Good evening, welcome to the Dyadic International's Third Quarter 2021 Financial Results Conference Call. Currently, all participants are in a listen-only mode. Following management's prepared remarks, there will be a brief question-and-answer session. As a reminder, this conference is being recorded today, November 10, 2021. I'd now like to turn the call over to Ms. Ping Rawson, Dyadic's Chief Financial Officer. Please go ahead, Ping.

Thank you. Good evening and welcome everyone to Dyadic International's third quarter 2021 financial results conference call. I hope you had opportunity to review Dyadic’s press release, announcing financial results for the third quarter ended September 30, 2021 and the recent company highlights. You may access our press release and Form 10-Q under the Investors section of the company's website at dyadic.com. On today's call, our President and CEO, Mark Emalfarb, will give a review of our third quarter business and corporate highlights, including a brief summary of our research and business development efforts. I will follow with a review of our financial results in more detail. We will then hold a brief Q&A session. At this time, I'd like to inform you that certain commentary made in this conference call may be considered forward-looking statements, which involve risks and uncertainties, and other factors that could cause Dyadic's actual results, performance, scientific or otherwise, or achievements to be materially different from those expressed or implied by these forward-looking statements. Dyadic expressly disclaims any duty to provide update to it’s forward-looking statements, whether as a result of new information, future events or otherwise. Participants are directed to the Risk Factors set forth in Dyadic's reports filed with the SEC. It is now my pleasure to pass the call to our CEO, Mark Emalfarb. Mark?

