Good evening. Thank you for holding. Welcome to Dyadic International's Fourth Quarter and Full Year 2020 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, March 30, 2021. I'd now like to turn the call over to Ms. Ping Rawson, Dyadic's Chief Financial Officer. Please go ahead..

Thank you, Joe. Good evening, everyone, and welcome to Dyadic International's fourth quarter and full year 2020 financial results conference call. Earlier today, Dyadic issued a press release, announcing financial results for the full year ended December 31, 2020 and the recent company highlights.

You may access to our press release and Form 10-K 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 business and corporate accomplishments for the full year 2020, 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. Our senior management team, Matthew Jones and Ronen Tchelet will join Mark and I for the 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 these 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?.

at Fri Apr 2 04:51:00 2021 ]expired, we also remain open to exploring new potential commercial opportunities in the industrial biotech markets.

In regard to some of our scientific achievements as for internal development, the company continues to make progress in terms of the stability and productivity of the C1 technology, including through glycoengineering, C1 cells to impart human like glycan structures and reducing the extracellular protease background by 50-fold.

Strides in glycoengineering and non-glycoengineering cell lines should broaden the potential applications of the C1 expression platform, producing, developing and manufacturing vaccines, monoclonal antibodies, and a variety of other therapeutic proteins.

In closing, 2020 was marked by many new partnerships and significant progress towards clinical development. We look forward to building on a momentum achieved in 2020 as we work towards advancing our COVID-19 vaccine candidate, DYAI-100 into a Phase 1 clinical trial later this year.

We expect our extensive number of collaborations will continue to generate robust scientific data that highlights the broad potential impact of our C1 platform and diverse animal and human health applications.

And as always, we will continue to work tirelessly to advance our C1 platform, while evaluating other opportunities that maximize it value to meet the global need for rapid, safe and scalable therapeutics. As recently announced, Patrick Lucy, has joined our Board of Directors. I've known Patrick for over 2 decades.

His extensive experience in the development, adoption and commercialization of cell lines using the biopharmaceutical industry will be extremely helpful in guiding our strategic scientific and commercialization efforts. We're very excited to have Patrick joined Dyadic's Board of Directors.

Lastly, I want to give special thanks to our employees and partners for their commitment and dedication during these challenging times. I also like to thank our shareholders and our board members for their continued confidence and support as we work towards bringing more affordable healthcare solutions to a global population.

With that, I'll turn the call over to Ping for financial update..

Ladies and gentlemen, we're experiencing some technical issues with Miss Rawson. We will be continuing - we will continue shortly..

Mark, as long as the [indiscernible], can you?.

Yeah, I can read it, in the case she is turning it on. In addition to financial results, we will discuss now you can find additional information on our Form 10-K, which we filed earlier today. Our cash and cash equivalents are approximately $20.6 million for the year ended December 31, 2020 compared to $4.8 million at December 31, 2019.

The carrying value of investment-grade securities, including accrued interest at December 31, 2020 was approximately $8.6 million compared to $31.2 million at December 31, 2019. Our cash burn for the year ended December 31, 2020, was approximately $6.6 million in line with previous quarters and our expectations.

Our research and development revenue for the year ended December 31, 2020 was approximately $1,602,000 compared to $1,681,000 for the year ended December 31, 2019.

We reported a slight decrease in cost of research and development revenue for the year ending December 31, 2020, to approximately $1,425,000 compared to $1,460,000 for the year ending December 31, 2019. We also reported a provision for contract losses of approximately $187,000 for year ended December 31, 2020. The slight decrease in revenue and cost….

Thank you, Mark. This is Ping. I'm back. Sorry, about it. This is when you [indiscernible]..

Yes, you know where I'm at?.

Yes. The slight decreases….

Yeah, go on..

Yes, thank you. The slight decreases in revenue and cost of research and development revenue for the year ended December 31, 2020 reflected a growing number of research collaborations to 14 compared to 10 collaborations for the year ended December 31, 2019, however, with smaller dollar amounts for each project.

Importantly, our fully funded research collaborations continuing to provide an additional source of income and particularly offset our ongoing R&D expenses, this has allowed us to mitigate our cash burn to extend and maintain a comfortable position to fund our ongoing business activities.

R&D expenses for the year ended December 31, 2020, increased to approximately $3,868,000 compared to $3,088,000 for the year ended December 31, 2019. The increase primarily reflected additional costs of COVID-related projects and other internal research projects.

There were no risks in R&D expenses related party for the year ended December 31, 2020, compared to approximately $869,000 for the year ended December 31, 2019. The decrease was due to the completion of research service agreements with BDI in June 2019.

