Debrief: Circular thoughts with James Hayward

James Hayward: The pieces are in place at Applied DNA Sciences, starting with "irrefutably cool" science.

When last we Debriefed Applied DNA Sciences CEO James Hayward, the Stony Brook-based supply-chain, anti-counterfeiting, anti-theft and product-authentication company was forming a promising partnership with a national law-enforcement/security training organization and inching a toe into the Scandinavian auto theft prevention-and-recovery market. This week, as the biotech partners with textile manufacturer Loftex Home to launch the hot new CertainT platform, Hayward reports big gains in those maturing verticals and progress by Applied DNA’s all-star advisory board – two big parts of a master plan to reverse a string of subpar quarterly financials. The doctor’s orders:

Major-league roster: We have brought on Bob Catell from KeySpan and National Grid, and Mehmood Khan from PepsiCo., and most recently Ray Kelly. Their experience really goes beyond their specific verticals, into several lifetimes’ worth of business experience. We are already the beneficiary of their commercial wisdom and life experiences – what we’re hoping to gain is insights into the industries they know closely, their intuition.

Stay tuned: I think the recruitment of these superstars to our Strategic Advisory Board is an indication of the trust our platform is engendering in the greater global market. We will continue to expand that board membership to help guide us through the various commercial verticals we’re pursuing, but at this moment I’m not going to announce any new appointments.

Absolutely CertainT: CertainT is a program that integrates our commercial platforms into a licensable strategy. It’s an integrated supply-chain verification platform. That means we can provide a certification system that companies can use to indicate they’re DNA compliant. In the past, we commercialized single elements of this integrated program – for example, DNA tagging throughout the cotton-supply chain. Now, we can authenticate straight through recycled supply chains, for example, where the consumer purchase is really predicated on their interest in earth-friendly and sustainable products.

Circular logic: The problem is those products are not always constituted as represented. A claim can be made about recycled cotton, but the consumer can’t be certain – and as the circular economy becomes more important globally, the capacity to authenticate that a product is sustainable is essential to a brand or retailer’s customer relationships.

Stop, thief: Our European auto-theft market is going great. We’re increasing from (DNA tagging) roughly 2,000 vehicles per month to close to 3,200 vehicles per month. The product has grown to about $75,000 per month in revenues, and it has provoked the interest of multiple brands. BMW in Scandinavia is a customer, and we were just invited by a European auto manufacturer to participate in a tender offer for the marking of 2 million car components. That’s really an indication of our acceptance by the high-end auto industry. Significant brands are beginning to put their trust in our system.

Safe and security: We have maintained our relationship with that California security-training firm and have been actively forming direct relationships with departments and security firms across the country. We just recently hired a very well-respected individual from the security industry, our new Director of U.S. Security Gordon Hope. It was the first time an industry analyst called me up to congratulate me on a hire.

Corridors of (microscopic) power: In the middle of Stony Brook University, Cold Spring Harbor Laboratory, Brookhaven National Lab and other institutions, we are pleased to participate in the overall momentum of the Long Island DNA corridor. Just being here has had a significant impact on us. About 18 months ago, we hired Dr. Michael Hogan, a Princeton professor who is deeply experienced in the commercial world of DNA. It is a direct result of being in this environment that we were able to have him help lead our efforts.

Federal expressed: Our relationship with several federal agencies also remains strong. We’ve had our supply agreement with the Defense Logistics Agency renewed, and we remain very optimistic about our future relationship with the federal government.

Textile message: We expect the adoption of our cotton platform to continue to grow, with significant players adopting the platform. The cotton vertical is obviously important, but it’s just one part of the textile world and one part of the world of natural commodities, including food and natural materials in general. In natural commodities, there’s always a risk of misrepresentation, and we can assure manufacturers and consumers of the authenticity of their product and sources. The experience we have with cotton is cloneable with other natural fibers and many natural commodities.

Bottom line on the bottom line: Our financial performance is not surprising. In fact, I’m pleased with our evolution to date. Although we aspire to a faster rate and a higher level of financial performance, the biotech world and the maturation to profit often takes a path just like ours. We have significantly matured from a toolbox company to a platform company, capable of servicing big commercial ecosystems like textiles or fertilizers. We’re getting past the early-adoption phase now and looking forward to more commercial uptake.

Interview by Gregory Zeller

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