Today, Slack Capital - an Australian investment research publication - has released an investment report on eXoZymes. The release of the report is accompanied by an hour-long interview with our CEO, Michael Heltzen which can be viewed here. The interview is also available as a podcast episode via Spotify.

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 below

James | Slack Capital:
Today's conversation is with Michael Heltzen, the CEO of eXoZymes. Michael is a seasoned business professional with over 20 years of experience in leading startups and established businesses in the Biotech space.

Today's conversation revolves around who eXoZymes are as a company, their core mission and vision, as well as key concepts related to the industry in which they operate.

This video is supplementary to my extensive eXoZymes report, which I released over my Substack, and I'll provide a link to the report in the description below.

Enjoy the conversation.

Michael | eXoZymes:
A short introduction of myself, I'm Michael Heltzen, the CEO of the company. I was born and raised in Denmark, hence my accent. I have a background of basically having built a couple of companies before in that cross-space between computational power on one side and molecular biology on the other side, and the new use cases that come from combining those areas.

As a brief overview of eXoZymes, we basically build bio-solutions. That means the capability of biomanufacturing chemicals that are typically found out in nature. Then we have to isolate it, and what humankind figured out, many years ago, that there was such a thing as oil, and we could start basically building all the chemicals, and you can argue the good life that we are living in the modern era. We kind of had those two as the fundamental ways of getting access to chemicals. What we do differently is that we try to take the best of those two worlds and basically leave behind the limitations of those two things.

On the natural side, the limitations have been, well frankly, that there's too little to go around, so we can't make it in the volumes so everybody can get it, but it's sustainable. On the other side, petrochemicals, you can very easily scale that up, but it's not sustainable. It's actually often either toxic or polluting, or other challenges.

So, the best of both worlds approach would of course be if you had the diversity that biology represents, and if you had the engineering control level that petrochemicals allow for, so that we can get things up at mega scales. And also, to be fair to nature, it's actually very innovative, like evolution is really good at making new chemicals exactly where they're needed. It's much harder for us to kind of do that over in the petrochemical world.

So, at its core, we built bio-solutions that have the best of both worlds. And we do that with Exozymes that we will dive into a little bit here.

James | Slack Capital:
Thanks Michael. So, before we go into eXoZymes, I'd love to paint a picture of yourself and your prior history in the Biotech space. So, could you please detail some of your previous roles in the industry?

Michael | eXoZymes:
So "Biotech" is not a word people typically think too much about, but it's actually "Biotech" and "Techbio" that is kind of the professional language of the space I'm in. So, we end up saying "Techbio" because people are already running away with the word "biotech."
Biotech, people think about drug development, but it's actually biological technologies. And that's why if that word had been free, if that had not been occupied territory, then the kind of technology I belong to would probably have called ourselves biological technologies. It is a fundamental belief that technology is biology, and biology is technology if you really think about it.

Obviously, it's said with a smile. We don't look for the USB port in the tomato, nor do we go out and claim that we can fully code life. But there is a really intriguing level of that DNA code for RNAs that forms and then gives life via proteins, to keep it really short. And what we probably have termed Techbio is us, the kind of entrepreneurial people that are intrigued about the next generation of tools we can build so that we can use biology as technology and allow us to build things that otherwise could not be built.

My professional history basically started 20 years ago back in Denmark, where we were some startup guys that built a company called CLC Bio that was a bioinformatics company. So basically, what could we do with computational power to figure out what the DNA that could be sequenced, much lower, much more expensive, less quality, at least in some perspectives compared to today. But what could we do with DNA knowledge, what does that mean? What can we do with that?

So, we built a bioinformatics company, and it went really well and became one of the world's largest, at least from a commercial point of view, bioinformatics companies in the world. We sold that to QIAGEN Bioinformatics, so software programs that are used by a lot of people in the genomics, genetics, transcriptomics, and proteomics spaces. But it was really in the next-generation sequencing analysis space specifically that we had a big breakthrough in regard to development and deployment of those kind of technologies. That led me to a career where I got invited into a number of projects, companies, startups around the world. And today is too short for us to go through the whole list of things that I've been lucky to be a part of, but just to mention some of them.

I was one of the guys running one of the early human genome projects, genome project number 8 to 10 from the point of view of sequencing a human to find out from a perspective of the specific starting point was the ARID human genome. So, we, the human race, wandered out of Africa, and that arid peninsula we split up and became all the good types of humans we are today. And therefore, from a population genetics point of view, it’s a very interesting genetic data set. So, I ran one of those programs back in 2007 when we were talking about millions of dollars per human genome. And every single tool used per gene was custom-built to that specific dataset person, depending on how we think about it.

It led me to go on to the next companies that I've been co-founding that has basically always been in this Biotech/Techbio space where how do we take the newest of new technology, and allow for a new type of measurements that allows for a new type of, for example, calculation or insight that allows for new application.

So, we started in the first startup that I talked about already to use machine learning and pattern recognition. So how can you basically use patterns in data to foresee something or guess something or know something, or maybe even better if it's a circular training circuit, how do you by using and generating data, get to the next level that then can generate data that gets to the next level, that gets to the next level. And fast-forwarding to eXoZymes, that is what we do here.

