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Equity Research Profiles |
Dyadic International, Inc. DYAI / NasdaqCM / $8.57 August 21, 2020 |
Business Overview |
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Dyadic International, Inc.
(the Company) is advancing its patented C1 expression system to help
bring biologic vaccines and drugs to market faster, in greater volumes, at
lower cost, and with new properties. C1 is a thermophilic fungus originally
isolated from alkaline soil in Russia. The Company and its licensees have
invested several hundred million dollars to turn C1 into a proven gene
expression platform. |
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The C1 technology is a
highly productive recombinant production host that uses genetic recombination
techniques to develop and manufacture novel enzyme and other protein
products. It allows for rapid scaling, lowers capital and operating expenses,
and has potential to improve therapeutic vaccine and drug performance. The C1
gene expression system has demonstrated impressive yield and purity for
therapeutic proteins and proof of principal for antigen classes routinely
used in vaccines. |
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The market for biologics is a
fast-growing drug segment estimated in 2020 to be $287 billion worldwide. The
high cost of these drugs has spurred even more rapid growth in the biosimilar
market, which in 2020 is estimated to be $26 billion worldwide. Management
believes that the C1 technology has potential to lower the cost of biologics,
bring new and improved biologics to market, and help to overcome protein
expression challenges biologics drug candidates. |
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The target markets are
recombinant vaccines (both human and veterinary), new therapeutics, biosimilars/biobetters (non-Glycosylated protein market),
biosimilars/biobetters (Glycosylated protein market),
metabolites (primary and secondary), and diagnostic. |
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Dyadic has developed a
number of ongoing collaborations, including Zoonotic Anticipation and
Preparedness Initiative (pandemic and epidemic zoonotic diseases and biologic
threats), Sanofi-Aventis Deutschland GmbH (expression of Sanofi therapeutic
and vaccine proteins in a feasibility study), Serum Institute of India
(development and manufacture of antibodies and vaccines), and The Israel
Institute for Biological Research (combat emerging diseases). |
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On March 30, 2020, the Company announced a
nonexclusive research license with Hong Kong-listed WuXi
Biologics, an open-access biologics technology platform company and Contract
Development and Manufacturing Organization (CDMO). WuXi
will have restricted access to the Dyadic gene expression platform to
evaluate the platform for their customers worldwide. |
2020 Focus |
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The on-going collaborations referenced
above are funded and exhibit promise for 2020. |
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Management is seeking
additional research collaborations, government funding, and partnerships to
sub-license or partner its C1 platform technology in the vaccine, antibody,
and biosimilar industries. For large pharma companies focused on specific
therapeutic agents, the Company seeks funded proof of concept collaborations
followed by upfront access fees, milestones, and royalty payments. For
smaller biotechnology firms, Dyadic seeks equity, milestones, and royalties. |
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On July 15, 2020, the
Company signed a fully funded R&D collaboration with one of the top five
global pharma companies for human health. On July 8, 2020, it announced the
signing of two new fully funded collaborations with two of the leading global
animal health companies to demonstrate the potential application of C1
technology platform for expression and production of therapeutic proteins for
companion and farm animal diseases. |
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The Company has formed new partnerships globally
which have resulted in many new opportunities related to COVID-19 and for
future infectious diseases, pandemics, epidemics, and other biological
outbreaks. |
Management and Directors |
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Mark A. Emalfarb
is the CEO and founder. He has 25+ U.S. and foreign biotechnology patents
relating to the proprietary C1 fungus, and he has been successful in forming
several R&D, manufacturing, and marketing relationships. Other members of
the management team include P. Rawson, CFO; R. Tchelet,
Chief Scientific Officer; and M. Jones, Chief Commercial Officer. |
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The BoD
consists of Mr. Emalfarb and five non-employee
members, all with extensive healthcare experience. The backgrounds of the
management and directors are outlined on the Dyadic website and SEC filings. |
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As of December 31, 2019, executive officers and
directors beneficially owned 24.7% of the number of common share equivalents
outstanding. |
Financials |
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Income Statement (6 months through 06/30/20 vs. 06/30/19) |
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Revenues: 839,643 vs. 793,401 G&A expense: 3,128,624
vs. 3,298,745 R&D expense: 1,871,616
vs. 2,236,393 Other operating income
(expense): (1,019,934) vs. (661,097) Operating income (loss): (5,180,531)
vs (5,402,834) Interest income (expense):
314,970 vs. 532,684 Pretax income (loss): (4,865,561)
vs. (4,870,150) Net income (loss): (4,865,561)
vs. (4,871,050) Earnings (loss) per basic and diluted common share: (0.18)
vs. (0.18) Weighted average number of common shares outstanding: 27,459,415
vs. 26,771,439 |
|
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Balance Sheet (06/30/20) |
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Cash & equivalents: 11,781,549 Short-term investments: 20,053,019 Other current assets: 1,890,937 Total current assets: 33,725,505 Other assets: 6.116 Total assets: 33,731,621 Current liabilities: 1,638,416 Stockholders
equity: 32,093,205 Common shares
outstanding (08/12/20): 27,482,157 Stock options
outstanding: 4,650,390 at a weighted-average exercise price of $2.44 |
|
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On August 13, 2020, Dyadic
filed an S-3 shelf registration for future offerings of up to $50 million of Dyadic’s common stock. It also established an ATM
offering program with Jefferies LLC, under which it may sell shares of its
common stock for aggregate gross proceeds of $50 million. |
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During 2017 and 2018, the
Company repurchased 12,253,502 of its common shares outstanding at an average
price per share of approximately $1.54. All of those shares are presently
held as treasury stock. There were no additional treasury stock purchases
during 2019. |
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On December 31, 2015, the Company sold its
industrial biotech unit to DuPont Danisco for $75 million. Dyadic had
licensed the C1 technology platform for industrial uses to Abengoa, BASF, Codexis/Shell, and others, and it received
more than $30 million in cash payments for non-exclusive licenses and
generated more than $100 million in enzyme product revenues from customers
worldwide. |
Valuation Considerations |
The target markets are substantial, and the Company has a proven
ability to collaborate and partner with companies and organizations that are
well established players in those markets. |
|
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The working capital position is robust. |
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The impact
of COVID-19 is an uncertainty. In addition, the Dyadic website and SEC filings
detail a number of risk factors, and these are hereby incorporated by
reference. |
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Executive offices: 140
International Pointe Drive, Suite 404, Jupiter, FL 33477. Phone: 561.743.8333. |
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Investor contact: Mark A. Emalfarb, CEO; memalfarb@dyadic.com. Phone 561.743.8333. |
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