Lightwave Logic, Inc. (LWLG) Earnings Call Transcript & Summary

Hello. This is Jim Marcelli, President and Chief Operating Officer of Lightwave Logic, and I welcome you to our investor presentation today. It's a second slide, is just the safe harbor, statement that we have to make before we do these presentations. Also, I'd like to make this a short statement with regards to COVID in our company. We have here in Colorado, we were able to have everybody in our operations. We have 19 employees, all of them are in the facility, both in our synthetic area where we make our [ coma force as well as our clean rooms ] . So we have safeguards put in place, including with everybody taking our temperature before they come into the facility, and wearing masks in all common areas. But at this point, we don't have anyone working from home, everybody is in the facility. Lightwave Logic overview. I wanted to tell you what we're talking about today. Obviously, Lightwave technology platform is designed to really scale up and help the existing Internet structure that's in place. And we're able to, with our technology and our platform, we're able to transmit data at much higher speeds, at much lower power. And right now, we're running at about 1 volt in all our tests that we're running right now, which means we can run modulators without drivers. And the whole point is to leverage our yield polymers and create different types of devices and different types of -- with our platform. Right now, we are, in which I'll talk about later, we're underway with Tier 1 partners under NDA Unfortunately, we're not allowed to use their name. The other thing is -- as I said earlier, we have everybody in our facility. We have our facility, we are able to do all the material development and production here as well as we have 3 clean rooms and we're processing all our wafers and here at the facility. We have complete in-house control of the whole fabrication area and material area and package design. We do go outside with a partner to do our actually package our devices. From the financial side, right now, we have a very strong balance sheet. We have an equity line with Lincoln Park Capital, which we still have a little under $17 million list. So that gives us a -- our financials for as financial is concerning based on our current burn rate and budgets through 2021 going into 2022. We have enough cash available to us to take us through May of 2022. On the IP side, we'll talk about -- we have right now a very strong IP position, and we have about 51 patents. So obviously, it's a huge traffic jam, and everybody's obviously split this, everyone working from home is under the circumstances with COVID. There's been a lot of pressure on the Internet and it's being really stressed. So we're able to, with our technology, is to really speed up at the Internet and the different devices that we're making with our EO polymer technology and platform. We really -- everybody agrees, we need the need of innovation. And under these circumstances right now, we're getting a lot of attention from a lot of Tier 1 companies with our technology to be able to increase bandwidth and increase speed. On the market side, the network capacity is obviously falling way behind -- is falling behind the traffic growth, and it's even more so today than it's ever been in the -- it's going to take innovation. And I think that's what we've developed. And our material basically enhances a lot of the existing technology, whether that's gallium arsenide or Indium Phosphide. We can actually marry our materials with that, not only just straight polymer modulator. But we can actually use our platform, our material platform with silicon photonics and with any phosphide-type products and materials that are being developed. The market right now, the total photonics market is forecasted to grow to over $44 billion by 2025. And the other side is the -- energy consumption rate is going to be paramount with all these companies and our ability to reduce power usage and be able to run devices at near 1 volt or less or CMOS levels, means we don't need a driver, and we can save a lot of energy for customers. And by the way, we have a patent covering, those designs, with that type of device. So basically, we're starting with the fiber communications. We have a proprietary engineered organic polymer materials. I said earlier, that , that has less power increased data through to the existing network. Basically, we were developing ultrafast optical modulators because while most people are running anywhere from 10 gigahertz to 40 gigahertz, our bandwidth is 70 gigahertz and faster. And so we can grow anywhere from 50 to 70 gigahertz, which allows us to get a 100 gigabits on a single device, and multiplex that into 200 gigabits per second. Basically, again, the current prototypes we're doing are basically 50 gigabaud and the next generation is 100 gigabaud, which is, as I said, in the 50, 70 gigahertz. The top -- the target speeds we're trying to do is the 100 gigabaud or device that we can run 800 gigabits per second. And as I already mentioned is the voltages around 1 volt. We're really excited about this and the people that we're working with are very excited. And that level of excitement has really even increased further because of the pressure that the Internet infrastructure is going through right now. Again, on the competitive advantages that we have as a company is one, we can reduce network energy cost because we're running at a much lower voltage. And we've said this before, I mean, I think that anywhere the minimum of 26%, we think we can save even more. And that's a lot of savings for network operators on their energy costs. Today, I think on the previous presentation I did, I got a chance -- I told you I got a chance to visit a large facility down in New Mexico. Intel's facility because they've been public about it, about they have that facility up and running. And the first thing is to notice when you go in there, when you go to that side is that they basically have got a substation to run that. So I mean anywhere where they can save energy, they want to look for that, and that gives them a h*** of a lot of savings. And we're able to -- much faster networks with a very robust, stable materials that we're doing. We continue to do testing that we recently acquired to more engineers to run all of the -- all the test parameters that we need that people are asking us for. And we're getting them that information as quickly as we can. And when we get that out, the other thing we want to do is to be able to announce those results out to the public information out to our shareholders. And again, we're having a very flexible platform, which is -- it allows us to basically marry our technology with other -- with the packaging designs. And that's what we're working on with our -- with people that we're under with. The target customers you can see on the next slide is basically -- we're selling up and down the line. So we're looking at the Internet providers and talking to them. So we're trying to sell from the top down and as well as the bottom up. So what we could consider the optical comp order supplier or material supplier. The -- we're talking to anything from high-speed optics manufacturers to networking equipment manufacturers. And then they push those into the Internet service providers. So we're talking both from, if you will, from the Internet service providers. On one end to the producers of the products and devices that go into those, that go into the