We basically use very advanced bioengineering to optimize enzymes to push them to a new generation where we then record data on them really quick to train an algorithm to guess how to take it to the next level. And we run that circle that you can think of as evolution, but we are just massively speeding it up so we can kind of, in popular terms, run a million years of evolution over the weekend. So, it gives us some capabilities to build and push enzymes into states they maybe, maybe not, would have gone to naturally, but would havetaken millions of years. And we can from that perspective start having enzymes that can do things that they typically don't do.

What is an enzyme's the next level of that question? Well, that's where we get all excited about Exozymes and so on. We will save that for a bit later. But who am I as a person? I'm an entrepreneurial strategist, visionary, business executive that also, as much as I talk and I dream, I like making things happen for real, because otherwise it doesn't really matter in my world. And having executional focus and power is one of the things I bring to the table.

James | Slack Capital:
So it seems like you havebeen involved quite early on with some pretty significant and globally impactful platforms. So, all this knowledge and information that you havegained in the past has led you to the wonderful role as the CEO of eXoZymes, and that's very exciting.

Along this journey, you would have witnessed a lot of Techbio and Biotech ideas, some of which were obviously quite successful. So each company would have provided valuable lessons to yourself, the companies that you're involved in, but also the companies in a broad sense within the market as they go to launch their platforms. So, you would have seen what works and what doesn't work and take little snippets of each.

So then prior to joining eXoZymes, you would have gone over the claims of the company and filtered it through your experience and your own knowledge. So, what was this vetting process like for yourself prior to stepping in as the CEO of the company?

Michael | eXoZymes:
The first time I heard about this grand idea of taking what happens inside of a cell, the enzyme pathways that makes the chemicals that I was talking about, that somebody had figured out how to run them outside of the cell, it was so mind puzzling that I basically dismissed it. I was just like, "this's no way, that's not possible."

Everything I know contradicts that, and not that I'm a super knowledgeable kind of scientist, but I have done nothing else the last 20 years than trying to find the newest new and so on, and I just have to eat that.

The guys figured it out, and it was actually as easy as sitting down and reading some of their Nature publications and getting up here and kicking the tires of it. It doesn't really matter if I understand every single detail of it because it's so evident that it works, the same way I would argue that my cell phone, there's no way I can prove to myself that it actually works other than it works. And therefore, I can do all of the amazing things, and I'm pretty sure it is, for example, you James sitting on the other side of this call and so forth, because I have a reality check opportunity by other channels.

So, it is even what the co-founders, the technical co-founders themselves are saying, it was almost too good to be true when it was there. So, they actually were challenged by trusting the data. It's not easy though. It's not like we're lucky and then from there it was a golden goose that just kept laying eggs. It was more of a blip in a data set that was like, did that really just happen? How can we make that happen in a stable manufacturing way?

And it's taken a decade for the guys to really dig in. So that's the second part of why it's relatively easy for me to do my due diligence that I otherwise pride myself for doing both on a technical side, sometimes via bodies of mind that have the really deep technical insight that also looked at this too, to be honest, they looked at it anyway, but didn't really have to in this case. And then how does that fit with the world we live in today? How does that fit with the business opportunities? Because it doesn't help if the business opportunity is in 10 years from now. It has to be something that can be applied now for it to have my interest at least in the moment.

It’s very evident when you start digging into these things that we are solving problems that are otherwise unsolvable, we are producing things that are otherwise not possible. And that's kind of enough for me to start building with that. Then there's the extra layers of what we can do in the future when we get more and more sophisticated with the platform. But we can talk about that a little later.

James | Slack Capital:
And what I recommend listeners to do is head over to my company report on Slack Capital, and you can find more layman's terms of these scientific concepts that Michael's talking about, in addition to the scientific reports that eXoZymes has released previously, and reading over them is quite impactful and it provides a really clear picture of what eXoZymes has achieved in the past and also what they can achieve.

So then let's dive a bit more into the eXoZymes platform. Can you detail what the platform accomplishes, produces, and also the impact it has on its commercial partners?

Michael | eXoZymes:
So, if we take the conversation first from a short-term perspective, what is it we do here now, and then afterwards we can have the same conversation, but just from a let's dared to dream and talk about like real long-term perspectives. Those are obviously two different things.

Short term, we build BioSolutions that allows us to make, for example, nutraceuticals and pharmaceuticals that are inspired by natural products. Something that's happened out in nature, but you will deplete the world's resource of it if you try to put that molecule that maybe is already proven as a nutraceutical or as a pharmaceutical or the potential of a pharmaceutical. But if you want enough to talk about it being a treatment, then you would deplete the world's resources within a year, and you would basically have cut down the tree you're sitting in, so to say.

Those small molecules, those medicinal compounds that people have found in nature, but we can't make them, even if our life depends on it. We like to go in and say, what are the enzymes inside of that bark cell or that root cell or wherever, this pathway of enzymes that takes basically like sugars or the readily available things and breaks it down in very small tiny compounds or small bits and pieces of chemicals. Then other enzymes build them back up into the exact molecule, the exact chemicals that is needed to, in the conversation we're having here, to be a medicine, but for the tree or the plant or wherever this enzymatic pathway lives in nature plays some other role.

