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

Good day, and welcome to the IAcessAlpha Virtual Best Ideas Fall Investment Conference 2026. Our next presenting company is Dyadic Applied BioSolutions. [Operator Instructions] I'd now like to turn the floor over to today's host, Joe Hazelton, President and CEO at Dyadic Applied BioSolutions. Please go ahead.

Thank you, and thank you, everyone, for joining us today. Again, my name is Joe Hazelton. I'm the President and Chief Operating Officer for Dyadic Applied BioSolutions. And I spent about the last 30 years in biopharmaceutical commercialization and development before 3 years ago owning data to help with the commercialization of their platform technology across 3 core areas: life sciences; food nutrition; and BioIndustrial. And what I'm really excited about is we're now at the commercial stage. So we've transitioned from a true R&D organization into a commercial organization with multiple products either on the market or in current commercialization using our gene expression technology. Now we're going to wait for the slide, here we go. So I'm going to be making, obviously, certain forward-looking statements. Please refer to our risk profiles and our SEC documents found on our website. And let's talk about why Dyadic is exciting right now, and it's really because of the growth in the demand for proteins worldwide, specifically animal-free solutions. So as we look at the global demand for protein is growing across all 3 of our key segments, life sciences, food nutrition and bioindustrial for multiple different reasons, not only from a food and nutrition standpoint, we have a growing population. In the life sciences, companies are looking for safer, more reliable alternatives to animal or plant-derived proteins. And when you use recombinant or nonanimal solutions, you can have broader allocations these proteins than you do with the animal or plant drive sources. And that's where Dyadic really has the opportunity to be transformational in terms of what it can offer for real-world applications across our 3 core segments. And we currently have products both ourselves and our partners that are addressing specific protein needs in each of those sectors. As as that demand continues to grow, we hope to be able to provide solutions to take advantage of it. Now why Dyadic and why now? What makes us an attractive investment opportunity? Well, it's because we've actually moved to the commercialization and execution stage. So when we sold our industrial business to Dupont in 2015, we embarked on transitioning or developing the host technology to create more valuable products. It takes time to do that. It takes time to essentially reengineer the cell lines to move from bioindustrial to life sciences or food and nutrition. So now that we've done that, we've shifted our focus to products that don't require human clinical trials. They don't require FDA review and not that biopharmaceuticals is not going to be a key value driver for us in the future. in the short and in the mid and short term, it really is about products that can be put on the market and sold without regulatory review and without FDA review or human clinical trials. These are products that we currently have available like albumin transferring growth factors in our cell culture media portfolio. We have other products such as alpha-lactalbumin and [ chymosin ] has just launched in the food and nutrition space. And we also have products we'll talk about later in the BioIndustrial. But we're at that commercial inflection point, both to ourselves, our partners and our distributors. We're ensuring the global market access for the products that we're launching. We've got multiple revenue models in place, both direct sales. We have licensing and milestone revenues as well as partnerships and profit sharing. And we have strategic partners to help us pull this through and commercialize and that's going to continue to expand. So we're really at the inflection point where we actually have products on the market, and that's the biggest change from Dyadic even a year ago, but let alone 5 years ago. We've actually completed the transition to commercial execution. And we're doing that by using our proprietary gene expression technology, which we named C1 and our sister platform, which is [indiscernible]. We have 2 platforms which enables us to target multiple segments of each of our core verticals in life sciences, food nutrition and bio and industrial. And even though we're going to talk about a lot of different products, a lot of different markets, what we do remain for the same. We engineer our filamentas-fungal platform to produce the proteins of interest for our markets, and those are our customers. And then we obviously engineer and scale that platform into commercialization. The 2 platforms that we have, C1 and Dapibus. C1 is more our Life Sciences and biopharma platform. It's been specifically engineered to produce more complex proteins like human therapeutics, monoclonal antibodies, vaccine antigens. Our depth of this platform has been specifically designed to be optimized for high-yield, low-cost production food nutrition or bio industrial applications. So we're taking the industrial heritage that we had, and now we're applying it to more high-value areas. And now we've got 2 platforms that help us capture value across our portfolios. But again, we're doing the same thing for each project. We're engineering our technology to produce the protein. So even though we talk about a lot of different markets, we're really a solutions provider. We're using our technology to provide solutions across multiple end markets. But on a daily basis, what we do is the same. So it's not really -- it's not like we're focused