Dyadic International, Inc. (DYAI) Earnings Call Transcript & Summary

Good day, and welcome to the iAcessAlpha Virtual Best Ideas winter Investment Conference 2025. The next presenting company is Dyadic International. [Operator Instructions] I'd now like to turn the floor over to today's host, Joe Hazelton, President and Chief Operating Officer at Dyadic International. Sir, the floor is yours.

Thank you, and good morning, everyone, and thanks for joining us today. I'm Joe Hazelton, President and Chief Operating Officer of Dyadic Applied Biosolutions, and I'm pleased to walk you through our December 2025 investor presentation. Our mission is clear: to deliver scalable, animal-free recombinant protein solutions, serving the life sciences, food nutrition and bioindustrial markets. We believe Dyadic is at a true commercial inflection point with multiple products entering the market and revenue engines that are now active. Before we begin, I'd like to remind everybody that today's discussion will include forward-looking statements, which involve risks and uncertainties. Actual results may differ materially. Please refer to our SEC filings for additional details. Dyadic has a long history of innovation. Initially founded in 1979 in industrial biomanufacturing, we've gone on a basically 4-decade journey of growth in our industrial Inzymes business, which we built from 1992 to around 2015 was acquired by DuPont for $75 million. Since that time, we've engineered or fungal genetic platforms to produce high-value input proteins in high-margin and relevant areas where animal drive proteins are starting to not necessarily fall out of favor. But essentially, the market is moving towards more sustainable and predictable proteins. The major shift for Dyadic is that our focus is now on input proteins rather than therapeutics. So when I joined the company in 2022, I embarked on a transition of taking the company from R&D revenues and grant-based revenues based on therapeutic projects to revenues based on commercial applications of our technology in these core segments. So from 2025, we've not only expanded our platforms to be able to produce proteins, including the death of this platform, food & Nutrition, we're also focusing on building a portfolio of products using that technology to accelerate our revenue-generating capabilities. We expect starting this year and moving through '26 and '27 to have multiple product launches via direct sales and partner channels. So the real story for today is why Dyadic and why now? Well, we have proven platform validation. We have two dual platforms based off the same native fungal species to address different market segments and basically, what it comes down to is different margins within those market segments. We have a robust genetic toolbox and additional licensing for the CRISPR-Cas9 system that allows us to optimize and strengthen our ability to produce strains that can service the market. We're transitioning from R&D to commercial execution. While, traditionally, we've been focused on enhancing the platform in the therapeutic spaces, we're now focusing on areas where the products don't require basically FDA review or human clinical trials to get them to market. We're focusing on non-therapeutics which means near-term revenue. We have faster time lines and lower regulatory thresholds, and we can go from proof of concept to revenues in about 12 to 18 months. And now we're at that inflection point. We had our first bulk purchase orders received for growth hormones in the fourth quarter, and we're expanding our portfolio and commercial reach. That pipeline is going to continue expanding within segments of the market where we feel that our technology has specific advantages either in terms of cost or productivity and we have active partnerships that are going to drive revenue across those core segments as well, such as life sciences, food nutrition and Bioindustrial. So while I'm going to talk about multiple different segments of the market in all three of our core verticals, what we do remains the same. We use our platform technology to turn engineered strains into scalable protein solutions. We take our C1 or Dapibus platforms, which I'll explain a little bit about in the coming slides, to design and engineer precision strains to produce nonanimal recombinant proteins. And then we build -- basically, we build the methods of production to express and purify and then scale the application or scale to the application. So the beauty of this is, even though we can talk about everything from diagnostics to food proteins to bioindustrial, the job of Dyadic is to engineer these strains to meet the needs of the markets that we're entering into. So while it seems we're doing a lot of different things, our day-to-day activities ultimately remain the same. So these are our two engines of growth: our C1 and our Dapibus microbial platforms, they're eukaryotic platforms to produce recombinant animal-free protein