JUPITER, FL – August 9, 2018 Dyadic International, Inc. (“Dyadic”) (OTCQX: DYAI), a global biotechnology company focused on further improving and applying its proprietary C1 gene expression platform to speed up the development and lower the cost of biologic vaccines and drugs at flexible commercial scales, announced its financial results for the second quarter and six months ended June 30, 2018. It also announced that on August 6, 2018, the Company’s Board of Directors authorized an extension of the Company’s existing stock repurchase program through August 15, 2019.
“Since the beginning of this year, we have achieved numerous corporate and research milestones in our third-party collaborations and internal research programs and continue to be encouraged by the progress we are making,” said Mark Emalfarb, President and CEO of Dyadic. Mr. Emalfarb also commented that “we have generated data that demonstrate a potential for C1 to help manufacture biologics rapidly, at lower cost, and with potentially new properties and productivity levels that are superior when compared to Chinese Hamster Ovary (“CHO”) cells, which are commonly used for biomanufacturing. Research programs to develop C1 strains that produce mAbs with mammalian-like glycosylation are also progressing well. In the next six months, we expect to enter into additional funded research collaborations with top-tier biopharmaceutical companies in an effort to apply C1 for use in both animal and human health applications.”
BUSINESS HIGHLIGHTS AND RECENT ACHIEVEMENTS/ DEVELOPMENTS
- Entered into an additional research collaboration with a biotech company to test the feasibility of using C1 to produce seven different molecular biology enzymes as pharmaceutical products. We have secured a total of four collaborations since the beginning of this year.
- Data generated indicated C1 can express a variety of different types of vaccines and therapeutic proteins, including monoclonal antibodies (mAbs), Fab antibody fragments, FC-Fusion proteins, and difficult-to-express genes such, as virus-like particles (VLPs), Bi-Specific antibodies, and antigens, at a higher productivity level than other gene expression platforms.
- Achieved record C1 productivity levels as high as 2.4 grams per liter per day (9 g/l in 90 hours) for monoclonal antibodies and 1.9 grams per liter per day for Fabs.
- Through process and media optimization, achieved 50% C1 fermentation process improvement accompanied by a corresponding drop in the defined media cost.
- Created C1 protease expression library and improved protein stability and productivity by eliminating targeted C1 protease genes.
- On June 6, 2018, the Company’s shareholders approved a proposal to amend Dyadic’s Restated Certificate of Incorporation to effect a reverse stock split of the Company’s issued and outstanding shares of common stock at a ratio of up to 1-for-4, if and when the Company’s Board of Directors determines it is in the Company’s best interest to do so.
FINANCIAL RESULTS FOR THE QUARTER AND SIX MONTHS ENDED JUNE 30, 2018
At June 30, 2018, cash and cash equivalents were approximately $3.2 million compared to $5.8 million at December 31, 2017. The carrying value of investment grade securities, including interest receivable as of June 30, 2018, was approximately $42.6 million compared to $43.3 million at December 31, 2017.
As of June 30, 2018, there were approximately 28.1 million shares outstanding and 10.9 million shares held in treasury.
Research and development revenue for the three months ended June 30, 2018, decreased to approximately $161,000 compared to $207,000 for the same period a year ago. Research and development revenue for the six months ended June 30, 2018, increased to approximately $346,000 compared to $329,000 for the same period a year ago.
Cost of research and development revenue for the three months ended June 30, 2018, decreased to approximately $129,000 compared to $200,000 for the same period a year ago. Cost of research and development revenue for the six months ended June 30, 2018, decreased to approximately $276,000 compared to $321,000 for the same period a year ago.
The changes in revenue and cost of research and development revenue reflect different research collaborations completed in 2017 and new research collaborations started in 2018.
Interest income for the three months ended June 30, 2018 increased 69.2% to approximately $220,000 compared to $130,000 for the same period a year ago. Interest income for the six months ended June 30, 2018 increased 65.0% to approximately $406,000 compared to $246,000 for the same period a year ago. The increase in interest income reflects the higher yield on the Company’s investment grade securities, which are classified as held-to-maturity.
Provision for contract losses for the three months ended June 30, 2018 was $0 compared to approximately $10,000 for the same period a year ago. Provision for contract losses for the six months ended June 30, 2018 was $0 compared to approximately $221,000 for the same period a year ago. The provision for contract losses recorded in 2017 was associated with the Company’s extended involvement in the ZAPI program and another research collaboration completed in 2017.
