Tim Gerdeman, Vice Chair and Co-Founder and Chief Marketing Officer of Water Tower Research. In today's podcast episode, I am joined by Michael Heltzen, CEO of eXoZymes, NASDAQ ticker symbol EXOZ. Also joining us is my WTR healthcare analyst, Robert Sassoon. Exozymes is pioneering AI-enhanced enzymes that convert sustainable feedstocks into highly valuable nutraceuticals and novel medicines. The company has developed a next-generation biomanufacturing platform designed to efficiently produce valuable natural products. So, Michael and Robert, welcome to today's podcast. Thank you very much. I look forward to it. Good morning, Tim, and good morning to you, Michael. Michael, before I hand it over to Robert to ask a few industry-specific questions, let me start by asking you to tell our listeners about your professional background, what brought you to become CEO of eXoZymes, and then please provide our listeners with a 30,000-foot overview of the company and its primary business model. Cool. I was born and raised back in Denmark. It became clear relatively early in my life that I had been an entrepreneurial personality. I see opportunities where people see problems. I start making plans when I see some of them, and I like executing on it. So, this is my fifth company that I'm a part of building. I'm in my mid-40s, so I've been a little busy with that. In the early 20s, we were some guys back in Denmark that wanted to take over the bioinformatics market, basically using computational power to understand how DNA, RNA, and proteins worked. And to keep the story short, we ended up building the largest bioinformatics platform for next-generation sequencing, sequence analysis. And basically got into genomics before it was even termed such. So, that's kind of what I have become specialized in computational power on the one side, molecular biology on the other side. How do we turn those new opportunities into businesses? And I have built a number of companies where I then, when I sold the last one, was recruited to what is today, eXoZymes. Great. So, yep. Excellent. That's a good overview. I have to say as a joke here that given that you're on your fifth startup by now, you should either have gray or white hair or no hair. So, somehow you beat the, you're an outlier in terms of how you manage the stress. But with that, I'll turn it over later. There's plenty of gray hairs to show and plenty of battle scars if you want to see them. Touché. Robert? Yeah. Thanks, Tim. And Michael, good to have you on this podcast. So, Michael, you've described Exozymes as a platform as a using AI enhanced enzymes that operate in a cell-free bioreactor, removing the need for living cells while offering a cleaner alternative to both petrochemical and conventional biochemical processes. Now, synthetic biology players have made similar claims for years, but often struggle to scale or sustain efficiency. So, what makes your approach fundamentally different from those failures and how replicable is it by competitors? Yep. Great. Big question. So, let me just start dividing it up into a couple of small pieces. eXoZymes, it's, we're basically a company that makes very valuable natural product inspired molecules. So, typically a nutraceutical or a pharmaceutical small molecule. And we basically specialize in taking natural product inspired small molecules that have been known for a long time to be insanely valuable. People just haven't been able to make enough of it. If they tried to find it in nature, they would have to basically deplete the natural resource from it to get enough for one generation of the product. Or if they tried to do it with petrochemistry, they either couldn't or it was super polluting or super expensive. People then tried, as you pointed out, with synthetic biology that is basically genetically engineering a cell to make these things. A number of people have tried a lot of things, but they often got stuck in that they couldn't scale that. And we can get into that a little bit later, why cell based biomanufacturing had such a hard time scaling a lot of these things and why the solution is cell free. So, stepping back, it sounds like a complex thing, but it's actually relatively simple from an overview perspective. We have just taken the biochemistry that works inside of cells, that is break down enzymes, a feedstock that is broken down into building blocks and build up enzymes that puts those building blocks back together up to the end molecule. We've taken that out of the cell and run it cell free. And it's fair enough if there's a scientist or two out there that goes like, hey, you can't do that because enzymatic pathways, they only work inside of cells because the cell is supplying a lot of the building block, the energy, the balances that is needed. That is what we have replicated in our setup. So we can run that artificial environment that is like being inside of a cell, but you're just inside of a big steel tank instead of if you're the enzyme. And then we are working on the enzymes to make them what we call the Superman versions of the enzymes that we call exosymes. So enzymes that can work outside of the cell, they are strong enough and steady enough because we genetically engineer them to be so. So that's the second layer of it. How do we genetically engineer those enzymes to become exosymes? Well, like everybody else, we could sit down and kind of theorize one mutation. What would that potentially be like? And then we could go in the lab, put it into a cell, express the enzyme, see if the enzyme performs better and take it back. But that's super low throughput. So what we do is we sit down and bioinformatically with alpha fold inspired kind of algorithms. We're now in like third or fourth generation of those algorithms. We sit down and project per enzyme in our