on a thousand different things. We're doing the same thing just in multiple different markets. What's also shifted is our ability to generate revenue. So we currently have a partnership with Integrated Biotherapeutics where we are selling our products directly into the market. Now these are research-grade products in cell culture, molecular biology reagents, things like growth factors transfer in alpha-lactalbumin. These are things that are currently being sold through our partnership with IBT, and we're also selling them directly to large and third parties. Those sales are just starting. We just launched these products. We just got them into the market, and now we're starting to see some initial sales coming in. We also have licensing and milestone revenues coming in from our partner, EN3ZYME and other partners where we've already received about $1.3 million in upfront and milestones from the launch of their [ Bovine Thomason ], which is now currently on the market and generating commercial sales. And then we have partnership revenues like with Proliant Health & Biologics. They're our partner for recombinant human albumin. They launched in March of this year, and they're currently also developing 2 additional recombinant human albumin products that they announced about 2 months ago, they'll be launching not just in the research space, but also in the cell and gene therapy market. as well as in the cell culture market. So they will have 3 different versions of recombinant human albumin in the market and we receive a share of the profits. We have partners like Fermbox Bio we also have a profit share for products that they're launching in the bioindustrial space, and then we have royalties from EN3ZYME and BRIG BIO as they commercialize alpha-lactalbumin. So we have multiple ways now that we've been able to diversify our revenue streams so that we can shorten the time to our ability to generate revenues. We can sell products directly. We still have retained the ability to license and have profit sharing with other partners as well. It's a capital-light strategy because we're selling products that are relatively easy to bring to the market and the research grade space. And for those that require more development or more resources to launch, we're using a partner-driven approach like we've done with EN3ZYME and Proliant. The markets that we're targeting are life sciences, food, nutrition and BioIndustrial. And within each of those, we've down into submarkets where we feel that our technology has a specific advantage, and most of that being that we can produce complex proteins, but with the horsepower of industrial -- the industrial heritage that we have. So when you look at the life sciences segment, when you look at human therapeutics, reagents, buffers, input proteins, this is a $80 billion to $100 billion segment. We're focusing in on cell culture media and molecular biology reagents. And it gives us an addressable market of about $10 million. So these are products that are used in the production of therapeutics. They're used in research development as well as discovery. They're used for cell and gene therapy. They're used to -- they're used for input proteins to make monoclonal antibodies with mammalian cell lines. These are proteins that are used every day in research, development, diagnostics and manufacturing of products. And it's a key market where the regulatory environment is such that they're looking for a more sustainable quality, higher purity and repeatability in their proteins. And that's what recombinant expression does, and we're able to do these in larger amounts lower cost than some of the competing platforms out there. In the food and nutrition space, again, when you look at different markets across alternative proteins, you're looking the nonanimal dairy market is a significant opportunity as we move forward. And you just take a trip to the grocery store and you're seeing all these different types of milk, whether it's soy milk, oat milk, now there's going to be animal free milk, which, again, is using proteins that are expressed in these gene expression technologies where we're able to produce way proteins like alpha-lactalbumin. And those are markets where, again, our technology has a competitive advantage because you're competing with animal-derived sources or you're competing with plant-derived sources, which are relatively inexpensive versus recombinant production, which is why you need a host that's been designed to produce proteins in large amounts and at low cost, and that's exactly where Dyadic started its industrial businesses. And again, that's what we're using. We're using those industrially proven techniques and platform capabilities to apply to these segments, that are competing in more margin sensitive areas. And then we look back in the bio industrial segment. We obviously were very successful in that in the past. And now we're reentering it, but in markets that we know very well or we're exploring niche or specialty opportunities where we believe that our ability to express complex proteins or enzymes like[indiscernible] could be beneficial in key areas like cosmetics. We're also in biofuels [indiscernible], which is a biomass processing cellulosic enzyme with Fermbox early this year, and we're already starting to see some initial sales there. And again, as we start to expand into this market, we're not trying to boil the ocean of BioIndustrial, which is $150 billion segment. We're focusing in on the areas where we know we have competitive advantages or experience or areas where we believe there's a specialty opportunity. In the near term, the majority of our near-term revenues, we feel are going to come from life sciences, whether that's from direct sales, licensing, milestones