solutions. They've been specifically designed for speed, productivity, scale and low cost. They deliver industrial performance because that's our heritage. We came from the industrial biomanufacturing space where not only DuPont purchased our technology in 2015, but we work with companies like BASF, Shell Oil, Abengoa. We've run all the way up to 0.5 million-plus liters in commercial production. We have proven platforms that have been proven the ability to scale. We've since reengineered these platforms to produce more high-value targets. Our C1 system has been evolved to produce more complex proteins and enzymes for everything from therapeutic monoclonal antibodies to vaccine antigens, but now we're using it produce things like cell culture media that are essentially input proteins in the biopharmaceutical segment. It is a platform that's been validated in humans. We actually completed a Phase I program and it's been optimized to produce high yields and low cost, but also address the regulatory readiness that you need when you're entering into therapeutic markets. And we use this platform, specifically in our Life Sciences segment. We've also developed our Dapibus platform to address food nutrition and bioindustrial where the margins are obviously tighter. You need to compete with animal or plant-based proteins. And to do that, you need a system that can basically produce large amounts of recombinant proteins and enzymes at costs comparable to how they're sourcing proteins today. So we've built the Dapibus platform to produce these less complex, but more margin-sensitive proteins, and it enables sustainable, affordable large-scale manufacturing with a low carbon footprint and sustainability. So how are we going to monetize? Essentially, we have a 3-pillar strategy: buy, brand and build. Our customers can buy products directly from us, and those will be suppliers, distributor or end users across all three of our core segments, and we can do direct sales, bulk sales, OEM sales, and we're also looking to launch our own branded products. Just as I mentioned, we already have our first bulk order for growth factors that came in the fourth quarter, and we're looking to expand in that segment and others very rapidly. You can also brand with us. Our platform technology enables us to license strains that we build or the platform technology itself to suppliers and manufacturers that want to produce their own products which gives us a second potential revenue stream. And then you can build with us if potential parties have their own proprietary assets, but they're looking for an expression technology that can hit the margins as well as the productivity, we offer a simple and effective way to build your own brands using our technology. So those are the three monetization channels that we're using to drive commercialization. As I mentioned before, our three strategic growth verticals are Life Sciences, Food Nutrition and Bioindustrial. And while these are extremely large segments of the market, we are focusing in on areas like in life sciences, where we're focusing on cell culture media, cell and gene therapy, areas where we have specific advantages in terms of the products that we offer and the cost that we can achieve. We have things like human transfer and human albumin, human growth factors, those are the core components of cell culture media. We also have products in the DNA and RNA space. And again, it's where our platforms have specific advantages in terms of being able to produce these very expensive proteins and enzymes at much more affordable prices due to our high productivity and our lower overall cost of goods and we're focusing on those market applications that are growing the most rapidly, which is cell and gene therapy, diagnostics, reagents and therapeutic proteins and enzymes. In the Food & Nutrition segment, while the alternative protein segment is likely a $50 billion to $70 billion market, we're focusing in on nonanimal dairy as well as functional food proteins because again, our Dapibus platform, we feel, has specific advantages in addition to being a GRAS-certified organism, which basically means it's safe for food and nutrition uses. It also has the high productivity and low cost that are needed in these segments like nonanimal dairy, where we have products like Bovine alpha-lactalbumin, which is a wave protein that's used in milk-based products, everything from infant formula to sports nutrition and medical nutrition and we have things like Bovine transferrin, which, again, is a cell-culture media product that's used in applications like cultured meat. So we're at the forefront of next-generation food solutions using our technology to bring down the cost of these animal sourced products. And we're also reentering the bioindustrial space through our partnership with Fermbox Bio. They're a company based out of India that we've licensed the technology to essentially get our foot back in the bioindustrial market for cellulosic