Stephen Dilly: I can start with the write-down question first. We did book roughly $4 million in impairments on investments in private life science companies that we hold. We have investments holds in our queue in MAI, SQL and Arzeda, the write-downs are related to SQL and Arzeda. And really, it’s just a function of the fact that these are companies that have been active on the financing front, and anytime they do that, we have to reassess the value that they raise money at and appropriately reflect that on our financials.
Kevin Norrett: And I’ll cover the MAI and Alphazyme, two very different situations. But strangely enough, we’ve talked to both of them within the last couple of days. MAI, we have a fairly significant equity stake and you’ll remember they’re using our TDT enzyme version that does DNA and RNA to do DNA synthesis. They’re making super good progress, technically, in terms of coming up with some very long, very pure DNA strands, we’re super happy with that in that relationship. And really we’re looking how we collaborate going forward. So that’s very positive. Also, with Alphazyme, they’ve now become part of the broader [Merrivale] umbrella. We’re talking to them. They have existing contracts in place with us. And we’re also talking about going forward, how we can leverage that relationship. So that obviously being a small company trying to cover a broad landscape, there’s a lot of collaborations in our future.
Unidentified Analyst: Got you. Thanks a lot for the question.
Operator: Thank you. Our next question comes from the line of Matt Hewitt with Craig-Hallum. Please proceed with your question.
Matt Hewitt : Good afternoon, and thank you for the progress update. Maybe two for me. The first one, what is the — as you look at, what is the biggest challenge to achieving gram-scale synthesis for ECO? And then separately, you’re talking about getting maybe your some of your first orders later in the second half of next year, how should we be thinking about the size of those orders? Are these six figures? Are they seven figures? Just help us calibrate how big those initial orders can be? Obviously, we would expect those to scale and ramp higher over time. But where do we start? Thank you.
Stephen Dilly: Great. So I’ll cover the gram-scale synthesis question and Kevin, you’re going to talk about double-stranded ligase next year. So, with the gram-scale synthesis, it sounds like a very simple statement until you pull it apart and say, what does it actually mean? And what we’re talking about here is making an appropriate quantity of a suitable length oligo that has the appropriate modifications in it under process conditions, with a reasonable purity and so on. And we’ve been making very strong progress on that, where we’ve reiterated our confidence in hitting that. Yep, I think the most interesting question will be, how long we actually go with the oligo by the end of this year, because we were already up with what we showed it TIDES was a very nice six-MER that we made, which is comparable to what some other companies were showing with phosphoramidite chemistry, in terms of its purity, and specifications, all the rest of it.
But no one’s ever run a TDT RNA oligo out to 15, 16, 17 yet. And we’re hoping to do that relatively soon. So we can really understand the physical chemistry better. So that’s the thing that I’m most excited about. But I’ve been super happy with things like the conversion efficiency of the enzyme in its present state, that the productivity, the reliability, the ability to include the modification. So we’re, we’re feeling like we’re very much on track, and intrigued by how it performs that. Kevin?
Kevin Norrett: Yes. And then you layer on top of that, it’s important to note that Stephen mention the double-stranded RNA ligase. Already, ligation approaches are becoming more and more common within the phosphoramidite chemistry world, because phosphoramidite chemistry tends to fall down in the longer oligo range in terms of requirements of more input materials, it becomes a little less efficient, you get a higher impurity profile, the longer the strands. So a lot of companies have approached us around testing our RNA ligase in the first half of next year, so that they can look at making shorter all of those strands of phosphoramidite chemistry will really well and stitching together 10 Mers or five Mers and be able to get to siRNA strands in the 20 to 30 Mer range and maybe even a bit longer with the ligation.
So when it comes to orders itself, though, we’re talking about testing with customers in the first half of 2024 and looking at actual customer orders in the second half of 2024 based upon that experience. And the other thing I should mention, we also have two other customized double stranded RNA ligase programs that are wrapping up from an evolution standpoint, where we could see some additional orders for those customized programs, but we haven’t put those supply agreements in place.
Matt Hewitt : I mean, order of magnitude in terms of the size of those orders that you’d be happy with. I mean?
Kevin Norrett: Well, I mean, I think from an individual enzyme standpoint, you know, double stranded RNA ligase is one piece it’s still in the range of a total peak opportunity at least today without huge growth, towards the end of the decade if we’re successful ECO Synthesis somewhere in the range of $15 million to $25 million enzyme opportunity. So by the end of this year with early launch maybe you could see some single digit millions in terms of ordering. But we’ll put out more information around that as we get to our financial guidance for 2024. I think the other thing here really – I just going to say one more thing that, sorry, just to highlight like, This highlights how important it is that we have the cash run we have to be able to set the market correctly, with not only the double-stranded RNA ligase, but also the ECO Synthesis platform and getting that in the hands of customers for testing is coming in.
Matt Hewitt : That’s really helpful. Thank you.
Operator: Thank you. Our next question comes from the line of Chad Wiatrowski with TD Cowen. Please proceed with your question.
Chad Wiatrowski: Hi, this is Chad on for Steven Mah. Just to follow up on Brandon’s question on the ECO Synthesis flexibility. Did you guys present any data that the enzyme based approach allows the utilization of all the various modified nucleotides and analogues which can be used by chemical synthesis methods? And what about future modified bases? How easy would they be to think the integrated using the existing enzyme or with new enzymes that has to be engineered?
Stephen Dilly: So thanks for the question, Chad. Yes, I mean, this is part of the sort of central driver of how we’re evolving the TDT. And what we showed at TIDES was some very sort of relevant examples of current modifications, with furthering that in terms of our gram-scale synthesis. And the aim is that version 1.0 of ECO Synthesis covers the modifications currently in use. Now, we’ve always said that this is going to be to your analogy, like the iPhone or whatever else as newer more sort of strange, unnatural modifications come through, we may well have additional enzymes that we need to evolve to include that or further evolve the current TDT to add that to its armamentarium. There’s probably a law of diminishing returns with any single enzyme such that we will perfect around what currently exists with TDT 1.0, and then move on to some of the more innovative ones.
And this is where Kevin and his team are really doing a lot of hard work to link up with innovated companies, they’re often small companies that are looking at very new constructs. And you’re learning about those and trying to stay current. And one of the big concepts about the alpha testing we’ve been talking about early next year, is to put our enzyme kit in their hands to see how it works under their conditions with their modification, and getting the feedback, right? And you can imagine the flexibility to this system, because the enzyme is tethered and the oligo moves is that you can pass it through more than one column to one of a better word. So you could have several TDT enzymes specified for the specific oligo that you’re trying to make.
And so we’re very aware that one of the performance characteristics that we need to deliver beyond volumetric efficiency is flexibility and speed.