We are in a very unique position to study the innovation that has happened in nature and then take that out and recreate those enzymes, first the pathway itself, and then we can start optimizing on the enzymes so we can get it to also make new versions of the natural product that is maybe even better, either from a feature point of view or from a cost point of view or from a stability point of view or whatever the market is really looking for.

And we seem to be the only people in the world that have come this far in the history of building enzymes that can kind of take us to the next generation of what in medicinal chemistry is called small molecules. That is something where you can build many small molecules with basically petrochemical or medicinal chemistry. But there is a very large limitation on places you have not been able to go before, where we can now walk into that new small molecule chemical space and start building molecules. So that has a lot of people's interest. And from a commercial point of view, that's what we're pursuing first.

James | Slack Capital:
And so, as you alluded to at the start, this is more the short-term vision, which the platform can achieve, and the company wants to see through. So, on a counter to that, what's the more longer-term, future vision in which you see for eXoZymes?

Michael | eXoZymes:
So, the reason why there is a difference is because if you try to do everything with a broad platform like ours can do, that would be the equivalent to trying to boil the ocean. There's no way you're going to do that. So having a focus strategy that allows us to take where the platform is now, what we can already do and know we are really good at making new versions of, and how that applies into a specific market vertical we can become really good at doing over and over again with different partners in slightly different market segments. That's why there's a short-term focus.

Longer term, you can argue is the potential. Longer term, this is frankly a new way of making chemicals for humankind. That is, if you think about it like a new natural resource, a new way of ensuring the future will be bright if you like, really zoom out because we are not going to have the limitations and the toxicity pollution problems of petrochemicals that we otherwise would probably sprinkle ourselves in, which is obviously a problem, and there will not be enough if we were just to rely on what we can harvest in nature.

So, presenting a third generation of access to chemicals for humankind, that is actually the balance point. That's the really big vision here. That means we can branch out into a lot of other things, the nutraceuticals with pharmaceutical potentials. We can go into industrial chemicals; we can go into fragrances and colors and like all the different kinds of chemicals that are out there.

And the way we have chosen, by the way, that's always the next question I get, it's basically as simple as we are a new platform, so we start with where there's relatively low volumes, high value per compound because it's just easier to make business on without having to build huge facilities. But of course, it doesn't mean that we have missed the fact that there's some really big potentials to take care of some of the extremely large industries that really, truly are the polluters of the world, and therefore something we need to address as humankind.

And we have been so lucky that, not just lucky, but also the reason why our focus strategy is literally called nutraceuticals with pharmaceuticals, potential and extraordinary business cases. That last part, extraordinary business cases is, for example, when the US government via the Department of Energy, walks in and goes, like, you guys can make basically compounds that can't be made with normal SynBio that have been a big investment area that unfortunately have very little to show for it. And they have spent so many billion dollars on trying to get biofuels, and they started realizing that if the SynBio way of trying to make cells make biofuels, so you confirm your way to it, then you run into that, other than ethanol that cells are relatively good at making and we humankind have taken once of a thousand years at least, all the other kind of fuels, for example, aviation fuel is chemicals that are so energy-rich that they're toxic for the cell, and therefore you kind of end up if you try to get the cells to make sustainable aviation fuel, you end up killing the cell; you end up with all of these problems.

They looked at us and went like, You guys are cell-free. You don't use cells. These are just enzymes. They’re not alive. It's just a protein that kind of makes a reaction happen, but there's no living matter there. So, it looks much more like chemistry but has all that advantage of biology. And they were kind of like, would you mind taking a basically a go at sustainable aviation fuel via the compound called isobutanol.

So Isobutanol is our extraordinary business case that we are working on and have been working on and have shown really nice results on already now, but it's a long development cycle where, just because you produced 10 times as much as you did last year if you produced a hundreds of a drop last year, then you're just still at the 10th of a drop this year and next year you will be at a drop. I'm not saying we are at drop scale, we are actually at significantly higher scales, but we are working our way up through that exponential growth curve that is needed for a very large industry like the aviation fuel industry to be replaced with sustainable aviation fuel because we are talking about super tanker after super tanker after super tanker kind of size before that is really making an impact where we have pharmaceutical use cases where a kilo of end product is literally the world market per year. And it's obviously just much easier for us to reach that level and make commercial business on it.

James | Slack Capital:
You have mentioned the significant benefits that eXoZymes platform has compared to existing chemical manufacturing methods in the industry. So, to paint a picture, can you provide an overview of the chemical manufacturing industry as it stands today?

Michael | eXoZymes:
Well, plant-based is pretty simple. If it's a compound, there's too little of nature and you can't just grow more of it, then you have a problem. If there's then a problem on top of that, that isolating that one-thousands or one-tenths of a thousand that the chemical might be of that root, then that might break your business right there. So that's kind of like in really rough terms, the challenges with natural products and harvesting chemicals from nature.

Then the other end of the scale that is us taking oil up and breaking that down with biochemistry is something that has served the world really well, and as much as it's a problem, we should not forget to be grateful for the lives it's given us and the progress it's given us. We would not have semiconductors, we would not have the living standards, we would not have all of these things if it wasn't because of it. But we have to see it as a gear where it was good in the acceleration phase, but it's not the long-term solution if we dare to think a hundred or a thousand years out in the future.

