Equity Research




Dyadic International, Inc.

DYAI / NasdaqCM / $8.57

August 21, 2020


Business Overview



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.


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.


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.


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.


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).


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



The on-going collaborations referenced above are funded and exhibit promise for 2020.


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.


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.


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



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.


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.


As of December 31, 2019, executive officers and directors beneficially owned 24.7% of the number of common share equivalents outstanding.






Income Statement (6 months through 06/30/20 vs. 06/30/19)


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



Balance Sheet (06/30/20)


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



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.


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.


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.


The working capital position is robust.


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.






Executive offices: 140 International Pointe Drive, Suite 404, Jupiter, FL 33477. Phone: 561.743.8333.


Investor contact: Mark A. Emalfarb, CEO; memalfarb@dyadic.com. Phone 561.743.8333.


PDF Version





TickerBuzz, LLC ("TickerBuzz"), a Florida limited liability company is the author of this Profile. TickerBuzz is not and does not act as a broker-dealer, investment advisor, placement agent, or crowdfunding portal. Furthermore, it does not offer any securities, nor does it provide any investment advice or analysis. The source material for this Profile is the Company presentation materials. Certain information, particularly information relating to future performance and other business matters, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. TickerBuzz cautions that these forward-looking statements are subject to numerous assumptions, risks, and uncertainties that may change over time and cause actual results to differ materially from the results discussed herein. The forward-looking statements are neither predictions nor guarantees of future events or performance. TickerBuzz has no obligation to update any forward-looking statements after they are made, except as required by applicable law. All of this information is intended for discussion purposes only, is not a solicitation to buy or sell any security, and must not be relied upon for financial, legal, tax, or any other professional advice. This company has not paid TickerBuzz any compensation for publication of this Profile. Analyst: William J. Ritger.



TickerBuzz, LLC


Contact: William J. Ritger, writger@gmail.com, 561.891.1903

Copyright 2020. TickerBuzz, LLC. All rights reserved.