enzymes. This is a market that we know very well. And while the overall bioindustrial enzyme market is probably over $150 billion, we're focusing on the $6 billion market of cellulosic enzymes, where we have the most experience and obviously, our platforms have proven capability in these segments. And these are products used for biomass conversion as well as biofuel preparation as well. So we have the applications, and obviously, we have the capability to enter those markets. So diving a little deeper into life sciences. As I mentioned, we're trying to focus in on the areas where they're growing but where we have specific advantages. In cell culture media, these are products that are used to grow either therapeutics, like they -- essentially, you need them to grow Chinese hamster ovary or CHO cells, which is one of the most used expression platforms to produce monoclonal antibodies. And we also are producing things like human albumin that's used as a vaccine stabilizing agent since using cell and gene therapy, and it's also used in diagnostics and medical device coding. We have a partnership or a proof point in this space and that we've licensed our human albumin to provide health and biologics. And they are one of the largest providers of naturally derived bovine albumin in the world. They have a global distribution network, a global customer base, and they essentially account for about 2/3 of all the bovine albumin that's currently produced in the world and now they're able to offer their partners a nonanimal version of albumin for them to use in these higher-margin segments. So they're expanding their capability. We have a great partner. We've already received a $1.5 million in license and milestone fees and we have shared the profits on the back end. And Proliant is in the first stages of launching three different products in the cell culture media and essentially the albumin space in general into these markets. So we're very happy to have them as a partner. And we're also very happy that they're getting ready to launch these products. In addition, we are launching human transferrin and human growth factors ourselves through not just our partnerships but also through distributors and OEM models. And we do believe that this is a segment that will contribute heavily to our success in the future. Then you have the DNA and RNA technology segments. Now we're focusing in on a very specific area, which is essentially molecular biology reagents. And these are products that are used to make mRNA or cell and gene therapies. Basically, any time you need to manipulate DNA or RNA, there's a group of enzymes, there's 5 enzymes that are typically used to do this. Our first product is going to be DNAse I. We actually are getting ready to start shipping product to some of our distributors in the fourth quarter. And what's nice now is we have, as I mentioned before, we have access to the CRISPR technology in that we'd be able to further optimize strains like RNA inhibitors or DNA ligases to further penetrate this market. So we want to add products into these segments that are particularly not just high value, but growing very rapidly as well. So as diagnostics and therapeutic grows, we're providing the tools that these companies are using to make these therapeutics. So our products aren't going to require the same level of regulatory validation than a therapeutic role so we can enter the market much more quickly. And as an example, the partnership that we signed with Proliant, we signed it in 2024 and in 2025, we're getting ready to launch products with them. So again, much faster routes to commercialization. And we've also expanded our commercial capability through a partnership with Intralink which is a business development firm that is essentially helping us in Asia Pacific region for Korea and Japan, where cell and gene therapy as well as other life science utilization of the cell culture media products is growing rapidly. So how does the revenue come in? And as you look at Dyadic, it's going to be layering revenues. So we're going to be layering partnership revenues like with Proliant on top of direct sales revenues like DNAse I or Transferrin we also. Retain the ability to partner products like DNAse I and Transferrin. So from the same strain, we can actually have multiple monetization channels out of one strain, whether we sell it ourselves or through our partners. So as I mentioned, we're launching -- through Proliant, we're launching human albumin in 2025. DNAse I is actually going to launch in 2025 as well. So we should start to see revenues coming in from both of those. Transferrin will actually start to ship research-grade product in December. So we will start to see some revenues in the first quarter. And as I mentioned, growth hormones or FGF, these are fibroblast growth factors. These have actually been moved up. We actually shipped our first shipment of bovine growth factors into the cultured meat segment. So we're