Last week, Slack Capital - an Australian investment research publication - has released an investment report on eXoZymes, accompanied by multiple interviews with our management team. This interview with our CCO, Damien Perriman, focuses on the commercialization of our platform.

The full investment report is available here and completely free. The investment report is also available in audio format, via YouTube or Spotify.

eXoZymes Disclaimer
This content references an independent investment research report prepared and published by a third-party organization, Slack Capital. The views, opinions, estimates, forecasts, and conclusions expressed in the report are solely those of the authors and do not reflect the views or positions of eXoZymes. While select members of the management team from eXoZymes were interviewed as part of the creation of this report, eXoZymes did not commission, contribute to, or review the report prior to its publication. The inclusion of this report on our website is for informational purposes only and does not constitute an endorsement, guarantee, or representation of its accuracy, completeness, or relevance. Readers are encouraged to conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions.

About Slack Capital
Slack Capital is an Australian investment research publication dedicated to uncovering and sharing a select number of high-impact company reports focused on asymmetric investment opportunities, with a primary focus on commodities, deep technology and breakthrough innovations. At the heart of Slack Capital are in-depth, free company reports, often the result of over 50 hours of research, where all available information on a company is meticulously compiled and filtered into a centralised report. These reports provide an extensive understanding, often including direct conversations with a company’s management team. They serve as the foundation of an investment thesis and sharpen conviction. Please read and understand Slack Capital's General Investment Disclaimer here. More on Slack Capital here.

Video transcript

In today's conversation, I sit down with Damien Perriman, the Chief Commercial Officer of eXoZymes. Damien is an industry veteran with over 25 years of experience in developing and commercialising platforms in the biotech sector.

He has held senior roles at Genomatica and GEVO before joining eXoZymes at the start of April this year. Today we speak about eXoZymes' commercialisation pathways and potential, as well as other related topics.

If you want to find out more about the company, head to my Substack report provided in the link below. Enjoy the conversation. Well, g'day. My name is Damien Perriman. I am the Chief Commercial Officer for eXoZymes.

It's a job really to kind of bring my market perspective to this really exciting platform technology and try and find that conversation. combination, that unique intersection where what we do that is wonderful and interesting is actually connected to a market where there is a problem that needs to be fixed.

And so you've got an impressive 25-year history in the biotech space, supporting companies as they transition into market. Could you share some details about your previous roles like at GEVO and at GENO? Certainly.

You could probably tell from the accent that I didn't grow up in California. Originally from Mount Isa, Australia, the far outback of Australia. I think kind of what I saw there is this idea of pluckiness comes from working with resources that are limited, but doing something that is kind of amazing.

And I think if you extrapolate to the Australian culture and what we do globally, that's kind of who we are. Right. Coming into California, working in green chemistry 25 years ago, was this sort of realisation of a dream of doing something as the underdog that's a little bit different.

I joined the Dow Chemical Company. I joined the Dow Chemical Company right when oil was just going through a major crisis and globally, we were becoming a little more aware of the impact and importance of climate change.

I'd say through my time with Big Chem, you can kind of see when Big Chem makes a decision to do something, the resources they can bring to bear, the scale of the impact that they can make really does change the lives of many, many thousands of people.

I joined with that ambition of trying to do just that. But one of the things we're in store, sorry, saw shortage of was the right technologies. Where were the solutions for the problems that we were trying to fix? That kind of caused me to lean over into the innovation side, where I spent 13 wonderful fast-paced years with a company called Genomatica, now known as Geno.

And we really were the pioneers of engineering microbes with metabolic pathways to make the exact same chemicals. that the industry needed. And this was answering that the industry needed. And this was answering that promise, you know, going to Dow to create impact, but needing solutions for the things that we were making.

I got to realise that at Genomatica. At my time at Genomatica, I was there as a commercial leadership. We were able to commercialise a novel technologies for making 1,4-butanediol, which is a spandex ingredient, 1,3-butylene glycol, which is a personal care ingredient, a novel fragrance molecule, a macrocyclic mask, 1,4-butanediol used in nutrition.

We brought through demo scale technology for making bio-based nylons and for making palm oil alternatives. So it was a really informative time on how to go from idea through R&D into commercial scale.

I would say I was there at the time where we were kind of setting the standard for how quickly one could engineer a microorganism. And how quickly one could scale up and move into commercial scale. And how you learn from the partnerships you put in place to build that ecosystem so you could commercialise things.

I left Genomatica at the beginning of last year. I took on an assignment with a company called Givo. And at Givo, I led the commercialisation of a novel motorsport racing blend stock, which excited to see where that goes.

Shell is in partnership with Givo now for the distribution of blend stock. I'm watching the sportscast to see which teams can use that fuel and to where they can go. But I think where my heart really was is this intersection of what can technology do to take us even further forward.

I discovered this company, eXoZymes, spent a little bit of time talking to the CEO, a little bit of time getting to know the company. And honestly, I honestly just was blown away by how quickly their R&D tools were developing, how quickly they were doing proof of concept.