G&A expenses for the year ended December 31, 2020, increased 10.2% to approximately [$8,085,000] (sic) $6,085,000 compared to $5,520,000 for the year ended December 31, 2019.

The increase principally reflected increases in noncash share-based compensation expenses of $397,000; insurance premiums and other outside services of $216,000; legal and SEC registration expenses of $193,000; business development and investor relations costs of $191,000, offset by reductions in executive compensation costs and accrued incentives of $216,000; tradeshow and travel expenses of $143,000 and other decreases of $73,000.

Interest income for the year ended December 31, 2020, was approximately $447,000 compared to $985,000 for the year ended December 31, 2019. The decrease was primarily due to a decrease in interest rates and yield on a company's investment-grade securities, which are classified as held-to-maturity.

For the year ended December 31, 2020, the company also reported and unrealized gain related to its investments in Alphazyme, resulting from the third-party capital contribution. As of December 31, 2020, the fair value of the company's investments in Alphazyme was approximately $285,000.

Net loss for the year ended December 31, 2020, was approximately $9.3 million or $0.34 per share, compared to a net loss of $8.3 million or $0.31 per share for year ended December 31, 2019. Looking forward, we expect our total cash burn for 2021 will be in the range of $10 million to $12 million.

Taking into consideration our Phase 1 clinical trials and other ongoing internal research projects, we believe we have sufficient funds to provide the working capital needed for our research and operations for the next couple of years. With that, I will now ask the operator to begin our Q&A session. Dr.

Ronen Tchelet and Matthew Jones will be joining Mark and I to answer your questions. 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.

Joe?.

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question is from Jason Kolbert from Dawson James. Please proceed..

Hey, Mark. Hey, Ping. Thank you very much for the update. I want to go after a couple of things. Mark, you talked a little bit about the COVID variants.

Have you seen reason to believe that any of the vaccines are showing resistance to the variants, because my understanding is that they're all targeting the spike protein? While I don't want to use the word that it's a conserved region, so far, to the best of my knowledge, we have not seen mutations that are favorable in terms of resistance to the vaccines.

Maybe that's inevitable.

But I'm asking you and your team scientifically, do you think that could happen, whether that is likely to happen?.

Well, I think that scientists globally, and I think there was a survey today that feel that the mutations of the coronavirus could render their current vaccines ineffective within a year. What ineffective means to these experts in 28 countries? I'm not sure.

But our scientists and the ZAPI group scientists we've talked to at Oxford, UCL, in otherwise believe that it's imminent, that we're going to need to have variant vaccines to give full protection, especially in some of these countries that aren't getting fully vaccinated for years..

Okay, so what you're saying is that the spike protein is not a concern for region, and therefore, like a chain of marbles that can rearrange itself. And since all of the vaccines that I'm aware of are targeting that spike protein, that it's inevitable that we will see some escape variants..

Well, you're seeing escape variants now in South Africa, in Brazil, in Japan, in India, and New York..

No, to the best of my knowledge, we have not seen escape variants in Japan, South Africa or Brazil. And I've been really up to date on that.

So there have been variants and they have changed the profile, but nothing in terms of the ability to render, say, the mRNA vaccines or the J&J vaccine, not effective, because the region they're targeting in the spike protein so far has not changed to render the vaccine. And that's why it becomes a very important question..

Well, I think if you look at the J&J vaccine, the Novavax vaccines, and some of these other vaccines, are certainly less effective on the South African variant. And I'll let Ronen answer the question, because he's more technically astute.

So, Ronen, are you there?.

Yes. Yeah, I think that it was very nicely shown that those variants also have a very important mutation on the receptor-binding motifs. And all of those changes really showed higher affinity binding to the H2 receptor. And obviously, I think that shows that there is some benefit by having a different type of antigen.

So I think in general, obviously, I think the current vaccination does work on the variants. But actually it will take time to understand to which level they can really protect the population.

And I think the fact that there are still so many infected people around the globe and there are many more variants that appears by all kinds of mutations, I think the ability to be able to quickly respond to any kind of new variant I think is a very important tool. And I think - which is what we are aiming to..

Right. Good, good. No argument from me about that. And what I'd like to do is if we extend the question a little bit further, I know you're working in Israel, Mark, I know you're working with ZAPI. Congratulations on the deal you announced in Korea.

Among those deals or others that we're not aware of, are those partners working on different regions, so that they could potentially come up with a different vaccine that then incorporates the C1 platform, so that you potentially are in a position to offer a new COVID vaccine that would not be - that would not be one that would be resistant to say some of the mRNA vaccines that we're seeing today?.

