115 million dollar market cap company right now. How big do you think it could get? We are here to make it really, really large. When we think about the potential, we have to realize this is a new form of chemistry. Just in the pharmaceutical space, we're talking about a new way of doing medicinal chemistry. We can make new generations of products that was unthinkable before. Welcome to the Upside with Lou Basenese. Nowadays, everyone's talking about AI as the fourth industrial revolution because we're going to transform and process data in a new way. But what if I told you the fifth industrial revolution is already underway in how we process matter that could transform the way that we produce chemicals, fragrances, drugs, all sorts of things that totally add up to about $5 trillion dollars of economic value. Well, that is actually happening. And today, we're lucky to have with us Michael Heltzen, the CEO of eXoZymes. Michael, welcome to the Upside. Thank you very much. I've been looking forward to it. Yeah, well, good to have you in New York here. We always start with the end in mind. So what is the big breakthrough that eXoZymes is powering right now? Yeah, the reason why people are excited about what we're doing right now is that we have really translated the technology breakthrough into new product lines now. So you're not in the lab, to be clear. This is something that's going to market. I know people hear new technology and they worry like, this is 10 years away. This is happening right now. Exactly. And we are proving the speed of the ability to bring things to market fast is basically the next thing we're really pushing for. So NCT is basically a small molecule that boosts metabolism. That means burns fat, create energy. That's a good value proposition. Overall, it's something that obviously plays into this whole market of obesity and weight loss and metabolic health So this would be on the front side of it, really, to really catalyze the body to burn fat, produce more energy naturally without having to interfere with receptors. Yeah, exactly. So where GLP-1s that are kind of the drugs that Eli Lilly and Novo Nordisk have brought to market and 10 other companies at least now, is trying to get a lot of the time. It's trying to get a bite off. It's basically a large molecule that just turns off your hunger signal. It also turns off other activity signals such as muscle growth, bowel movement, a number of other things. And that's actually not a positive thing. So if people are to be on that drug for a lifetime at these high doses, that can be troubling. It's just not for everybody. Yeah. So NCT, is this a pharmaceutical? What would we classify it as? The unique thing about us is that we can build it as both. And let me define what both is, a nutraceutical and a pharmaceutical. So a nutraceutical, the way we define it is with the end in mind of selling it as over-the-counter. So basically the ability to replicate exactly what nature is doing with the natural product. And because NCT is something that has been around for thousands of years and been eaten for thousands of years. So what's the chemical name for NCT? I'm not even going to try (N-trans-caffeoyltyramine) It's naturally occurring, been around for thousands of years. So you can bring it to market over-the-counter. So when I say it's been around for thousands of years, it's to provoke people to kind of start thinking about where, wonder where it's from. So it's actually amongst other sources, you can find it in tiny, tiny amounts in black pepper. That's why I said thousands of years, because humankind have been eating that for thousands of years. The challenge, as I typically say, is like you need to eat a house full worth of black pepper to get enough of an NCT dose. So it actually does something for you. Yeah, it was like the longevity trend with wine, with Reservatrol, right? As you thought, if you could concentrate it, that you could live forever. Yeah. Yeah. So you guys, your technology is enabling the production of NCT in large quantities without having to extract it from the natural resources that produce it. Exactly. And that's what's opening up for the nutraceutical, over-the-counter business opportunity. What we can also do because of the platform we have, where we have a lot of control of every single chemical step in the process, we can build pharmaceutical versions of NCT. That means analogs that are more potent, more focused on specific use cases, and more bio-available. Whatever we want to develop it in the direction of, we can basically push our chemistry. That is going to end up as a new molecule. That means new-to-nature, composition of matter, patent opportunities, and therefore, as a pharmaceutical opportunity. That obviously has to take the pharmaceutical route and approval process, where over-the-counter is much faster to market. But this double dip of going into nutraceuticals, and then also optimizing a more potent version for pharmaceuticals, that's a theme we are going to reuse again and again. So as a layman, I got to ask an obvious question, because I think we talk about in the context of GLP-1s, like this could be a competitor to a GLP-1 to have the same end goal. I don't like taking shots. So this is not going to be a shot, right? This is going to be a pill form, I would imagine? Yes, it is. Okay. So immediately there, if you went and asked the 100 million obese people in the United States or North America, would you rather take a shot or a pill? It's immediately a pill. Correct. You could have the same