Earnings call transcript Q3 2023

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Operator

Good day, and welcome to the Applied DNA Sciences Inc. Fiscal Third Quarter 2023 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Sanjay Hurry, Head of Investor Relations. Please go ahead.

Sanjay Hurry

Betsy. you, Thank and discuss everyone, Applied conference DNA's Good third welcome quarter to our results. fiscal call afternoon, to XXXX financial

access on the that release Relations section today a the corporate after Investor presentation can website. our slide call close as as was this accompanying of market well You issued press

of Jantzen, Murrah, today Chief Officer; Financial and the Chief Shorrock, our call are our will available the Chief James on also Hayward, Judy President call. on to our Chairman, Officer Business and Operating Officer, answer Head Legal Speaking of our the Dr. and Development; CEO, Beth be portion Q&A Clay questions

we to our to any no expressed performance this of important the Before those results differ cause developments. information during call discussion provided the and may XX-Q of from company's on update to as presentation and consist or obligation could Slide X statements. our statements. the that a for forward-looking forward-looking other or please revise you ago, begin, Form short information result or of while new results some refer risk today you will filed future actual that information statements materially hear forward-looking or factors note of any in We a implied or undertake I

Beth. it's our to call, first ahead, introduce Please my go pleasure Beth Now speaker on Jantzen. today's

Beth Jantzen

our initiatives. turn third CEO, quarter of I the then the Dr. Sanjay. Thank who on overview us XX, ended for XXXX. update business call. everyone. you our and afternoon, Hayward, investor to you Thank over quarter our I fiscal will Good start joining with results ongoing James you, this for will call President our an afternoon will June on

for questions We will and institutional our from investors. open the analysts then line

third emergency. constitutes the COVID-XX results demand public fiscal health early our To a declaration for environment testing federal a the that no quarter, reflect longer following COVID-XX weaker performance in in preface our May,

as customer the in our quarter testing call, in mid-June. of CUNY was and the term program City New their noted declaration University not down The services. our contracts the concluded our second of opted renew the Following end at the May testing York, academic program began of and to diagnostic by wind fiscal largest for

With revenue this as a final contract largest $XXX,XXX DNA $X.X production for the LinearDNA approximately a a to backdrop, the was period $X.X related ended last to XX, our compared from XXXX, decline year-over-year year. million our the for quarter of to Offsetting total same June date. under million increase for was segment delivery Therapeutic

was profit a to fiscal XX% Gross was improved COVID-XX or management million Applied compared DNA improvement profit $X.X higher-margin XX% $X surveillance margin of in The and CUNY the higher with associated prior period. contract due improved by segment's gross percentage margins expense at driven or to in Clinical the Labs primarily attributable million testing. to year the revenues

SG&A year absorbed to our The the an for year-over-year to expenses balance cost period. increase operating an quality to from increase approximately $X.X fiscal was The the in $X.X diagnostics being implementation operating of account million operating Total million an in increased that services total accounts reserve expenses segment surveillance for currently allowance by in reflects deemed primarily testing are doubtful of automation and system uncollectible. related X% prior testing contracts. molecular

a fiscal loss was loss fair as net company's best for in in value fiscal change liability classified our line, million the operating the Operating on gain unrealized as representing operations. we QX prior loss now highlight included at the of $X.X compared flat the warrants the to With period.

the million compared resulted in negative This year primarily our during gross was negative $X.X QX fiscal to fiscal million for improvement improved EBITDA from quarter. ago profit adjusted consolidated expenses, fiscal non-cash the Excluding $X.X period. third

Cash excluding sheet. million $XX.X balance restricted at our XX. on cash, $XX.X XX, equivalents, cash million compared March Now totaled turning to June and to

at June stood accounts receivables As our XX, of $XXX,XXX.