Yeah, the answer is yes. And that's one of the, I think, the significant advantages of a recombinant protein production system is that we can produce individual vaccines to different variants, whether it be Brazil, South African, UK, et cetera.

And then, we could blend those to specific ratios to allow the vaccine to cover more broad protection and whether that's the full spike or the RBD vaccine or combination thereof. But we also could provide those ingredients, so the active ingredients to other people to mix and blend in with their - to make their vaccines..

Right, so what I'm going after, Mark, here is that how excited are you with the current partners that you have that you guys will potentially have a novel - that Dyadic could be part of a novel vaccine that could emerge? And what's the timing look like, given the fact that you're starting to go into Phase 1, with this first generation vaccine? Is it a year, is it 2 years? How do we get a handle on kind of the timing and catalysts around like COVID-related program?.

Well, keep in mind, the first, DYAI-100 we're going into human beings, first and foremost to prove safety and initial efficacy, not just for a COVID vaccine, but to demonstrate that proteins, therapeutic proteins and other vaccines for human disease can be produced safely in C1. So that's the primary goal and was always the goal at the beginning.

But in addition to that, to your point, we've already started to engineer, the UK variant, the South African variant, the South American or Brazilian variant to have these mixtures of vaccines to actually come up with a unique and novel better protecting vaccine.

How fast it happens is after we prove safety and preliminary efficacy of the DYAI-100 or before that, and discussions we're having with pharma and biotech companies is - will they join in and speed that development.

And that's what we're hoping will happen either before or after we announce the results, which we believe will be safe and show preliminary efficacy. And I think people are realizing - okay, so the people realized - yeah, go ahead..

Two more quick questions. One is - I want to keep it short, because I know you have other people online..

Sure..

The vaccine economics traditionally haven't been great. And when I look at Dyadic, I'm trying to understand what your vaccine economics are, because you're not necessarily the originator, right? You're more of the manufacturing partner.

Should I be looking at that, that way or should I be looking at it a little bit differently?.

In this particular case, we are the originator, we have, the gene sequence is ours, the cell line is ours. We're moving it into Phase 1 human trials is ours. So it's an owned vaccine from Dyadic, not just as a cell-line provider.

All the variants being loaded into C1 for the next multi-broad variants or the multivalent, tetravalent, trivalent vaccines, those are ours. Now, those can be licensed out to other people.

But in addition to our own vaccine, we have other people bringing us gene sequences, in addition to this with the second generation vaccine, which are theirs, which we're helping to enable, and then obviously, sharing the rewards of that. And then in the case of Medytox, we're partners in that deal, where we shared greatly in the economics.

On the commercialization….

I understand. So two last questions, first of all, in terms of the financial burn guidance, thank you, Ping, your guidance was exactly - it's been - the expense control, it's been great at the company. And your guidance is right in the middle of my number. So that's exactly right. Thank you.

But where I get a little bit confused, Mark, when you and I sat down 2 years ago, when we started thinking about all of the different areas, where we could see business, we talked about bio-generics, we talked about traditional pharma products, and of course, now vaccines.

We have said that you could see a business development deals and partnerships emerge over the next couple of years from any of those sectors. Today, we're very focused on COVID.

But should we still be modeling in deals and partnerships in those other areas?.

Absolutely. As we mentioned, we signed deals with 5 people in pharma last year, on collaboration, some of the new deals. As we mentioned, in some of the recent conference presentations, we have a pharma, big pharma company that funded research last year.

That's funding an additional research moving towards oncology and rheumatoid arthritis with 2 other protein drug candidates. It could go to regulatory, that could turn into a license agreement. We're in discussions with a lot of different animal and human health companies, in addition to the ones that are already in doing research and development.

I think this year you're going to see an accelerated pace. We have 13 or 11 new deals and 2 or 3 extensions last year. We're already at the pace of 5 and is accelerating right now. And it's mostly non-COVID..

Okay. Mark, thank you very much. Really, thanks for letting me take up some time with all the questions. Appreciate it..

Oh, thank you for your help..

Thank you, Jason..

Thank you. Our next question is from John Vandermosten from Zacks Investment Research. Please proceed..

Hey. Good evening. I wanted to ask about the IND and interaction with the FDA, that you're anticipating over the next few months.

What do you anticipate some milestones to be in that area, preparing the IND and then ensuring that it gets cleared within normal timeframe?.

Yeah, Ronen, you want to pick that up?.