impact. So this then becomes a consumer product that you could get over, potentially, over-the-counter. How long is the timeframe before it could be commercialized? So we're basically setting up, in negotiations right now, partnership that could potentially already kick in in the end of next year or soon thereafter. So we have a lot of interest from basically people from the longevity and metabolomics space showing interest from making this into a supplement that can be sold. And what is really going to be the time limit is we're going to have to have GRAS approval. On this, that's going to take some time, probably six months -ish, depending on how things work out, if government is open and other things. Yeah, we're on day 37-ish, 38-ish right now of the shutdown. Yeah, let's not jinx it. Hopefully that's soon. By Thanksgiving, so we have something to be thankful for. Yeah, that would be nice. Thank you. Yeah, but still, six months to get GRAS approval and go through that is like an hour compared to clinical trials for a typical drug. I mean, typical drugs are taking five to seven years to get the market. Absolutely. Best case scenario. And then you set up a pilot production that is basically your first setup where you do learn a lot from the first thing. So you typically get a lot of cost savings. So the first pilot production is the reason why we call it a pilot. And then you have the commercial production afterwards. Okay, so let's talk recent developments. Have you already done the pilot production? I mean, obviously, I would think, I don't want to make a faulty assumption that if you're having partnership discussions that you've already been able to produce it at some scale. What scale are we at right now? Yeah, so we have announced, and so this is a public company, of course, keeping the balance here. We have basically announced gram scale and also that we're working on the scale up phase. We haven't announced any of those numbers yet. And it's obviously one of the things we look forward to kind of basically, it's a value inflection point in our stock when we start having kind of like the real production up and running. So you're basically going to see us make announcements. Maybe every time we make a hundred times scale up step in things. So that's good, because I always like to think about recent developments. We cover that with NCT here. And now what are the next catalysts? So it's a scale up announcement next, right? That would be the next thing. Then potential partners that, I mean, at what scale do you get really commercial interest for someone to go to market with this? So we have a couple of value inflection points on that journey. So you can argue the next one, other than the actual scale of it, is basically, as we've already announced, we want to spin this out as an individual company. We are in conversations and negotiations with people to build that company together with us. So when that opportunity is announced, that's probably depending on how good the opportunity looks like at that point. So this would, in the realm, I mean, frame of reference for me is biotech companies that have a unique platform that they then are commercializing individual drugs. And then instead of doing a biotech, you know, biobucks deal, where they take in a milestone fee, you're talking about actually capitalizing a new joint venture company to commercialize NCT specifically. Yeah, we realized when we realized when we were basically in the negotiations with people that came when they heard we could make NCT at scale, we had a number of partners coming in, potential partners coming in saying like, we really want to buy that, or we want to exclusively license it, or we want to do a joint venture. And basically building the models of what is the potential for NCT versus what is the value at this given time? Because obviously, we had partners that came in and recognized this is a multi-billion dollar business opportunity. Just NCT. Just NCT. What is that worth today? And frankly, we want to capture a lot of the value creation here in the beginning, where we're also in a better position. So when we have these very, what we call extraordinary business cases in our hands that we have a unique opportunity to bring to market, we're going to keep ownership longer than in other biosolutions where we're producing other products that is still going to be really good business, but we will license it out. We don't need to partake in the journey of creating the company surrounding it. Yeah. So this gets into it. I want to get to the business model as well as the technology overview, but I think the business model is most interesting to investors that you describe it as a platform of platforms, right? NCT could be spun out into its own company, and then you figure out the next nutraceutical focus that could become its own spin out. Is there a focus initially on nutraceuticals that could be dual, that could become pharmaceuticals? Is that the target market, NCT, and then what's next? As a model, we're taking positive advantage of that we're the first very capital light biomanufacturing platform. So this ability to very fast compared to other platforms and very cheap compared to other platforms, being able to make these highly valuable natural products and pharmaceutical versions of them that everybody else from other perspective will have to spend many, many years and maybe tens of millions of dollars on just developing the product R&D part. Yeah. That we can move so much faster and cheaper is what we want to take advantage of