Dyadic International, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Dyadic is a biotechnology company developing C1 and Dapibus microbial protein-production platforms for pharmaceutical, animal-health, food, and other applications. It reported one operating segment and has no products approved for sale; reported revenue is primarily from research collaborations and licensing.
Financial results and position
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Revenue | $334,617 | $978,052; down 65.8% |
| Gross profit on R&D revenue | $190,662; 57.0% margin | $207,016; 21.1% margin |
| Research and development expense | $522,723 | $810,566; down 35.5% |
| General and administrative expense | $1,788,594 | $1,480,040; up 20.9% |
| Operating loss | $(2,125,558) | $(2,050,494) |
| Net loss | $(2,009,596), or $(0.07) per share | $(956,444), or $(0.03) per share |
| Operating cash flow | $(1,112,979) | $(2,186,938) |
At March 31, cash and cash equivalents were $10.57 million and short-term investment securities were $1.47 million, versus $6.52 million and $0.75 million, respectively, at year-end 2023. Current assets were $12.54 million against current liabilities of $2.26 million. Total liabilities were $8.17 million and stockholders’ equity was $4.52 million. The balance sheet included $6.0 million principal of convertible notes, presented net of issuance costs.
Material changes and unusual items
- Revenue fell largely because several large research collaborations wound down; Janssen revenue ended following its decision to wind down the collaboration effective December 31, 2023. Q1 2024 revenue came from ten collaborations, compared with seven in Q1 2023.
- R&D expense declined as DYAI-100 Phase 1 dosing was completed in 2023 and internal research activity decreased. G&A rose, principally due to higher business development and investor-relations expenses, audit fees, and management incentives.
- Net loss increased year over year, primarily because Q1 2023 included a $989,319 gain on the Alphazyme equity sale; Q1 2024 included a $60,977 Alphazyme earn-out gain. Q1 2024 also included interest expense on newly issued notes.
- Operating cash use improved year over year. Financing provided $5.82 million in net proceeds from the March 2024 note placement; investing used $0.65 million, mainly for purchases of investment securities.
Outlook, commentary, and risks
- Management expects losses and negative operating cash flows as it develops its platforms and products. It says cash, investments, expected operating cash flows, and note proceeds should fund operations for at least 12 months from the financial-statement issuance date; this estimate depends on assumptions and may change. Additional financing may be needed and could be dilutive.
- The March 8, 2024 notes carry 8% cash interest, mature March 8, 2027, are secured by a first-priority lien on substantially all Company and subsidiary assets, and are convertible at the holders’ option at $1.79 per share. Holders may require redemption on specified dates beginning 18 months after issuance. $2.0 million principal was purchased by related parties, including family members and trusts related to the CEO.
- Management cited new and developing opportunities, including funded collaborations, a rabies-vaccine project, food-enzyme development, and potential albumin and other product partnerships. These are not revenue guidance, and several opportunities remain subject to development, verification, or definitive agreements. The filing provides no quantitative revenue or earnings guidance.
- Key risks include continued losses and capital needs; uncertain technical, clinical, regulatory, and commercial success; competition; dependence on collaborators, customers, and contract research organizations; and intellectual-property and third-party risks. Four customers represented 67.2% of Q1 R&D revenue, and three CROs represented 81.4% of research services purchased.
- Dyadic reported no litigation believed likely to have a material adverse effect, no material change to the risk factors in its 2023 Form 10-K, and effective disclosure controls as of quarter-end. It disclosed a VTT research-contract extension through January 31, 2025, with payments totaling €186,000 and a 90-day termination right.
Important facts for investors to verify
- Whether collaboration activity and revenue recover following the Janssen wind-down and completion of other funded programs.
- Cash burn, investment balances, and management’s 12-month liquidity assessment as development spending and commercial plans evolve.
- The notes’ security, redemption provisions, related-party participation, interest payments, and potential share dilution at the $1.79 conversion price.
- Progress and binding terms for announced development, licensing, and commercialization opportunities, including any milestone or royalty revenue.
- Customer and CRO concentration and the effect of any further contract losses or delays.