Dyadic International, Inc. 2026 Q2 Earnings Call

Good evening, and welcome everyone to Dyadic's second quarter 2026 conference call. I hope you have had the opportunity to review Dyadic's press releases announcing financial results for the quarter ended June 30, 2026. You may access our release at Form 10-Q under the Investors section of the company's website at dyadic.com. On today's call, our President and Chief Operating Officer, Joe Hazelton, will review our Q2 2026 business and corporate highlights and provide commentary on the strategic direction of the business. Our CEO, Mark Emalfarb, will provide an update on our biopharmaceutical programs, and I will follow with a review of our financial results in more detail. After which, we will hold a brief question and answer session.

At this time, I would 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 updates to its forward-looking statements, whether because 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 President and COO, Joe Hazelton.

Joe? Thanks, Ping, and thank you everyone for joining us today.

Last quarter, we talked about Dyadic moving from a platform development story toward a commercially driven business. In Q2, that transition became more tangible. We are shipping products, supporting customer evaluations, generating initial sales, and expanding distribution. We are also improving manufacturing economics and using that commercial activity to create broader opportunities for partnerships and licensing. At the same time, we are expanding and accelerating both our internal product pipeline and third-party product development opportunities. That distinction is important. In our markets, commercialization is rarely a single event. It typically progresses from technical validation to sampling, customer qualification, initial purchasing, and if the product performs and the economics work, to repeat and potentially larger volume orders. During Q2 and after quarter end, we saw a growing number of Dyadic products move further along that continuum.

A good example of improving manufacturing economics to accelerate the potential for commercial launch is our animal-free recombinant human transferrin program. During the quarter, our initial pilot scale run increased productivity by approximately 80%. Based on our current preliminary biomanufacturing assumptions, that improvement is expected to reduce costs by approximately 40%. We have now sampled the product into research and cell culture applications, in addition to the recombinant bovine transferrin progress into cultivated meat that we have discussed previously. That matters for several reasons. Lower manufacturing cost improves our commercial flexibility while supporting attractive product economics and maintaining a strong quality profile. Higher productivity improves the scalability and supply profile customers evaluate before qualifying a critical media component. Importantly, these improvements provide another data point in which we can demonstrate to prospective partners evaluating whether our protein production platforms can manufacture proteins in greater quantities, more efficiently and economically.

This is the commercial model we are building. We improve the strain and process, use those improvements to support product sales and customer qualification, and then use the resulting performance data to strengthen the case for larger strategic collaborations, licensing arrangements, or technology access opportunities. The value of an 80% productivity improvement is not limited to transferrin itself. It also helps validate the broader platforms. We are seeing similar progress across our life science portfolio. During Q2, we began product shipments to IBT Bioservices under our OEM distribution agreement and completed additional shipments after quarter end for research, diagnostic, and cell culture applications. We also generated initial pilot sales of recombinant transferrin and growth factors for cultivated meat applications. These sales remain early, but they potentially put Dyadic produced proteins into customer workflows where performance, consistency, supply, and economics can be evaluated under real operating conditions.

Our distribution strategy is intentionally capital efficient. Rather than build a large direct commercial organization for every market, we are combining selective direct sales with distributors and OEM partners that already have customer relationships, application expertise, and global reach. That gives us multiple ways to reach the market while keeping our fixed commercial infrastructure relatively lean and selectively launching our own products. Proliant has begun commercialization of Albufree™ DX recombinant human albumin for life science and diagnostic applications and has announced plans to broaden the portfolio with Albufree™ TX for cell culture and Albufree™ CGT for cell and gene therapy applications. Successful commercialization under our arrangement could provide Dyadic with potential future royalty participation while an established partner leads market development and customer adoption. We are also seeing commercial validation in food and nutrition through Enzymes. Their non-animal bovine chymosin, produced using Dyadic technology, is now generating commercial sales.