again and again, hence why we are a platform of platforms. And frankly, also because we're the only people in the world that understands how that part of science works, this ability to run enzymatic pathways outside of the cell and use AI to optimize those enzymes so they become these Superman versions of enzymes that we call exosymes. Yeah. No, that's a perfect segue because I'm going to bring up a dirty word. It's synthetic biology, right? Because that was something that took a lot of capital and didn't get very far with that capital, the first generation of it. So let's talk about the technology. You talked about it. You're taking enzymatic pathways. You're getting out of the cell. Let's review what is eXoZyme's true technology innovation? How has it developed and really how is it changing the game? Yep. So as you were saying, synthetic biology where the pitch used to be, not that many people are pitching it, anymore, but it used to be, we'll use. It was a darling of Wall Street for many years. It was. And there's billions of dollars that have been sunk into it with very little return on investment. I've incinerated my own capital and other companies, but thankfully no synthetic biology companies. Good, good, good. You dodged that bullet. The way biomanufacturing used to work was people genetically engineering a cell inside of that cell. It's basically when we talk about enzymes, it's the biochemistry of living matter. So some feedstock, let's say sugar is consumed or broken into building blocks by the breakdown enzymes. And then the buildup enzymes basically put these building blocks back together. So you get these molecules, these chemistries that the biology. You get the desired output. So the classic example is fermentation, creating alcohol, right? I mean, that would be a great example of synthetic biology, but trying to do that on a scale now to create, to engineer and get more of the desired product at the end. And it failed. Why did it fail? And what do you guys do different? That you're not failing to do differently that you're not failing to fail? Frankly, something more valuable than just alcohol is, it has been the whole idea of using these cells as chemical factories and people genetically optimized and got cells to do a little bit of chemistry. But fundamentally, the cells push back because cells does not want to, and have by evolution basically been set up to not producing anything they don't need. Right. Because that's the smart thing from a survival perspective and definitely not producing things at volumes that they don't need. So you ended up with these biomanufacturing platforms that try to turn off the production all the time. Got it. And if that wasn't enough to kind of kill the hopes and dreams, it also turned out that when you're producing a valuable compound inside of a cell that has a million other things going on, then it's actually very difficult to take your end product out without having to spend a lot of isolation costs. In a number of cases, that was actually what killed the companies, that they could make the product, but the isolation cost was higher than the value of the compound. So the science was sound, but the extraction cost was too significant and some of the others didn't make any sense economically. So you couldn't scale it up. And it's literally because you have everything mixed together inside of the cell. That's what we basically alleviate by, we talk about liberating the enzymatic pathway from the cell by literally taking those enzymatic steps out and running it in steel tanks where there's nothing else than the feedstock, the enzymes, and the end product when it's done running. And that's why a lot of molecular biologists, they raise their hand and go like, hey, Michael, that's impossible. Yeah, yeah. This definitely raises some eyebrows when you talked about, right? I mean, the genesis of the technology spinning out of UCLA where everyone was going about it the conventional way. And then the original founder, Dr. Bowie said, hey guys, why don't you try and do it without the cell? Right? And what was the original reaction to that? Tyler and Paul, as co-founders, took it on them to do it, but everybody else basically told them that it would be walking on water. The reality is that there has been a strong belief that you needed the cells and all the different functions of the cell to keep the enzymes stable, to keep the production of all the building blocks and energies and thermostable balances and all of these fancy things that the cell provide that you couldn't replicate that outside of the cell. And that's basically what those three guys and then later on our team ended up disproving that with their scientific breakthroughs, they could build these things so it can run outside of the cell. And it basically allows us to add the second generation of technology on top of that. That is, okay, now we have a platform where we can run things in a, you can argue, chemical controlled way that is much different than a living cell that has its own ideas and what it want to do with its energy and all of these things. So it's a much better data set to AI optimize on. And that's, I want to talk about that a little bit too, but you did bring up a thread that I want to make sure everyone understands. NCT is not the first thing that you've created using this platform. It's actually, you've done with multiple other chemicals. So it's not this, hey, this is our first try at work. You have demonstrated that the technology scales over different chemicals, correct? NCT is