, which is at least very important to me because it removes the problem of having one big topic to decide, but you can look at the different markets and decide where you're good and where you're not good. But now let's go to the matrix I promised you. If we have favorable exogenous and favorable endogenous factors, we are most likely to do things ourselves. Or depending on the risk/reward profile, we might do a spinout or joint venture. If the exogenous factors are unfavorable while as the endogenous factors are still favorable, we are -- we might do things ourselves as well. However, opportunistically, we might also look at spin-outs or joint ventures. If we move more to the left side, i.e., unfavorable endogenous factors, we are less likely to do things ourselves. We will rather go for licensing out the technology. However, there might be some place for opportunistic joint ventures or doing some applications in-house. And I'm pretty sure you're disappointed that you don't see any categories or application names in here. I'm sorry, but for competition reasons, we cannot disclose that to you, but rest assured, the slides on my desk have categories and targets on it. But I don't want to let you go home without any information on specific categories. So I want to give you a brief overview of some categories that we have looked at. And this is, again, and as mentioned earlier, a brief overview. We do have this analysis for each and every category that you see. We have subcategories and applications where we assess in more detail for each of the sub-applications how well the technology is suited, and we've run all the analysis that you see here for the subcategories. What you see is 2 highlighted categories. First, industrial biotech, which is most likely no surprise to you. Because this is a category where we feel home, where we are good and where we see a lot of potential. What you also see, however, is the field of diagnostics. Diagnostics is probably something you haven't heard us saying too much in the past, besides this day because Michael and Paul have mentioned it earlier as well. We cannot disclose yet what our exact hypothesis on the mode of action is. However, if we--and with we, I'm mainly referring to Paul and his team--can prove that our hypothesis is true, we can probably have a significant competitive edge in the field of diagnostics, and this could be a potentially really interesting market for us. So looking at the graph, you see, okay, 2 categories are highlighted. So what do you do with the rest? Don't you do anything there? Is that not to be commercialized? No, in the contrary. The only thing this table tells us is that these categories are less likely to be pursued by us as own developments, but they would rather be candidates to partner up with either in a joint venture or in a license-out deal. This all sounds great. Doesn't it? Perfect. Why don't we go for it? Let's go for it. Yes, we should. However, we also need to consider a couple of things. Paul mentioned already that there is work to be done. This is a great success story already. However, if we want to make this an even bigger success story, we need to reach some milestones in R&D, and I thought a little bit about that. And I was wondering how projects in BRAIN have failed in the past. And thinking about that, I identified that, from my point of view, one of the single biggest reasons for projects to fail in BRAIN in the past has been that there was lack of focus. A lack of focus, in terms of resources, but also in terms of BRAIN capacity, i.e., our people that were working on multiple projects at the same time. And this was crucial to avoid in this project. So we decided and have recently announced internally the introduction of an ambidextrous organization. An ambidextrous organization is an organization where you pull out a part of the business or part of the teams of the business outside of the organization and make it a separate organization within BRAIN, and this is what we did. We now have established a team, our scientists, which is only working on CRISPR. No other projects. Nothing else. They're only working on BEC. And this team is accompanied with some, what we call, traffickers. And these are colleagues that know the technology very well as well and that are in close contact with the core CRISPR team. And they are the bridge to BRAIN's normal business, to BRAIN's CRISPR business, to BRAIN's tailor-made solutions business. And they can help that the technology is being used within BRAIN for customer projects, We CRISPR for You, but also for internal development. And this was a really important step because, as I said, focus is one of the most important things that we need to consider. This ambidextrous organization has some other advantages. It allows us to show you transparent cost forecasting as well as reporting. And if you have followed our earnings call last week, you will have seen that we have also already communicated our investments in CRISPR for this fiscal year as well as the forecast for the full fiscal year. There's other advantages. Separating the structure already makes it much easier to put the whole construct in a separate company in a second step. It is also more flexible and agile. And it is a dedicated team, as mentioned earlier, that only works on CRISPR. And I'm excited that the team is just as excited as me that we have started this whole thing and that we can now