Yeah. So, currently, we are going for the [– first of all hygiene] [ph]. So currently, we are going for the toxicology study. That will start soon. And then, I think, once we get the green light, we should - next step will be to go for the Phase 1 clinical study. We are aiming to start it I think in August.

And I think after that, we should have all the paperwork to submit in order to have - to be able to go for the next clinical studies.

Did that answer your questions?.

Okay, thank you. Thank you.

And then, looking down the road a bit, how far can Dyadic go with DYAI-100 before you need a partner?.

Well, it's not a question of how far we can go, it's how far we want to go. And I think the point is that we will look for a partner as soon as we show safety and efficacy, or preliminary efficacy. But we're also in discussions and talking about partners right now, and have been about picking that up.

And I think what the main interest is to, again I'm going to repeat, to DYAI-100 is to prove safety in human beings, not just for this COVID opportunity, but for virtually hundreds, if not, thousands of potential products in the future, for human drugs and vaccines. That's the main purpose.

The secondary purpose, in addition to that, is to work on the variants, which we've already started to engineer, because we believe that we can make variants in larger amounts in a shorter amount of time, at less cost to help the world out of this horrific situation it's sitting in.

And we believe that recombinant protein-based technologies and our recombinant based cell line is far more productive than any other cell line that's out there today. As you know, in the ZAPI program, and otherwise, we've shown versus insect cells or baculovirus, 300-fold improvement in productivity.

We've now demonstrated in cattle, sheep and mice, safety, efficacy and protection. So, if we achieve the goals and objectives of this clinical trial, not only we're going to demonstrate safety in human beings, it can be leveraged and accelerate the commercialization efforts for human pharmaceuticals.

But potentially, we could be the one company that can make the quantities at a cost under flexible commercial scales for tri-valent or tetra-valent COVID-19 vaccines on an annual basis, which the world may need like seasonal flu shots that continues to persist, as many experts basically predicted, then I think we're in great shape to pick-up partners to pick this up and run with it, and to finance it all the way..

Yeah, just I want to add a little bit on Mark's comment. I think, from a financial perspective, we are constantly evaluating, our collaborators and partners to either co-develop or have non-diluted fundings in the case of Medytox.

This is the co-developed scenario, where Medytox's going to put their own resources and funding into the part of the work that they are doing. So as you - as John, we are very careful about our cash, and also how we use the money to most economically and making more sense for the shareholders to advance our science.

But at the same time make it more efficient from financial perspective. Sorry about dropping off the call earlier is just a typical pandemic situation working from home. I'm trying to un-mute it, but hit the wrong button. Sorry, for the inconvenience..

Yeah. So John, I think it's important. If you remember, Dr. Yang from Medytox, as you pointed out, they started working with us in July of 2020. And that was after they basically evaluated CHO cells and insect cells. And they saw the remarkable versatility and hyper-productivity of C1 with their own hands.

And we want to transfer them the technology and they've grown it up, and they've reproduced the productivity in their own tanks. And so, as he pointed out the fungi-derived C1 expression system, in his mind is the most realistic technology to develop and manufacture multi-valent, or tri-valent, or tetra-valent vaccines for these COVID-19 variants.

If people are struggling today to produce one protein, one single vaccine based on one protein, how are they going to do 3 or 4 in an economically viable manner at affordable cost and the volume that world needs.

So we're hoping that this puts us in even a better position this year than we were last year, because of the variants and the need, because if you realize seasonal flu vaccines are comprised of 4 different proteins. So we're going to need potentially, tetra-valent or quadrivalent or tri-valent vaccines on potentially an annual basis.

If that's the case, I believe, we can make more for less at flexible commercial scales. With the technology, they've been tech transferred, and grown in single use or stainless steel standard microbial fermenters that are basically available on every continent and multiple countries.

So I think, we're sitting pretty, and that's why we're going forward DYAI-100, it's improved to safety, preliminary efficacy, and were already engineering the variants. And we think we're in a great position to help the world, help our shareholders create significant value. And together, we can help eradicate this horrific disease..

Great. Thanks for taking the questions, guys..

Thank you. Our next question is from [Skip Gozzo, Cluny Road Rental] [ph]. Please proceed..

Hey, Mark, how you doing?.

Good, Skip.

How about you?.

Good.

So Mark, I want to kind of piggyback off of what Dawson James was talking about, what's the fellows name there?.

Jason Kolbert..

Yeah, Jason. So you mentioned to him that this vaccine that we're working on the COVID vaccine, that we have to get through preliminary to make sure that we're safe, you're already going to animal trials. You have every reason to think that it should be safe, when it goes into human trials based on past experience of what you've done.