majority the Year-to-date, comparable due receipts monthly well $XXX,XXX is collected AR. under lower primarily the This to since our to improvement period. have contract to increased of the our is this We as in average prior support $XXX,XXX cash compared CUNY contract. cash cost burn CUNY as

latter quarter monthly forward. Average million order CUNY flow a cash projection does cash year-to-date for cash is about This $X the business burn U.S. ginning CapEx the development. the as we contingent the for and not for also DNA It support projections we include for suitable and use genomics our start Updating per tagging anticipate restricted clinical platform beginning our $XXX,XXX. in of burn monthly post a conclusion, of burn our templates, the LinearDNA and necessary the contingent establish current moving production is to our of LinearDNA, IVT approach textiles, ongoing on of cotton month capacity launch pharma in to contract season on

continued filed included and just operating outflows our a recurring a activities XX-Q cash of our disclosure doubt on is Form Based concern. substantial from in from operations a of losses going

our Our our dependent concern raise ability going on ability business alleviate revenues plan capital. implement to or further to is the and generate

on was approximately $X.X July XX, million. position cash Our

This concludes for us for remarks. my will prepared comments. now turn Jim call joining his the Thank over I today. you to

James Hayward

the nucleic progress In us Thank manufacture pivot quarters, on the our have made our joining Well, applied recent the PCR next-generation of market strategic the thank everyone. on therapies. you, steady Beth. you full today. call of towards unlocking biotherapeutics of our expertise value acid and to Good for afternoon, we

encodes messenger as patient The an for is transcribed protein-based the take or a against of as case when the may enzyme SARS-CoV-X the DNA delivery the which protein preformed in place the sequence in or of such with RNA the protein. is itself a RNA vaccines acid antibody encodes replacement messenger translation for vaccine. therapeutic vitro or Remember, translated express the monoclonal modality amino a

therapeutics polymerase Biotech. of advantages. following our us our IVT It When we Spindle RNA templates, with platform it advantages total quarter, addressable offering in offering. the substantially of After offers with to acquisition market LinearDNA rather, the with market pipeline our mRNA a close the growing The combined in step translates increase acquisition gives our made a total relevant the roughly conventional addressable mRNA mRNA And economics. over toward IVT mRNA of took to forward increases commercial the fourfold our a differentiated significant integrated with our increases market improved Spindle's globally. proprietary production. relevance -- our It now development through of

In we development new plan ago, As Clay branded a offering. this "Better Linea exciting our weeks with platform, as to slide. this take announced moment, I'll for the business mRNA...Faster" we few IVT ask this through integrated new a you in shown tagline, have

enhance quality platform's is to for additional evaluation stages. to demand goal capacity and support at the bring value we relevant Our our cGMP acquire developers commercial mRNA and further online volumes to clinical to production while the DNA proposition manufacturers both and customers

being detail which of today order at largest the Recall we the revenue opportunities advanced the fiscal opportunities announced paths LinearDNA these for aggregate, nontherapeutic alongside for diagnostic presentation is the initiatives. the growth. will mRNA My purchase of LinearDNA, single also receipt In our start year, assay. that a our represent compelling of

in our require LinearDNA produce opportunities also the diagnostic to as diagnostic commercial a DNA. year And the U.S., we DNA Now approaching the the not or some enforcement. of to by These tied today less of UFLPA, for chain catalyzed Labor do traceability of cotton us season cost our are Uyghur applications enjoying the Protection ginning which second applications. that is supply can we the DNA. are quality of Forced is of Consequently, than compliance sufficient of now therapeutic Act, start therapeutic business at its

I will call path now messenger to over the of insights Clay Clay? in RNA. acquisition and our into to offer turn his our Spindle forward

Clay Shorrock

afternoon, Jim, everyone. and Thank you, good

differentiated of and DS platform integration about offering key points two with two, the acquisition as are we material LinearDNA double our contamination. Spindle excited mRNA plasmid use Linea our or One, template that compelling new and to to overly mRNA stakeholders starting manufacturing. pain we very IVT DNA RNA create stranded and Biotech, addresses in We IVT our feel and

therapies indications, a disease opportunities to mRNA at IVT pace infectious late diseases approximately we infectious clinical target ranging product These Linea clinical of of a purity that workflow and to preclinical common continues mRNA therapies opportunities. mind launched range platform wide represent customer's in the for with from will horizon on production. platform. grow reaching our produce XXX these market simplified the large utilizing workflow, breakneck trials. or It's oncology vaccine RSV, a number mRNA we the compared When with mRNA very development. conventional genetic are with mRNA manufacturing an IVT and mRNA in as production therapies The have Linea increasing to disorders such higher believe with