Thank you, Ping. Good afternoon and thank you for joining us today. Our mission is to transform bio manufacturing to improve how we feed, fuel and heal the world by utilizing modern biotechnology to revolutionize science, medicine, agriculture, and engineering. We are addressing the animal and human health markets by working together with the global scientific community in academia, industry and government to provide a cost effective solution to increase bio manufacturing outputs and satisfy the growing demands for protein production and unmet needs for affordable biologic drugs, vaccines and other biologic products and processes that can help address health inequity in middle and lower income countries. We are continuing to advance our science and business development efforts towards the commercialization of our C1 protein production platform for use in human and animal pharmaceutical industries. 2020 was a very productive year where we announced many new developments and commercial partnerships in addition to publishing critical proof-of-concept, scientific and animal data, further advancing the attributes of our C1 technology. 2021 has been a continuation of those efforts as we continue to advance towards our first in-human clinical trial of our COVID-19 vaccine candidate, DYAI-100. To validate C1 produce proteins are safe in humans and further accelerate global C1 platform adoption. The efforts to launch the C1 protein production platform has been a global effort, which includes important collaboration relationships in Africa, Asia, Europe, and the Americas. It is important to understand that while many people believe COVID will soon be in the rearview mirror, it is still a real problem. It will likely require annual vaccinations or periodic boosters to maintain antibody effectiveness. Many underdeveloped countries are still struggling to produce sufficient quantities at affordable prices to protect their citizens. A key takeaway from my comments today is that our Phase 1 trial is not just about COVID, it's a means to an end. Our main objective is to demonstrate safety and efficacy in humans, so we can pursue all the other indications that our C1 platform can be used for. COVID just happens to be the current focus. There are many countries interested in the C1 platform for numerous other applications in vaccines and drugs. Demonstrating safety in Phase 1 is an important gating event. I would like to give you some brief updates on several ongoing collaborations. The Rubic consortium our C1 technology transfer has commenced, and the DYAI-100 and other COVID-19 variant RBDs have been delivered. In addition, genetic tools, C1 trainings and protocols for engineering human cells and producing proteins from sub cells has also been transferred. We are in discussion with Rubic regarding where in addition to COVID-19 they can successfully apply the C1 technology for the development and commercialization of several other vaccine candidates. Syngene International accelerated tech transfer of the DYAI-100 cell line has been completed, the manufacturing part of technology training on the C1 production platform has shown initial success and a number of the servers COVID to RBD variants concern, antigens, including the Delta RBD has been delivered. Many talks C1 platform tech transfer has been completed and they are developing nanoparticle vaccine candidates for COVID-19 variants. Sorrento Therapeutics for continuing negotiate the licence agreement and the terms which may be materially different than the terms set forth in the binding term sheet announced in August 11 2021. We can have no -- give no guidance here for when the license agreement will be executed by in the interim technology transfer for Sorrento for DYAI-100 and the C1 platform has been initiated. This week in Israel, Bio-Technology General Israel, a faring pharmaceutical company is carrying out what we anticipate will be a successful purification of the DYAI-100 drug substance, which will have to be converted into a drug product after regulatory acceptance, maybe using one or more DYAI-100 Phase 1 clinical trials. A GLP animal toxicology study has demonstrated preliminary safety profile of our C1 produced SARS-CoV- 2 RBD vaccine a vaccine candidate DYAI-100. SARS-CoV- 2 virus specific immunoglobulin IgG antibodies have been detected in those animals. We continue to focus on the glycoengineering of C1 cells for the use and producing monoclonal antibodies, but continues to show progress towards both a proof of concept biomolecule Nivolumab to demonstrate that C1 can be used to manufacture monoclonal and other antibodies. Multi specifics and other glycosylated proteins faster had high yield and a lower costs. Now, I'd like to provide a brief update on our ongoing efforts using C1 for manufacturing vaccines and drugs for use in animal health. The Zoonoses Anticipation and Preparedness Initiative, ZAPI, was successfully concluded in July 2021. The ZAPI program validated C1 is the most effective production platform to express SBV and RVFV antigens. C1 cell express antigens were successfully used to develop recombinant protein particle-display vaccines. The C1 produced SBV antigen showed safety, efficacy and protection in cattle, sheep and mice. In June, the ZAPI study was published in vaccines, a leading peer-reviewed scientific journal. We are continuing to work with a global animal health company that is conducting poultry animal trials, using C1 produced antigens. The C1 antigens are demonstrating promising efficacy in those studies. We began a fully funded Phase 2 portion of this project to work on further increasing productivity of one or more of these antigens. Based on the encouraging results to-date, we are in discussions to determine how to expand our collaboration for additional potential commercial antigens for farm animals. We are also working with another global animal health company to develop a companion animal antibody. The inbound interest that we are experiencing in applying our two plus decades of industrial biotech experience and expertise, knowledge and technology in non-pharmaceutical markets, is accelerating. These potential markets, in conjunction with our current focus of applying C1 in animal and human health markets underscores to broad potential applications we are exploring in agricultural, cosmetics, food, nutraceuticals, as well as other markets. Our growth has been an iterative process. As an often is the case, the company has not been able to make an announcement or name a collaborating partner. However, we've made every effort to do so where possible. Based on the collaboration we've announced and the level of new activity we are working on, we are clearly executing on our mission and gaining commercial traction across life science industries, especially in geographical regions, where vaccine and drug distribution and production are lacking and where flexible, easy to use, to set up tooling, and manufacturing facilities with smaller physical footprints are necessary. We are uniquely positioned to deal with these situations. We are at a critical point in the company's corporate and operational development lifecycle, as our efforts across many initiatives are starting to bear fruit or otherwise nearing to a head regarding outcomes. As much as the tension around Dyadic’s operating activity has been COVID-19 related, in results of a clear need for the production capabilities of the C1 platform, our journey to create a better production technology for vaccines, biologics, human and animal health started well before the pandemic. And our story is not just a play on COVID, but once-in-a-generation technology shift, whose benefits could transform global bio manufacturing for decades to come. We have a clear and strategic operating plan, as well as a resources and appropriate capital allocation strategy. Our focus has been and continues to be to expand commercial opportunities of where to apply our C1 technology to human and animal health applications. Getting the company's proprietary COVID-19 vaccine candidate DYAI-100 into a first in human Phase 1 clinical trial is a key next step. I'm pleased to welcome Joe Hazelton to our executive leadership team. Joe joined us as a Chief Business Officer. He comes to Dyadic with over 20 years of portfolio management, regulatory oversight and global commercialization experience, including 15 years with Novartis. Joe joins at a critical point and a commercial development, supporting the global commercialization of the company's new and existing business initiatives, including closing out opportunities, business development, licensing, and regulatory matters. Joe's experience is critically important as we continue to pursue cutting edge science in order to further the application of our C1 protein expression and manufacturing platform. I previously mentioned that our non-compete agreement with DuPont, outside of licensed Sciences has expired allowing Dyadic to explore additional new business development activity going forward. Our C1 production platform is a culmination of more than 20 years of ongoing research, development, evolution and ultimately cross application of proven industrial scale enzyme and protein production in broad ranging industries, such as biofuel. Dyadic’s development advances have transformed to scalability, production, efficiency, as well as the manufacturing footprint needed for those industries to reliably produce enzymes and proteins had industrial scale. We have an enormous number of opportunities to monetize our C1 platform technology for the benefit of shareholders. Management is committed to focusing on those that present the best opportunity to maximize our limited resources. We've done it before and we're working toward doing it again. I will now turn the call over to Ping for financial update.