the choice of product we have made. The technology and the platform is built with a number of other molecules that the company was booted up on basically federal grants. So whatever those federal grants was paying for. And we do have public knowledge available on having been given money by the US federal government to research on cannabinoids, which is a little bit unusual because technically seeing a cannabinoid is typically a scheduled one drug. And by law, it means that there's no medicinal use case by law. The reality is though, that everybody knows that there are some of the cannabinoids that has medicinal use cases, but if they come from the plant, they're one of many. Yeah. Isn't there something like 147 or some odd cannabinoids that are in the plant? I typically say 200, but it sounds like you are either really smart or you just made it up. One of those two things. ChatGPT. Yes. Yeah. Okay. All right. So NCT cannabinoids. I know there's other things that could be produced, but the key point I wanted to drive home really is that this is something that's proven, written up in Nature Magazine, other scientific journals. So this is not something that's a proof of concept with NCT. It's actually been proven out and you can replicate it. Right? So let me talk, the next segue I wanted to talk about really is you mentioned AI and these enzyme systems. How has AI changed the speed to developing these systems? So then test to go to market. Yep. So to basically understand how we use AI, we typically just say like we brute force evolution. So what does that mean? Basically, evolution is out in nature when one genetic change happens and then if it becomes an advantage, then over the coming generations, that becomes the prevalent trait of whatever organism we're talking about. So it takes a lot of lifetime generations for evolution to play out. Right. We just sit down and basically use a Large Language Model to say, look at this genetic code for this one enzyme. What if I change this one base pair? Would that lead to an improvement or not? And we have Large Language Models today that basically understands this protein to enzymatic structure relationship. The Nobel Prize was given to the DeepMind guys in the UK. Okay. So you're leveraging that foundational science. That kind of thinking of using Large Language Models to predict what the next impact is going to be when you guess what a new step would be. So we basically, we sit down and project hundreds, if not a thousand genetic mutations per enzyme. And where a lot of people then, again, in molecular biology would say like, okay, but then you get stuck right there because it's going to take you like years if you have like hundreds, if not thousands of cell-lines. You have to go out, grow up, sequence. But you don't have to do that. But you don't have to do that. Because we're cell free. Correct. So we know how to go from DNA to enzyme without putting it into a living cell. And it takes basically no time compared to if you were putting it into cells. So give me context, no time. And look, this was a key implementation strategy of you joining the company. I remember, I recall, you basically came to the team and said, hey guys, AI is legit and it's going to take us, forget hiring another, doubling our staff. We're going to hire anyone else and we're going to use AI to get there. So in real terms, what did it compress the development cycle down for you and the team? Like NCT, what was the design timeline on that? So we could not have done NCT if we were not basically using these methodologies is my best guess. And so it's not even kind of like, what is the timeline? Can you not do it? The other perspective is like- Hey, the impossible, possible. But are we talking about these things can be designed in a matter of weeks, months versus quarters and years? Yeah. So it's that significant of a compression. Formerly in biomanufacturing, you're always counting in years. Yeah, yeah. We did basically the proof of concept of NCT. So we convinced ourselves we could actually build it in five weeks. And then we made the system- Wow. So you went from the horse buggy to the Porsche Roadsters, like just you accelerated. I mean, it's a significant- Maybe a rocket, right? Maybe a rocket, right? Maybe a rocket. I like it. Yes. So definitely a huge improvement, but not just in speed also that we can now talk about explore more chemical space or more enzymatic space. So basically, instead of where we before would have sat down as a team and theorized what are the best five, 10 mutations, and we would have worked on that for a long time, we can guess that in a heartbeat. And then we can go and express these hundreds, if not a thousand mutations in a matter of a week. And it gives us some enormous data sets that can then be trained Large Language Model style and reinforcement training style. So this is a collective wisdom that keeps expanding, right? Because if you design, if you understand the traits of one enzyme or one enzyme system that's got multiple components, you can take some of that into the next system, correct? Is that- At least inside of the classes and the families of enzymes. So if we think of Legos, these are building blocks and these are designated shapes of Legos that then you could move into another potential chemical. And maybe even more like software where when you have developed a function that works, you can just call it in that piece of code the next time. So absolutely, we're expanding the toolbox and the capabilities of the platform the more we use it. So