Now, this has been a long road, you've got, you sold out the industrial site in 2000 - at the end of 2016, or June of 2016. Here we are almost 5 years later. And we still don't have any income, right? We haven't - we've been advancing the technology for the last 5 years when you got that $75 million.

And we're at the point, right now, I'm going to try to dummy down - dummy this down. So that you don't have to be a scientist to understand these phone calls, I've been an investor in this company for a long time.

So let's just say we're baking bread, and the bread that we want to make is, whatever, there's only a few ingredients, 3, 4, 5 ingredients, water, sugar, the dough, et cetera, but not a lot of ingredients. I'm assuming these COVID vaccines that are out right now have a lot of different ingredients in it.

Is that right or not right?.

Well, they have a number of different components that make up the vaccine candidate that ultimately became the product. And DYAI-100 is on the same parallel path is comprised of different components that make up the actual vaccine, in addition to the protein that we produced from C1..

Okay.

Is it the same amount of components or is it much less, because of the C1 technology is my question?.

Yeah, well, it's actually less not because it is C1 technology. And because, we think keeping it simple, allows us to produce an effective safe vaccine that can be made in billions of doses more quickly and more cheaply, using standard manufacturing facilities all over the globe.

But it contains an adjuvant, which is basically helps boost human agility and other components to make its stable..

at Fri Apr 2 04:53:00 2021 ]cost, and probably, what these 2 vaccines cost by Moderna and Pfizer, right?.

Yeah, I think what you have to realize your question over the last 4-plus years, because by the time we transferred the technologies DuPont, and got started with the genetic engineering, and synthetic biology, just as an example, if we didn't knock out these protease genes, where we've knocked out 14 of them in C1.

We would not be making these vaccines at the levels we're making them at, with the stability that we have.

So the investment in the platform has paid off in spades, not only for Dyadic, and its shareholders by making what we believe is the most productive recombinant protein subunit vaccine manufacturing platform on the planet, it's paying off for human beings potentially.

And potentially use not only for this pandemic, but future pandemics and variants, but also to your point for hundreds potentially, if not more, of vaccines and drugs, once we prove safety in human beings. And when this whole thing started, it wasn't to take our own vaccine and make it on our own, but to partner it out to your point.

But we wanted to start out this is the quickest, easiest, least expensive way for us to get into human beings improved safety. And guess what we're going to do that. And when we do that, to your point, we believe, although, we have multiple conversations, multiple collaborations already, more coming.

That accelerator we'll expand dramatically and we're seeing that now and basically what we're doing is every day it seems like we're on phone calls, 2 or 3 calls discussing either science, business development, collaboration, potential licenses on animal health, human health and COVID-19 vaccines and antibodies and other treatments, because it's a platform….

at Fri Apr 2 04:56:00 2021 ]starting to - now you're going to reap the benefits, all the hard work has been done over these last 5 years.

You made your investment, you got efficient on your technology through your partners and all these different scientists on every partner that comes in and now you're getting to the point where you're getting to be able to cross the finish line is what it sounds like in layman terms - simple layman terms..

I think, if you think about Elon Musk in Tesla, how many naysayers there were right. We saw the future. We believe that bio-manufacture was in a vision too slow, too costly to existing technologies that people are using are ineffective and too costly.

So we looked at we had a way from the industrial business that we had spent 2.5 decades and hundreds of millions of dollars were spent by us and our collaborators, and licensees. We felt and have now demonstrated with data - a significant amount of data, safety, efficacy, potency in animals, and now we're moving toward humans.

And as I mentioned, we believe from a recombinant protein production system we have the most efficient way to develop and produce recombinant vaccines than any other cell line or any other technology on the planet, and that drives significant value in COVID and otherwise..

at Fri Apr 2 05:00:00 2021 ]computer like for me I will never use excel spreadsheet from Apple is just no way to do all what I want to do. So just give you that example and hope that will help you to understand what we are trying to do here and that the….

at Fri Apr 2 05:01:00 2021 ]technologies that people are using are failing in some ways. And we believe that our technology can solve the problem better, more efficiently at a lower cost and can be used locally for people to manufacture their own vaccines for the next pandemic of the variants.

And that's what we're doing, we're looking to partner of this technology for animal health, human health, vaccines, COVID vaccines, COVID antibodies, other treatment, all biologics and we're getting more and more attention, because the results and Pink pointed out, you watch those presentations on ZAPI, the 5-year recap of 8 hours of videos and 14 presentations where they basically talk about in part of there, it's nothing else came out of ZAPI in 5 years, C1 was fantastic.