manufacturing solution, per enzyme, probably a thousand mutations. We computationally think that that is a thousand mutations that each makes a benefit from a performance perspective. Then when we have projected that we can go to the laboratory and as very few people in the world, if not the only, we can take all thousands and express them without cells because we are cell free experts. So we go from DNA to enzymes without putting into living cells. And by basically building that system that the DNA with the mutation goes into the new version of that enzyme, we can very fast in parallel express all of these enzymes, performance test them, take that data back to the algorithm and say, you were right about this one. Let's put that over in the group of things we were built with. And you're wrong about this one. Learn from that. So you become a better algorithm. So we basically brute force evolution. Reinforcement training on DNA to enzymes, enzymes to performance back to the projection. So we can run that circle. And this is kind of popular speed. So it's not precise science, but we basically run a couple of billions of years of evolution in a week. Right. And I guess you think that you're fairly unique in that sense in that it's not something that there's a huge amount of competition out there for you. And we feel a little alone sometimes. That's good sometimes to be alone. So there are a few other companies that are working in this push to make things sell free. And we actually a company that are very, very friendly to anyone that wants into the sell free space. So we have a number of things that we will either license out or literally give away. And we are actively helping universities to get access enough to this kind of technology that they can teach it. Because we see it as the next generation of biomanufacturing. So in 2025, Exozymes shifted from a partnership led strategy to advancing select programs internally, citing partner skepticism of synthetic biology and unfavorable deal terms. So is this a long term strategic shift in how the company plans to capture value or a temporary move to build proof points to improve negotiating leverage? You gave me an A and a B. It's B. Let me unpack that for you. Basically, it is not a long term shift. It is short term, a way of overcoming the reality that we met some skepticism in the market, because this sounds too good to be true. And people literally said like, well, we have already burned our fingers on synthetic biology and handed over tens of millions of dollars to people that promised us the sky. And they came back and basically they had a Petri dish with a little bit of what they had promised, but it couldn't scale. So they were very disappointed with synthetic biology. We realized that not that the well was poisoned, but it was probably not as clean as we wanted it to be. So we took a step back and said, like, instead of us arguing with potential partners about if this will work, why don't we just build a couple of things ourselves? And to be very frank, we also found a couple of things where the business case was just so great, where we were starting to think internally, why would we give this away? That's NCT and Cannabinoids. We can talk a little bit about later that our flagship product programs. So you mentioned those two flagship efforts, the NCT program in metabolic health and your cannabinoid biomanufacturing platform. So could you actually give us a high level overview of each and what you're ultimately trying to achieve with those programs? Yeah, absolutely. So when I talked about that, we are looking for things that have known to be very valuable, but nobody has been able to commercialize and basically make the business case. That's basically a product of us having our idea management program where we run all ideas against, screen them, which one will most likely be the best from a product market fit perspective, from a technology product perspective, from a size of market and all of that. And we ran into these two areas where NCT is just very, very timely. This is a small molecule that boosts metabolism. That means turns fat into energy. That is a big conversation the world is having with itself right now, but it's from a different perspective. It's the GLP-1 conversation of like, if you take this GLP-1, then you turn off your hunger signal, but you also turn off your bowel movement signal and your muscle growth signal and other things that are actually not an advantage. So just like dosing up on GLP-1 is not like the one and all solution. So there's a lot of our pharma partners that we're talking about. Could you start combining a GLP-1 with something? And as you know, this is where the market have gone. So some people get around and call them the GLP-3s because it's GLP-1 and a couple of other things. Those combination drugs, we sat down and we looked in our portfolio and we said, well, NCT is exactly that. And it's better than what a lot of other people are doing because it's actually hitting a drug receptor that boosts metabolism. It's a much better value proposition of burning more of your fat and getting more energy than just trying to kind of limit your fuel. Yeah. What about your cannabinoid program? So, um, same kind of story with a twist. Cannabinoids have been known for a thousand years that they have some additional impact and opportunity to them. But, um, imagine you got a drug that you got drunk from that. That would be fun the first day, but like the rest of your life would be ruined. Right. So, so that's the problem with cannabinoids. You get the medicinal effort, but you also get high from it. And therefore you have this whole kind of like, we can't make that a drug. We can't make that, uh, something the FDA is going to approve also because the cannabinoids that we are typically