let's talk a little bit about patent protection, right? Because I'm a firm believer. I know you are too. We've had conversations. If you don't own the IP, you don't own the market, or you can't own it fully. And extract the most economic value. Where do you guys sit right now with a patent portfolio? And then what's your approach to continuing to grow that? Yeah, we're super lucky that the guys at UCLA started the thought direction so early on. And basically, the foundational couple of patents that was developed at UCLA, we have exclusive licensing rights for. And then we have another 10 patents on top of that that have been issued. And then on top of that, we probably have, I don't know, 15 others that is In prosecution, like basically application phases. Yeah, so there's no fear. I mean, because I think about the multiple AI models, right, that are out there in existence right now. It's with every given week, leadership changes. But is there, I mean, let's talk about competition a little bit. Is there any competing cell-free platforms to what you're doing? What have you seen out there? Because you've studied this space, and this is what brought you to eXoZymes, I believe, their uniqueness. Yeah. To my knowledge, we're the only truly cell-free. There's other people that can run one or a few enzymes outside of the cell. That is something that has been done for a long time. But this ability to run the whole enzymatic pathway, that means the full chemistry steps, that's only us that has that capability. And we are absolutely accelerating, as you were saying, the IP from the perspective of when you build these new-to-nature molecules, you can get composition of matter on the pharma side. That's a 20-year exclusivity. So you've got basically a machine that could print out 20-year -plus patents on protected products that could go nutraceutical, pharmaceutical. So you're extracting value from each step, theoretically. By definition, the nutraceutical side will not be patent-protected. Not be patented. Because it's a natural product that is available to the world already. Right, but then there's a way to adjust that where you can then get into the pharmaceuticals and thereby. So you earn value quickly and then protect the long-term value creation from that. So let's talk a little bit more market overview, right? What are the opportunities? Because this sounds like a technology that could literally take over entire chemical production. I brought it up in the intro. That could be $5 trillion, which sounds ridiculous, right? That just sounds promotional. That's on me. I'm not saying you said that. What are the near-term markets that you look at? So NCT, we think, is billions plus. What would be some other natural things that become of interest to you? Yeah. So we're in conversations with people about licensing our cannabinoid program. So as we talked about, because we uniquely are so much in control of the cannabinoid development, we can guarantee we're not making any psychoactive version of a cannabinoid. So no THC pollution into our drugs. So we're thinking CBD versus THC kind of things, right? Like keeping out of the THC, the psychoactive, but doing things that have supplemental value. Yeah. And there's basically a lot of interest in that space right now because there's a conversation about reclassifying cannabinoids from a Schedule I drug to another schedule, a lower schedule. And therefore, we're seeing a lot of interest in our ability to basically help biotech companies get in that space and get competitive advantages in that space. So that's kind of like one of the other areas. Similar in size and scope to nutraceuticals for NCT, do you think? I think what is very unique about the cannabinoid space is that we have something, we humans have something called the endocannabinoid receptor system. So it's one of the drug receptors we have in most of our cells and very interesting impacts. So I think the opportunities may be more of a group of opportunities and a number of different diseases more than like one, but it's an enormous potential. So this is a completely uncharted territory of studying supplements and potential pharmaceuticals. I mean, because we think about receptors are the key, right? For the layman that, I mean, the GLP-1s are targeting certain of the GIP receptor and the GLP receptors, right? So that's the key unlocking to potential immune system benefits. So market, let's talk risks, like what, you know, don't really have any competition that you're aware of or not anyone that's close to threatening you. You've got a lot of upside, near-term commercial potential with NCT and then natural extensions from there. What are the risks that keep you up at night? We obviously took a bold decision of instead of going the typical VC route and raising money in a private setting that the VC financing allows for, that we went directly to NASDAQ. You can argue we IPO'd a large scientific breakthrough. And last year, there was a lot of people saying like pre-revenue biotech, what are you doing? But the reality is that there was enough people understanding how big this science breakthrough is. and the potential long-term and was willing to invest in that. So I would say the goal was reached. We IPO'd, we have been successful. We have trended well. We're relatively seen to everything else. Biotech, that was, if IPO'd, then was slaughtered. And especially the biomanufacturing industry where you, if you look at the last couple of years, like people have really been not even cut over in half. Much, much less than