And that was where SynBio came in with a very similar, if you won't argue it's the same vision as we are living and dreaming by, that could we make cells the chemical factories and we could engineer them and be in control of them then we would basically have taken the best of both worlds.

I just think people should have taken a deep breath and thought about controlling nature. How easy that sounds, how often we've managed to do that. Try to go out and hold back a wave out close to the Pacific here, right? Like it's not as straightforward as it maybe sounds on a piece of paper. And we ended up with SynBio being super excited about being able to genetically engineer cells and make them produces a little bit of chemials. But where we kind of forgot to ask the host, so to say, what kind of party we could have, was that the cell does not want to do anything it doesn't benefit from, because that's literally evolution 101. That's how you get on in life if you are a cell. And therefore, when we turned on the production of some chemicals the cell doesn't benefit from, it just went in and turned it off really relatively quick. So, you basically have built yourself a chemical factory that shuts down all the time. And that's not good for business obviously.
The next layer is that if, and it's not just a simple shut off, there's many, many mechanisms to optimize what is going on in a cell. So, it's not just one button you go up to and tape it on, and then you have fixed it. And this is where SynBio got caught for a decade, and there is today, and I truly hope that it will succeed more than it succeeds because we need many solutions for the future. But there's not a lot of success that has come from SynBio.
The next layer is that the cell itself can actually get sick or die from the chemicals we make them produce. So to continue this picture, that's the equivalent to like you're making a chemical in a factory where the chemical makes the factory burn down. Good luck making a business out of that.

Next layer of this explanation of why SynBio is challenged, is that okay, fair game, let's say we solve the two first ones and we actually get it to keep producing and we stop it from burning down, so to say. Then you have a factory where the product doesn't come in, it's not like you're giving feedstock in the one side and product comes out in the other side, you walk into a factory and your product that is maybe very little bit of the whole factory is now built into the walls, spilled into the floors, it's scattered all over the place. So, your isolation cost of getting to your end compound this way is often higher than the value of the compound. How are you going to make business out of that Excel sheet if your cost of isolation is higher than the value of what you're isolating?

That doesn't take a lot of math to figure out that's why a lot of the SynBio companies are now basically on the graveyard. Like from a financial point of view, it would never make sense when you can't isolate it. And this is the story that people have, unfortunately, because it is a little sad, has spent billions and billions of dollars on, it was so easy to raise money in that space because you could come out with a Petri dish and see, I'm making this compound it's worth so much imagine in the future where we had the cells do that at mega scale, but it never scaled.

So that's a fundamental challenge that our technical co-founder team here, when they sat down with Cell-based and made a publication and they were all excited about it, they also afterwards looked at each other and went like, but guys, this is never going to be real. This is never going to happen for real because the cell will never allow us, the financial model behind this will never make sense. And they wanted to make impact.

So that's where this famous moment that we've described a couple of times is where Jim Bowie, basically the PI in the lab says to the two PhD students, okay, build the pathway without the cell, have a good day. And let's just retire the cell and we still don't know exactly how many percentages that was a joke and how many percentages that was a genius idea. And as Tyler Korman describes it, and Paul Opgenorth describes it, it was kind of like they were young and naive enough to give it a shot. It was like, who says we can't walk on water if we're just running fast enough, like entrepreneurial style and there's some truth to that.

So, that was where the journey started. What does it actually take for us to have these enzymes that are the in enzymatic pathways, production pathways inside of the cell, live outside of the cell. And most people will say, well, that's not possible because there's all the cell support systems that makes the pathways able to run. And they sat down and said like, okay, down for fundamentals, what are those systems actually, how can we recreate them? Or something similar outside of the cell.
What is it that makes everybody go, like if you take an enzyme and you take it outside of the cell, it will basically stop working on you. And there were proofs already back to actually Denmark, Novozymes and other companies that have been leaders in the world of taking one enzyme from somewhere in nature and then making it in a version that works outside of the cell. So for example, most likely in your detergents there will be one or few enzymes that are from Novozymes that has been, probably spent tens of years and at least tens of millions, if not more, on optimizing that one enzyme to break down fat or soil or blood, so that you don't have to use as much heat in your washing detergent. You have an enzyme that goes in and makes that chemical reaction happen faster than where before you're basically heating it up for that chemical reaction or point to break. And so, there was evidence in that you could make enzymes live outside of the cell.

So, Exo-enzymes and that's why these guys sat down and said like, what if we just recreated, we build all of these support systems, figure out all the energy, cofactor balances and so on, which is like already here. Most people with a PhD, they will start throwing rotten tomatoes at you say like this, you can't take on all of those things at the same time but again, the oomph of not knowing the ability to just run past problems and sometimes through walls is basically what brought them to a state where it started working.

And then of course figuring out when it works one time, why does it work in this case, how can you go back, change the system, take it up to a new version? Now if it works on more things, it works on the same thing, but better. And basically, having worked on the platform until it was then spun out from university in 2019, and those academic realizations that was captured in some patents that was licensed over in the company then became like, okay, now it's actually more about doing it, but doing it on commercial scales. How do we do these things?