And then also this idea of being able to hit that material world, hit that nutrition world where you get to impact humans very intimately and very, very directly. That was exciting for me to move over and to bring kind of that commercialisation experience into the picture of this young tech savvy company to kind of ground it, but also see, you know, where are we going to launch? What markets are we going to hit and make impact with? And so you joined eXoZymes at the start of April and you released- First of April.

And you did an introduction video and you said that you see exozymes as the logical successor to SynBio. So what are some of the differences that you see in exozymes from traditional synthetic bio? Yeah.

Successor kind of suggests that someone has died. And what I kind of think about what I was shooting off in that lab video is I actually think it's more kind of a next generation. In much of the technology I've worked on previously where we're inside the cell, there's some products and some solutions where that is exactly the right solution, right? They're working well and they should continue to work well.

What I really think of at exozymes as being that next generation is what issues can it overcome that we struggled with when we were working in the cell? And the way I kind of think about it is, you know, when we were pushing feedstock sugar into the cell, the cell was doing many, many things with that sugar.

It wasn't just making the product. It's kind of like having a factory where a ton of the workers were off doing different things that actually had nothing to do with the business of that factory. And that's what the organism is like.

Yeah. And it's very difficult to control and to regulate or even to stop that because it's necessary for the cell to live. If we could take that production line, that pathway of enzymes out of the cell, it's like getting out of all the waste.

And all the distraction that exists within that microorganism. I saw in that, that potential to be highly effective with much, much higher yields than what we could accomplish by working inside the cell.

The problems we're encountering made is a number of the ingredients or a number of the products that we were looking at were toxic to the cell, or maybe some of the intermediates along the pathway were toxic to the cell.

And so that would really slow down growth, which was super expensive in the production processes. as well. So there were a number of targets I know I've looked at over my years that we said, nope, we can't do that inside the cell.

But I reflect back on them and go, actually, now we can do that free of the cell because we can utilize these pathways in a way that's not toxic, doesn't have that feedback, that doesn't have that waste.

And I think that's really, really exciting for the landscape of product opportunities that we dismissed before that now come back into focus. And the claims which X-design are making are very, very grand and very exciting for the chemical manufacturing industry.

So given that, you know, often biotech companies make large claims out there, what their platform can do, what was your specific vetting process to ensure that, you know, the claims are valid and the company can achieve what it's setting out to do? Yeah, that's a good question.

Spending a bit of time here, right? Because I must admit, there was a little bit of a bias on, I'd spent so many years in fermentation and microorganism that you kind of, you want that to be meaningful.

You want to believe that that was the best science to be working on. But always in the back of your head, you're kind of asking the question of, well, what has, what have others worked out that I'm perhaps ignoring or not paying much attention to? And I think that's, that's the case for me as I look at what was happening with self -free systems is folks were tackling problems that we dismissed, right? You left it behind.

That doesn't mean everyone leaves it behind. Someone's going to probably pick the problem up and try and work on it. And that's, that's what happened. I think reading some of the work that our founders, Tyler and Paul had published along with their, their collaborator at UCLA, James Bowie, seeing how they were reporting on and the credibility.

Those papers gave me a big shot confidence. But it's also asking the network, you know, the people, you know, who sometimes know a little bit more about a subject than you do. Finding out how sort of the general opinion in the industry was towards this company.

And the company spent a handful of years private before they went public. I think looking for the right things to work on, looking for the right markets to go and tap into that kind of learning incubation period.

You get to know people, you get to meet people. And I was able to tap into a handful of those to get perspective on the company. And then I turned up and started to see once they got me under a non-disclosure agreement and I could start to see what was happening under the hood.

You go, okay, they're moving really quick. Like things that I would expect a year to take, they're doing in weeks. And, uh, you know, that kind of blew myself off. And I started speaking to some of my colleagues and go like, what if, what if we could actually move proof of concept so much faster than we did before? You know, what does it mean to the type of partnerships that we could create or could we engage partners much sooner in the equation than we did before? Can we de-risk the program differently to what we've had to do before? And exactly to that point, you know, I spoke with Michael and Tyler about the tools and the systems that X-Design is using.

So, uh, AI and computational models. So you've been in there and you've seen it all work and, and the impressive systems that X-Design has. Yeah. And I think for mature companies, when we started looking at AI tools, we looked at it as a threat as, you know, what is this going to expose us to, you know, how is this going to let our information perhaps leak into the outside world? So we have this sort of, this sort of protectionist attitude.

But when I look at startups and particularly, I look here at X-Design is AI is not a threat. AI is a super chart, right? It's enabling us to do things that we couldn't do before. And just that mindset difference, I think speaks to why we have startups, why we have entrepreneurs, innovators, because, you know, even tech companies who have accomplished great things, it's easy to kind of let go of that, that drive to reinvent yourself.

That, um, that was what enabled you in your youth. But, you know, as you mature, you, you need to, I somehow get, you let go of that. Whether you were supposed to, whether you were supposed to or not.