having access to is from plants. And like the, the vast from, from an amount of cannabinoid point of view, the vast, uh, the, the most cannabinoid you get out of a plant is THC. That's the one you get high from. And there's only a couple of other ones that is kind of enough that you can harvest. And then you have like a hundred or 200 other cannabinoids in tiny, tiny, tiny amounts. It happens to be the ones that has the medicinal effects often. So from that perspective, it's like, ah, I can't really get it because again, I have a situation where I can imagine the value proposition, the market and the opportunity, but I can't get to it. So we have to be in a very unique position where, because we literally engineer our pathways, there's nothing alive in our cell, uh, sorry, in, in our cell free, uh, systems. Step by step is chemistry. It's biochemistry. It's very inspired by nature, but it is step by step, not an alive thing. It's just a chemical reaction. We can literally guarantee THC free cannabinoids as probably one of the only, uh, groups in the world. And as you have maybe followed, uh, there have been a rescheduling of, uh, cannabinoids because there have been a recollection and, and realization of that. There's, there's, um, intoxicating and non intoxicating cannabinoids and the non intoxicating ones, keeping them away from the market. When the, um, the endocannabinoid system, as it's the receptor system in the human body is so vast. It's literally in all of ourself and it has so many potential benefits. We're keeping mankind away from because of this, uh, messy reality of THC always being mixed in coming with a solution to that is something that has been a strong market demand for, and we look forward to launching. There's certainly a lot of research momentum in clemenabinoids into, you know, mental health disorders, such as Alzheimer's. It's really a very interesting area now. Exactly. So going back to NCT, um, it is described as the only known potent agonist of HNF4 alpha, a master regulator of liver metabolism that has been an accessible at scale. And your platform can amazingly produce it at a greater than 99% pharma grade purity. As you transition from demonstrating scientific and production capability to building a real commercial business, what data support the idea of the active, that activation of this regulator can drive meaningful monetizable outcomes. And where would you place yourselves today along the evidence curve? Yep. Um, so, uh, you're right. Um, the, um, the receptor is a receptor that sits inside of mitochondria inside of, uh, the, the powerhouse of the cell where, uh, energy production, uh, goes on. So it's, it's a receptor that is known to basically, if you can activate it, it basically goes up in activity and actually over time, you can even have mitochondria, uh, grow almost like a muscle if you use it more. So, so that is, that is a long standing, uh, proven many, many different ways. Then the next step is obviously the, the animal models. People have been running, um, uh, a number of different, uh, layers of, uh, proof points over the years. I would say the, the, the, the one, um, uh, the, the one that is, is, uh, the, the cleanest and, and the, the kind of easiest to, to look at is, um, uh, the one from. Sanford, Bernheim. The group basically sat down and gave high fat diet to, uh, I believe rats and the, the, the, the rat that got the high fat diet got big and bloated and, uh, had a basically destroyed liver, exactly. Uh, fatty liver disease style. Then the, the, the, the same clone of that rat, but. And, and same amount of food, but with NCT in it ended up with 30 to 40% less body mass. And a much, much healthier liver. So, so that's, that's kind of where, where the first layers of indication and, and everybody woke up to the world and said like, wow, this, if we could only get, uh, access to this compound, the challenge is that you find this in, uh, I think it's like 14 parts per million in, for example, uh, black, uh, pepper, uh, kernels. So you need a household worth of black pepper to have enough for, for one dose of this thing. And, and there's just no practical reality where, where you can isolate it from nature. And then people have tried, um, all kinds of different things, but haven't ended up with the kind of purity and the, the kind of production matrix is needed until we applied our platform on it. And, um, as you pointed out, we, uh, together became in chemicals, basically ran a pilot where we, uh, where we showed that, um, basically, uh, uh, the vast majority, 90%, 99% of the feedstock ended up as the end product. So imagine if this was a cell based system, if you gave a cell, let's just say some sugar or some feedstock, how much of that sugar will turn into your end product in the other end, no matter how much genetic optimization you have done, the cell will start using the feedstock for other things or try to turn off the production of what you want it to do, because it's basically, um, it's, it's basically not in need of it. So to, to, to answer your, your last part of the question, uh, NCT has been, uh, used in, in humans and are considered, uh, very safe, uh, from the perspective of, um, uh, it's, it's been used for, for basically gut health. Uh, the, um, the, the, the, the, the gut lining, uh, ripens up when you give NCT. And that, that, that is, uh, one area people are pursuing. There's an area, uh, where basically people worked from a, a diabetes and, uh, metabolomics perspective where, uh, we see things, uh, slightly different is that nobody have had this in pure form before. So we are sitting down and you asked where we are specifically in the evidence curve. We, we are now getting to the, the, the in human use, uh, studies and, uh, teaming up with, uh, uh, people in, um, uh, metabolomics, uh, uh, space