network-switching equipment. So we're selling it, like I said, on both sides. And our business model is actually 3-pronged. We can sell components, we can do licensing of our technology and we do technology transfer. When we talk about technology transfer, we're talking about co-packaging of devices and product. What we use are our materials and enabling material for design with a customer. And then that gets us designed in for that future for the product for the next-generation product, which is very sticky. We're not going anywhere, once they design us in, and that's what we're working on there. We also -- the 51 patents, there's similar technology we might look at licensing for royalty. And we think we have some level of being able to selling components directly. Like I said, we can produce all the chips in the house here with regards to selling components directly, but we do have a packaging partner to package those into modulators. So basically, we're doing -- right now, we're doing -- we have customers that have signed NDAs. We're working with those customers. We've done prototyping, we've gotten feedback on prototypes. We're making the appropriate changes to those -- to that first testing. And then we run another level of prototypes. And we get those into customers for testing, and we've done some limited sampling. And then as I said, we're working for initial design in, that would be more on the technology transfer side, and that will bring us right into basically commercial sales, whether that is a combination of selling components, licensing certain parts of our technology or doing co-packaging with a Tier 1 customer. And that's what we're working towards right now. So we have 51 issued patents. We're prosecuting another, I think, 9 or 11. We've split a couple out some in that range. And it's key to us that we protect all of our IP and technology. It's something that's very strong and something we believe in strongly, I should say. And we have got to pick a fence around it. So we not only do we have encompass protecting our materials, we're protecting processes, device design, the method design. So we have patents that protect us in all areas. And that's -- and we're building on that. So basically, we try to find ways to protect our technology completely. And so that we can make a lot of things -- make a lot easier for both doing our co-packaging and tech transfer as well as any licensing agreements. I think what -- we have a very experienced management Board. Michael Lebby is our CEO. I'm the President and COO, been with the company since 2008. We have a very, very strong Board. To point out a couple of them, Dr. Frederick J. Leonberger, who's kind of the father of modulators, he [ started ] lithium niobate modulators; and Dr. Joe Miller, who was both the CTO of DuPont and Corning Corporation is on our Board; and Siraj El-Ahmadi, who's on the network side and is very important to our Board as well. We have a very, very, very strong Board of Directors, a very active Board of Directors. And the other thing we put together is world-class Advisory Board to help us really move through some of these different design and design issues and help us open doors in several of these Tier 1 companies. And these have been very active. We just recently added [ Frank So ] to our Board, Advisory Board, I should say, and he's really helped us a lot to see on OLEDs. He was involved in -- very heavily in the commercialization of OLED, which is not unlike trying to commercialize electrolytic polymers. And we're very, very glad to have him on our Advisory Board. So I think, again, key takeaways on this is being able -- we've made to scale up existing Internet structures. We can marry our technology with silicon photonics within a phosphate gallium arsenide as well as just pure polymer modulators. We were able to be flexible with our technology. It allows us to basically spin on the coat, different types of platforms and different types of material platforms, and be able to make their technology run much, much faster. And that's what we're -- and that's exactly what we're doing. We're designing our technology design to transfer data at much higher speeds and much less power. So this allows us to run modulators, like I said, down in the 1-volt area. And we've leveraged all of our internal engineering and to create these devices that will actually convert data from electrical signals, optical signals very, very, very quickly. And the velocity matching with polymers get velocity matching between the optical signal and logical signal, which allows us to do that. And we have in-house control of all of our material supply device fabrication and package design. And so the only thing we go out for is for the packaging in itself, we have a partner that actually packages our modulators. And again, the total market size that we're -- what piece of it we're still working on, that we'll get. But the fact of the matter is what our sample would be. But the total market size is about $44 billion by 2025. And again, we are technology evaluation with Tier 1 partners that are under NDA. One of the things -- I think with all of the testing we're doing and with the addition to additional engineers that allow us to speed up all of our testing protocols. And I think that we should be -- we're hopeful that we'll be out with some more news to the shareholders so they can see better where we are right now and getting better visibility on how we're coming along on commercialization, and I look forward to doing that. And we're using it for any investor relations side. Our Investor Relations contact is both Luke and Greg here. You can contact them directly or you can contact us through lightwavelogic.com, our website. And I would also encourage everybody to look at our new website that we just launched not too long ago. It had some very good content in there and also, there's a great video that starts out, which really explains it, explains where we are with everything.

Thank you for your presentation today. It looks like we have some time for questions. Our first question is how many patents does the company own?

I'm sorry, you broke up a little bit on the question.

How many patents was the company own?

The company has 51 patents to date, and we're prosecuting, like I said, another -- I say, 9 to 11 because I think we did a divisional, so I think it's 11 more patents.

Do you plan to list on a national exchange anytime soon?

The whole -- our goal is to uplift absolutely, and -- but we want to do that organically. We meet all of the criteria for, let's say, NASDAQ except for share price. So we are -- we want to -- like I said, I think as we get more information out to shareholders and getting more guidance, I think our share price will increase, and that's the only thing that we need to establish -- need to do is have our share price increase so that we can uplift.

Next question. What is the company's monthly burn rate?

Our burn rate, which we put in our 10-Q that we had just put out a few weeks ago, our burn rate is about $588,000 a month.

Next question, when do you expect to enter into a partnership, this year or next?

Well, we -- as quickly as possible. We haven't given any guidance exactly what with time that we will do it. But I'm telling you, we're moving as fast as we can, getting information to people as quickly as we can. And as soon as we satisfy that, then I think we would be moving into a partnership that we can announce.

Our next question is how far away are you from commercial volumes?