Yeah. So then with the companies that you've worked with previously, so both large corporations, as well as more startup based companies, what are some of the toughest challenges that they face when trying to commercialize their platform? And, uh, what, what insights are you bringing to X -Design to help mitigate these risks? Yeah.

I mean, it's, I think very understandable to think that to go from idea to a mature position in the marketplace requires an incredibly broad set of experiences and a lot of insights and a lot of knowledge and often a lot of different companies bringing expertise at different stages of the life cycle.

Why I bring that up is it's almost impossible to think that a small group of plucky entrepreneurs has got that all figured out. Right. Which means if I have an idea and I think it's disruptive. And if anyone was to tell you, I've got this idea, I think it's disruptive and I know exactly how it's going to go to market.

That's not pluckiness. That's naivety. Yeah. You, you, it's important. You have that kind of that perseverance that demina. To go the distance to market, but to say, you know exactly how to get there.

You don't write. You're going to learn a ton of stuff along the way. There's expertise you'll tap into that's enabling and unlocking. And what this means to a company that's in its early stage is what it doesn't know is those various pieces.

Yeah. And what it needs to be able to access is the insights that help guide its next step. Is it picking the right product to put your platform against? Is it picking the right application to take your product into? Is it picking the right channel partner to team up with, to bring your application into marketplace? You know, I feel those decisions from my mindset become really, really important to how a company grows or goes along that commercialization journey.

Where companies make a lot of mistake though, is. They may realize they have to make decisions on products and applications and market. And they get locked in with the first decision that they make. And they think this is it, right? We have to go after this hell or high water, or we have to go home.

And losing that sense of adaptability, that you're going to learn things that you didn't know, because that's the next part of your commercialization journey. And the biggest mistake it is, is kind of ignoring that learning.

And through sheer stubbornness, just continue. You know, taking that learning on board and embracing it, pivoting where necessary is vitally important. And that's what I was very impressed when speaking with Michael, just that, that energy that the team has driving everything forward, that the tech platform itself does seem mature, but it's building out the commercial capabilities in which the company is getting all the right team, all the right resources, all the right networks into the company to forward that aspect.

We've picked up a process here internally. We call it our idea management process, where we've got a platform and we've got a couple of ideas that we want to take to market, but they're just a couple.

And we're going to need a lot more ideas to go to market before this journey is said and done, because some will fail, some will win, hopefully more wins than failures. But where will that next tranche of ideas come from? And our mindset is, this is a wonderful team with a strong culture where people feel, empowered and enabled, they have to have a voice.

And so now anyone can contribute ideas to the targets we want to go after. And we're building and growing upon the system of where do the next generation of ideas come from? Well, it'll come from us. It'll come from our partners.

It'll come from our kids. It'll come from anywhere. But we really need to be so open-minded as to, we could pick these up. We could put our platform to something. We need to have some criteria and some constraints.

So we pick really good, fun, interesting things to go after. But that open-mindedness and that curiosity, I think can fuel a ton of innovation. And so looking broadly at the synthetic bio sector, it's still evolving, but there have been a lot of promises made and some of these have fallen short.

And so this has led to a bit of skepticism in the industry from partners and some investors. So I'd love to get a sense of how potential partners and collaborators are responding currently to eXoZymes' claims and their platform.

The nature of people with big ambitions who want to make big impacts, they make a big splash. And the danger of that not working has a big, big aftershock. And, you know, when things don't work in our industry, it's important for those that are here is that we just pick ourselves up.

When we come to work tomorrow, we keep going. We persist. We continue to turn up. And it becomes our credibility that carries the day with our partners, with our team members, with our investors that we're working with.

And it's not that the entire industry brands our outcome, right? Because we will stand up for ourselves. We will turn up with credibility, which means we put people around the table who've got insights on what the journey looks like, who has perspective that is mature, who has perspective that understands that you get knocked down from time to time, but you pick yourself up, you get stronger, you keep going.

Yeah. We also believe in delivering upon what we say. And when the industry gets a little bit of a credibility shock, you need to start setting shorter phase milestones so you can demonstrate with more frequency that you are doing what you say.

And it means you report a little bit more, you share a little bit more. But I mean, trust comes from that reliability. And trust is a super important feature. It's a very important quality of our overall industry.

I think the partners we're talking to so far, James, it's been a really a conversation of, look, we're here, we've got something we're excited about. Oh, we need to listen, right? You need to kind of talk to us a little bit about what your experiences have been with our industry, what your challenges are, how are you serving your growth needs? How are you meeting your customers in the marketplace? What are your problems? And we need to listen to that, right? So we can try and find a place where what we're doing can actually solve a real problem for them.

And then you'll hear us talk more about our milestones and our outcomes and our results, because, you know, that's how we build that credibility and how we grow, I guess, the reputation for this industry and for us specifically doing what we set out to do.

And are you having those partners come into the lab and witness firsthand what's occurring? The lab is certainly a sales feature, right? Lab tourism is a popular sport in this game. And when you're based in California, you tend to get a higher frequency of lab tourists than, say, if you were based somewhere else, because the weather here is always great.