Spindle. IVT fusion consisting the LinearDNA IVT integration that platform built The fusion developed RNAP template the acquired Spindle DNA-binding we by protein wild-type is our or RNA and novel Linea a is of upon from domain. RNAP RNAP TX proprietary Our polymerase of and

The efficiently DNA-binding chemical has a LinearDNA PCR. can to affinity domain be certain added compounds that template for IVT high via our

RNAP. to unique has this enabling biotech. time something the the for pre-commercial tier an efficiently add effectively modifications Spindle from attracted the partners upper chemical Spindle us these Spindle acquisition, list ability technology full PCR-based cost of platform's the At to of benefit the allowing amicable but Our drawn and of Biotech is extract was

at chemically So inability to modified scale. it manufacture held back the template IVT

Spindle this RNAP. unlocks the solve Our PCR-based issue the platform LinearDNA of full value and

to As Spindle basis, launching -- sheet. expands IVT On our and mRNA acquiring mRNA IVT manufacturing Linear our me, related market. a are LinearDNA our balance relative noted, you addressable of stand-alone excuse platform IVT total the Linea the templates X% approximately or

under related representing the And to template a approximate large expect company's have required produce only to Linea market. mRNA amounts ability now to a XX% an RNAP in the Xx with over of template increase IVT with to of total the relevance IVT of addressable Spindle paired DNA the manufacturing sell chain, value we mRNA limited amount mRNA very platform, is the

IVT minimizing workflow. DNA providing As platform DS RNA mRNA noted, Linea manufacturing. newly points IVT plasmid also and contamination address of template use I interventional the all launched two key Avoiding our pain simplified while

X, production On using Linea's and a current that workflow workflow RNAP. conventional both production RNAP. Linea chemically utilizes conventional IVT TX potential IVT the modified of top slide represents Spindle that mRNA is wild-type the the template which DNA slide, a The plasmid represents mRNA and of DNA Slide bottom

between differences important two highlight processes. will I

end causes difference of use, require front additional regulatory DDNA expensive to costs of and long enzymes The filtration The DNA or specific the as scrutiny a use lead the first increased plasmid is and mRNA manufacturing numerous of steps its the prop. steps. and to simplification times template including

plasmid-based conventional reduced, that estimate of using DNA We which By bottom LinearDNA the points LinearDNA replacing extreme upstream are move steps involved workflow, the resulting mRNA in about pain in with plasmid-related workflow. to simpler IVT, XX% the in these plasmid to is workflow. top a

a difference contamination the linear process contamination RNAP. in streamlining used to manufacturing. back RNA is of byproduct of of of wild-type DNA the the mRNA TX template create the end through from to Spindle in is DS throughout small DS of TX is unique the and amounts mRNA used its mRNA RNA of a RNA amount ability Second reducing chemically-modified industry manufacturing template. large by due combination RNAP all

RNA. of is can But RNA and trend that RNA before via from therapeutic. DS is removed the there problematic as be which DS removed inflammatory downstream Currently, a are complex mRNA, purification byproduct and a to it method. trade-offs, is needs expensive stimulatory including used the be production single construct DS

DS IVT Linea the RNA the to and customers. we due our downstream Now be our of for platform contamination purification reduced reduce will without for yields, to believe mRNA sacrificing streamlining further ability workflow need significantly mRNA the

our enable both with can aspect believe steps and IVT peripheral and summary, upstream produce downstream in we with simplifying our platform of time Linea better workflow -- mRNA RNA the lines. So customer by reduced to reduced production,

approaches after reception across clear industry developers pain RNA it's manufacturers to shortly platform addressed plasmid the very seeking Spindle, to and our is contamination new and platform And are The DNA a acquired key new we mRNA Now by and industry. called DS points are we differentiated encouraged. call. production. The attended that IVT conference our

mRNA the within industry. are encouraging strong Equally the initiatives gaining traction

preclinical due vaccines highest common valuation developers today from the developers large is range to of therapy pursuing of year illnesses. to respiratory mRNA are These our IVT therapy since mRNA CDMOs template We customers the for number to one launch ago. customers

committed planned customers year evaluation Our capability to calendar to supply cGMP these stage large remain this converting and to capabilities in critical agreements, future are production from we sale 'XX. the quality early launching