So that's the core of the company and then what Tyler and Paul and the teams here hadn't spent a lot of time on before, I came and I looked at it and I started kicking the wheels, was using computational power machine learning and AI style. And it was pretty evident to me by just looking at it, that here were guys that had so much knowledge and so much data on how to optimize enzymes over to what we have now named Exozymes. So basically, enzymes that lives outside of the cells and fits into these much more human designed parameters because we know exactly what kind of bioreactor, under what heat, under what pH and so on. So, we controlled the environment that the cell otherwise took care of controlling so we can bio-manufacture with it. And I was looking at a team that just had an enormous amount of knowledge and all amount of data and could by talking to each other pattern recognize, every time that becomes obvious to me, I go like, that's a computer that should be doing that, we shouldn't be doing that.

And to pay credit where it's due, it was a number of our younger scientists in the team that when we started talking about this thing, like, yeah, these guys were using computational power to all the tools available. But that whole idea of can we sit down and use computational power to foresee what genetic mutation leads to a feature change up in the enzyme? And you can argue that's what we've been doing, but very much in conversation and one-offs.

That was where Emily from our team went in and was kind of like, there are these new tools coming out and algorithms coming out, and especially if you set them up right, then we can start producing a lot of guesses. So, tens, hundreds of guesses on what are the mutations are, but at the same time, that was a little bit like, okay, but how is that going to help us?

Because before we sat down, everybody put our heads together and said like, okay, what is the best mutation? What is maybe the 3, 5, 10 best mutations? Because we need to go out in the lab. I don't know if you can see the lab out there, but like, we need to go out in the lab and literally insert that DNA into, for example, in E.coli, have that express the enzyme and then see if it was actually better. That feedback loop was relatively slow and was a lot of work and was costly, therefore. Then another couple of people from our team, Bastian specifically was like, hey, I actually have a sense of how we can, if we have so many guesses, how we can brute force that whole thing with basically liquid handling robotics. And then we started talking about how can we speed up the circle from when we have a guess on something that is better? How can we get that to actually happen by an enzyme? How can we record data on that enzyme, feed it back in? Because now you have the circular training loop that for anyone that is nerdy about machine learning as I am, will go like, instead of just having a data set, and then you have to save some of your data to train a model over here, and then you can predict over on what you are, but you kind of run out of data.

If you can come to a point where the solution itself generates data, this is the self-driving cars kind of setup where every time someone is driving, let's say a Tesla, another self-driving car, then you actually generate data. It's not so much when you drive a perfect route on a place where people have been before. It's actually more if you drive a place where nobody has been before, or if you have as brutal as it sounds when you do something wrong, when you literally hit the wall, then that's a good training data or not to do that again. And with that picture in mind, it's actually how I can explain how we benefit from as the first company to take not just our machine learning to what could be better but learning from when it goes wrong. So, we can actually celebrate equally as much when we make a prediction, we're supposed to do this thing and then it doesn't do it because then we know we need to go back and train the algorithm to know not to hit that wall. So, this is where AI and machine learning really takes enzyme evolution to the next level. And we are just passionate, nerdy, and business-oriented in that specific vertical.

So, this is back to is it Biotech or is it Techbio? It's a little bit of both. It's both the new technologies and then making applications. So, it allows us to make drugs for very specific things that otherwise could not be made by petrochemical and other things.

James | Slack Capital:
Thanks so much for the extensive details that you have gone into. That's provided a really good picture of the current space. You know, there's so much to go off there, but I firstly want to recognize the SynBio and cell-based, how it's simply struggled with the fact that it can't economically scale, and as unfortunate as that is, it also highlights how monumental eXoZymes platform is, given the fact that it doesn't experience these inherent issues.

And to that point of the integration of modern tools, I'm really excited to be talking with Tyler Korman, the VP of Research at eXoZymes, and we will be discussing the tools and the integrations of these systems into the company's platform in the next interview episode. So, I encourage everyone to listen to that episode when it comes out as well.

So, you mentioned that eXoZymes, your platform can allow enzymes and the biocatalysis process to occur outside a cell. So, is your company the first one to achieve these results in the space?

Michael | eXoZymes:
We stand on the shoulder of giants. So don't get me wrong, when I say we are the only one, we stand on the shoulder of giants.

The type of ingredients and building blocks we are building with is four of the latest Nobel Prizes in chemistry. We use those technologies and at the same time when that said, I think Jim, Paul and Tyler, they just decided to swim against stream when everybody was going with the stream because there was so much money in SynBio and they just had a clear vision on like, it would never scale. And if it doesn't scale, why is it going to matter other than academically for research papers? But that's not what they wanted to do with their life. And they didn't want to just raise money for the sake of raising money when they knew the money would be spent on something that wouldn't work.

So, I think that's why we are in the lead position we are today. There is a combination of technologies, so we are the leader in enzyme optimization, especially in this Exozymes direction because no one else has have sat down and said like, Hey this thing about having enzymes outside of the cell, instead of just doing one or a few doing maybe even tens but a least 5 or 10, that's just been considered kind of like too costly would take too long. Why would you even do it? Because people didn't dare to dream it all the way through.

