Dyadic International, Inc. — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023. Unaudited results; balance-sheet comparisons are to December 31, 2022. Dyadic is a biotechnology company developing C1 and Dapibus microbial protein-production platforms. Revenue is primarily from funded research collaborations and license arrangements; the company reported no products approved for sale.
Financial performance and position
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Total revenue | $837,159 | $658,553 | $1,815,211 | $1,306,980 |
| Operating loss | $(2,290,427) | $(3,318,004) | $(4,340,921) | $(6,062,637) |
| Net loss | $(2,152,960) | $(3,287,995) | $(3,109,404) | $(5,779,660) |
| Loss per share, basic and diluted | $(0.07) | $(0.12) | $(0.11) | $(0.20) |
| Operating cash used | — | $(3,841,654) | $(4,625,800) |
- Q2 revenue rose about 27% year over year; six-month revenue rose about 39%. Research and development revenue increased, while license revenue declined for the six-month comparison.
- Research and development revenue costs were $792,944 in Q2 and $1,519,862 for six months, leaving a small difference between R&D revenue and its reported direct costs. The filing does not present a consolidated gross-margin measure.
- Operating expenses fell year over year: R&D expense was $917,552 in Q2 and $1,728,118 for six months; general and administrative expense was $1,402,569 and $2,882,609, respectively.
- Six-month net loss included $1,017,592 of other income from the Alphazyme equity sale. Interest income was $213,925 for six months, versus $32,977 a year earlier.
- At June 30, cash and cash equivalents were $5.84 million and short-term investments were $4.29 million, totaling about $10.13 million. Cash was nearly unchanged from year-end; short-term investments declined from $6.85 million. Current assets were $11.07 million and current liabilities $2.00 million. No borrowings or interest-bearing debt were reported.
- Net cash used in operations was $3.84 million; investing activities provided $3.89 million, principally reflecting Alphazyme sale proceeds of $1.30 million and investment maturities. Cash increased by $47,319 over the six months.
- Total assets were $11.07 million, liabilities $2.09 million, and stockholders’ equity $8.99 million. Accumulated deficit was $76.59 million.
Material changes and notable items
- Management attributed lower R&D expense to reduced CRO and consultant work and lower cGMP manufacturing costs after completing DYAI-100 Phase 1 dosing in February 2023. Lower G&A reflected decreases in incentives, business development and investor-relations, insurance, and legal expenses.
- Alphazyme equity was sold under an agreement entered in January 2023. Dyadic received approximately $1.3 million in cash and recognized a $1.02 million gain; possible additional payments tied to future sales, milestones, and royalties remain contingent and had not been recognized.
- Stock-based compensation was $664,955 for the first half, down from $908,291. Common shares outstanding were 28,811,061 as of June 30; 5,456,447 options and 163,044 unvested restricted stock units were outstanding.
Outlook, risks, and contingencies
- Management expects cash, cash equivalents, investments, and operating cash flows to fund operations for at least 12 months from issuance of the statements, while cautioning that assumptions may prove inaccurate. Future capital needs could prompt equity offerings or other financing, potentially on dilutive or unfavorable terms.
- The company expects ongoing losses and negative operating cash flows while developing its platforms and products. DYAI-100’s six-month follow-up was ongoing; the full Phase 1 study report was expected in the second half of 2023. Dyadic said it did not expect significant additional capital to complete Phase 1 in 2023, but would not proceed to Phase 2/3 without partner or collaborator funding.
- Commercial prospects depend on research results, securing funded collaborations and licenses, regulatory progress, and eventual commercialization. Key risks include customer and CRO concentration, reliance on third parties, clinical and regulatory uncertainty, competition, and intellectual-property risks. Three customers generated 66.7% of first-half revenue; three CROs represented 97.6% of research services purchased.
- Collaborations and development activity included a new funded top-five pharmaceutical research collaboration, expanded or renewed work with several partners, and a funded Fermbox agreement for alternative-protein applications. These arrangements may involve options, milestones, royalties, or commercialization fees; future payments are not assured.
- Dyadic reported no litigation it believed would materially adversely affect its financial condition or results. It reported no material change to previously disclosed risk factors, no off-balance-sheet arrangements, and effective disclosure controls. The at-the-market offering agreement was scheduled to terminate August 25, 2023; no shares had been sold under it.
Important facts for investors to verify
- Whether management’s stated 12-month liquidity estimate remains supported by operating burn, collaboration receipts, and investment maturities.
- Timing and results of the DYAI-100 Phase 1 follow-up and full study report, and whether partners fund any later-stage trials.
- Revenue quality and concentration: the timing and funding of research collaborations, customer retention, and dependence on a small number of customers and CROs.
- Whether contingent Alphazyme, Janssen, Phibro/Abic, and other collaboration milestones, royalties, or commercialization opportunities materialize.
- How ongoing losses, stock-based compensation, and potential future fundraising could affect cash runway and shareholder dilution.