Thank you, Mark. In addition to the financial results, I will be discussing now, you can also find additional information in our Form 10-Q, which we filed earlier today. Our cash, cash equivalents and the carrying value of investment-grade securities, including interest were $22.8 million as of September 30, 2021, compared to US$29.2 million as of December 31, 2020. Research and Development revenue for the three months ended September 30, 2021, increase to approximately $693,000 compared to $415,000 for the same period a year ago. Cost of the research and development revenue for the three months ended September 30, 2021 increase to approximately $393,000 compared to $267,000 for the same period a year ago. The increase in revenue and cost of research and development revenue was due to higher revenue and cost amounts for individual projects, including zappy compared to the same period a year ago. R&D expenses for the three months ended September 30, 2021, increase to approximately $1,902,000 compared to $986,000 for the same period a year ago. The increase primarily reflected the Phase 1 clinical trial costs of DYAI-100 or COVID-19 vaccine candidates in the amount of $128,000 offset by a decrease of $292,000 related to our other internal research projects. G&A expenses for the three months ended September 30, 2021 increased by 3% to approximately $1.693 million compared to $1.643 million for the same period a year ago. The increase principally reflected increases in payroll and the share-based compensation related to cost of $86,000 and insurance expenses of $65,000 offset by reductions in business development and Investor Relations costs of $79,000 and other decreases of $22,000. Increased income for the three months ended September 30, 2021 was approximately $3,000 compared to $77,000 for the same period a year ago. The decrease was primarily due to the lower balance of held to maturity securities and the less reinvestment due to the decrease in interest rate. Other income for the three months ended September 30, 2021 was approximately $1.606 million compared to zero in the same period a year ago. The increase was due to the sale of our BDI equity interest in July 2021. Net loss for the three months ended September 30, 2021, was approximately $1.715 million or $0.06 per share compared to $2.499 million or $0.09 per share for the same period a year ago. With that, I will not ask the operator to begin our Q&A session. Each caller will be allowed one question and one follow-up question to provide all callers an opportunity to participate. If time permits, the operator will allow additional questions from those who have already spoken. Operator?

Thank you. We'll now conduct a question-and-answer session. [Operator Instructions] Our first question today is coming from John Vandermosten from Zacks. Your line is now live.

Hi, Mark, Ping and welcome aboard to Joe. Let me just start with a question and also Mark, thanks for the update on all the active programs, good to hear how they're coming along. Do you have a process in place to keep up and meet with all the partner collaborators on a regular basis?

Yes, yes, we do. We actually -- in R&D, virtually every month or every 45 days, depending on the progress of projects, we have -- now, it's a Zoom meeting, but actually, run in for the first time since COVID was actually in Finland at VTT this week with one of our collaborators.

Okay, great. Great. And I guess how many active collaborators do you do estimate we have right now? I think I have a list of about 40 -- about 40 different entities that you work with? How many of those could we consider to be active?

Well, John, I think that's like Mark mentioned earlier, a lot of them, we can't really publicly talk about that. And there are a lot of ones that's -- the one that you have on the list are very accurate in terms of the ones that we have already announced. Like this quarter, we actually signed additional two new collaborations, which we can only give you, you know, the general description of the organization. We can't really name them, but one of them is, you know, academia like a institution, which we have been in touch with them for a long time. And the other one is industry partner that we are exploring potential opportunities to afford a different industry, And to be to kind of reinforce the statement that we made in prior calls, we do expect still to announce the human pharmaceutical collaboration between now and the end of the year with a big pharma company.