that, unfortunately for those companies. So we have done well. The risk is, of course, that we are still early stage from the perspective of, we are setting up a brand new technology platform. So delivering on these things. So you can argue the value inflection points and delaying the value inflection points is therefore the risk. So what keeps me up at night is work to make sure we hit our goals and make progress. Right. Because then that provides the financing mechanisms, right? The opportunity to continue to finance it versus being private. But I'd argue here, you would never be able to realize all the value of a company like this in the private markets, because if you try to keep spinning off, the traditional VC model is not set up to fund that. That's true. Another thing that comes kind of part and parcel with that is how do you think about, is it a risk as you think about a spinoff and properly staffing that with the technically and commercially capable people? So you're talking about a nutraceutical, that's consumer products, not going to pharmaceutical. How do you address that risk? That's a good point. We're, for example, right now starting to have conversations with the people that would like either as individuals or as teams want to join NCT. So we have people coming in that understands that market from the supplement side much better than we do. They will be amazing partners for us. So in which order do we hire people in and how fast do we spin out everything to NCT? How much of it do we basically 'back office' for that company? Those are the kind of things that can either be painless or painful depending on how we get it executed? Yeah, but very entrepreneurial team that is looking to expand and open up and bring in. I mean, how quickly have you grown from staffing? I mean, you went public last year, right? And have you staffed up significantly? We have actually not, which is like probably what people have to get used to is that it's all about having the few really good people. And then you can do a lot of things between outsourcing and AI nowadays, where it's actually more important to have a cohesive team that really, really understand something that is ahead of the rest of the world than it is just to have a lot of people. Yeah. All right. So we started with the end in mind, right? How big could this get? I want to get it in your words, but I want to make sure I have the right understanding. If I'm an owner, a shareholder of eXoZymes, which I am, and you're going to do a spin out, hopefully of NCT, and then keep spinning out additional companies and molecules from that, are those all going to go to shareholders of eXoZymes? Are they going to have the first opportunity? So what's the upside here in terms of a shareholder for eXoZymes? I obviously take care of the shareholders. That is literally by title definition what I've been chartered to do, right? So that can be done in a number of different ways, building value into eXoZymes itself. And then also when we think about the business model that we touched a little bit on, like we build these extraordinary business cases that is only possible with this technology platform and this breakthrough we have. And we want to basically recycle that opportunity as many times. So when do we hand over either via licensing, via joint ventures, or via fully owned subsidiaries, that then can be financed, those are obviously where we can really create the most value for our shareholders. So it'll be a mix of these things. So over the next coming years, we'll be a little bit like a portfolio where you can buy into the technology platform and then you basically get ownership into a portfolio of business opportunities. Everything from- So this will be like Intel, but eXoZymes inside, right? In terms of a portfolio idea of these companies being embedded with that. So $115 million market cap company right now. I mean, how big do you think it could get? We are here to make it really, really large. When we think about the potential, then we have to realize this is a new form of chemistry. And to start with, we just focus on nutraceuticals and pharmaceuticals. And just in the pharmaceutical space, we're talking about a new way of doing medicinal chemistry. We can make new generations of drugs that was unthinkable before. So that in itself is a rather large market. market opportunity. Those numbers that go into that type of market are in the billions, if not tens of billions. New chemistry, new drugs, new-to-nature. Am I off base there? Nope, definitely not. That is our focus market in the beginning. The longer term perspective is that this can be used in a number of other industries. It is a new form of how you do chemistry. You can argue we are taking biology out of biomanufacturing and replace it with chemistry. That is though the chemistry that exists in nature. So this ability to take enzymes out of nature and use it in chemical manufacturing scales and practicalities that allows us to make things at much higher volumes and at much higher purities and frankly, financially much, much cheaper so we can have enormous, really good business cases coming out of it. Well, I think you said it best. You're just getting started in terms of bringing the science to market. You're just getting started with all of the possibilities. So I think that means there's plenty of upside ahead. I'd love to have you come back as you announce significant milestones along the way of this just getting started. I would love to come again. All right. Thank you again. Thank you, Lou.