And if nothing else happened, that was a phenomenal thing. And those are from some of the best independent third-party infectious disease, coronavirus scientists on the planet. And so we didn't pay them to do that, they came up on their own conclusion, because they tried it, and they felt it.

So when they see it firsthand just like the Israelis, and now like the Koreans. This is the most realistic way to develop recombinant protein antigens for the COVID-19 variants, and other protein antigens for traditional vaccines and drugs..

So once we know that it safe in humans, which we're going to know in about 6 months, right? Then that is a big part of the equation.

Is that correct?.

Yes. That's why we're doing. It's a stepping stone to exploding the adoption and use of new platform. But even despite not having that data, more and more pharma companies, biotech companies, animal health companies, governmental agencies, are still excited about C1 and already funding research, expecting those results are going to be positive.

And we will show safety, there is no reason that we know of that C1 won't be safe. In fact, probably the pedigree of the C1 cell line is far safer than E.coli, which is used to make drugs, because there you have endotoxins, did you have to remove, and we don't have those in the first place in C1. We don't have viruses like the CHO cells.

So we believe all the animal data, all the clinical data, we've had so far preclinical, all the other data from the GRAS toxicity, plus pathogenic studies show us that we should be saving human beings and we intend on demonstrating that.

And then, obviously, using that as an accelerating tool to expand the breadth and scope and depth of where we can apply this on human health, animal health, and for infectious disease, COVID and otherwise..

So in 6 months, we're going to have a….

Okay, Skip, I think, we should let somebody else, has some questions, if there's anyone else….

Yeah, let me just finish up with this. So when we finish human to get through the first part to find out whether C1 is safe. At that point, you're thinking that that's when the big pharmaceuticals could come to you and say, hey, listen, we're ready to rock and roll with you, we'll put up the money, and do whatever or go into a partnership or whatever.

Is that when you're expecting some income is the question that I'm getting to?.

Yeah. Also we're expecting and go even before that, because some pharmaceutical companies are already in the door, as we mentioned, ones already heading potentially toward the later stage, not clinical trial, but in our development for potential late stage preclinical for oncology and rheumatoid arthritis.

And those could go to regulatory, and so they're going to need a license to do that. And so we're also in discussion with a variety of other pharma companies, and animal health companies that may jump even before that. So some people have vision, they see the future and they want to get ahead of it. Some people want to wait, maybe too late..

And that's when the royalties could start, right?.

Well, the upfront access cash like we saw in the industrial side, upfront cash payments, milestones and royalties..

You're still on the royalty part, right? You're not going to be funding this yourself to come up with a vaccine, you're going to be getting a partner, after you get through the initial phase of human trials, is my point?.

That's the point. And your point to $10 million or $12 million is not about the funding for the COVID Phase 1. That's a total spending burn for the year. That's just part of it. And that's a small part of it. We're not burning a lot of money to do this trial.

We're investing money that's going to accelerate the development and increase the shareholder value of the technology. So maybe we can get the next question, if there is someone there..

Yes. Thank you. Our next question is from [Dick Williams from Williams Resource Group] [ph]. Please proceed..

Hey, well, Mark, the next question, I've been patiently waiting for you..

I've been trying to get you on..

I have 2 kind of short questions.

The one thing is in relation to the new vaccine, DYAI-100 and you've kind of sold all of the aspects and merits of why that is so terrific, and the C1 platform is so terrific? So - and getting some color on the filing, you're going to have to file an IND with the FDA, when you're finished doing the things that Ronan said and mentioned, at that juncture, you're ready to file the IND to get approval for the trial.

At that juncture, have you thought about the ability to file for breakthrough designation in this filing? You've already given all the answers that I was going to try to throw in as to why you should, would C1 and the fact that it's totally atypical towards of the other drugs and everything else develop.

Number one, the platform, and everything that goes with it, and most especially throwing in another advantage that's very, very major, at least in today's day and age. And that's to be able to scale up production at low cost, to get this into the hands of billions of people worldwide.

So combining that aspect of it, as well as all the things you brought to fore that heretofore have not been done by anybody filing for an IND for drugs.

This is the very first time we should qualify for breakthrough designation, have you given thought to that or reviewed?.

Yeah, of course, we have. And, of course, we're going to take the quickest path forward. But Dyadic itself is not going to run Phase 2 and Phase 3 clinical trials that will be a partner, or it'll be a partnership or a collaboration like Medytox, where we're a co-developer.

But they're going to be doing the financing and move it forward at their dime and/or financing they arrange for as well. And we're going to share and commercialization profits of that product.