As these guys, they dare to from the beginning and say like, well, it's SynBio Generation Two, where we don't have all the things that is not going to make the first-generation work.
And it's fundamentally a drive that I also frankly screened the company for. I know your question was also like, what did you do to screen the technology? The reason that I drew things is because I want to see the impact on the world and therefore, as provocative as it can sound and it's really not meant as it, the technology is maximum a third of that equation of it's going to happen for real. So, it's the technology. Is it the right time for that technology? Is it the right team? Very often, it's not, and it's unfortunately very easy for one person to screw up a team of 30 people.

So, it's really a high bar it's not just like in average it's a good team or its most of the people are good. It's literally like, is everybody set up to be the best versions of themself in that moment and pulling in the same direction. And let's just say I saw an A+ in the technology opportunity, but an A++ team opportunity in this team.

So that was really why I joined, and I think it's really important to remember that when we start talking about the ability to turn this kind of technology in into reality and business opportunities that's a consequence of those realities. Because it can fail many ways and it's never 100% according to plan.

I do belong to the younger generation of entrepreneurs that basically says, like, if you ask for a written business plan and you sit down and you spill it all out by the second that is done, reality have already gone to the next page and you're now behind. And maybe the only thing you get and don't get me wrong with what I said, like the only thing you get from a business plan is that you agree on your assumptions and your beliefs in that moment. But I guarantee you, if you write it down, it's not going to happen that way, it's almost like defiant that way. But at least you now have the chance to have a fixed starting point where everybody's on the same page and then every time, if you have a team that is good at communicating, can communicate back when they've realized something is different than the assumption and dares to base on trust come and say, Hey, what I was advocating for before it's actually wrong. Because it's often the experts in the area that hves to realize they're wrong.
Therefore, you have to have a culture were finding something, it's not going to be about blame and shame and like, why did you say that before? But more of a like, okay, that's great. How do we calibrate really quick that advantage of that opportunity? Because if so there's a shadow and shade, there's sun somewhere.

So, it's just a matter about getting out of the darkness and getting over to where the sun is and that's much more about teams and how you create cultures and how you make individuals be the best versions of themselves. So that's equally important as the whole technology aspect.

James | Slack Capital:
And having the right team is such a significant point, and I've been really impressed to see the caliber of individuals that eXoZymes has accumulated at the company. And I recommend that listeners head over to my report to go and read those key business executives that are working amongst eXoZymes. And it's really exciting to see their past experience and the deals that they were able to achieve and now all bringing that together into eXoZymes and launching it into the future.

And you have previously mentioned the company’s as well collected some of the world's best scientists in their respective fields, who are working to build and facilitate the development of eXoZymes platform. When you have a team working like that with the synergistic energy and really seeing and wanting to usher in a vision of the future, it's a very exciting and very collaborative place to work within.

So further beyond your company, eXoZymes also has quite a few partnerships with MDB Capital, with the DOE’s NRL division as part of Shell's Game Changer program. So how do these relationships work to expedite eXoZymes platform going forward?

Michael | eXoZymes:
So, let's start in meta language. It takes a village to raise one of these opportunities. So, we recognize that we come with technology bio-solutions that represents a competitive advantage into a specific market and especially when we find a partner that can help us utilize the opportunity from a business perspective, then that's definitely a great partnership.
So that's overall, it takes a lot of different people in partnerships in the individual application space, in the opportunity to take the platform to the next level. We are using technologies that we buy a license in, so we don't have to build everything ourselves. There are different kind of partners you need at different level and stages and for different things.

And very specifically, MDB Capital have been the very unique capital provider and capital access point provider in the journey of eXoZymes incorporated by basically daring to be an investment bank that sat down and said, we will look for what they call big ideas where it's like so fundamentally different that it's going to change the world, if it's really true, if it can really work and there there's very skilled team of researchers, market researchers, found basically this business opportunity after it had just started as a startup. And was still halfway in academia because licensing wise, it was about to be spun out and they dare to take a bet on a green banana. Despite that is something that is very scary for most investors. But sat down and said, okay, there is an opportunity. If that's really real, then we want to be a part of that journey.

And with the support of MDB Capital, we IPO’d last year because that is the very unique thing they provide. It's not just a cash investment as for example, a VC would do it. They come in and say, forget about the typical VC terms and all the stack preferences and all of these things that is why I have gray hair despite just being in the middle of my forties because that's how my life has been before. And it's really truly one of the hardest things of building other companies is to navigate that whole reality, that money is just needed to survive and at the same time, it is what's going to make your life so much harder that you take VC money.

And MDB Capital comes in and says like, we want to be co-founders. We basically, we will take common stock, there will be no special preferences on the ownership, and we will basically lift you forward to an early stage IPO, we will make you ready to communicate your vision so that you can go out and they helped that. It was the MDB community that spotted me and my potential fit over to eXoZymes Incorporated. From that perspective have brought a lot of the different things to the table. And via a roadshow last year, we were one of the very few successful biotech IPOs last year on NASDAQ. That is how we have raised money to go and really commercially start building and scaling up to the to the larger potential we hold.