actually able to start pulling these forward a little bit, and we're starting to see some revenues in these spaces. And as we move out into '26 and '27 further expanding their portfolio with, as I mentioned before, further molecular biology reagents for DNA and RNA manipulation and also functional proteins that are used not only in the life sciences space, but things like lactoferrin and alpha-lactalbumin, these are also proteins that are found in milk products. So these will have multiple applications as we move forward. But essentially, they can also be used for research grade uses such as carrier proteins or in biochemical assays and analyses. So as we move into the Food & Nutrition segment, again, our focus is on nonanimal dairy products. Just last week, we signed a partnership with BRIG BIO to commercialize or to develop and commercialize our bovine alpha-lactalbumin strain. That partnership brings along with it access fees, milestones, royalties and co-marketing capabilities. So we'll actually be able to book the revenues from products that we're able to sell bovine -- that we're able to sell. We have an existing partnership with Inzymes where we've received almost $1.2 million in license and milestone fees since 2023 is when we signed that deal, and they're getting ready to launch a non-animal dairy enzyme. So we're focusing on ingredient suppliers, food and beverage companies and all dairy brands as we move into these segments. And this is a very fast-growing segment, whether it's infant nutrition, sports nutrition, LP aging. These are key areas. Another area of food nutrition is cultured meat or lab-grown meats. And this is where we're starting to see some significant traction in terms of our cell culture media for growing animal muscle cells. So things like transfer and growth factors and albumin are also used not just in -- to grow CHO cells, to grow therapeutics, they're also used in the food nutrition space to grow animal muscle cells and we saw the first bulk purchase order in the cultured meat segment of our bovine growth factor. So as we start to move forward here in the food nutrition space, we see a lot of acceleration potentially, and we also see the ability to expand our product offering with things like lactoferrin and other nonanimal dairy enzymes and growth factors. And in the bioindustrial space, as I mentioned, we have a partnership with Fermbox Bio. It's a 50-50 profit-sharing arrangement they're essentially going to be our bioindustrial partner because they have the scale as well as the capability to enter into key markets like India and Asia Pacific as well. And they're essentially going to be responsible for producing and launching our products in this space for biofuels, biomass reduction and they currently have the EN3ZYME product, which has already had initial purchase orders and they're looking for follow-on orders, and we expect to see revenues from this partnership in early 2026. And now we started to expand our efforts in sampling into other biofuel organizations. And we're also exploring other uses of our cellulosic enzymes in things like regenerative medicine where we have capabilities as well. So we're looking -- as I mentioned before, having a platform technology enables you to enter into multiple different market segments very quickly. But again, what we do remains the same. So while we're in a lot of different things in a lot of different industries, it's kind of like the intel inside. We want to be in everything. We are the backbone of building some of these platforms to support these markets. So in looking at the terms of, again, where is our revenue going to be coming from? Well, as I mentioned, we have partnerships like with Inzymes and BRIG BIO and Fermbox, but we also will be selling direct products into these segments as well. So our Inzymes partnership, they're going to be launching in the nonanimal dairy space this year, bovine transferrin is currently being sampled in the cultured meat segment. And as I mentioned, we just partnered Bovine alpha-lactalbumin. So we'll start to see some initial sales from our existing partnerships while we're developing other products like bovine and human alpha-lactalbumin, which is essentially a high-value way protein for the infant nutrition, medical nutrition areas. And those take a little bit longer as you have more development work that needs to be done to ensure you have the quality the application testing that needs to be done in those segments, but we expect to start seeing revenues in late '26, early '27 from the food and nutrition space. But as I mentioned, both human and Bovine alpha-lactalbumin have application in life sciences as well where we may be able to see some earlier revenues. And then you layer on bioindustrial as well, where we expect to see revenues from Fermbox. And additionally, we have some direct sales opportunities for pulp and paper enzymes and we're also starting to look forward to the future in sort of like