and royalties as well as profit sharing, the majority of our near-term revenues are going to come from this life sciences space. And again, we've got multiple products that are now currently in the market. We have things like DNase-I which is a molecular biology reagent used to cleave DNA. So it's essentially needed in cell and gene therapy. You needed to make mRNA vaccines. You use it in diagnostics as well as even cleaning medical equipment to remove DNA. That's -- it's a very highly utilized agent. And again, one of the things that we're able to produce at some pretty good margin and unit economics. And then you look at cell culture media, in order for things like [indiscernible] cells or other cell line excel lines. to run, they need products to grow mammalian cells. And that's what transfer and growth factors albumin, that's what they do. They're cell culture applications, but they're also used as stabilizing agents or coding medical equipment. Each 1 of these has multiple end uses. And in the research segment, where we're currently starting to launch these products, we're starting to see that our proteins are generating good data. And now we have a global distribution capability through IBT, and they've now launched 6 products being made in our platform, and they're currently available and they're currently selling. So the sales process in the life sciences space is a little bit longer -- do -- after we -- in order to get a supply agreement, they do have to test to make sure that it works in the application like if they're using transfer and cell culture or they're using it in biochemical assays. They need to make sure that it works. And once they've done the testing, obviously, then they feel comfortable using it and incorporating it into their production or into their general businesses. So it does take maybe 3 to 4 months in order for them to get through that process. But once you're ingrained, it creates recurring demand over the years. And that's what we're looking for is to again, get in through the research segment and as people get comfortable with the products. start to use them in these higher-value applications like cell culture and cell and gene therapy. So we're really trying to create that lasting value in a market that is really growing with the demand for these high-value proteins, but from nonanimal solutions. I just want to target -- I just want to give 1 example of, again, why I think that is a great investment opportunity. We have the capability to make things like [indiscernible]. And [indiscernible] is it's a key biopharmaceutical drug delivery agent. It's also used in cosmetics. It's a high-value product class that has been the -- essentially the building back for companies like [indiscernible], and they've done us extremely well with 1 singular product, hiloronidades. And we believe we now have 2 different strains that we're able to make hioronidades. One is a human glycan strain with more humanized, and 1 has native glycan structure -- what it does is it gives us the capability to potentially target both the biopharmaceutical industry as well as the aesthetic medicine industry. And again, we think that our technology, because our capability to like to engineer the products as well as the high productivity, high expression levels that we see with our platforms, we believe that we can have the manufacturing economics that makes hilaronadase attractive. And those are the types of opportunities that we're just -- they're not being valued right now for us. We need to move them a little further along in the commercialization process, but it shows you what's possible with a singular product, just [indiscernible], again, obviously, you need to put a lot of data around it, but it can support entire companies in terms of its value proposition. We're also looking at other markets like food and nutrition and bio industrial for growth. And again, these take a little more time because the manufacturing and the unit economics are much more margin sensitive in areas like non-al dairy or alternative proteins and bio industrial. So we use a partner-driven approach. So that, again, we're using partners that understand the space understand how to commercialize in these areas, people like BRIG BIO or people like enzymes, enzymes has already launched [indiscernible]. They're now getting ready to launch a[indiscernible] the dairy enzyme market, and it's used for cheese applications. And then we have partners like BRIG BIO that are funding the development of our bovine alpha-lactalbumin strain for the food and nutrition market. And these are guys that have been in the precision fermentation industry at large dairy companies, and now they've gone out on their own to bring these precision fermented products to market, and we've partnered with these types of groups to be able to quickly develop production strengths to produce the targets of interest. And along the way, currently selling both in alpha-lactalbumin as a research-grade product. So we're able to generate revenues today from the strain that we have, while also preparing for the future through a partner-driven approach. It's capital light. These do require significant investment to launch in food and nutrition space. But again, we have great opportunity and great partners. In the bio industrial segment, we've partnered with Fermbox Bio. We have our first launch of entry which again is for biomass processing and we have a profit sharing on the back end with them. And we're also developing other industrial enzymes earlier this year. We announced that we are making a pulp and paper enzyme, an area that we've traditionally well in the past. And we're starting to look at others like [indiscernible] for other markets in the bioindustrial