James | Slack Capital:
MDBs backing has been quite monumental for the company. So, they helped form the company structure as well as provided the necessary resources to get the company to market. And one of the last interviews that I'll be releasing is part of this interview series will be with Chris Marlett, who is the CEO of MDB Capital, and he is also the chairman of eXoZymes, and we will be discussing MDBs vetting process on the company when they first discovered it. And I think this will add further validation to eXoZymes platform and the achievements that the company is making.

So, before you mentioned that SynBio and Biotech companies often need tens of millions or hundreds of millions of dollars to get their platform to market. So last year in November, eXoZymes raised $15 million in their NASDAQ IPO listing. Can you speak to why this amount was raised?

Michael | eXoZymes:
It is near impossible to do cell-based SynBio as the track record of an industry basically shows. Where the kind of BioSolutions we are building, a lot of the cost is building things that didn't exist before, before you get to, and that journey had was done academically and then was done based on since 2019 based primarily on grants.

So, there's more than two times as many dollars that have gone into this company from non-dilutive grants as investment dollars up until the IPO. And that has allowed for a new platform that basically engineers all the problems that could be observed publicly and then also with a focus strategy, we are focused on something that's, everything equal, is relatively close and easy to perform on. And then just also working on sustainable aviation fuel. But that's not going to be done very soon because it's such a humongous task to scale it up. The scaling up is typically also what costs, put your number on it, but like when people hear about hundreds of millions of dollars in scale up cost, that can be divided between actually still in the ground, it just cost a lot if it's a very large operation.

But then also with SynBio you had this challenge of you had a chemical production platform in a cell that kept getting sick on you, then having to go back and like what is now wrong with it? So, remember, cell-based is literally a living organism. It can get sick anyway, nature allows for something to go wrong and that is not a limited space of outcomes. So that's why there has been so much engineering going into it. It's why it typically takes years and tens of millions of dollars.

Where we are lucky because the platform has now been built and there's no living element in it. It's more about us sitting down and picking the right application areas where we are relatively close because we have already built the exercise, we have already proven the different modules. So, it's more about combining modules. We have already in developing a few new modules and then we have a new product.

And the scaling up. I am not making it smaller than it is. We are also facing a commercial challenge from scaling up things. But that's why we are picking things where for example as I mentioned, there are some of the medicinal and pharmaceutical use cases, but we are talking about kilograms per year that we can use our current facility too, it's a little bit more about some regulatory compliance things, but that's also solvable. And therefore, it's not needed to have like tens of millions and hundreds of millions invested.

So, where we are not just cheaper from that perspective, we can also reuse a lot of the cost by being a platform that then makes a nutraceutical with a pharmaceutical potential. When we make the next natural product, a lot of the work that have gone into the first might actually coexist, at least from an infrastructure perspective, from a knowledge perspective, from the QC tools and other things we are building around it. So, it's that ability to double dip in cost you have already had is why we can do it cheaper.

Then it's just fundamentally faster and more engineerable because nothing is alive, nothing is out of our control. If something breaks down, we can mesh on it. We know exactly where the breakdown is. So, it's almost like mechanical from the perspective where the other thing is literally living matter, with its own will. So that's why it's cheaper.

And then all of that aside, another perspective is we raised $15 million because that was a good amount for us to get to the next value inflection point. So, where were we as a company and how do we get to the next value inflection point so that we can have a conversation about raising more money or do something with those business opportunities we will be creating.

And that is you can argue the experienced entrepreneur's perspective on the world where instead of talking about I can do this, and you hear these popcorn frames worth of enjoyment of like, oh, we can do everything. I am looking for platform companies, but I get like super focused. How do we get to this value inflection point? With that end in mind, how do we break down to the steps we need to take to get there? And that is what we're spending our time and focus on. And if we can do that for a certain amount of money, raising more money than that just means unnecessary dilution and frankly, off risk because if we start having extra money, then we start being like, ah, we can also do this other thing. And if it's not on the critical path up to that value inflection point, that's probably how we end up killing ourselves. So having that focus.

Then there's the other aspect of you can obviously always kind of like gear that value inflection points to how big it's going to be and there is maybe different than a lot of other Biotech entrepreneurs and maybe comes from my culture. We are not trying to fake it till we make it. We're not trying to just make it big and then they'll come. It's much more of a like, how can we risk assess that journey because we absolutely want to get there be, because remember, my worldview is like, none of this matters. My time, my life would be wasted until it works for real. So, it is a reality conversation and check.

And there were just elements of like, we don't need that much money. It is the probably the worst year in man’s memory to raise biotech money on the stock exchange. So why did we do why do we do an IPO anyway? Well, because now we actually are a public company and it gives us some completely new and freer tools to raise money than if you were caught up in the VC game where you don't really have, probably don't even have control over your own company after having taken the first money. But even if you think you have control over it, it's like you have put in a swim lane that takes you down a path that that will not allow you to take advantage of the different opportunities that does exist in the public reality, the public capital markets.

James | Slack Capital:
And another point to consider as well is that eXoZymes will achieve revenue through certain partnership deal structures. So, whether that be, you know, spin outs, joint ventures, or down the line licensing agreements. And I'll be speaking with Damien Perriman, the Chief Commercial Officer of eXoZymes. And that will be also a part of the interview series, which I'm very looking forward to being releasing.
So, to that aspect, what state is eXoZymes platform currently in? Is it something that can be rolled out in the immediate future, or is it still something that needs two to three years of development and then can be rolled out or?