This represents a partner taking a product developed with our platform through development and into the market, where it is being sold commercially. A second product is also in development, creating the potential for an additional milestone and future royalty economics. With Fermbox Bio, commercialization has expanded around recombinant DNase I and recombinant human and bovine transferrin. Taken together, these relationships demonstrate the different stages of the commercial cycle, from product development and distribution to initial purchasing and actual commercial sales. They create multiple potential revenue pathways for Dyadic through direct sales, partner sales, milestones, royalties, development funding, and licensing. We also initiated scale-up activities with BRIG BIO for recombinant bovine alpha-lactalbumin under a fully funded development agreement. Additional product testing is underway to evaluate comparability to animal-produced proteins.

This is another example of how we're advancing products toward broader commercial applications while working with partners to support development and scale-up. Importantly, the strain being developed for this program is not limited to a single end market. We're also using it to produce research-grade material for reagent and cell culture applications. That cross-category strategy gives us additional commercial options earlier in the development cycle. A protein ultimately intended for a larger nutrition market may also be introduced into research, reagent, or cell culture channels, where volumes, qualification requirements, and commercialization timelines differ. This can provide earlier market validation and early revenue opportunities while the broader food and nutrition program advances. It also allows us to leverage the same development work across multiple markets.

When we create a high-performing strain, optimize the process, and develop the analytical package, we look for opportunities to deploy those capabilities through direct sales, distribution, funded development, licensing, or broader collaborations. After quarter end, we also expanded our precision fermented dairy protein portfolio through an additional development and commercialization agreement. We're following the same playbook in bioindustrial, where we're building a portfolio around scalable enzyme production. In July, we announced a new proprietary industrial cellulase product specifically engineered for advanced fiber modification applications. The program builds on the commercialization of EN3ZYME and is designed for applications that can include pulp biorefining, microcrystalline cellulose, and nanocellulose production with the potential to improve fiber strength and retention, reduce processing energy requirements, and increase usable fiber output and overall process efficiency.

In addition to the commercial launch of Inzymes' non-animal bovine chymosin and Fermbox Bio's EN3ZYME, this new cellulase program further demonstrates the potential of Dapibus as a repeatable product development and manufacturing platform across multiple enzyme classes and end markets. Rather than relying on different production organisms for different products, Dapibus is built around the common microbial production strains and shared development infrastructure, which can help streamline strain development, process optimization, scale-up, and manufacturing as additional products move through the pipeline. As our programs advance through optimization, pilot scale production, and customer evaluation, we expect to evaluate multiple commercialization paths, including direct product sales, strategic collaborations, contract manufacturing, and technology licensing. When you look across life sciences, food and nutrition, and bioindustrial, the model is becoming increasingly consistent. We now have products moving through qualification and distribution, products generating initial sales, and partner-developed products already being sold commercially.

At the same time, we're improving manufacturing productivity and costs and expanding the number of applications and markets our proteins and enzymes potentially can address. We use that commercial and technical validation to strengthen both the economics of individual products and the strategic value of the underlying platforms. That's why we view the commercial traction and strategic business development as complementary. We believe that the combination improves our ability to build recurring product revenue while also increasing the potential value of licensing and broader strategic collaborations. Importantly, the benefits are not limited to one platform or market. We're increasingly able to leverage learnings and technology advances across C1 and Dapibus, including our proprietary combinatorial libraries and the rapid plasmid-to-protein development capabilities advanced through the fully funded biopharmaceutical program. That work has demonstrated the ability in certain programs to move from plasmid to purified protein in approximately 15 days.

We believe applying these capabilities across our shared technology foundation can help improve development speed, expression yields, manufacturing economics, and time to commercialization across life sciences, food and nutrition, bioindustrial, and biopharmaceutical opportunities. With that, I will now turn the call over to Mark to discuss our biopharmaceutical programs, including how the data and capabilities being generated there can further strengthen C1 and potentially create additional strategic value across Dyadic.