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

My name is Zunaid Suleman. I'll be your host today. And if you've been watching the show, you know that what we love to do is to get executives from publicly traded companies on our show so we could ask them the questions of what's going on in the company and see what type of answers we can get. And today, we've got a great guest. He is coming back on the show. We love talking to him. It's Dr. Michael Lebby who is the chairman and CEO of Lightwave Logic. Ticker on the NASDAQ is LWLG. All access starts right now. Good morning Doc, how is it going?

Great. How are you? Good to see you again.

It's always great to see you, and I love the conversations we have, especially the cool things your company does. I appreciate you coming back on the show. For the folks, though, that might just be tuning in for the first time, just give us a quick overview of what is it that your company does.

Lightwave Logic is a company developing electro-optic polymers. So these are polymers that actually switch light, and we use these polymers on the Internet to send information or traffic much faster and much lower power. So it's a polymer-based technology is very different than the incumbent technology that's out there today. It's faster, lower power. It's very small size, and we developed it in Colorado.

Every time I hear like the speed of light and different things like I'm always thinking in terms of moon and space travel, which we just had a nice beautiful landing last week, but it's cool to kind of hear it in the perspective of what you and your company are doing. So let's dive right in. With generative AI, which is picking up steam left, right and everywhere else you want to look, how do you envision the EO polymers and their role in the future of the Internet themselves.

So AI, generative AI has been the subject. Even last week, we saw some record performance from NVIDIA in terms of market cap. I mean, that company that's generating those computational GPU chips, the graphical process unit chips is doing really well. I mean, I think it's like a 5x increase over the last 18 months. It's amazing. Now it makes me think about the bubble. The bubble in 1999, 2000 that's when everybody said the Internet was going to take off, and it never really did. And there was a lot of really great valuations. Well, today, we're seeing a similar sort of excitement except today, I don't believe it's a bubble. Today, we're seeing some of the big data center social media companies invest in lots of CapEx. That means that they're really investing in upgrading the optical network, upgrading the Internet. And why are they doing that is because of this AI is generating a lot more information, these GPUs are really like working hard, they're sending more traffic, more information than we want to see on the machine learning. And what that actually does is that really drives the networks to upgrade their performance. So they need faster modulators. These are devices that go in front of lasers. These are devices that we create using electro-optic polymers. They want them to be much lower power. So where we actually indirectly benefit from this AI, degenerative AI boom that's happening right now. And as I've just indicated, I don't think this is a bubble. I think this is real. I think this is going to continue, and this is really, really exciting probably the most exciting thing we've seen in 20 years.

Yes. I mean NVIDIA has definitely been on a great run. I was watching an interview the other day. And someone had mentioned an analyst about how people that are in the stock love it, people that aren't in it, hate it just because they missed the wave you talk about continuing things and not just having to be a bubble. So let me go ahead and talk about any continuing deals that you might have going on because you signed an initial commercial deal. I think it was May of 2023. And then you stated that you're in discussion with Tier 1 for additional deals as well. Can you speak to the types of conversations you're having today? And more importantly, what firms are most interested in and the value that you can provide them?

So yes, when last time we talked, I did talk about our first deal or commercial licensing deal for electro-optic polymers which we inked back in May last year. And we've been in discussions with many different players. And it's not just Tier 1s. We're doing discussions with start-ups, we're doing discussions with OEM, original equipment manufacturers as well as Tier 1s. And some of the discussions in terms of what are they really looking for? What are they really discussing? Well, there's 2 things. I mean, our business model has both licensing our materials which is what we did our first -- a commercial deal last year as well as selling products. And yes, there is interest in both sides both the licensing and the materials as well as the purchasing of products. So that's really exciting. But it to drill down into even more detail. I think I -- when I talked to you last time, I talked about the interest in greater reliability and that is still on the table and that's still being discussed. And with our lab expansion we had last year, we really accelerated that. And so that's something that we can really provide good feedback. The other big issue is how do we scale because 1 of the things Lightwave Logic wants to do is to make these electro-optic polymers ubiquitous. They want to make -- we want to make them everywhere, just like you see polymers for OLED's organic LEDs, they're everywhere and every screen you look at these days. We want to do the same thing for electro-optic points. And so the scale question comes up. And in our 10-K, we just announced that in terms of working with the big foundries that we've talked about, we actually have modulators on 200-millimeter wafers is a 200-millimeter silicon wafers. These are 8 inches across. This is the standard size that foundries use. Now there are all bigger wafers in foundries, but for us, this is a big milestone. This means that we can scale our technology quickly and efficiently in volume. And the last thing that probably mostly from the larger companies we talk to us is financial stability. When you're a small company with a brand-new platform, a lot of the customers really want to know that you're going to be around for a long time. And if you look at our numbers, and I'm not going to go into the numbers today, we can all see them in the 10-K. We're very, very stable. We have a runway until mid-2025. We don't have any debts. So we really manage our company conservatively and very, very stable. And that actually goes down very well with our discussions with potential customers. And it's really exciting. I would say since the last time we talked, the interest has increased. So we are becoming more busy and there is a lot more interest and this, I think, is really exciting as we go into 2024.