Michael | eXoZymes:
It is a really good question, and it's going to take a little unpacking for us to get it right. Or I can just answer. Well, it depends on, and then it's not really an answer.

So, depending on what it is we want to bring to market, we are in between already there, Up to there's still lots of things to work on. So, the way we commercialize our platform with the focus we have talked about a lot today, nutraceuticals with the pharmaceutical potential, are to hit these points where something creates value. Value creation is revenue that is relatively easy to measure because it's like someone giving up his dollars from his bank account to my bank account versus, I'm giving him something… value creation has happened.

A little bit harder to precisely measure is basically when you build an asset, there has been an asset built up, and that's an asset that is now tangible enough that it can be either exited or at least valued on its own. And it's the second, commercial tool we are using.

So, we are talking with partners about creating an asset. So not ready for revenue generation, but ready enough to either be, I'm not saying we have anything to be sold right now, but like that could, in principle we put a value on. And lke, James, you buy it from me. How much are you willing to pay for this opportunity? I will, because I have the platform, the only platform I can do this, I can give you exclusivity in the specific market of your dreams with the specific compound of your choice. And how much are you willing to buy that for?

We're not selling anything like that, at least yet. But we are starting and are in deep conversations about for example, joint ventures where we say like, wow, this is such a good opportunity. The competitive advantage that our new platform allows for in this market is kind of out of scale. So, we don't want to just sell it. Then you can step into it like, okay, a licensing agreement, how much of that value creation will fall back to us. You can step even closer to us and say like, you know what, why don't we own half or some percentage part of it in a joint venture. You get part, I get part. You are the one that is the expert to go out to that specific market with this gun to a knife fight opportunity that I'm providing the gun for. But what is the fair joint venture set up there?

And then there is, because we basically want to eat our own medicine, so to say. Don't take me too literal on that one because we do make medicines here. We don't eat any of our own medicine. But when we spin out a company that is fully owned by ourselves, it's because we're looking at the business opportunity and going like, wow, that thing, we are literally not ready yet to give up ownership even in percentages for, because the asset buildup, we can see our way through these value inflection points to that. Even giving up 10% or 25% of a business opportunity right now would literally be like, we just need to do the next value inflection points then it will be recognized at a much higher valuation.

So those are our tools to do these things and where we are in that portfolio of fully owned assets, joint ventures and licensing. That's obviously where, as much as I would love bringing you breaking news, that's not possible because we are a publicly traded company, and I will let all shareholders have equal access to information in the right order.
With that said, I can still in meta language tell you that as we have basically been communicating before and after the IPO, that was what we fully started focusing on, because IPO took time itself, taking these technical solutions and finding the exact right technical competitive advantages we could provide. And then figuring out what are the right business models to commercialize via and basically what should go first because we are still a small company, we can't just go out and put on like 25 different projects because again, boiling or trying to drink the ocean never works.

So, what do we go first with? We are going to give some guidance later this year on these things, and we are also going to go out and announce these things. So, I'll be happy to come back on your interview podcast series here and talk about those specific opportunities because they are actually the ones that gets me like crazy excited because it's not about just building technology for the sake of technology. It's about making this impact on the world.

And that is where when we spin out either a fully owned subsidiary or joint venture, it gets very concrete. And frankly, also, my job gets so much easier because the questions like, what is you doing again? That we have now spent the most of an hour, if not more, on actually turns into conversations about, wow, you guys are the ones that makes this thing that can do this thing and this amazing because of this.

And then when people have kind of understood that and they go like, what do you mean with, it's powered by Exozymes and then taking a step back in the whole new universe of like, wow, this can be done again and again and again.

James | Slack Capital:
And that's pretty prolific and I think that once the first few deals come onto the table, it'll shed some light to the significance of eXoZymes platform and what the company can achieve. And I'm really looking forward to when they occur.

So, we're coming close to an hour here. So, to wrap up, why should investors pay attention to eXoZymes?

Michael | eXoZymes:
It's pretty simple and complex, and it's the same thing when people ask me for guidance. It's like, oh, you stock cheap or expensive right now. I can't give direct guidance on that.

But what I can say is that if people sit down and close their eyes and think about where they think we will be in 10 years from now, or 5 years from now, and they then compare to where we are, then it's a risk calculation on if we are the right team, if we are the right technology. And there's no doubt that we are not the steady going just wait for some dividends to come out kind of investment. If that's what you're looking for, we are not your guess.

If you're on the other hand, looking for a team that is taking a very large bet on finding a new generation of buyer solutions, then I have not found anyone that is even close to being as ambitious and as realistic as we are.

James | Slack Capital:
What a great way to finish off Michael. And thank you so much for jumping on and speaking with me about the company.

I'd just like to remind listeners to head over to Slack Capital, read my report, and also listen to the other videos in the interview series that will be released very shortly.

As a long-term shareholder, I can clearly see the impacts that eXoZymes platform will have and I'm very excited about the coming future.

Thank you so much again.

Michael | eXoZymes:
I agree and thank you very much.

Slack Capital: EXOZ investment report and CEO interview