It's important, though, when the tourists we bring through that we kind of don't overwhelm the work process that's happening there, because that's the key feature, right, is that's a productivity unit for us.

Scientists need to feel safe. They need to feel secure. However, the work that happens in the lab is also quite confidential. So, you know, it's important that we green who comes in and not anyone can just walk through the lab and kick tires.

There's a lot of information in there to protect. And in terms of the kind of response that eXoZymes is receiving, is the potential partners, are they excited or are they hesitant and waiting on the sidelines to see what evolves? Honestly, I'm getting a lot of excited curiosity.

I've been working in this arena for a long time. And as I said, I was responsible for, you know, hands in commercialization of quite a number of successful examples for SynBio. The network is significant.

I've spent probably the first week and a bit just fielding parties who are like, why are you there? What's going on? What's happening? What is this exozyme space? Tell me a little bit more. And that's been a ton of fun, like just connecting with the network and letting them know the new coordinates, letting them know why I'm excited about being in eXoZymes, getting them a little bit excited.

When we have a bunch of face-to-face meetings next month at SynBio Beta, which is a big conference that happens up in San Jose, we're going to see more of that energy, more of that people wanting to dig in.

I think people follow people, right? This isn't just a game of computers and data and bits. It's really a game of personalities. It's a game of engagement relationship. Because when you're doing innovation and tech, it's a high-trust world, right? You don't just throw your money on a risky bet to someone you've never heard of, you've never seen before.

You know, so that credibility, that reliability I mentioned is critical. But, you know, spending face time getting to help our customers, help our partners understand why we're doing what we're doing is super important.

We'll continue to do that. It's been productive in our conversations today. So now I'd love to kind of zoom in into the more commercial aspects of the assets and the commercial deals that eXoZymes is hoping to achieve.

So initially, the company has provided guidance that you're targeting the nutraceuticals with pharmaceuticals potential and also special business cases such as biofuels. So can you give me some intricacies of these markets? Yeah, well, I mean, our initial focus is nutraceuticals with pharmaceutical applications.

We like that space because there we can see ourselves moving quickly. We see ourselves addressing a need that exists within that space in that it's often quite expensive to recover nutraceuticals from sort of natural biomass.

It's expensive because extraction technologies are inefficient, their yield levels are low, they're very low quality. Synthetic routes, themselves, themselves, you suffer because they're not as selective.

They don't replicate the regio selectivity that natural products have well. So they become expensive with a lot of yield losses. And also the world of nutraceuticals does not like synthetic chemistry.

You know, they like the natural, they like the bio as a means of sourcing and producing the products they use there. So we see ourselves as being able to step in with R&D programs that can be with economics that can be competitive when actually delivering products that have not just the benefit of being a source of phenolics or a source of antioxidant, but have benefits for human health and well-being.

If we can actually develop a method of making that product that's highly reproducible, that's highly safe, then they can actually step into that world of pharmaceutical application where we think the value could be a substantial higher.

So we see this as a really interesting sweet spot for us to deploy in exozyme's Path 2. And it's also one of those like early wins for us, right? Is the scale of which we need to operate is not that challenging.

So we really just need to focus on the science, get the science into scale, and then we can start making product quantities that are meaningful, which is very different to some of the extraordinary opportunities you mentioned.

I'd buy fuels where the scale is enormous. So I'd rather tackle fast R&D programs, small scale, frequent victories as a means to sort of build in credibility. That reliability I talked to you before about, James, like showing that we can stack up some wins before we start taking bigger bets and bigger bets and even bigger bets.

So then on that aspect of balancing that rapidness, how do you go about, you know, the more immediate capture of nutraceuticals against the pharmaceuticals market, which have FDA processes and the FDA processes and the FDA processes and the PRIGLs? Yeah, I mean, if we can use our technology to produce a nutrition product or a dietary supplement, we see that as a win.

If that ingredient, because it can now be produced at a scale, at a quality, at a set of economics with a reproducibility that then becomes attractive for a preclinical package, and now that ingredient, or perhaps an analog of that ingredient or a variation of that ingredient can go into a pharmaceutical application, then that goes from being an attractive win to a substantial application.

And then on that aspect of the biofuels. So you said that's a massive broad market. So obviously there are more headwinds related to that industry. Can you detail some of those and kind of how eXoZymes is navigating that? Yeah, I think eXoZymes is navigating that by staying focused on the science aspect.

How can we take a feedstock to a target fuel product, right? We're not worrying today on how do we scale it up? We're worried on can we actually produce that molecule in a way that is disruptive, differentiated, that is potentially advantaged over an existing route? Because the scale up journey of fuels is tough.

I've lived this world, right? Being through it, the capital that you need, the scale that you need to operate at, there is no room for failure, right? If something in your supply chain breaks, if maybe your catalysts or your enzymes aren't working exactly right, or they're sensitive to higher pressures or different temperatures, there's so many different value points.

And any small value points kind of unforgivable in biofuels, because then you're out of the economics so very, very quickly. Whereas if you're working on a high gross margin opportunity, like we are over in nutraceuticals, is the number of victories we have to have in order to be economical is a lot less.

