Dyadic International, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Dyadic is a biotechnology platform company focused primarily on applying its C1-cell protein-production technology to human and animal biopharmaceuticals. It has no pharmaceutical products approved for sale; revenue is principally from research collaborations and licensing.
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Total revenue | $648,427 | $460,520; up about 41% |
| Research and development revenue | $533,721 | $460,520 |
| License revenue | $114,706 | None |
| Costs of R&D revenue | $404,746 | $390,762 |
| R&D expense | $1,342,862 | $1,808,098 |
| General and administrative expense | $1,655,700 | $1,554,007 |
| Operating loss | $(2,744,633) | $(3,320,619) |
| Net loss | $(2,491,665), or $(0.09) per share | $(3,294,949), or $(0.12) per share |
| Operating cash used | $(2,850,383) | $(1,906,513) |
At March 31, 2022, cash and cash equivalents were $12.4 million, and short- and long-term investment securities totaled about $5.0 million at carrying value. Current assets were $16.2 million versus current liabilities of $1.8 million. Total liabilities were $2.1 million; the filing reports no debt. Cash and cash equivalents declined $3.3 million during the quarter. Management stated that cash and investment-grade securities should cover operating and other liquidity needs for at least 12 months.
Material changes and unusual items
- Revenue rose about 41%, reflecting larger research collaborations and new license revenue associated with the Phibro/Abic and Janssen agreements.
- R&D expense fell about 26%, primarily due to reduced CRO, pharmaceutical quality and regulatory consulting, and cGMP manufacturing costs. G&A rose about 7%, mainly from insurance, business development and investor relations expenses.
- Net loss improved by about $803,000. The comparison includes $250,000 of Q1 2022 other income from a settlement payment related to termination of a proposed license and collaboration term sheet; this is an unusual item.
- Q1 2022 operating cash use increased year over year, while investing cash use fell to $521,000 from $5.8 million, mainly reflecting purchases and maturities of investment securities.
- Stock-based compensation was $454,000. The company had 5.43 million options outstanding at quarter-end; weighted-average common shares outstanding were 28.25 million.
Outlook, developments and risks
- Dyadic is self-funding development and cGMP manufacturing of its DYAI-100 COVID-19 vaccine candidate toward a planned Phase 1 trial. The filing gives no firm trial start date. The company says first-in-human data could help demonstrate the safety of C1-produced proteins and support broader platform adoption.
- On May 10, 2022, Dyadic entered a joint development agreement with Leprino Foods, effective May 12, for animal-free ingredients. The project is funded by Leprino up to €3.6 million; Dyadic may also earn success fees, a low-eight-figure commercialization fee, and low-single-digit sales royalties, subject to milestones and commercialization.
- Other potential payments are contingent: Janssen’s agreement includes research funding of up to €1.6 million and potential option, milestone and commercial payments; Phibro/Abic includes potential regulatory milestones and sales royalties. The filing reports no recognized sublicense milestone or royalty revenue to date.
- Management cautions that funding may be needed if existing resources prove insufficient; equity or other financing may not be available on acceptable terms. An ATM offering of up to $50 million was available, but no shares had been sold under it as of filing.
- Key risks include success and timing of research, preclinical and clinical programs; regulatory and industry adoption of C1; reliance on a small number of customers and CROs; intellectual-property protection; and potential COVID-19-related disruption. Three CROs accounted for 96.7% of research services purchased in the quarter, and eight customers generated revenue. Risk factors were reported as unchanged from the 2021 Form 10-K.
- The company reported no litigation it believes would materially adversely affect its financial condition or results. It stated disclosure controls were effective and reported no material changes in internal control over financial reporting.
Important facts for investors to verify
- Whether DYAI-100 advances to a Phase 1 trial, and the timing, financing and results of that program.
- Whether Janssen, Phibro/Abic and Leprino projects meet development, success-fee, commercialization or royalty milestones; these potential payments are not guaranteed.
- Cash burn and runway relative to management’s 12-month liquidity estimate, including spending on clinical development and any need for financing.
- Customer and CRO concentration, and the impact of any project delays, termination or loss of a key counterparty.
- How much of the reported loss improvement reflects ongoing cost reductions versus the one-time $250,000 settlement income.