cosmetics, with hyaluronidase, which is an enzyme that's used quite heavily in the cosmetic space. So as you look -- and I think the next slide will be the easiest to share with you. This is how we're going to achieve our larger revenues and get to being cash flow positive in a very short time frame. We're layering products on top of licensing, on top of partnerships. So each of those plays a role in ensuring that we get our pathway to revenue. We already have product revenues coming in from bovine growth factors. We expect to ship DNAse I and -- actually respect to ship human transferrin in December as well. Our partnerships with Fermbox, our partnerships with Proliant, our partnership with Inzymes, those are all starting to commercialize or have commercialized. So we expect to see revenues coming in from them. And then as you get into the out years, the partnership that we just signed last week with BRIG BIO, you'll start to see like Bovine alpha-lactalbumin and food nutrition start to come in, in the '27, '28 time frame. So as you look at this, we're layering revenues on top of revenues from the by brand and build strategy. We also are going to continue -- we're not completely walking away from biopharmaceutical applications. We are going to continue our legacy R&D programs. We have active partnerships with people like the Gates Foundation, where we're developing monoclonal antibodies. We also have partnerships with CEPI, the Coalition for Epidemic Preparedness Innovations, where we're working with the Fondazione Biotecnopolo di Siena. It's led by Dr. Rino Rappuoli. He's one of the foremost leaders in vaccinology. He's also part of the vaccine hub or the European vaccine hub, which is EUR 170 million initiative for pandemic preparedness in the EU. So we're going to continue to advance these programs because it helps to add greater visibility and validation to the platform for therapeutic use but it's not going to be at the expense of our focus or our capital resources. These are all fully funded, externally, fully funded programs that will continue to provide potential long-term value for us. while we're focused on the near-term revenues of products and partnerships of commercialized products. So we obviously will continue to look for other partnerships in areas where we can advance our technology in the therapeutic space while at the same time, sticking very close with commercialization. We have a veteran leadership team, our Founder and CEO, Mark Emalfarb, he spends the majority of his time focusing on our legacy programs to ensure that we continue to move those forward. while I maintain the day-to-day operational oversight of our revenue strategy. So we continue to build out our capabilities and we have the right team to execute it. So I'll just leave you with why now? And truthfully, it's because we've transitioned. We're no longer just an R&D company. We're actually using our technology to produce products that we can sell or our partners can sell today. And as we do that, we're going to expand our portfolio. We've rebranded the organization. We have a new website. We have our new name with Dyadic Applied Biosolutions. We have new materials that are aligned with our commercial strategy. So essentially, we've aligned our business from the ground up to focus on commercial revenues. Both of our platforms have been validated, and we have active partnerships across all three of our segments. We're continuing to add value and some competitive differentiation with the ability to have access to the CRISPR technology, and we're now starting to actually see product revenues coming in. This focus on non-therapeutics is what's allowing us to bring those revenues earlier in the life cycle. We're not focusing on products that they require FDA or human clinical trials. So we have multiple launches of products. Just in the cell culture media space, we have albumin launching with Proliant. We have transferrin and growth factors that we're launching, and we're also looking to partner those as well. We're expanding our commercial footprint by our partnership with Intralink in Asia Pacific that's already produced several potential opportunities to work with distributors in suppliers in those markets where cell and gene therapy is growing very rapidly. And we're going to keep focus -- we're not going to -- we're going to have the legacy programs to provide those tailwinds for us, but it's all externally funded. So it's nondilutive partnerships that's going to strengthen our technology and keep that global visibility of Dyadic in the platform in the therapeutic space. But the revenue inflection point is coming. We anticipate a step change in commercial revenue starting essentially right now, we're in late 2025, and we're beginning to launch products. And we have multiple products across all of our segments that we're going to be launching and driving growth in the near future. So with that, I will say thank you, and we'll take a look at the Q&A.