work on hitting our R&D milestones. So I talked about the NewCo. Here it is. After looking at the ambidextrous organization, the next logical step is, of course, to build a NewCo. This NewCo has -- besides the operational flexibility, which we can already achieve with an ambidextrous organization, also has freedom in terms of a separate legal structure. The idea is the following: BRAIN puts the IP as well as important key BEC employees into the company; BRAIN NewCo is then responsible for developing the technology, for filing IP and to commercialize the technology. And below that company, we can then have many deals. We can have joint ventures. We can have spinouts. We can have partnerships or we can hand out licenses. And you might recall, these are the categories we have been looking at earlier. And as I said, we can do all these things for all the different categories and all the different markets and applications we have been looking at. This company that BRAIN NewCo will also give back the license to BRAIN AG. This will be a license to be used for BRAIN, this is what the traffickers were for, to be used in our tailor-made solution business, in customer projects where we CRISPR for our customers. And we see this structure as very well fitted, and we think that it makes sense to establish this structure as soon as possible. So we have a lot of plans. What will it cost? And we have looked at it from different angles. And if you just ask me what will that cost? The answer is, as so often in life and business, it depends. We have to find that to give you some guidance in 2 different categories. First of all, we have looked at what will it cost to develop our IP portfolio and to also create dependent IP. This will include topics like multiplexing, like mode of action studies, work on mammalians and so on and so forth. And in the next couple of years, we expect to invest $10 million to $20 million in that part of the project. If we look at developing our own products based on CRISPR, we will need a new budget for that. And this budget will then, of course, also be communicated because it heavily depends on what you want to develop. If you want to do a host strain development, this can be relatively cheap compared to a development of a new drug or leukemia treatment or whatever. And by the way, we are not intending to go into the market of leukemia treatments because we don't have that deep pockets. So we don't have that money. We all know that. So we need to look at funding options. And in general, we have 2 major funding options. We can be looking at funding throughout BRAIN. And this could be either equity financing. This could be debt financing or this could be financing through its strategic partner. However, if we look at financing through a strategic partner, we would be looking at an equity premium on the current share price. This company or this financing could then flow through BRAIN into the NewCo or the developments which might happen within BRAIN in the first place, in the ambidextrous organization, to finance the work and to make sure Paul and team can run well. The other option is to found a company now and get funding into the company from external parties. This would be a pretty appealing model for me as the CFO, of course, but we also have to take into account what the timing effects are. Because if we decide to do that now, we will have a significant cap on the valuation or we will have a significant cap on the valuation. And we believe that it is our job to maximize our stakeholders. So what we will be looking at is all these different models and we will assess what the best way will be to finance this exciting project. So what's next? If we look at timing, we have to find 2 broad categories in the next 6 to 12 months and in the next 12 to 24 months. Looking at the next 6 to 12 months, we see a couple of things. First of all, we intend to fund the NewCo and found the NewCo. We intend to start additional external co-development projects with parties. This refers to the dependent IP which I explained to you earlier. We want to close first and additional deals on the TMS, We CRISPR for You business. We want to reach additional patent filing, and we will publish our first and main IP on the technology. In the next 12 to 24 months, we are looking at closing, hopefully, some license deals. We are looking at evaluating first spinouts and joint ventures. We are looking at a verification of the mode of action, an activation in mammalian cells as well as developing the core technology into a toolkit. With this, I'm almost finishing my presentation today. But please allow me some closing remarks. If there's 3 messages you're taking home from this Capital Markets Day, please consider the following 3: first, this project has huge economic potential, and therefore, we decided to devote the whole Capital Markets Day to this topic; second, we have very broad customer interest and very strong concepts how to commercialize the technology; and last but not least, this project is not a distant dream. In the contrary, we expect to be able to generate first revenues through the We CRISPR for You business in the very short term and to unlock the huge potential that we have in other areas we need to reach additional milestones in R&D. And I would really enjoy seeing you as our investors as part of this journey because together, we can add it to the living for the better. Thank you.