Research and development expenses for the three months ended June 30, 2018 was approximately $601,000 compared to $420,000 for the same period a year ago. Research and development expenses for the six months ended June 30, 2018 was approximately $1,178,000 compared to $739,000 for the same period a year ago. The increase primarily reflects the costs of additional internal research activities with third-party contract research organizations and personnel related costs.
Research and development expenses – related party, for the three months ended June 30, 2018, increased to approximately $341,000 compared to $0 for the same period a year ago. Research and development expenses – related party, for the six months ended June 30, 2018 increased to approximately $733,000 compared to $0 for the same period a year ago. The increase reflects the research and development costs related to the Company’s R&D agreements with BDI, which started in July 2017.
General and administrative expenses for the three months ended June 30, 2018 decreased 25.3% to approximately $922,000 compared to $1,234,000 for the same period a year ago. The decrease primarily reflects reductions in legal and litigation costs of approximately $137,000, compensation costs associated with our former CFO of approximately $86,000, share-based compensation expenses related to stock options granted in 2018 of approximately $55,000, and other cost reductions of approximately $34,000.
General and administrative expenses for the six months ended June 30, 2018 decreased 26.8% to approximately $2,215,000 compared to $3,024,000 for the same period a year ago. The decrease primarily reflects reductions in legal and litigation costs of approximately $699,000, share-based compensation expenses related to stock options granted in 2018 of approximately $146,000, and other cost reductions of approximately $29,000, offset by increases in business development costs of approximately $54,000 and separation costs (including stock option modification costs), net of compensation cost reduction, associated with our former CFO of approximately $11,000.
Foreign currency exchange gain for the three months ended June 30, 2018 was approximately $15,000 compared to $178,000 for the same period a year ago. Foreign currency exchange gain for the six months ended June 30, 2018 was approximately $10,000 compared to $206,000 for the same period a year ago. The change reflects the reduction in cash balance carried in Euro and the currency fluctuation of the Euro in comparison to the U.S. dollar.
Net loss for the three months ended June 30, 2018 was approximately $(1.6) million, or $(0.06) per basic and diluted share, compared to $(1.3) million, or $(0.05) per basic and diluted share, for the same period a year ago. The increase in net loss was primarily due to the higher research and development expenses in 2018.
Net loss for the six months ended June 30, 2018 was approximately$(3.6) million, or $(0.13) per basic and diluted share, compared to a net income of $0.7 million, or $0.03 per basic and diluted share, for the same period a year ago. Net income for the six months ended June 30, 2017 was primarily due to the receipt of a litigation settlement of $4.4 million.
EXTENSION OF STOCK REPURCHASE PROGRAM
Under the Company’s existing stock repurchase program, Dyadic may repurchase up to $5 million of the Company’s common stock in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The extent to which Dyadic repurchases its stock, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations, as determined by Dyadic’s management. The repurchase program may be extended, suspended or discontinued at any time. Since August 2017, the Company has repurchased $0.9 million of its common stock under this program, leaving it with additional authorization of up to $4.1 million under the program as a result of this extension. The Company expects to finance the program from existing cash resources.
CONFERENCE CALL INFORMATION
Dyadic management will host a conference call today, Thursday, August 9, 2018, at 5:00 PM ET to discuss the financial results for the quarter ended June 30, 2018. In order to participate in the conference call, please dial 800-967-7164 for U.S./Canada callers and +323-994-2131 for International callers, using access code 9709316.
A replay of the conference call will be available on Dyadic’s website (www.dyadic.com) within 24 hours after the live event.
About Dyadic International, Inc.
Dyadic International, Inc. is a global biotechnology company which is developing what it believes will be a potentially significant biopharmaceutical gene expression platform based on the fungus Myceliophthora thermophila, named C1. The C1 microorganism, which enables the development and large scale manufacture of low cost proteins, has the potential to be further developed into a safe and efficient expression system that may help speed up the development, lower production costs and improve the performance of biologic vaccines and drugs at flexible commercial scales. Dyadic is using the C1 technology and other technologies to conduct research, development and commercial activities for the development and manufacturing of human and animal vaccines (such as virus like particles (VLPs) and antigens), monoclonal antibodies, Fab antibody fragments, FC-Fusion proteins, biosimilars and/or biobetters, and other therapeutic proteins. Dyadic pursues research and development collaborations, licensing arrangements and other commercial opportunities with its partners and collaborators to leverage the value and benefits of these technologies in development and manufacture of biopharmaceuticals. In particular, as the aging population grows in developed and undeveloped countries, Dyadic believes the C1 technology may help bring biologic drugs to market faster, in greater volumes, at lower cost, and with new properties to drug developers and manufacturers and, hopefully, improve access and cost to patients and the healthcare system, but most importantly save lives.