space where we can add value. So these, again, are areas where we're looking for partners can help us with -- these are large-scale manufacturing projects you're talking about literally metric tons of products that need to be manufactured for these markets. And that's why we use a more partner-driven approach in these areas. As you look to the future, 2025 was about building the pipeline and getting these products ready to launch. '26 is the launch year. Now we have, again, 6 products are listed on IBT's website. They're currently selling those into the market. We're selling products directly and these are things like DNase-I. We have human albumin that's been launched by Proliant and now they're getting ready to launch additional versions of recombinant human albumin. We have human transfer and that we have initial pilot sales and we have lots of sampling and testing going on in the market. We also have human growth factors that are currently sold in the market. and bovine alpha-lactalbumin as well as a human alpha-lactalbumin are being used in the research segment. So we have lost some cross-category application for some of these, so we're able to monetize them, not just in life sciences, but also things like Food and nutrition. And in food and nutrition, we're developing additional protein enzymes like lactoferrin. It's a high-value protein in the food and nutrition space in non-animal dairy, also is used for cell culture media supplementation and life sciences. So again, multiple revenue opportunities from the same strain, and that's again how we look to multiples out of each product. And again, partnership model where we're looking for bovine alpha-lactalbumin to start generating revenues from research-grade sales. and ultimately from food and nutrition sales in the future. And then the bio industrial space, again, we're already launched, and we're getting ready to target additional pulp and paper markets as well as some specialty markets with things like [indiscernible]. So we've got a very diversified product portfolio. But again, what we're doing is the same. We're basically engineering the strains to produce these proteins of interest. And now we're looking at what's next. So we continue to refill that pipeline as we start to expand and launch these products into the market, both to ourselves and through our partners. Now we're not going to walk away from biopharmaceuticals, and I want to make that point. We do believe that the C1 platform will be transformational in its ability to make low-cost human therapeutics and we do have several significant partners like the Gates Foundation or the foundation Biotecnopolo di Siena. We're also part of the European vaccine hub where C1 is part of their discovery pillar, where they're looking for new vaccines and antibodies to treat world conditions. And we do believe that's going to continue to create strategic value for us. and continue to validate platform for human use. We've completed a Phase I study. So we know the C1 platform can be used to make human therapeutics. What we need the next step is for this to be taken through a Phase III clinical program and ultimately into a product that's approved by recognized regulatory health authority like the FDA or the EMA. And that's what our partners are helping us do right now. Obviously, we're a small micro cap company. We don't have the capability or the resources right now to bring these full across the goal line but the partners we have do have that kind of capability and they have those types of partnerships in place. And the markets are absolutely massive. If you look at just 1 monoclonal antibody in a -- even in a disease area like malaria, you could be talking about a couple of hundred million dollar product right there, if not more. And then you have, obviously, oncology agents and other vaccines for RSV that we're developing or even Ebola that we're looking at with Scripps as well. So we have lots of partnerships that will continue to not just be nondilutive to us, but also create strategic value and long-term upside. And that takes me to my last slide, which is this is our path forward. We are talking about launching products, expanding our position within the market, both through our own product sales as well as through our partnered product sales or partner distribution and supply agreements to create value for our shareholders. And we're finally at that stage where we're starting to -- I know that the initial sales are small, but again, it's taken a little longer than we anticipated, but we finally have products in the market. DNase-I is available today. We have growth factors available today, transfer and what's available today, and we're starting to leverage that in our partner relationships as well as with our supply agreements. And then we have our partners like Proliant, EN3ZYME, Fermbox that are now launching products into the space as well as another group of partners like BriggBio and others that are developing products in these other markets to essentially commercialize. So we have a lot of opportunities. And the beauty of having a platform technology is that you can address and create solutions for multiple end products. So we have multiple third-party projects for proprietary proteins and enzymes of third parties that they want to use our platform to do that. they want to use our platform in order to make their products and commercialize them. So we believe that's going to build long-term value while retaining that capability in biopharmaceuticals that, again, over time, we do believe it will add significant value to the organization. So I'm going to stop right there, and I want to thank everyone for their time today, and thank you for listening to me, and we'll pause here now for Q&A.