Linea our in business focused our further a ahead, Looking our IVT marketplace efforts of interest development and the are broader on base profile elevating platform. building in

of the mRNA a at material optimization or same Our IT Linea SA of hard our at therapies. existing on for work as center number the efforts and are new At platform platform products as both the also to and sales well will time, marketing continued we self-amplifying updating conventional highlight customers. mRNA growing to

our remain various with brought Linea's of we of to other Rx as patent RNA the production. it applications services. large and committed products Finally, portfolio modalities Spindle pending international state building as patent our acquisition The next-generation well covering around of a enzyme

company continues the LinearDNA the IVT pursue protection platforms. to addition, patents around both and In Linea

Now turn to let the remarks. call back me for further Jim

James Hayward

growth address you, thank in now the revenue Well, addition to IVT. Clay. to Linear I'll opportunities drive

DNA. of support Recent genetic RNA lipid immunogenicity long-term candidate vision in partners and ability medicines nanoparticle LinearDNA in central models. LNP messenger Beyond a drawbacks is subject platform conducted safety the the our manufacture for encapsulated demonstrated our that LinearDNA an mouse currently to is collaboration to with work of to vaccine host and plasmid our the of of a

LinearDNA-based design manufacturing class this thermal and soon institution animals. approach of expect combines with a high-value agreement of capabilities veterinary the veterinary medicine relative therapeutics. and to potential akin that a vaccine stability diseases impact health of we announce to the mRNA a sponsored Our human the LinearDNA rapid mind, of and research for new therapies, in simplicity to accelerate targeting With prestigious of platform establishment with the development manufacturing

for platform an LinearDNA veterinary our map developing includes therapeutics. road for long-term Our -- LinearDNA out-licensing

necessary aspirations. and our Our leverages approach for to production veterinary many health therapeutics human mRNA developments supports

our had exciting have other already, business the segments addition In developments. opportunities discussed to

During we the contract last to largest the date. our LinearDNA third fiscal delivered under quarter, shipment

X For time customer amplicon assay the their commercial of to progressed dollar quarters have the assay. shipments over multiple the in diagnostic readiness. a tripled values this as utilized context, for The represents validation these slide prior over three through a shipments single as has control

This rollout. stages developing the customer's LinearDNA-dependent also recurring in assays. of would additional X The today assay customer the we as expect is assay orders. early adopted, the commercial And is is

We expect other assays. they grow commercialize as this will these customer's demand LinearDNA for and validate

company a assay production LinearDNA in heavy are first leading but presence identical for for These the is assay another I cutting-edge two metals to other a in are opportunities water early described therapeutic. biotech also in being by in use evaluated including latter of to that application they a and control cases, for test an the diagnostic stages quality from perspective.

pharmacogenomics the State awaiting segment actively the of and Now within approval Meanwhile, building we Department awareness assay. plan partners. are our we've institutional our our been Health's of PGx New company users of and York and go-to-market platform potential for our

revenues. customers. to traceability the continues to Act textile demand for tools have launch and ongoing as XX new growth to compliance turning the of business Now adjust the are our verification requirements, we steady source seeing industry service, in supply the chain we associated Since UFLP verification over added our our

we base higher an As represented expand complementary potentially prior discussed to margins, DNA which within slide. at tagging customers can this customer on source value the as is offering verification genotyping include and calls, on of initial our

into verification, India to in and DNA overseas Discussions are DNA with migrating tagging of This the of to brands revenue current manufacturers chains extend not opportunities and represent also customers supply to prospects but to tagging that potential source new and and ongoing millions aggregate, potentially with dollars. retailers, Pakistan. retail that extends only U.S. existing

some and of offering Before increases today. key of commercial The to points me to LinearDNA templates Biotech's that proprietary RNA opening the call our questions, mRNA IVT with our developers. Spindle briefly combination made the integrated let polymerase relevance manufacturers recap we've significantly

quality discussions evaluation suitable with existing in stages we much addressable The also to market. been XXXX. to clinical has customers, in at chain, reception significantly prospective calendar use evaluation acquisition remain of also increasing larger customers launch mRNA is while monetize and CG&T committed new attracting delivering for volume the advance total segment the acquisition industry's positive early to IVT to us our LinearDNA us value The helping and a positions commercial

manufacturer the position necessary We advance genetic continue platform linear DNA medicines. to to of for our work next-generation the

opportunities. gives us incremental for to ability deliver revenue applications path a LinearDNA Our to diagnostic

