Dyadic International, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. Financial statements are unaudited. Dyadic is a biotechnology company developing fungal-based protein production platforms, including C1 for pharmaceutical applications and Dapibus for food, nutrition, and wellness. It has no pharmaceutical products approved for sale; revenue is primarily from research collaborations and licenses.
Financial performance and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Total revenue | $658,553 | $937,092 | $1,306,980 | $1,397,612 |
| Operating loss | $(3,318,004) | $(3,867,074) | $(6,062,637) | $(7,187,693) |
| Net loss | $(3,287,995) | $(3,846,174) | $(5,779,660) | $(7,141,123) |
| Net loss per share | $(0.12) | $(0.14) | $(0.20) | $(0.26) |
- Q2 revenue fell about 30% year over year, while net loss narrowed about 15%. For the first half, revenue declined about 6% and net loss narrowed about 19%.
- Research and development revenue was $614,435 in Q2 versus $937,092 a year earlier. License revenue was $44,118, compared with none in Q2 2021. Management attributed lower R&D revenue mainly to fewer ongoing collaborations.
- Cost of R&D revenue was $411,109 in Q2. The resulting R&D service contribution margin was about 33%, compared with about 11% in Q2 2021. This excludes other R&D and general and administrative expenses.
- Q2 R&D expense was $1.83 million, down from $2.21 million, primarily as contract research, regulatory support, and cGMP manufacturing activities wound down. Q2 general and administrative expense was $1.71 million, broadly flat year over year.
- At June 30, cash and cash equivalents were $9.48 million and short-term investment securities were $6.16 million, totaling about $15.64 million in cash and investments. Current assets were $16.93 million and current liabilities $3.40 million. No interest-bearing debt is reported in the supplied financial statements.
- First-half operating cash use was $4.63 million, versus $4.31 million in 2021. Investing activities used $1.68 million; financing activities provided $42,350. Cash declined $6.27 million from year-end 2021. Stock-based compensation was $908,291 for the first half.
- Total liabilities were $3.66 million at June 30, 2022, compared with $2.91 million at December 31, 2021. The company reported an accumulated deficit of $69.53 million.
Business developments, outlook, and risks
- Management said existing cash, cash equivalents, and investment-grade securities should meet operational and liquidity needs for at least 12 months. Dyadic is self-funding development and manufacturing of its DYAI-100 COVID-19 vaccine candidate; management noted there is no assurance external funding will be available on acceptable terms to advance it beyond Phase 1.
- On July 22, 2022, the company submitted a clinical trial application to South Africa’s SAHPRA for expedited review. The proposed Phase 1 trial would assess safety and reactogenicity of DYAI-100 as a booster in 30 healthy, SARS-CoV-2-seropositive participants. The filing anticipated trial commencement in late 2022; submission is not approval or evidence the trial has begun.
- A May 2022 joint development agreement with a global food ingredient company provides for approximately $4.1 million of funded research over two years, plus conditional success fees, a low-eight-figure commercialization fee, and low-single-digit royalties if commercialized. Dyadic recorded approximately $113,000 of related R&D revenue in the first half. Future fees and royalties depend on milestones or commercialization.
- Other programs include a fully funded Janssen research collaboration, an expanded Phibro/Abic animal-health license and research project, and ongoing preclinical work on antibody and vaccine candidates. These programs are subject to development, regulatory, and commercial uncertainty.
- The first-half net loss includes $250,000 of settlement income from termination of a proposed license and collaboration term sheet. This was recorded in the first quarter and is not described as recurring.
- Dyadic has an at-the-market equity offering program of up to $50 million, but reported no sales under it as of the filing date. Any future use could dilute shareholders. The company also identified dependence on customers and a small number of CROs; two CROs represented 96.5% of first-half research services purchased.
- Management said COVID-19 had not materially affected development timelines to date, but warned of possible future operational and financial disruption. It reported no material litigation, no changes to previously disclosed risk factors, and effective disclosure controls and procedures.
Important facts for investors to verify
- Whether SAHPRA authorizes the DYAI-100 trial and whether the anticipated timing, enrollment, and funding remain on track.
- Actual cash burn and runway relative to management’s 12-month liquidity assessment, including the cost of advancing DYAI-100 beyond Phase 1.
- Progress, funding, and termination rights under the global food ingredient, Janssen, and Phibro/Abic agreements; distinguish funded research revenue from contingent milestone, commercialization, and royalty potential.
- Revenue concentration and dependence on key customers and CROs, and whether collaboration revenue stabilizes or grows.
- Potential dilution if the company uses its $50 million ATM program or otherwise raises capital.
- Whether preclinical findings and platform performance translate into clinical, regulatory, and commercial outcomes.