And I will pull up the Q&A. All right. Okay. So first question, when we start seeing a meaningful ramp in product sales? And yes, that is the absolute right question and 1 I'm waiting for every day. It's going to take a little bit of time. And it's simply because we didn't have the resources to create significant inventory and just flood the market and try to create a bunch of, I guess, paper sales. Essentially, we're creating to demand right now. So the initial ramp is slow, but we have a lot of sampling. We have initial pilot sales not just in life sciences, we're also seeing we're selling transferring into the cultured meat segment, in food and nutrition we're selling growth factors into the cultured meat segment. So we're starting to see these start to ramp again when it becomes meaningful, we hope that's going to be in early 2027, we start to see a bigger bump in sales as we start to get some more supply agreements done, but that's really the goal as we start to see a significant increase in our own product sales and also as well as our partners. Obviously, Proliant is now launched in March, so they're almost 4 months into the launch, and they're getting ready to bring additional products into the market. So again, we're looking for big things over the next 12 to 24 months. So the next question is, the biggest commercial milestones investors should watch for over the next 12 months? From a commercial milestone standpoint, we do have commercial milestones from some of our contracts that we currently have in place. But really, it's about product opportunities and partnerships that we're currently working on. Those are the ones that I would be watching for. Now that we've commercialized these products and they're available on the market, it changes the discussion and it changes the people that we're having discussions with because now we are talking to larger suppliers, larger distributors that are looking for better solutions for some of these nonanimal recombinant proteins and enzymes. And we happen to have a very highly productive system that can produce these products and better unit economics. So it really is the partnerships, the licensing as well as the product sales. Those are the milestones we should be looking at. What products appear closest to generating meaningful commercial revenue today? That one is very easy to answer. Albumin, transferrin as well as growth factors. And those are the 3 right now that I think will generate the most meaningful commercial revenue today, one, because we have a great partner in Proliant. They're 1 of the largest providers of serum-derived albumin in the world, and this is their first non-animal solution. They have a global customer base, a global distribution network. So we obviously hope to see good things. Transferrin is a market right now that's underserved. There is a significant need out there for human transferrin and bovine transferrin. We're already seeing pretty solid uptake in the cultured meat segment. They're testing it. It's working well in application. It's growing these animal muscle cell lines. So we anticipate as these products start to get approved by different regulatory agencies, the uptake is going to improve as well. So I think those are some of the key things. I know we only have a minute left here. This is a great question. What do you think investors most misunderstand about Dyadic today? I think what I think people missed the most is we've made a transition. Now up until a year ago, when I took over -- a little over a year ago now when I took over as President, we were focused on research development grants, things that essentially we're trying to move our biopharmaceutical platform forward. And those biopharmaceutical programs take time. even if you're successful in biopharmaceuticals segment, let's just say we had a monoclonal antibody and someone was going to take it forward to Phase I, II, III and then ultimately, through approval, that's a 12-month process. that is a long time -- or I'm sorry, that's a 5- to 7-year process followed by a 12-month regulatory review. And that's on -- that's the best case scenario. And I think what's been misunderstood is how are we going to make money today and we now have products that have been commercialized. I think that's what people are missing is that we do have products in the market. Yes, I realize the ramp is not really what we can want we want obviously to grow faster, and that is a focus of ours. But I think that's the biggest thing is that we actually have commercial products. We've now pruned once again, we can use this platform to create commercially relevant products, both through ourselves as well as our partners. And now we have Integrated Biotherapeutics. If you go on their website, you'll see products that are being made in our platform. again, you go to the Proliant website, you're going to see that they're selling a[indiscernible] and more to come on other 2 new products that they're going to be launching. And that's what I think people are missing. These products are out, I get -- they're not generating millions of dollars today, but they're in the market and they're starting to grow. And that's what I think people are misunderstanding. We're using our technology not to make products that are going to be approved in 5 to 7 years, they're approved today, and they're on the market today being sold. And I think I'm just out of time, and I want to thank everyone, and really appreciate the questions. And I'm always here if anyone has others.

That concludes the Dyadic Applied Biosolutions presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.