We continue to tagging in in to customers, opportunities. source see DNA we're certainty and verification engage discussions for acquiring momentum starting

you Operator, this questions. to call open please concludes my prepared remarks, the will

Operator

[Operator Group. with go question McCarthy Jason The from Maxim Please Instructions] first comes ahead. today

Jason McCarthy

taking Thanks team. for questions. Hey, the

Can Just a a talk couple TX related little much uses to Linea guys bit you into IVT. the how about pretty process? is baked Everybody RNAP it.

protein what correctly, so you're switch how is doing user with don't fusion but So exotic. TX it's not for having it how that your how know from to it DNA-binding I good that guess is can the if of an which asking, domain separate the common, is easy regular use. very out I'm is and -- end I product? I'm phrasing for It's make

James Hayward

for virtually That's wild-type Jason. our process workflow and the great the for fusion protein The you. Thank Sure. question, a are both TX same.

feel on of burden So existing terms the manufacturer, in mRNA there is none. an really we

of can However, meaning and it's we workflow at when delivered. is in Perhaps the you efficiency second fact detrimental important that to process savings. a forms be build wild-type at as the associated highly time secondly, have shorten allergic RNA, a significant it's the use part of That end as also could the it, its that is, by the and the double-stranded very beginning process processivity inflammatory. you the consequence it. immunogenic, very more the TX And both which effect in

like to in of Clay, So we gain our value. would effort, with the can little platform you anything to provide that? believe use significant that add

Clay Shorrock

of noted, way with And Jim to that template, because it mean downstream reaction was platform that But of steps. Jim. it inhibitory build, to be in RNA. extent, So IVT to a us RNAP Spindle workflows, process wild-type certain the interacts LinearDNA to conditions existing and into the TX. the essentially answer, what alter I upstream wild-type takes mitigate have great greatly or a plug-and-play think would offer is that's our as I allows to be us the Jason a TX allows that way to DS right? eliminate the chemically-modified plasmid-based out

Jason McCarthy

Got two-part queue. it. And a jump into ask X now I'll I'm kind going back It's then of question, the and just to more.

makes Linea mentioned regulatory part. So one That's point At a from they're the there's therapies in else a mRNA-based conventionally? Clay, that switch developer clinical an preclinical to had developer, any you development. XXX along whatever process mRNA that drug can or using perspective, IVT from about

not part from to it make and Does or manufacturers your simple is a Linea to who contract this these other much and Moderna's you're lining the one all really else. way that COVID each IVT And different other that for attractive contract and plug point. that from targeting? for and they're a like separate other market something with another competing are from contract Does for just more play, manufacturers it each or vaccine probably product a is up

James Hayward

Clay, I'll into... jump So,

Clay Shorrock

Sure, go ahead, Jim.

James Hayward

how second I'll the and for jump into the that? first is you, question leave question

Clay Shorrock

good. Sounds

James Hayward

that for marketplace. So a in believe CDMO unit is color this a crowded way Jason, compete a we to great

platform you to our their gives or a to would to in the the well. -- offering like license effect And one? to spread that first speak Clay, So opportunity customers agreement as the to the to CDMO us benefit

Clay Shorrock

Sure. Sure. Yes.

could we plug out IVT we the not built do concept can a has of it how but have that some in act because question be we wanted options, of -- Linea really your do of a with existing this and the when to and its IP there, as noted, couple of X.X, chose on there's head that we we is really much an Spindle you built plug play. had platform, CDMO is and of being So IVT the turned some capabilities play, positive to version and that IVT progress it the huge market to that have we in could

pretty workloads. built LinearDNA, of But this plugs version DNA advantage the that on form of to see enzyme in into kind do and action manufacturing that's it X.X, mechanism you the of having down some So that think domains line. And IVT, maybe where the with Spindle the the concept used chemically-modifying line, a is we that fast-paced of binding can things exotic new using but existing locking manufacturers. be key we can down the a do IVT I existing plus of

Jason McCarthy

Great. Thank you.