to, to, to, to really investigate. Now when we have so pure form and, and so we, we, we, we can, we can basically, uh, deliver the next generation of, uh, preclinical insight. And then of course, when we talk to people, there is a two routes commercially. There's the nutraceutical route. This can very, very, very likely be grass approved, uh, because the, the lesser pure form have already been grass approved. So we are pretty sure about it. Generally recognized as safe can be sold over the counter as a nutraceutical supplement. And that means there's a, uh, path to revenue, uh, relatively fast. And then at the same time, and this is actually probably the most exciting part about all of our platforms. So hang on to this one. When we go to the pharmaceutical side, it's not NCT, the natural product version, because we're in engineering level control. We now have design control over the small molecule in a way, medicinal chemistry way that we'll have never had access to before. So we can make more potent versions, more bioavailable versions. We can literally tinker with the small molecule all the way back to the computer. And we can design what small molecules should be used for specific indications. So I'm personally very excited about fatty liver disease. I'm very excited about, um, uh, the, the, the overall, um, uh, metabolomics, uh, diseases that, that this can probably be, uh, customized for. But, but that's where we are taking the, the, the pharmaceutical direction. And that's where we are having conversations with, uh, biotech and pharma companies. And it came down to your first question of like, when we negotiate those things, or obviously we know we can, we can take this further along the, the value, uh, inflection point curve. So from a negotiation point of view, it's like, you know what we can, for a relatively small amount of money, we can get to the next value inflection point. Why would I do a licensing deal before that? Right. Yeah. Very interesting anyway. Um, but going back to the, uh, cannabinoid inspired molecules, uh, platform that you, um, are also developing. Uh, we've had some partial regulate, uh, rescheduling as you, uh, as you, uh, uh, uh, mentioned, uh, uh, previously, but the broader cannabis, uh, adjacent space has struggled with distribution, regulatory complexity and consumer trust. Those are things that may take a while to, um, uh, to, uh, you know, to, to, to, um, prevail over. Yep. What specifically are you doing differently to avoid those same pitfalls? So, um, first of all, just being very blunt about, we will never touch anything people, uh, could be, uh, high from. So no intoxicating cannabinoids found at, at our facility. And we actually DEA, uh, registered. So, so we have a license from the DEA to make cannabinoids. So, uh, we, we're very, very compliant from that perspective. And then as, as you pointed out, there has been a lot of regulatory hurdles, but that was because there was a schedule one drug. That's literally the definition. A schedule one drug is a drug that the U S government, um, see no medicinal use case for. Right. And, and therefore how, how can you convince anyone in the FDA or anyone anywhere that, that there is a medicinal use case? So, so that's, that's the second. Big change that that is here. But first of all, we can stay away from the intoxicated ones. Number two, we have, uh, a rescheduling event going on. And then frankly, there's just a couple of hundred years worth of preclinical and clinical and outside of the clinical, uh, setting, uh, data sets on what works for what. So now we come back to this core thing of our platform where we can engineer the small molecules. So we will actually not just be taking the, the ultra rare cannabinoids that people are dying to get hold of. We will also take them and say, why don't we engineer your, your rare cannabinoid and make a new to nature cannabinoid. So you can get a patent, a composition of a matter patent on it, but also, so you can optimize it to the specific use case or maybe cut it away from doing anything else than your specific use case. So, so that optimization is the third argument for why we can make very unique cannabinoids. And then from a marketing perspective, you might not even call it a cannabinoid because if you have the specific disease, do you really care where we were inspired from when we built this new molecule that, that helps with whatever we're talking about? Good, good, good answer. So what are the key near term milestones for NCT and the cannabinoid programs? And when do you expect to start generating meaningful revenues from either of them? So, so in NCT first, we are probably a year away from launching the, the, the, the nutraceutical, according to our plans. And it will probably in the beginning be more about introducing the product to market. So it will be introduced to a, most likely to a relatively high price because there's a segment of longevity and health focused individuals that will pay basically anything for this. And we will probably establish in that market. And then when the production goes up, get the price point down so that it is for everybody. And, and it's not just to kind of like skim the market. That's actually not what it's about. It's about establishing the conversation about how valuable this new molecule is and, and, and what it can do. So depending on how, how you define meaningful revenue, it will be meaningful from the perspective of, it will be the first revenue and it will start the chain. Will it be significant in, in the form of numbers? So, it's not, not right away, but it is the takeoff point. And we, we do believe that if this is launched correctly, that it can become a very big deal because it's a natural product inspired, either alternative to DLP ones that you can buy over the