Well, 2 things. I know you said you're having those conversations, but whenever those deals finalize, I'd love for you to come back so we can kind of dive into how -- not just a deal happy, but how it benefits you and everything else that you're doing. You mentioned about deals and different things of that nature in your previous answers. And 1 thing I've always believed and heard is how your network is like your net worth and the reason I love talking about networking is because so many deals can happen in these type of places, and I'm talking about an example, the European Conference on Optical Communications that you most recently went on, do these type of conferences serve as a great networking venue where you're actually in front of these potential customers? Like do deals, conversations actually happen? And are they beneficial to what you're looking to do?

Absolutely. As you probably already know, I attend a lot of financial and banking conferences as well as a lot of technical conferences. In fact, with 2 technical doctorates, I'm a little bit of a techie. So yes, I do go to these conferences, manage panels, chair different sessions and interact with the customers. Now if you think about it just for a second, some of the customers, the data center guys, the optical network guys, the component guys, they have really deep technical teams, and they send to these conferences to check out technologies. And that's what they need to do because they are looking for their differential advantage so they can get a leverage on their competition. So yes, we do engage with customers at these conferences. And in fact, if we think about it, the ECOP1 is where we won an award of the hybrid photonic integrated circuit last year. But we're also speaking at Optical Fiber Conference in March. That's called OFC down in San Diego and there's another international conference, the big International in Brussels, in Belgium in April. In both those conferences, we engage with the customer community, the technical community for technical discussions as well as business discussions. And in fact, what's really exciting about the one coming up in March, I've given a talk on, I believe, the session is called heterogeneous integration, which is exactly what our technology does. We're doing a polymer technology with a big 200-millimeter silicon wafer. And so yes, I'm giving a technical talk at OFC, but the following day, one of the most prestigious sessions at this conference is called the Executive Forum and actually chairing a panel of CEOs, the biggest CEOs in our field. And I get chance, just like you're doing today to ask them the tough questions what are these guys really looking for? What's really exciting, what's really going to happen. And so yes, we are engaging not only with the techies, but also the leaders of the community, which is really important if you've got a brand-new technology platform.

Well, I mean, I am happy that you get a chance to see what it's like at my -- I definitely couldn't do what you're doing on the other side. You talked about you've got San Diego coming up. You've got Brussels coming up as well. Leave me with a little bit more in terms of what catalysts investors should look out for, for the rest of 2024.

So investors keep reaching out to me and really the question the investors are asking is commercial progress as really we started that last year, and we are 100%, 110% focused on making sure we progress commercially in 2024. So you're going to see. Obviously, you're going to see technical things like reliability data. You're going to see prototypes. You're going to see demonstrations, these are things that are going to happen in 2024, which is great because this is what the customers want to see. You're going to see a lot more activity on the IP front, the intellectual property front and the patent front because people are now realizing we have a great technology. So it's up to us to really be aggressive on that front. And lastly, I think you're going to see us in the community a lot more being a lot more public. We do get a lot of comments that were very conservative, we're quite private. And I think we're doing that for the right reasons. We want to make sure we move forward commercially with the right level of expectations. And so to my investor base, which are loyal, and I really appreciate your support. We will be coming out with a lot more information this year, and we are really, really excited as we look towards 2025 and 2024 is looking to be a great year commercially.

I love it. Hey, I'm greedy so I'd love to have you come back and we can talk to the people through this venue here as well. But thank you so much, Doc. It's always a pleasure to just talk shop and see what you're up to. And I love the fact that you say techies. I might have to use that from here on out.

Thank you Zunaid, appreciate it.

Absolutely. Have a great one. And thank you for always being with us here. It's so great because we do this for you, the viewers at home. We want to ask executives and publicly traded companies, these questions because we're all curious what's going on and what is going to happen in the future as well. But again, I want to give a big thank you to Dr. Michael Lebby, who is the Chairman and CEO of Lightwave Logic. Ticker on the NASDAQ is LWLG and we thank you for watching all access. All right.