All right. The question is, can you update when first meaningful revenues from C1 and Dapibus? And it's a great question and hopefully, I addressed it a little bit in the presentation. Essentially, we expect to see meaningful revenues beginning in the first and through the second quarter of next year. We have products that we're supplying -- that we're currently engaged with suppliers and distributors, and we're starting to produce those products now so that we can get them into the market. So again, not -- we're layering revenues on top of revenue. So we anticipate also the Proliant partnership will be providing revenues. Fermbox will be providing revenues. And then we have our OEM agreements and products that we're going to sell directly into the market. So our goal is by the end of 2026, we are essentially showing the revenue growth that we can expect and hopefully accelerate through the rest of the forecast period. The second question is, can you update us on the size and quality of your customer pipeline across media, dairy and industrial applications? So the customer pipeline is actually very broad. So we have -- as I mentioned, we have a buy, brand and build strategy. So we have multiple customers today that we're working with for distribution and supply agreements where we will either be providing them OEM product that they'll package and sell themselves. And that is happening across cell culture media, and we're working specifically with cell culture media suppliers and distributors, both in the EU and the U.S. And as you look at nonanimal dairy, those are areas where we have immediate applicability for things like research grade, human alpha-lactalbumin. But those products like bovine alpha-lactalbumin or lactoferrin, those need additional development to hit the cost as well as the quality thresholds for these markets. So while we have very high-performing strains today, they need further development and then application testing to ensure that they have the same functional properties and qualities that you want in those products. So we -- as I mentioned, we just signed with BRIG BIO, it's a company where a lot of their leadership and their support staff have come from companies like FrieslandCampina or Formo, these are companies that are large dairy companies that have that expertise in the segment. So in areas where we don't have the internal knowledge we're trying to partner key groups or key companies that can help us drive and enter those markets. And the industrial applications, that as well, we're working directly with Fermbox, and they're sampling multiple, not just multiple companies within the biofuel space, but also biomass processing. So we're working with companies even outside of biofuels like in the sugar industries where you're processing sugarcane and things of that nature. So we have multiple customers across the segment in addition to products that we're looking to push into the market through OEM and direct sales agreements as well. As more products move from R&D to commercial sales, how much operating leverage should we expect? The nice thing about the -- well, the nice thing about our technology is, as we've spent, again, the last 10 years basically reengineering these cell lines to produce these products, it takes about 12 months to go from proof-of-concept to a cell line that we can leverage either through direct sales or potential licensing. So do I expect that -- yes, well, we have some leverage on that. Of course, we will because we need to develop some of these strains. Now some of them will be partnered, we'll co-develop them like we are with BRIG BIO or like we've done with Inzymes and some of them will look to put forward ourselves. But the nice thing about our system and the fact that we've used it for so long is we know how to move these products very rapidly. And I don't want to say inexpensively but it's -- they're much quicker to move through the process and to get them to a revenue-bearing state, you're not looking at tens of millions of dollars, you're looking at a couple of hundred thousand dollars to take you from proof of concept to where you potentially have a research grade material, like DNAse I, that's one where we've probably spent around $200,000 and now we're getting ready to manufacture. The leverage will come on manufacturing the products to get them actually sold into the market. The development costs are really de minimis in terms of leverage we should expect. So is the approximate $12 million revenue run rate, about right to reach cash flow positive financials? That's about right. It's likely a little lower. Our average burn is around $4 million to $5 million per year. Obviously, we have some expenses due to the manufacturing. So that $12 million is right around that rate. It also depends on the margins we're able to achieve in some of these segments. In Life Sciences, I expect to achieve higher margins than I do in Food Nutrition or Bioindustrial, which is why the majority of our time effort is focused on Life Sciences. So if we're operating at a 50% margin, yes, $12 million would be there for -- potentially be better than that, then obviously, the number would be a little bit lower. But essentially, that's what we're looking to achieve. But that's not too far from what I would expect. And I'm seeing no further questions. Yes. I'm seeing no further questions. So I want to thank everybody for their time today. And hopefully, you'll see us and look for us in the news here because we obviously have a lot of products that are getting ready to launch, and we're looking forward to growing with our potential.

That concludes Dyadic International's presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.