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eXoZymes (EXOZ): Can Cell-Free Biomanufacturing Deliver at Commercial Scale? · WTR Small-Cap Spotlight

• 0:01
  SPEAKER_01: Welcome to the WTR Small Cap Spotlight Podcast.
• 0:04
  SPEAKER_01: I'm your host, Tim Gerdeman, Vice Chair and Co-Founder and Chief Marketing Officer of Water Tower Research.
• 0:10
  SPEAKER_01: Today I'm joined by my colleague Robert Sassoon, Watertower Research Managing Director of Healthcare Equity Research, to talk about his newly published initiation of coverage report on Exozymes, NASDAQ ticker symbol, EXOZ.
• 0:24
  SPEAKER_01: Exozymes is developing a cell-free biomanufacturing platform designed to produce molecules that are difficult or uneconomic to make by conventional methods.
• 0:34
  SPEAKER_01: Robert, welcome back to the show.
• 0:37
  SPEAKER_00: Thanks, Tim.
• 0:38
  SPEAKER_00: Great to be here.
• 0:39
  SPEAKER_01: How about if we kick things off, Robert, by you giving us a 30,000-foot overview of Exozymes?
• 0:44
  SPEAKER_00: Absolutely.
• 0:45
  SPEAKER_00: So Exozymes is a California headquartered biotech that grew out of research from UCLA.
• 0:50
  SPEAKER_00: The science behind the company goes back nearly a decade, so it's uh not absolutely new.
• 0:55
  SPEAKER_00: The core idea being the development of a cell-free biomanufacturing capability.
• 0:59
  SPEAKER_00: Rather than programming a microbe or yeast to make a molecule, exozymes engineers enzymes, which it calls exozymes, hence the name of the company, and runs the chemistry in a reactor outside a living cell.
• 1:11
  SPEAKER_00: The targets are molecules that are difficult or uneconomic to source through extraction or conventional synthesis.
• 1:17
  SPEAKER_00: So the company has two capabilities built on that foundation.
• 1:20
  SPEAKER_00: One is the manufacturing technology platform, which it intends to commercialize first in neutraceuticals.
• 1:27
  SPEAKER_00: The other is a molecule design capability, which is they call BioClick, and that's intended to create new to nature analogs, and that's aimed at the pharmaceutical sector.
• 1:36
  SPEAKER_00: Now, Exoscience's business model is geared to be asset-like, meaning Exosimes owns no manufacturing plant and does not intend to build one.
• 1:45
  SPEAKER_00: It designs the process and transfers it to contract manufacturers.
• 1:48
  SPEAKER_00: And in fact, the company announced the selection of CDMO CDMO Curio Global as its principal manufacturing partner last quarter.
• 1:57
  SPEAKER_00: The plan is also to work with commercial partners on branding and distribution while the company keeps ownership of the enzymes, the process IP, and the know-how.
• 2:05
  SPEAKER_00: The lead asset is a compound called NCT, which is a plant-derived activator of HNF4 Alpha, which in simple terms is a master regulator of matter metabolism in your body.
• 2:19
  SPEAKER_00: Naturally, it only occurs in trace amounts, which is exactly the type of supply problem the Exozymes platform was created to solve.
• 2:27
  SPEAKER_00: So the company is at pre-revenue today, but that is expected to change next year as the company is in the process of transitioning from a pilot program to a commercial one with the launch of an NCT product targeted for the first half of 2027.
• 2:40
  SPEAKER_00: Ultimately, management sees exozymes as more than an NCT story, though.
• 2:45
  SPEAKER_00: Behind NCT is a pipeline of other compounds led by cannabinoids, where supply constraints similar to NCTs could potentially become be overcome by the platform.
• 2:54
  SPEAKER_01: So the pilot results and the tenfold productivity gain are impressive.
• 2:59
  SPEAKER_01: What are the next steps to prove the NCT process can deliver attractive economics at a commercial scale?
• 3:05
  SPEAKER_00: So Toby, it would be helpful to recap how far NCT has come in under two years.
• 3:10
  SPEAKER_00: Exerciz went from four grams in the lab in July 2025 to a 100-litre pilot run independently by a third party party uh uh company called Cayman Chemical.
• 3:23
  SPEAKER_00: That campaign produced 535 grams at 99.6% purity with a 90% isolated yield.
• 3:30
  SPEAKER_00: What that means is that an outside manufacturer was able to reproduce the exercises process end-to-end.
• 3:36
  SPEAKER_00: And in August, the company reported a tenfold productivity gain, with reaction time falling from about 20 hours, which is impressive on its own, but just it fell to just four hours, which is um uh out of this world.
• 3:50
  SPEAKER_00: Management is also report uh has also reported that the manufacturing cost equivalent has fallen more than 100 times from the original process.
• 3:59
  SPEAKER_00: So all highly impressive results at a pilot scale.
• 4:02
  SPEAKER_00: The next phase centers on Curia Global, the major global CDMO that exercises selected in September as its uh principal manufacturing partner.
• 4:11
  SPEAKER_00: Now that is a clear step up from the research scale provider that ran the pilot.
• 4:16
  SPEAKER_00: Now, working at Curia's uh sites in Spain and Italy, the program aims to validate the full integrated process from enzyme production through the cell-free reaction to purification.
• 4:27
  SPEAKER_00: It will also produce a roadmap for a larger scale production starting in uh 2027.
• 4:33
  SPEAKER_00: So the phase needs to prove two things.
• 4:35
  SPEAKER_00: The first is reproducibility.