So when you think of tolerabilities for failure or tolerabilities for inefficiencies, there's a lot more forgiveness. And you need that when you're early. When you're building your competency set, you most definitely need it.

We don't want to waste money on large scale up. It could potentially go wrong when we're in our early infancy. We've buried a lot of companies over the years, James, who have tried to go too big too quickly.

And the resources or the competency. We're not there to back it up. Well, exactly as you said, if focusing on the science and making sure that is very sound, that build the credibility of your platform.

It feeds one another, you know, while we're building the credibility of scaling in nutraceuticals and the science of these extraordinary opportunities is if we can get to science now, it's really, really good. Oh, by the way, we've got a couple of years of experience scaling up in nutraceuticals.

All of that experience comes over and then makes the next step in some of our extraordinary programs more likely. So we're not losing time or we're not losing opportunity in some of these extraordinary spots.

We're actually getting ourselves strong in order to be able to do that. And as I'll touch on later, you know, that brings forward strong collaborations in joint ventures with partnering who can bring in that capital, can bring in that infrastructure expertise and marketability of your SAF products.

Yeah, absolutely right. Yeah. So then within nutraceuticals with pharmaceuticals potential, how do you decide upon which assets, opportunities in that specific industry fit? How do you decide upon which assets, opportunities in that particular market? Yeah, it's part of that idea management approach that I talked to you about where we have, you know, a large pool of possible candidates that we could go after.

But we're looking for firstly, from a technology perspective, where do we feel like we unlock the solution uniquely? That's us. What is it about what Tyler and Paul can do and the rest of the team that no one else can do? Well, what is it about what is it about what is it about that capability that uniquely matches to that particular problem? So we've been identifying a handful of those.

But then on the commercial side, we're asking the question, well, who cares? Is there someone out there that that actually means something to that that matters? And so can we go and find that we scroll the IP landscape to see, okay, when someone cares, that generally means there's been previous efforts, previous efforts to solve the problem.

So there's always going to be a landscape you need to be aware of. And can we actually carve a space out for us that we can defend and hold and keep as our own. So then that IP picture comes into perspective.

And then there's a really important feature here that a lot of people overlook. And that is this question of how big is this opportunity and how much is it going to cost us to do it? And then if I take one number and divide it by the other number, do you reckon we can make a return for our shareholders? Because that's super important as well.

So we look at that. That's really, really important. We do the technology economics. We run our DCFs. We run our scenarios and we convince ourselves that when we do this, we have an exit scenario. We've got technology that can get the job done better than anybody else.

This is a problem that people will be motivated to invest in a change or invest in doing something. And we can hold that space and we can do a return for our shareholders. That's what we get after. By the way, that's not an exhaustive list.

You put all those constraints in place, this big white space starts to get narrow. Pretty quickly. But when we do one, our capability set expands. And so our potential to do more grows. And the more successful we are, the more feet we put in front of the other, the more momentum we build up.

That's how innovation works. And then so capturing that value for the company and its shareholders. X-Designs has said that they'll be focusing on spin-outs, joint ventures and licensing agreements as its core commercial business models.

So could you explain kind of the uniqueness of each of these three type of deals and potentially what a deal could look like? Spin-out joint venture is sort of much the same thing. There's just sort of an order of when does a partner come along, right? But the goal in both of those scenarios is that we know our technology can get to market faster and more efficiently if there is a partner that can bring market perspective, right? It isn't just can this technology solve our problem? It gets into, well, how well do we do that? Well, is it solving the problem? And with more direct, engaged market feedback that's, say, invested in the journey, do we pick up some refinements that really improve the probability of success or even accelerate the rate to market? So that's one of the power of these spin-out JB models is bringing to the table all the capabilities you need to complete the journey.

That's important. It would be a tough, tough world, James, if we developed a technology and the market said, oh, great, thank you for developing it. Now can you scale it up? Oh, well done on scaling it up.

Now can you go and bring it to market, right? If you have to do absolutely everything yourself, that's a slog. That's a long slog. We want to move fast. And so bringing partners in, incentivizing them to come in so they get a share of the pie.

They get to experience the upside of what's there. But partners won't come in unless they're excited about that potential. So we've got to do a good job of showing them what our technology is capable of.

Why are we excited? Help them understand why they should be excited. You mentioned licensing. Licensing to me is sort of a secondary effort. It comes later. I mean, we form a spin-out. Yes, we're going to be licensing IP into that spin-out, but licensing is a transaction module.

That happens when your technology is de-risk, right? If someone already has all the infrastructure to use your technology, then a licensing model there works because they have what is needed to exploit the potential of that technology.

But if you think in our exozymes via solutions, right now the infrastructure of facilities all over the world that can make the enzymes that we need, that can use them in the way that we want, that doesn't include the technology.

That's not a licensing model. So that's not a licensing model. Until that point in time where all of that infrastructure exists. And now you can license, right? Now you can fall back and enjoy that licensing.