And if those products come to market, they can, we could decide to expand the Southeast Asian license if they take that at the time, and to further opportunities. Or we could take that technology and bridge it, and run it in other markets as well. So we have a lot of different angles, and getting their job done.

But, first and foremost, we're focused on getting the human trial up and proven. And then, we're already working on the variants. So we can quickly slip those in, modify it make a better vaccine with broader coverage, as Jason was talking about. And we're wondering, and we don't know if and how the FDA will react.

But how all these mRNA vaccines are going to make tetravalent or quadrivalent vaccines, because that's going to require an input 3 or 4 genes in a vector that goes into your body and asking your body to do 3 or 4 things at once, instead of one thing. So we think that is a recombinant protein production system.

And we believe we have the most efficient effective one. And it's not just about large-scale production, because we can make massive amounts, even in small fermenters, because of the productivity. So it can be made regionally.

So we believe that recombinant proteins are going to be a big, let's say, help in combating these COVID variants, because we can make numbers of them. And we can blend them off to specific ratios. So that the FDA knows exactly what's going in, and what proportion each time.

And we think that the cost and the yield that we can do that at to your point that we're an actually better shape, as I mentioned earlier. This year than we are really last year, because now people know we exist. There's a new problem. It exists, these variants of they don't go away. They're going to be around a long time, potentially year after year.

And then you can make more for less with broader protection wins the race, and we're like the tortoise, we're not going to burn out on the way up. So….

Okay, last question. And in terms of where we are today in the marketplace, and obviously, for some reason we don't seem to get the same recognition and not from the financial community that we have gotten and are continuing to get in the medical community and scientific community.

How are we doing and stepping up to additional analytical type coverage, where the story will get broader reach into the financial markets, any comments on that?.

Yeah. Ping, do you want to comment about that first? Then I can follow-up, so it's not just me answering the questions..

Sure. I think it takes time and effort to get attention from the investment community. And I think we are putting a lot of efforts in doing that. And we also engage the different investor relations firm to help us to - again, the awareness of that, I think it also takes time and effort.

And you guys know that we are running very lean and efficient in terms of our management team, just with all the business side ongoing, it takes a lot of time of Mark's time. And also, Ronen and Matthew are usually on the road all the time. This year, we actually had the benefit of working from home and to have those online virtual calls.

But sometimes, I think it takes people - several calls for them to understand our business, to really understand what is C1 and what C1 can accomplish, just like a lot of long-term investors on the call, including [Skip] [ph] and some other people. I can't recognize their name.

It takes a while for them to truly understand our business and in the model - or the business strategy and the business model that we are having. So I think we are working on that and we'll get there..

Well, Ping, I think one of the things - that's really exciting and we're seeing growing demand, and interest from the analysts and the banks. The banks have always been excited.

But the analysts now are digging in and starting to have conversations with us much deeper, to think about whether they want to launch coverage or not, in addition to Zacks and Jason Kolbert, who we're thankful, are doing coverage.

But there are a variety of other analysts that are involved in this space that recognize the science and the technology, and the significant advances we've made on both, and the business development efforts, and the expanding partnerships and collaborations, like Medytox and others.

So I would say stay tuned, that we hope to get broader coverage by more analysts that have a deeper understanding of what we're doing. And it can help us gain the exposure on Wall Street. But to be honest with you, the exposure we need we're getting, because the pandemic brought us to the forefront.

And it brought the problem to the forefront of bio-manufacturing. And so, as Ping pointed out, some people are never going to change from Microsoft to Apple. But the market is so big. If only a few changes, it's a huge win for Dyadic and C1. And then, more and more people, just like I said with Elon Musk, there were no believers.

But guess what, all the manufacturers are now making electric cars. So we believe in time, C1 will become embedded in laboratories all over the globe for really good reasons, enablement, high productivity, low cost and flexibility. And across hundreds, if not, thousands of opportunities outside of COVID, let alone COVID, or other infectious disease.

I'd say stay tuned, because the infectious disease people and the scientists, the scientists that we talk to at UCL, at Oxford, at Utrecht, at TiHo. These guys are our biggest supporters because they've seen firsthand the power and not fully caught up in the politics. They want to do the right thing for the right reasons.

And that's us, and C1 is there to do the right things for the right reasons, at the largest productivity and lowest cost and flexible commercial scales. And in the end, that's going to win out. So we need to be patient. And we don't need to be the hare, we need to be the tortoise, because we're not going to burn out on the way up, so..

Okay, Mark, thank you. Keep up the great work..