Okay, good deal. And the follow-up question. Just on cash burn. I think that the latest update I had on your guidance, there was 10 million to 12 million this year. Does that still sound like it's in the right range?

Yes, I think so, I think, is still in the bulk range. You know, obviously, we still have several months depending on how things going with the Phase 1 clinical trial. We are constantly assessing the different locations, in terms of the Phase 1 clinical trial, given a lot of countries. They don't really have any, you know, COVID cases any longer, for example, in the US. So we definitely have to look at possibilities, to reduce the cost, but that's still in the ballpark.

Okay. Thanks for your time.

Welcome.

Thank you. Your next question today is coming from Lewis Vuitton [ph] from a Private Investor. Your line is now live. Q – Unidentified Analyst: Hey, Mark, how are you?

Hi, Louis. Hello, hello. Good. Hi. Q – Unidentified Analyst: Yes, just again, I've one question. I know you can't talk about Sorento very much. But you have about two years of cash. And I think people were excited about Sorento because they were going to come in with something like 14 million in cash and stock. And then you could remember the 34 million over time. And now that seems to be in jeopardy. And you know, I don't know where it's going to turn out. But let's say it doesn't work out and you can't be can't come to closure with them. What would you do to replace that money?

Well, first of all, obviously, we're first and foremost trying to do collaborations with Big Pharma and other companies, which we did in the industrial biotech space before if you remember with Shell and BASF, Abengoa Bioenergy, but we did non-exclusive license deals and we got upfront cash. And then milestone– it seeds would come in. So we've always been prior to Sorento and during the same timeframe now and going forward, pursuing those same types of opportunities to bring in non-dilutive cash with upfront access fees milestones and royalties. So that's the primary reaching goals and objectives. And then of course, if need be, you know, we could go back to the market. So we have plenty of cash to upgrade the business. We have more than enough cash to be comfortably finished a Phase 1 clinical trial on our own without any help from Sorento. And we're pursuing that. And as we said earlier, the main goal here is to get preliminary safety and efficacy data to open the doors up to get some of their cash and accelerate the access fees from big pharma biotech companies that we expect. Q – Unidentified Analyst: Okay. If I could do a follow-up, and it's sort of the same kind of idea, but you talk about matters that you're talking about with Sorento not one single matter, but you have plural matters. And then I guess the issue is, it sounds like you have met all the requirements of the term sheet. So it means that they have not written out the requirements of the term sheet is not an accurate statement.

I really can't comment about that because we're in discussions and negotiations. And, you know, you can speculate, but you know, we believe that we actually met potentially, all the things that we're supposed to have done. But, let's see where it all goes. And hopefully, we can come together and do what we intended to do in the first place, is to launch products on one product, but the use of the platform for Coronavirus is not just SARS-CoV-2, two but coronaviruses pain in the future potentially, both in therapeutics as well as in vaccines to bring affordable healthcare to a global population. So that's our goal. That's our objective and I hope that's still their goal objective as well. Q – Unidentified Analyst: Thank you, Mark. Appreciate it.

Thank you. Our next question today is coming from Robert Smith from Center for Performance Investing. Your line is now live.

Thanks. Hi, Mark. Could you give me an idea of what Joe’s first – what is he going to be doing first so to speak?

Yes, well, it's a very complex question. But first and foremost, he's going to be getting his arms around what we do here at Dyadic in terms of the technology, the business development, the different market opportunities that are expanding. As we mentioned, we're being approached by multiple other industries to apply our technologies and our expertise and our knowledge, including an industrial biotech. So we're going to be evaluating in addition to animal and human health if and where to apply our energy and our technologies to expand the market opportunities, especially in particular, some of those are more near-term cash generating opportunities. So that's really what is me doing as long and as well, working with myself and Matt and others on the business development efforts?

Yeah, Robert, this is Ping. I’ll add to Mike's comments that one of the other things, of course, is core Sorento, as mentioned by Luis earlier, but one of these is core to us is that we are taking our own proprietary product in-human in a Phase 1 study soon. We plan that not only to open up doors to a range of other human and animal health conversations, particularly thinking about how sensitive big pharma are to safety data. So bringing that to them. And to Mark's point, there are a great many other opportunities that we are as a small company, in discussions around and while Sorento and other things, of course, are hitting some headlines, that's not distracting us from the job at hand, which is to make sure that they are able to commercialize C1 in a range of different verticals. And you know, Joe's going to help us do that.