Licensing also works where maybe someone's got a target, an ingredient that they already work with, a molecule they already work with, but they want to change it somehow. But they already own a product.

They already have a market. They already have a channel. They already have all of that space. And there they're just looking for our capability. It's a nudge. The licensing model works there as well. The thing about licensing is you take less risk as a developer because the responsibility of performance goes to the customer, but you also get less return, right? And so you sit back and you kind of look at opportunities and you ask the question, where's the arbitrage here? If I put in a little bit more effort and if I carry it a little bit further, if I take a little bit more responsibility, do I get a lion's share then of the return? Or is it time to let someone else do that because they're better set up to do it and we need to move on to the next idea? I'd love to say I have a prescription for you of exactly what we're going to do for every product, but it's kind of like painting.

It reveals itself what the right model is. We'll use the tool that's suitable for the product, the market, and the part as it will assemble around it. Yeah. So at the start, you mentioned strategically finding that balance between rapid asset deployment into the market versus the value of that asset in which you spin it out or you bring in a JV partner.

So how do you determine when an asset is reaching more that maximum value threshold? Yeah. I think if we're honest with ourselves, we'll know when we feel like we no longer have the answers of what to do next.

And then you know you need someone, right? If you're really honest with yourself, you know that you need someone. For example, we're not a company that knows how to do clinical studies. So would we want to go and take a drug through phase one, two, three clinical studies? Absolutely not.

Could we? Could we? Could we go and hire people? Could we go and build the infrastructure to do that? Well, we could. I don't know where the money to come from would do that. And I don't know how we could confidently tell investors a story that that's a good use of their resources.

So we focus to our strengths and that's how we know where the right partner to come along is right. You can see that sort of that point of demarcation. This is what eXoZymes is really, really good at.

It's not taking products all the way to market. It is partnering to help find others to help kind of finish that. finish that journey off. So then do you see eXoZymes yourselves manufacturing some of the compounds and sending them directly to the market or in each type of asset will you be partnering with someone? I think that's kind of looking through a crystal ball at this point, James.

For me personally, I'm not afraid of manufacturing. I've led a manufacturing enterprise before. Yeah. And you do that when there aren't a lot of other choices. You do that when it's kind of special and you can be the only one.

Because not being a polished manufacturer, trying to compete against others who that's their business. That's what they do every single day. And they have the systems in place to ensure quality and reliability and robustness.

Stepping into that as a new player, there's a lot of mistakes that you can make. But if there's no competition and it's only you, well, you can afford to make some of those mistakes. I think for me personally, the smallest scale where we're looking to be fast, where we have customers that will take the product we would possibly make when we can kind of de-risk in that way.

I think manufacturing might make sense in some particular examples where, as I said, it's early for us and it's all about speed and demonstration. But I would say for the most of this, let the scale be taken on by people whose very businesses are manufacturing that scale.

Yeah. So then on those value inflection points, is that more from a commercial perspective or a scientific perspective as well? Yeah, both. Right. So the first value inflection point you have is when you come up with an idea.

Right. Our capability, our experience in certain enzymes means we feel like we've got a unique solution to that problem. That's a value inflection point. When we actually go and put that into the lab and we prove that we can make that product via that pathway, that proof of concept, that's another value inflection point.

And that's happening very, very quickly. Those first two are happening fast. Idea management is helping us get to those ideas quickly. And then just the exozymes, technology here, the AI enzyme tool sets are helping us get to the proof of concept on a vast number of opportunities within weeks, quickly, quickly.

The next step, that validation of actually showing that you can optimize the enzymes, optimize the pathway and go from sort of a theoretical set of yield and productivity numbers to a demonstrated set of yield and productivity numbers is another inflection point.

That's probably one that's in front of us for a handful of candidates. That's what we're going to be candidates. That's what we're going to be working on is showing that inflection point. After that, it's, can I actually take this to a much larger scale? Can I get those same productivity numbers if I was to go up 10x or 100x in scale? I would like to think that we can bring partners in to help in that scaling journey because I think that's where we would need the most help.

It's also where you could think of as having multiple product opportunities happening in parallel. If you had to do all of the product development and all of the scale up on every opportunity, that would exhaust yourself pretty quickly and slow you down, slow down the number of things you want.

And so when you're communicating with these partners, how do you justify the economic value that you've derived of these assets for them to purchase into? If you think about that economic assessment of being able to extrapolate based on the performance you're seeing in the strain or in the process to a set of future cost of goods.

And then you can go and describe a market where this product would be placed. It would compete against either products of the same nature or solutions of a similar problem. Then you can start to kind of put a price perspective on it.

You can create a gross margin of something that then you can kind of look to your partner and say, hey, I did this much work, created this much value. And maybe because I did the early work, I carry more risk than you did.

So I get a premium to that. Yeah. And you came along later and you do this much work. You also bring perspective and capability that will also value. Therefore, I'll get this kind of share and you'll get that kind of share.

That's how I've tackled these in the past. That's kind of the standard way of doing it. And then so with these type of deals, I'm assuming you won't be selling 100% equity stake in your subsidiary. You'll be splitting it up percentage share wise with the commercial partners.