Thank you. Our next question is from [Lee Alper from Hammock Investors] [ph]. Please proceed..

Hi, Mark. Congratulations on the progress you've been making.

But can we step back a little bit from COVID and talk about animal health?.

Yes, I'd be happy to..

And so many other things like Sanofi? I mean, you've been telling us that we've been waiting for them to make a decision for quite a long time.

I mean, what's going on with the program with them, and also with animal health people?.

Well, again, yeah, so Sanofi we talked about before. They're trying to find some protein that fits exactly for C1 and something that, as I mentioned before, they're one of the Microsoft people that are having a difficult time switching to Apple. It isn't that they don't know we have a more powerful way to make proteins.

It's they want to find one, virtually, that they can make efficiently and effectively in their existing technologies and use that to sort of pave the way.

On the animal health side, if you have been watching or paying attention to the ZAPI data that they've generated for the SBV antigen, they not only show the hyper-productivity, the 300-fold higher productivity than the insect cells or baculovirus. But they showed now, safety, efficacy and potency in sheep, cattle and mice.

And now, they're doing even further trials with that, more animal studies on both SBV and Rift Valley fever virus. We're also involved with some of the top animal health companies and some of those programs are moving forward as well. So I would say stay tuned.

And hopefully, some of those will head into their own commercial animal trials, moving towards commercialization..

But what's it going to take to get one across the line and give you some money upfront and work a deal?.

Well, I mean, we're working on that every day. And I can tell you that we're busy every day with calls with some of them and existing research, new ones coming in, new discussions about potential licenses, with one or more of them. And so, it's a work in progress. What is it going to take? Certainly the data is there on the vaccine side.

It's compelling. And I think it probably as I mentioned, we believe. And I think if you talk to the scientists from ZAPI and other people firsthand at IIBR, that we have the most productive way to make recombinant antigens. On the antibody side, it's still a cake being baked. We're making progress. We haven't achieved everything we wanted to do there.

But we made a significant, let's say, inroads in getting where we want to go. We've got high productivity on certain of those molecules. We've got stability on certain of those. And we've done glycoengineering. Now, we're putting all those pieces back together. So we have the tires, we have the engine, and we have the chassis.

And we're building it, so that it all runs. When you put it in the race, it actually runs smoothly, efficiently, produces the protein you want with the right properties, at the right quantities and the right quality. And that's on the mAb side. So there's a variety of different uses and applications.

We're primetime on recombinant vaccines, and were being developed and put together all the pieces of the C1 mAb production system, in terms of productivity, quality, stability and glycoengineering..

Thank you. Our next question is from [Robert Smith from Center of Performance Investment] [ph]. Please proceed..

Hi. Thank you, Mark. It's been a long time here. Thanks for standing by and accepting my call. So, Mark, I just want to circle back for a moment and look at the timeline for the clinical trial. So here we are at the end of March. At the end of Q1, you said you're going to go into the clinic in the second half of the year.

So that's anywhere from July 1 to December 31.

Can you give me an idea or color as to what's going to impact when you're going to enter the clinical trial on the second half?.

Yeah, I think, Ronen mentioned earlier, we expect to start the tox study next month. And we expect to start the clinical trial, Phase 1 clinical trial sometime at the end of August..

Okay, I didn't hear that..

That's a little more zeroed in for you..

Yeah, that's good. Thanks. That's what I was waiting for. And thanks for….

Look, we would have started the clinical trial last year, if we had the data. But what we did, if you remember, we ran multiple animal studies all over the globe, with multiple parties, academics, pharmaceutical biotech companies, governmental agencies, to get a good feel for the performance, the efficacy, the safety in animals.

And then, we put all that together, made a decision, how to put what we think is a slam-dunk in terms of safety, because the most important thing we got to prove first is safety of a protein produced from C1 in human beings. And that's the overriding factor of our clinical trial. And then in the meantime - yeah, go ahead..

If we get in there by August 1, how long will the trial last?.

I don't know how long it lasts, but we'll get a good readout, I'm sure by the end of the year on the safety, if not, right towards the first - 2022. But I think by the end of the year, we'll have a good readout on the safety. And hope we'll be able to report something to you there..

Great. Thanks again. Great. Good luck..

Thank you..

There are no further questions. I will now turn the call back over to Dyadic CEO, Mr. Emalfarb..

Thank you again to everyone for joining us in the call. We're pleased you could join us to hear our achievements over 2020, what we started to achieve in 2021.

We look forward to the continued advancement of our innovative C1 platform, the business development efforts maturing into bigger broader deals and keeping you updated on our progress along the way..

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