Operator

Wainwright. ahead. The Please from question [Operator go next Chen Instructions] comes Yi with H.C.

Unidentified Analyst

is bad. signal apologies, was behalf Yi my [ph] This And Chen. Chetan of my

with know please So I already authenticity of questions, if comment indicated respect certainty, the added. you've attracting me. that excuse these But on answered you you types XX could customers customers over have you to you're platform?

So be you from very the manufacturing Any across potential take standpoint? in on its textile And world. and color much. are future helpful. revenue Thank these the that also customers a your would on so

James Hayward

Sure. Happy to.

chain Protection every is and our So to the Labor node every Forced the technology relevant is in node impacted Act. Uyghur supply by

even to chain if the to prove you the level at the consider starting the able debated be the the or way when Spindle. needs baled of through it's farm, So cotton all origin supply its at

every element see one -- for or product the -- weaver to from the we're sell we that to with supply the can not made benefit retailer. to chain the whether their without from requests operation the Each farm labor. prove spinner the owner concerned to to they So to forced be cotton brand is has the every of the seeing of

of are entire chain, So every across seeing but we're effectively we the node part. the for it across world only supply seeing it relevant not integrated most the

We've exciting long-standing business a got opportunities American in with Pakistan. have we So dealing India cotton. and new

global this us certainty become is relevant platform answer so a enterprise. And question? that is Does of helping your to

Unidentified Analyst

with are would in nature this at very Thank It And of prospective you much. so one Linea apologies it but on with Any customers? so IVT. color one helpful. did. missed my I you of on discussions you earlier terms much. Thank be quick -- evaluation if where stage And on, discussions again, It did. the

James Hayward

Clay, would to you like handle one? that

Clay Shorrock

Sure. Yes.

Spindle ago, produced one integration about Linea platform, is month IVT templates right? templating launched LinearDNA of which one that is service. year templates right the we've the the we our LinearDNA So with enzymatically IVT ago, RNAP. the launched About And

We biotech have to to at of a our templates. gamut good preclinical running LinearDNA from CDMOs evaluation customers, startup looking pharma number really the large

We fair a launched platform, of last have Linea the we for evaluation interest which our customers within month. existing amount IVT just

So template them pharma existing for relationships to our to get platform. our the contacts is strategy to commercialization evaluate Linea with and these our leverage biotech strong in IVT

In of Linea ago, addition, exclusively. a launch And since a we seeing a platform platform wish amount really have are way this the this have there DS IVT its manufacturer of the going, And through against can two where address conference CDMO be with mRNA industry we're seems contacts That of last mainly we for RNA. self-amplifying a believe in of lot challenges platform and do to we in substantial is as weeks the month interest and many to evaluate the SA potential new those. mitigate do manufacturing fair that to we're seeing that space mRNA.

Unidentified Analyst

so you much. Thank Excellent.

Operator

any remarks. the question-and-answer our turn I like over conference to closing Hayward concludes This for would back Instructions] [Operator James to session.

James Hayward

Thank much. thank today. you Well, you so for joining us all

the with community turn, university Before make I Hector from -- like our behalf decisions New their take I'd who data judged success the call, received COO, City community conclude to tools to Batista, real-time in solutions in administration, Applied of safe, of notes we DNA safe. were empowered kept on a York the including the was of the and Vice which and gratitude Chancellor say University of Chancellor to really keeping that, all an by opportunity assist the to privileged both stated, practical Executive informed we as "Your that

science us that noteworthy recognize throughout the of of positivity pandemic, From the rates also CUNY a DNA borrows. of importance that contract, course Applied following was the But surrounding the the at helping principle." it's to recognize beginning we uphold and our to the instrumental of fraction remained

you forward you and thank a Thank you again, we on progress year-end. good very much, to look and our quarter Well, have our fiscal on updating evening. and fourth

Operator

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

disconnect. now may You

Applied DNA Sciences (APDN) 10 Aug 232023 Q3 Earnings call transcript