That's again, kind of looking forward through the crystal ball. It'll be product, partner, market specific. It'll also speak to what we're seeing as our marching orders, like our mandate. Some products we might decide we want to dig into.

And get more equity carry through some of those later phases. Others, we might feel like it's in good hands now. Let's go and take our energy and efforts and work on something else. And then so in terms of those ones, which you do, you know, exit completely, would you attach a royalty agreement or is that once again, case by case? Yeah.

Again, in this case by case, what's sort of normal for first of a kind technologies or perhaps new innovation is, a partner wants to convince themselves that you're going to help them be successful. Right.

And they do that by not giving you all of your payment up front and waiting goodbye. So they will want to negotiate to have royalties on the back end. That once they are successful, a portion of your value will come through that royalty stream.

You know, if I was honest, I think I'd want all my payment up front. Because I've done all the hard work. I've been at this for the last two years. It's your turn. But in order to get a good deal, you have to have a blend.

If I wanted everything up front, it's going to be heavily discounted by the partner who still feels like they've got some risk to carry. If I wanted to take everything at the back end, I could say to my investors, like, look at this amazing royalty deal that I've got.

But it's all back end loaded. And now I've got to wait for my partner to perform. You know, I've got to carry that risk profile. So I find it healthy to get a combination of the two. Yeah, it's always good to get a little bit of money earlier, put that back into business, put that back into the innovation engine.

But not take all of it up front, because you can get a lucrative royalty rate if you're willing to push some of that value a little bit downstream. The customers had a chance to start making money themselves.

And you've touched on some of these points previously. But what are some of the qualities that you look for in a synergistic relationship with potential partners or collaborators? Yeah, we talked about capabilities, right? That's important.

Do they bring capabilities that are complementary to you? Are they bringing capabilities that complete the solution? Or do we need yet another partner to come in to finish the journey? Right. So we've got to make sure that pie in the way that it gets divided is divided across all those hands that need to be fed in order to finish the journey.

So the capabilities and understanding the extent of those capabilities is really, really important. Shared vision is super important in technology, particularly in disruption. You can have a partner that's got all the capabilities you need, but if you misunderstand them, you can find yourself at that point of commercialization.

And then your technology is now shell. And then your technology is now shelved. Because they might be protecting some of their own assets. And something that is disruptive and potentially competitive to something they already do would actually be their way of securing what they're doing.

Like the money they paid out to get into the partnership is easily justified by the business that they have protected. So really understanding, is there a shared vision between you and your partner? Culture.

Because you're going to make mistakes. You're going to have disagreements. You're going to have disagreements. You'll sign a contract and 30 days later, there's going to be a dispute over how milestone works.

Right. So you've got to have this culture where you guys get along, where there is sort of a sense of mutual respect, where there is engagement of the appropriate authority levels. Yep. But this isn't just a deal done by someone sitting in the satellite office that really has no authority, that this does actually have full level executive engagement.

Those, in my mind, have a handful of the most important attributes. So you can see one of them is really hard, but two of them are kind of soft. I've found over the years soft features that make for more successful outcomes.

And then once you hand off these deals and the assets to the partner, obviously X-Designs isn't just going to dust their hands and say, we're done with this. So what will X-Designs contribute once it kind of passes over the baton? Yeah.

If you think about AI and its power to kind of learn on the systems and learn on the data that's available to it, I think we've got a lot to offer our partners after a transaction has happened, after a technology has been prepared, because our platform is going to continue to learn at a pace greater than any individual project that we've developed.

I think that's an opportunity for our partners to kind of stay connected to us. We can make what they licensed or what they partnered for even better. You know, whatever standard we, when that deal was done, we can improve upon that.

We can drive it to be more economical. We can drive it to have more selectivity. We can drive a more quality outcome over time. So that's, I think, a very important part of that relationship. But I've also found it's much easier doing a deal with a company the second time than it was the first time.

So we want to stay connected with those partners for the second opportunity. And then the third, I think I've found the best relationships I've had in business development over the years has been those companies where you come back to the table and you work together.

So then how will X-Design's balance work with existing partners and collaborators versus bringing on, you know, new engagements and how will the growth of the company influence this? Yeah, that's a really good question.

One of the fun elements of this job right now is the fact that Michael and I, our CEO, Michael Heldson, we share an office. If you could only ever see what's on the other side of my screen, that whiteboard over there, which is just like a chaotic mess of market pen of different colors and arrows and all sorts of interesting directions is, is we are kind of debating how much should we be working on, on what timeline, how far we should be pushing, you know, how much risk, how much growth is the right? I don't have a great crystal ball for it.

I think it's going to be a question that kind of evolves over time and maybe a bit of a like, watch this space. Um, we have big ambitions, but we also believe big ambitions are accomplished not through giant leaps and massive wallets.

It's achieved by consistent steady steps. I spent most of my life playing rugby and coaching rugby for most of my adult life. And I would talk to these guys about pushing scrums, right? It doesn't happen with one big giant shove.