Yes. And then my follow-up is about this big pharma company that you mentioned. So could you give us any, any different color at all and then what is the areas that antibody or?

Well, I would say, just stay tuned, because we're, you know, we're still in discussions, and hopefully, we're nearing the term to put that ink to the paper and get that done. But I think most importantly, is, it's not only about the R&D, but it's the support, and the size and the potential breadth and scope of what they can turn out to be. So I just say to stay tuned.

Okay, in the next month and a half. That's the hopeful target so to say.

Between now and the end of the year, we bring it across the goal line, but you never know. But we feel pretty good. We feel pretty good about it. And they're a great partner. And I think that everybody will recognize that it's a name brand, company that can really make a difference.

Thanks, Mark.

Thank you. Our next question is coming from Steven Raphael, a private investor. Your line is now live.

Hi, Mark.

Hey, Steven.

Somebody earlier asked the question, I was going to ask, which is about the Sorento deal. But tangential to that, you say, you're comfortable with your cash position, I'm not. You say that you can always go to the market to raise money. The stock has no bid Mark. I doubt very much, you could sell 5 million or 10 million shares, even at this level, which is – which has to be handled. So make me more comfortable, please.

We've had multiple institutional investors offering to come in and buy stock in big chunks in the past. And I think that actually opportunities even greater today. So, I'm not really worried about raising the cash. Obviously, you know that we don't want to raise a cash and take dilution if we don't have to. And so, I'm not really worried about getting our hands on cash. I'm worried about running a business, advancing the technology, expanding the opportunities, getting into human being showing preliminary safety and efficacy, which will lead to more opportunities to increase shareholder value. And hopefully, do we need the cash to do it at a higher level than we are today?

Well, my view is that, if the opportunities that you're explaining are so great, doesn't make a difference whether you sell stock at $3 a share with what was -- $5 or $8 a share. But again, my concern is you bleeding $10 million a year, $10 million to $12 million a year, you got $21 million. So that's two years. That's a pretty short fuse. So I'm just giving you my opinion.

Hi, if I may Mark just add a small comment to that if I may to Steven. This is Matt [ph] here. I think I'd say two things. One is that if you look at any biotech, and we're a platform opportunity, we're not just contingent on one deal, or always one company or one takeover is a carrier, that we're fairly agnostic, actually, to where we can apply our technology to. So there is a wider net that we're casting. That's sort of one comment. Most biotechs as you know, Steven Byrne [ph] catch much more steeply than that we've ever described here. And we're quite careful. We're very careful about the partner to work with. Now with our COVID opportunity, it's an inflection point, right, where we will be able to have in man first demand proof of concept safety data under a GLP study. What we're saying is that we believe that's a very important step for direct because we will then have overcome what we believe and what they've been told by a lot of industrial leaders, from pharma, particularly from pharma, as that being a very important thing to go and show and do. And so we very, very thoughtfully, very carefully worked with partners to get to that point, which will, which we're heading towards very soon. So that's one of the number of different tasks that we believe is very important. Now, obviously, it's hard in this court to promise you what number that equates to, but that clearly is going to be a very important step for us. We're also in conjunction to that still looking to sign other kinds of deals. Mark's referred to, to one this side of Christmas, we believe very confidently in but there are others too, that we are pursuing very aggressively. So, I think your point on cash is not is understood by us. We recognize that. But there are many things in the pipeline that give us confidence in saying that this is a great platform that we're taking to work to great partners.

Thank you. The next question today is coming from Dick Williams [ph] from Williams Research Group. Your line is now live.

Hi, Mark. Most of the questions that I hadn't thought I had, I've already been taken care of by the other gentleman who were on, but there's just one area, it's really a color question. In terms of Pfizer coming out, of course, that's what hit a lot of the smaller biotechs who are working on COVID, including us, I think we got caught up in that as well. One thing is kind of a ridiculous in relation to Pfizer is a therapy pill has to be accompanied by another HIV pill, which I haven't seen any of the media. Or and I'm not sure that the markets are totally aware of that. But in any event, not withstanding the Sorrento situation and how that evolves and whether you close it and where we go after, how do you view the market opportunity now with Pfizer? Let's assume they're going to be the kingpin for a while. And I don't know they're talking 4 billion copies next year, the vaccine. So how do we fit in with the market opportunity for us assuming that that continues to be successful?