Please visit Dyadic’s website at http://www.dyadic.com for additional information, including details regarding Dyadic’s plans for its biopharmaceutical business.
Dyadic trades on the OTCQX tier of the OTC marketplace. Investors can find real-time quotes, market information and financial reports for Dyadic in the Company’s annual and quarterly reports which are filed with the OTC markets. Please visit the OTC markets website at www.otcmarkets.com/stock/DYAI/quote.
Safe Harbor Regarding Forward-Looking Statements
This press release contains forward-looking statements. All statements other than statements of historical fact are forward-looking statements, which are often indicated by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “goal,” “intend,” “look forward to,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions. Forward-looking statements are based on management’s beliefs and assumptions and on information available to management only as of the date of this press release. These forward-looking statements involve risks, uncertainties and other factors that could cause Dyadic’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Investors are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Dyadic expressly disclaims any intent or obligation to update or revise any forward-looking statements to reflect actual results, any changes in expectations or any change in events. Factors that could cause results to differ materially include, but are not limited to: (1) general economic, political and market conditions; (2) our ability to generate the required productivity, stability, purity, performance, cost, safety and other data necessary to carry out and implement our biopharmaceutical research and business plans and strategic initiatives; (3) our ability to retain and attract employees, consultants, directors and advisors; (4) our ability to implement and successfully carry out Dyadic’s and third parties research and development efforts; (5) our ability to obtain new license and research agreements; (6) our ability to maintain our existing access to, and/or expand access to third party contract research organizations in order to carry out our research projects for ourselves and third parties; (7) competitive pressures and reliance on key customers and collaborators; (8) the pharmaceutical and biotech industry, governmental regulatory and other agencies’ willingness to adopt, utilize and approve the use of the C1 gene expression platform; and (9) other factors discussed in Dyadic’s publicly available filings, including information set forth under the caption “Risk Factors” in our December 31, 2017 Annual Report filed with the OTC Markets on March 27, 2018, and our March 31, 2018 Quarterly Report filed with the OTC Markets on May 10, 2018. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us.
Dyadic International, Inc.
Ping W. Rawson
Chief Accounting Officer
Phone: (561) 743-8333
|DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES|
|CONSOLIDATED STATEMENTS OF OPERATIONS|
|Three Months Ended June 30,||Six Months Ended June 30,|
|Research and development revenue||$ 161,286||$ 207,402||$ 345,616||$ 328,929|
|Costs and expenses:|
|Costs of research and development revenue||129,116||199,794||275,925||321,322|
|Provision for contract losses||—||10,175||—||220,715|
|Research and development||601,199||419,750||1,178,083||739,274|
|Research and development – related party||340,849||—||733,398||—|
|General and administrative||921,542||1,233,801||2,214,539||3,024,092|
|Foreign currency exchange gain, net||(15,198)||(178,277)||(10,358)||(206,113)|
|Total costs and expenses||1,977,508||1,685,243||4,391,587||4,099,290|
|Loss from operations||(1,816,222)||(1,477,841)||(4,045,971)||(3,770,361)|
|Settlement of litigation, net||—||—||—||4,358,223|
|Interest income, net||219,585||130,236||406,042||246,429|
|Total other income||219,585||130,236||406,042||4,604,652|
|(Loss) income before income taxes||(1,596,637)||(1,347,605)||(3,639,929)||834,291|
|Provision for income taxes||—||1,901||—||87,457|
|Net (loss) income||$ (1,596,637)||$ (1,349,506)||$ (3,639,929)||$ 746,834|
|Net (loss) income per common share|
|Basic||$ (0.06)||$ (0.05)||$ (0.13)||$ 0.03|
|Diluted||$ (0.06)||$ (0.05)||$ (0.13)||$ 0.03|
|Weighted-average common shares outstanding|
|Balance sheet information:||June 30, 2018||December 31, 2017*|
|Cash and cash equivalents||$ 3,218,820||$ 5,786,348|
|Investment securities, short-term, long-term and interest receivable||42,602,190||43,311,243|
|Prepaid research and development (current and non-current)||718,654||1,167,439|
|Stockholders’ equity||$ 46,303,536||$ 49,975,264|
|*Condensed from audited financial statements|
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