It's a lot of digging in a lot of small steps that allow these things to move one way or the other. So that's what I believe, you know, how big will we become? Um, we have grand ambitions one step at a time.

And obviously the company currently has 32 employees. So I guess you can match that growth in alignment with the projects that come in. I mean, we'll have to add to the number of employees we have to take on more project capacity.

Um, we'll have to add to our employee base in order to bend the functional skill sets. We have to complete our technology journeys from beginning to end. It's not linear, right? If we want one more project, we don't have to add the same number of people.

Again, it's not discreet in that way because these AI and learning tools we have are just making that overall process. way efficient. Uh, so I do think we'll get better. I couldn't put a number as to how big we get today, but our growth will be proportional to the number of projects and the amount of revenue that we're generating.

And then in terms of the deals that you achieve, uh, how will these change over time? So obviously as the platform becomes more validated and recognized in the industry, so too, I'd expect that the deal terms would increase.

Yeah. Yeah. Yeah. Yeah. I mean, it's about earning that credibility, right? The deal, the deal terms will become more favorable to us as people rely on us more. And that's because we de-risk. Yeah. And people look at you and go, look, the, the riskiness of you is less than it was before.

So the terms will be a little bit better because we have more, we have more confidence. I also think the more, um, we establish projects into the market, the more we show that our technology has gone the distance, the more we'll be able to start sliding back into our licensing model.

We mentioned where we don't have to go the distance on every new project, which means that's resource and capabilities that we're not applying on taking things all the way to mark. Um, so we can bring those back in and actually work on more earlier stage projects, more earlier stage projects.

We could transition to a licensing model, the faster we can go. And the more sort of, and the more sort of near, um, um, reliable revenue streams. Okay. So looking to exercise kind of short to midterm, um, operations and development timeline, uh, biotech companies can often be quite overhyped, um, with expectations of quick market success.

So yeah. Could you give it like a, quite a grounded, uh, perspective of what the next 12 to 18 months could look like for the company? Yeah. I mean, the next 12 to 18 months will look like we are going to start talking about the products we're working on.

We'll start talking about the partners we're working with the exact timeline or, or shape of those messages will come from our CEO during our earnings calls. You mentioned some companies overhype is a lot of companies in Synbio, particularly in their early stages are in an environment where they're still private.

We're a public company and we take that responsibility of being a public company. very, very serious. We won't overhype because we're trying to raise venture finance for a series B and we're trying to pump up our pre money valuation, right? We have a different set of standards to live by.

So being very, um, honest about targets we're working towards and the timelines we're working on is, is super important to us. We have to fulfill that, uh, public company responsibility. Yeah. So then looking at, uh, kind of the, uh, development stage that exercise is currently at, would it be that one commercial deal occurs and then another commercial deal would occur six months afterwards as the company ramps up and understands that, uh, integration into the market or is the company in a capacity where it can take on a few more with a shorter timeframe? I mean, there's definitely capacity here to work on a handful of different things as we are exploring where can we make the greatest impact.

Again, to the frequency of the frequency of the frequency of which we're going to be announcing how many projects we're working on. That will come through the, uh, through the mouth of our, of our CEO. Yeah.

And so as we wrap up here, what excites you most about exercise future and its, uh, potential market impact? I think I have to start that question by saying I'm excited about the team. Again, working with a group that is super curious, super passionate.

Um, it really believes in trying to get the best out of themselves. But also the best out of one another. That's a really super exciting place to be in. But I also want to mention speed. Um, time has sort of always been that uncomfortable companion in my life in innovation and sort of that domain of uncertainty.

The longer a project takes, the more chance there is for, for something to go wrong. Um, and yeah, that could be in partners. It can be in markets. It could be in just about anything. So being able to get to market quickly means that thesis you have to be in a way to get to market.

And that's what you're going to have of why you're doing it has more of a chance to still be consistent, to still actually be true by the time that you get there. So I'm really excited by the ability this company has to move quickly and allow us to make impact quickly.

Getting back to that rugby analogy, right? Those small steps coming in fast intervals. That's how we build momentum. And that's the kind of impact I want to be able to make. And to that team aspect, that's what I'm really impressed with.

Speaking to everyone in the company, just, you can really tell the culture is there and knowing that the impact and that the drive and that the excitement of what Xdesigns has created is very present and it's really pushing that company forward.

And, and also to that aspect of the speed to market, Xdesigns recently released an announcement that you've developed a new chemical compound from, um, you know, from design to production in a matter of weeks.

And I think that is such an important aspect to the company. And that the fundamental science with all the modern tools is really solid. But then when you're moving that commercial deal, having yourself, uh, and Zach and all the networks and all the resources at the company's helm, I think that you guys can really expedite, you know, that commercial aspect, which is where the real growth for Xdesigns will really occur.

So, very, very, very excited to have you a part of, part of the company. Ah, thanks, James. Excited about what comes forward and appreciate your time and your curiosity here today.

Slack Capital interview: Damien Perriman, CCO