Yes. Well, I can't really comment about Pfizer’s pill. That's an after treatment. I mean, we actually had a phone call today with a major pharmaceutical company, Matt and I, where the gentleman said, the really, the problem here is to get the entire global population vaccinated to that, in fact, not spreading the disease, because even the vaccinated are spreading the disease today. So that's nice that Pfizer has a pill taken potentially help save lives, and that's great. As a human being, we were happy about that. But the goal here is to stop it from happening in the first place. And again, in our case, it's not about COVID-19, it's about getting any human beings, showing safety and efficacy, and launching a platform that's going to transform and revolutionize biomanufacturing. So we believe that in the long run, we will have one-off not the most efficient way to make recombinant protein vaccines, antibodies and other therapeutic drugs. And if we just make one of those in conjunction with a partner, let alone on our own, or if our COVID-19 vaccine gets launched in India, or in Africa, or in Southeast Asia. That is a remarkable achievement. But more importantly, we're bringing more than enough cash to solve Steve's question for all of our shareholders, but most importantly, bring accessible affordable health care to the world. So it's a win-win-win situation.

And just to add on Mark's comments, we are a platform company. C1 itself is expression platform. It's had multiple views as you know, so we are not the lack of markets. The issue for us is too big of a market for us to attack. I think a COVID and DYAI-100 happened just to be the first product that we are having, which we all know the first drop is the hardest, right, once we got the first one we opened the door, I think the market is going to be wildly open for us. So back to the strategy, we have getting DYAI-100 into human is the key for us and that's the core and the objective for the business for this year and next year and from there other markets as we are going through the difference of strategies and finding the right partners, I think, we'll add more assets into our portfolio.

And Dick, we mentioned earlier in the call, we're working on five different infectious disease targets in addition to COVID-19 between antibodies and vaccines, and there's more coming. We're being approached by worldwide players, big and small. They're evaluating now, more seriously to C1 platform for recombinant antigens, because of the proof-of-concept in ZAPI and in all the other animal studies we've carried on over the last year on four different components. So we have not only have the advancement of C1, as a platform, we've also picked up the knowledge and experience that we didn't have about taking a antigen forward into a Phase 1 clinical trials. So to be honest with you, we've learned a lot. We've got more experience. We've got the infrastructure. So if you come to us as a small biotech we can actually take your team, put it into our C1 cell, create a stable cell line in a very rapid timeframe, they can produce large quantities of your antigen to protect against certain diseases. We can then have the relationships that we've developed exactly and otherwise, conduct animal studies on behalf of those clients. And then we can launch it into a starting to do CMC or cGMP manufacturing with the partners we've developed. So we've built an infrastructure, and in some of the money going towards getting the proof of safety and efficacy of C1 of the platform, we now also have a platform that's far beyond just becoming a cell line provider. We can do it on our own for different antigens, or different antibodies or therapeutics. We are doing on behalf of companies. And we think we can do it more rapidly and more affordably. So let's just get into humans through safety and efficacy. And we'll let the chips fall where they may.

Okay, terrific. Thanks for the color.

Okay. Thank you.

Thank you. We reach the end of our question-and-answer session. I'd like to turn the floor back over today at a CEO. Mr. Emalfarb. Please go ahead.

I want to thank you for joining tonight's call, as we close out fiscal 2021. We have put in motion, many of the critical components needed to enable an application and the initiation of first-in-human trials in 2022 for DYAI-100, and potentially other products. Strategic planning for 2022 has begun. And we look forward to delivering on our objectives. The multiple shots on goal that we have created enhance the likelihood that our commercial reality will be realized sooner than later. Our C1 production platform has the potential to liberate all segments of the global population at risk, or who have been disenfranchised in the vaccine and drug production and distribution cycle. With GLP toxicology data soon to be published and the upcoming anticipated DYAI-100 Phase 1 clinical trial we're even more optimistic what we can accomplish in 2022 and beyond. Thank you again. And we look forward to keeping you updated on our progress along the way. And we'll see in the next call.

Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.