Applied DNA Sciences, Inc.
Q4 2022 Earnings Call Transcript

Published: 16 Dec 2022

[Operator:]

Good afternoon, and welcome to the Applied DNA Sciences Fourth Quarter and Fiscal Year 2022 Financial Results Conference Call. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions . Please note this event is being recorded. I would now like to turn the conference over to Sanjay Hurry, Investor Relations for Applied DNA. Please go ahead.

[Sanjay Hurry:]

Thank you, Gary. Good afternoon, everyone, and welcome to Applied DNA's conference call to discuss our fourth quarter and fiscal year 2022 financial results. You can access the press release that was issued after market closed today, as well as the slide presentation accompanying this call on the Investor Relations section of our corporate website. Speaking on the call today are Dr. James Hayward, our Chairman, President and CEO; and Beth Jantzen, our CFO. Judy Murrah, our COO; and Clay Shorrock, our Chief Legal Officer and Head of Business Development, will also be available to answer questions on the Q&A portion of the call. Before we begin, please note that some of the information you will hear today during our discussion may consist of forward-looking statements. I refer you to Slide 2 of the presentation and to our Form 10-K filed a short while ago for important risk factors that could cause the company's actual performance and results to differ materially from those expressed or implied in any forward-looking statements. We undertake no obligation to update or revise any forward-looking statements or any other information provided on this call as a result of new information, future results or developments. I also want to inform you that Jim and Clay will be in San Francisco next month at an offsite event to the annual JPMorgan Healthcare Conference, to meet with institutional investors and business development partners. If you'd like to meet with them, please contact me to schedule. You'll find my contact information at the bottom of today's earnings press release. Now it's my pleasure to introduce our first speaker on today's call, Beth Jantzen. Please go ahead, Beth.

[Beth Jantzen:]

Thank you, Sanjay. Good afternoon, everyone, and thank you for joining us on our fiscal year-end call. I will start this afternoon with an overview of our results for the quarter ended September 30, 2022. I will then turn the call over to Dr. James Hayward, our President and CEO, who will discuss progress against our strategic initiatives. We will then open the line for questions from our analysts and institutional investors. Before my review, I would like to note that effective with the filing of our 2022 Form 10-K today, we are reporting segment data that reflects the results of operations for our three reportable segments which are comprised of

[James Hayward:]

Okay. Thank you, Beth, and good afternoon, everyone. Thank you for joining us on our fourth quarter and year-end fiscal 2022 investor call. It was a strong year for Applied DNA, both from the perspective of revenue growth and operational execution. In fiscal 2022, our strategic priorities were

[Operator:]

We will now begin the question-and-answer session. Our first question is from Yi Chen with H.C. Wainwright. Please go ahead.

[Yi Chen:]

Thank you for taking my questions. My first question is, could you give us some – your expectation with regard to potential annual revenue generated from pharmacogenetic testing service?

[James Hayward:]

Yes. It has not been our habit, Yi, to provide guidance, but we can tell you that our survey indicates there's a real vacancy in the pharmacogenomics, particularly in New York State. And we've spoken to very large health care networks who have shown in intense interest. So suffice it to say, we're excited and have great expectations.

[Yi Chen:]

Okay. Thanks. My second question is, could you tell us how many biopharmaceutical companies are currently evaluating or have adopted the enzymatically produced linear DNA for their manufacture of genetic medicines?

[James Hayward:]

I don't have a precise number in front of me, but I would guess that number is in the neighborhood of 20, actively collaborating, and that covers the range and size from start-ups to well-established decades, old biotech firms.

[Yi Chen:]

And lastly, could you comment on the current trend of the COVID testing market demand?

[James Hayward:]

On the trend of COVID testing…

[Beth Jantzen:]

Market demand.

[Yi Chen:]

Volume or the trend in the current quarter and going forward?

[James Hayward:]

Well, we're encouraged by the amount of testing that we're doing when, of course, many of our competitors have stepped away from COVID testing, thinking that the pandemic was over. I can tell you it's not, and we are seeing high rates of positivity in the cohorts we're testing, and we are testing at a steady state, consistent with the revenues of last year. And we're hopeful that we'll stay at that steady state for at least in the next six to eight months.

[Yi Chen:]

Okay. Thank you.

[Operator:]

The next question is from Jason McCarthy with Maxim Group. Please go ahead.

[Jason McCarthy:]

Hi, Jim. Thanks for taking the question. Can you talk a little bit about – I know you can't reveal specific partners for the linear DNA program, but the types of therapies – you had mentioned oncology, but is that more towards cancer vaccine? Or are there other approaches in there, including things like DNA-based antibodies, particularly checkpoints? Not that many groups have done that, and I wondered if linear DNA can be applied to molecules that large?

[James Hayward:]

Right. Well, we have been able to incorporate quite large open reading frames than our linear DNA system. And so, we think that the range of applications is extraordinarily diverse. We have customers with interest in cancer and redirected cell therapies and novel approaches to rare diseases and vaccines. And so, I think, of the applications that have so excited the marketplace for RNA, many of them or most of them are addressable with linear DNA. And of course, with greater stability – and in some cases, far fewer problems like double-stranded RNA or in homogeneous poly A or challenges in capping, so we're being very conservative, Jason, by starting out focused on IVT templates. But we also think that gradually, as we prove that linear DNA does not integrate into genomes and is expressed episomally, we think the range of applications will grow quite quickly.

[Jason McCarthy:]

Can you – from a linear DNA-based RNA type approach, can you talk about what the interest level is in that area? Because, as you know, the, mRNA – obviously, RNA has captured everybody's attention because of COVID, but there are very specific reasons why it was successful as an infectious disease vaccine. They've never really been able to deliver it with great success anywhere else for a variety of reasons. Maybe DNA – linear DNA makes sense and solves that delivery problem and maybe there could be strong interest there? Or can you describe the level of interest around that type of approach?

[James Hayward:]

We can do things with linear DNA that you can't do with plasmids in terms of serving as a template. The flexibility we have with the chemistry of primers, the capacity to do unusual things like biotinylation, the fact that there is no restriction enzymes required in the processing of the RNA, the fact that we have a copy number advantage in linear DNA, have all proven motivating factors for the companies that are developing RNA drugs, both because of potential improvements in the RNA itself and in the consequent therapy and because of the opportunity for a decrease in cost and time.

[Jason McCarthy:]

Got it. Thank you for taking the questions.

[James Hayward:]

Thank you for asking, Jason.

[Operator:]

Showing no further questions, this concludes our question-and-answer session. I would like to turn the conference back over to Dr. Hayward for any closing remarks.

[James Hayward:]

Okay. Thank you, operator, and thank you to our investors and fans of the company for joining us on our call today. On behalf of the management team, the Board and all of our employees, we're very grateful for your continuing support. We wish you the best of happy holidays and look forward to speaking with you again on our first quarter call. Thanks very much. Goodbye.

[Operator:]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.