Dyadic International, Inc. — 2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. This is an annual report, not a quarterly filing; the provided filing text does not give separate fourth-quarter results. Dyadic is a development-stage biotechnology platform company focused on adapting its C1 fungal expression technology for human and animal biopharmaceutical applications. It had no pharmaceutical products approved for sale; revenue came from research collaborations and grants.
Financial performance and position
| Metric | 2020 | 2019 |
|---|---|---|
| Revenue | $1.60 million | $1.68 million |
| Cost of research revenue | $1.42 million | $1.46 million |
| Provision for contract losses | $187,000 | None |
| Research and development expense | $3.87 million | $3.09 million |
| General and administrative expense | $6.08 million | $5.52 million |
| Operating loss | $10.03 million | $9.28 million |
| Net loss | $9.33 million | $8.31 million |
| Basic and diluted loss per share | $0.34 | $0.31 |
| Cash used in operating activities | $6.57 million | $5.78 million |
- Revenue declined about 4.7%, while net loss increased about 12.2%. Research spending rose primarily due to COVID-19-related and other internal projects. G&A increased, including higher share-based compensation, insurance, legal and business-development costs.
- Revenue less research-revenue costs was approximately $177,000, or 11.1% of revenue, before the contract-loss provision; after that provision, the contribution was approximately negative $10,000. These are calculated from reported figures.
- At year-end, cash and cash equivalents were $20.64 million and short-term investments were $8.46 million; total current assets were $29.78 million. Cash plus short- and long-term investment securities was approximately $29.09 million, versus $35.73 million at year-end 2019.
- Current liabilities were $1.63 million and stockholders’ equity was $28.45 million. The balance sheet lists no debt; the filing text does not provide a separate debt balance. Management said existing cash, cash equivalents and investments were expected to fund operations for at least the next 12 months.
- Investing activities provided $22.12 million, principally from net maturities of investment securities; financing activities provided $255,000, mainly from option exercises. The company reported an accumulated deficit of $50.68 million.
Business developments, outlook and risks
- Dyadic reported 14 ongoing research collaborations in 2020, compared with 10 in 2019, but revenue was slightly lower because projects were smaller on average. One collaboration led to the $187,000 contract-loss provision. One CRO represented 91.6% of research services purchased, a notable supplier concentration.
- Management described C1 productivity, protein expression and animal-study results as promising, but commercialization remains unproven. The company reported no C1-produced product in clinical trials at year-end. It planned toxicology work for its DYAI-100 SARS-CoV-2 vaccine candidate in 2021 and anticipated a Phase 1 trial in the second half of 2021; these were forward-looking expectations, not completed milestones.
- In 2020, Dyadic expanded C1 research collaborations and received an Alphazyme equity interest in connection with a sublicense; its ownership was diluted from 2.50% to 1.99%. A potential Novovet animal-health sublicense had not advanced because Novovet lacked required funding, and Dyadic said it intended to terminate the agreement in 2021 if funding was not raised.
- The VTT research contract runs through June 2022 and includes payments for platform development and glycoengineering, with further expanded commitments. Total purchase obligations at year-end were $3.23 million, primarily for CRO services. Dyadic may fund some or all of a Phase 1 trial itself.
- Key risks include ongoing losses and dependence on external research funding and collaborations; clinical, safety, regulatory and adoption uncertainty; competition from better-resourced companies; reliance on CROs and a concentrated research-services provider; intellectual-property risks; and potential research disruption from COVID-19. Management said the pandemic’s financial and operational effects could not yet be estimated reliably.
- The company had an at-the-market offering authorization of up to $50 million, but reported no sales under it and no immediate plan to use it for its near-term business plan. Management’s 12-month liquidity statement is not a guarantee that funding will remain sufficient if spending, clinical development or collaboration receipts change.
- The independent auditor issued an unqualified opinion on the financial statements and reported no critical audit matters. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor did not attest to internal-control effectiveness.
Most important facts for investors to verify
- Current cash, investment balances and operating cash burn, including whether the stated 12-month runway remains adequate as clinical and research spending evolves.
- Whether DYAI-100 toxicology and Phase 1 plans progressed on schedule, and the resulting safety, efficacy and regulatory data.
- How many collaborations remain funded, their revenue contribution and terms, and whether any sublicense milestones or royalties have actually been earned.
- Whether C1’s reported productivity and glycoengineering results translate into reproducible quality, safety, scale-up and cost advantages acceptable to regulators and commercial partners.
- Exposure to the principal CRO and other research-service commitments, including the $3.23 million purchase-obligation schedule.
- Potential share dilution from the $50 million ATM program, outstanding options and future equity financing needs.