• 4:38
  SPEAKER_00: Can a commercial manufacturer run the optimized process reliably at scale with the same purity and yield that was produced by the uh uh the pilot?
• 4:46
  SPEAKER_00: The second is economics, specifically enzyme cost.
• 4:49
  SPEAKER_00: Now the enzymes still have to be produced, so cost per gram is what decides whether cell-free beats conventional routes.
• 4:55
  SPEAKER_00: The reported 100 times cost reduction is encouraging, but absolute figures have not been disclosed yet by the company by uh Exosimes and curious where they get tested.
• 5:05
  SPEAKER_00: Beyond that, investors should watch for a commercial supply agreement with terms on cost and capacity, the qualification of backup manufacturers, and the regulatory work converging on uh a targeted NCT launch in the first half of 2027.
• 5:19
  SPEAKER_00: So the science is proven uh is proven at pilot scale.
• 5:22
  SPEAKER_00: The next six to nine months are all about proving the business.
• 5:26
  SPEAKER_01: So, what is the market opportunity for NCT, Robert?
• 5:29
  SPEAKER_01: And can you describe its competitive landscape?
• 5:31
  SPEAKER_01: Okay, the uh good question.
• 5:33
  SPEAKER_00: The opportunity runs in two stages.
• 5:35
  SPEAKER_00: The near-term market is neutraceuticals, where NCT is positioned around metabolic wellness and healthy aging rather than as a weight loss product.
• 5:44
  SPEAKER_00: It works on how the body uses fat rather than a suppressing appetite like GLP1 drugs, which also opens a complementary uh positioning alongside them.
• 5:53
  SPEAKER_00: We uh estimate the portion of the nutraceuticals market relevant to NCT is roughly$80 billion today, growing to over$110 billion by 2030.
• 6:05
  SPEAKER_00: The longer-term opportunity is pharmaceutical, where BioClick analogues of NCT could carry their own composition of matter patents and be licensed to partners for indications such as mash, inflammator, inflammatory bowel disease, and obesity, all significantly sized business markets.
• 6:21
  SPEAKER_00: On the competitive landscape, we are not aware of any other cell-free NCT supplier.
• 6:26
  SPEAKER_00: There is a natural NCT manufacturer and supplier called Brightseed.
• 6:30
  SPEAKER_00: Remember, NCT is a natural monocule, so exercises has no compositional matter claim on that.
• 6:35
  SPEAKER_00: And Brightseed sells it in a hemp-derived ingredient and has shown it can be made by precision of fermentation.
• 6:41
  SPEAKER_00: But Bright Disease delivers NCT in a plant matrix combined with a related compound, so not as a defined high purity ingredient.
• 6:50
  SPEAKER_00: So exercises differentiation therefore rests on purity, compositional control, and costs, protected by an MP IPR estate spanning process patent, the analogues, the engineered enzymes themselves, and trade secrets, all sitting on top of an exclusive license from the University of California granted to Exerzymes.
• 7:11
  SPEAKER_01: So I'm curious, what are the key catalyst and targeted milestones in the remainder of 2026 into 2027?
• 7:18
  SPEAKER_00: Okay, so the coming months are unusually legible for a company at this stage because the uh milestones have timelines attached and each one is checkable.
• 7:26
  SPEAKER_00: The most important near-term event is the announcement of the commercial and marketing partner, expected by the end of uh the current quarter, the fourth quarter, since that determines brand channel, channel and the economics flowing back to exercises.
• 7:39
  SPEAKER_00: In parallel, the Curia technologies transfer runs from the fourth quarter into the first half of 2027, and that is the real technical finish line for showing the process works at a commercial scale.
• 7:52
  SPEAKER_00: On the regulatory side, the key steps are establishing NCT as generally recognized as safe or grass, a required FDA standard for food additives and ingredients, and also uh excited has to complete some supporting human studies, both in time for a targeted launch by mid 2027.
• 8:13
  SPEAKER_00: So third quarter results for 2026 are expected in November and will be the next opportunity for the management to confirm that this timeline is holding.
• 8:22
  SPEAKER_01: Wrapping up, Robert, any closing comments?
• 8:25
  SPEAKER_00: Yeah, this podcast covers only some of our key highlights.
• 8:28
  SPEAKER_00: So I would say the full analysis, including our financial model assumptions, the key risks, is in our initiation of coverage reports.
• 8:34
  SPEAKER_00: That's available on our open access website at www.watertowerresearch.com, and I encourage all the listeners here to uh to read it.
• 8:42
  SPEAKER_00: And also please join us on October the 22nd at 11 a.m.
• 8:46
  SPEAKER_00: Eastern for a fireside chat with Exozymes uh CEO Michael Heltson, where we will hear Benjamin's perspective on the company's progress towards its SET manufacturing and commercial partnering milestones.
• 8:58
  SPEAKER_00: So um, you know, a lot to look forward to.
• 9:00
  SPEAKER_01: Great.
• 9:01
  SPEAKER_01: Well, thanks for joining me today, Robert, to discuss exozymes.
• 9:05
  SPEAKER_01: Thank you.
• 9:05
  SPEAKER_01: Thank you.
• 9:06
  SPEAKER_01: Thank you for listening, and don't forget to subscribe, as well as visiting www.watertowerresearch.com to stay up to speed on the company's small cap written research reports, podcasts, fireside chats, industry specific symposiums, and conference schedules.
• 9:22
  SPEAKER_01: We will see you next time for another edition of the WTR Small Cap Spotlight Podcast.
• 9:27
  SPEAKER_01: Finally, a special thanks to the producer and editor of the podcast, Krista Fitzpatrick.