counter. Or it is a, if you've been on DLP ones, but you actually want to step off it, but you don't want to gain all your weight again, as people do. This is, this is, this is maybe your, your, your tool to, to mitigate that. So, so we, we are talking with a number of different partners that would like to, to basically market this into different segments. So, so that's where we're at right now. And what you should look forward to the next year or so on the NCT side is basically us partnering up with the manufacturing partners that is going to make this and the, the, the marketing partners that are going to bring this to, to different segments. Right. Well, as you know, that the lifeblood of any company at your development stage is financing. So you ended 2025 with $3 million in cash approximately and a runway into the middle of this quarter, the second quarter. How should investors think about the alignment between your current capital position and upcoming milestones, the ones that you just explained to us? And what is your strategy to bridge that funding gap? Yep. So we are right now in conversations with investors about investing into the company. And, uh, we are a little bit unique from the, the perspective of being a NASDAQ listed company, but still relatively early States. This is something that have been termed, uh, public ventures. So instead of a VC, a venture capital that typically is used to, to boot up companies like ours, we, we are funded by a, a venture capital model that has basically been developed by a MDP capital. That is one of the co-founders of the company. So they are an investment bank, but really think of them as a merchant bank, um, that, uh, uh, takes their time to find really big tech breakthroughs and then turns them into commercial successes. They have 30 year track record of, of, of doing exactly that. And, uh, they've been very successful at it. So, uh, MDP were our finance year up until the IPO. They were the investment bank that took us, um, uh, public in, uh, uh, uh, 20, 24 of November, 20, 24, right in the middle of the time where everybody's saying like, there's no way of IPO-ing right now. And we could anyway, because MDP capital is not just a bank of their own. It is also a community of hundreds of often entrepreneurial, uh, individuals that have had their own exits that doesn't really care about where the market is. If there's a big idea, if there's a big opportunity. So that's where we have had our capital coming from for the IPO. Those are the people we are also talking to, uh, now. Um, and, uh, we are, uh, with, with a high degree of certainty, uh, uh, we, we, we know we can take the capital in that we want, but we're in a, uh, very nice position where we can, um, uh, build very capital efficient. We, we, we spent less, we spent around $10 million a year building, uh, these very, very valuable asset packages. And, and right now there's just no good reason for taking more than 10, maybe $15 million, uh, max in because that easily gets us on the other side of the value in inflection points that, that we've been talking about that, that, that, that will generate much more value than that. So to not dilute our shareholders to be, um, uh, good stewards of the capital, we, we basically are set up in this very efficient system. Interesting. Now, final question for me. You said you aim to build the company into both a pharmaceutical platform and a specific asset play, doubling down on NCT and the cannabinoids, uh, cannabinoids, while also engaging biotech and pharma companies interested in your core technology. Those are two very different business models, product company versus a platform licensor. At what point do you have to choose one or the other? And what does that decision hinge on? Yeah. So before I get Bill Lloyd here sitting and saying that I'm focusing on two different things, that's, uh, obviously not what we're going to do. We are a platform of platforms that, that is who we are. We just happen to take our first born products, uh, through the pipeline ourselves to show people that this is real, that it really has the production matrixes that we say it does. And, that, that, that we can build these very valuable, compounds that, that have been considered impossible. so consider that kind of like the Kindle we use to kind of kickstart the fire, but we are a platform company that will be, uh, in three to five years from now, when we talk again, and we are, we are talking hindsight. We will be talking much more about licensing deals and us building biomanufacturing solutions for other people. So to begin with, it's, it's more of a, how do we get this engine started? Great answer to that. Well, thank you, Michael, for walking us through exercise and unpacking, you know, what people on the outside might think is pretty complex, but you've done pretty well in, in simplifying it for us and, and help us better understand the company's, uh, company and its business strategy. So I'm going to pass it back to Tim. Yeah. Thanks, Robert. And, Michael, thanks so much for joining us today to discuss eXoZymes. And I would, replicate what Robert just said. I was appreciating as you were speaking the granularity with which you went into detail, which I know investors will appreciate. So, uh, have a great afternoon, gentlemen. Thanks so much for the time. Thank you for listening. And don't forget to subscribe as well as visiting www .watertowerresearch.com to stay up to speed on the internet. Please stay up to speed on the company's small cap written research reports, podcasts, fireside chats, industry specific symposiums, and conference schedules. We will see you next time for another edition of the WTR Healthcare Happenings podcast. Finally, a special thanks to the producer and editor of the podcast, Krista Fitzpatrick. Thank you.