Dyadic International, Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021; filed November 10, 2021. Dyadic is a biotechnology platform company developing its C1 gene-expression technology for biopharmaceutical applications. It had no pharmaceutical products approved for sale; reported revenue was from research collaborations and grants.
Financial performance and liquidity
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $693,000 | $416,000 | $2.09 million | $1.26 million |
| Operating loss | $(3.32) million | $(2.58) million | $(10.51) million | $(7.76) million |
| Net loss | $(1.72) million | $(2.50) million | $(8.86) million | $(7.37) million |
| Net loss per share, basic and diluted | $(0.06) | $(0.09) | $(0.32) | $(0.27) |
- Research revenue less its direct costs was approximately $300,000 in Q3 2021 versus $149,000 a year earlier; for the nine-month periods, it was approximately $478,000 versus $87,000. No contract-loss provision was recorded in 2021, compared with $112,000 for Q3 2020 and $187,000 for the first nine months of 2020.
- R&D expense rose to $1.90 million in Q3 and $5.92 million for nine months, from $986,000 and $2.86 million, respectively. Management attributed much of the increase to DYAI-100 development and Phase 1-related work: $1.21 million in Q3 and $3.57 million for nine months.
- Q3 net loss narrowed year over year, largely with $1.61 million of other income from the BDI equity sale. Nine-month net loss increased, reflecting higher operating costs and lower interest income; interest income fell to $50,000 from $392,000.
- At September 30, cash and cash equivalents were $13.66 million and short-term investments were $9.09 million (approximately $22.75 million combined). Current assets were $23.57 million; current liabilities were $1.96 million. Total liabilities were current, and the balance sheet reported no debt.
- Operating cash use was $8.64 million for the first nine months, versus $5.29 million in 2020. Cash declined $6.98 million from year-end 2020. Financing provided $986,000, mainly from option exercises. Stockholders’ equity was $21.90 million, down from $28.45 million at year-end.
Material changes and business developments
- Revenue increased 66% in Q3 and 66% for the nine-month period. Nine-month collaborations numbered 13 versus 12 in 2020. International customers generated 76.5% of nine-month revenue, up from 48.5%.
- Dyadic sold its BDI holdings in August for approximately $1.6 million net of transaction and legal expenses, recording a corresponding gain in other income. It retained the right to engage BDI Pharma for R&D through June 30, 2025.
- The company reported progress in C1 technology transfers and vaccine collaborations. DYAI-100, its COVID-19 vaccine candidate, was being advanced toward a planned first-in-human Phase 1 trial in 2022; the filing describes preliminary animal safety findings and ongoing manufacturing work, not human clinical results.
- Outstanding common shares were 28,079,157 at November 9, 2021. The company also had 4,824,215 options outstanding at September 30. Its $50 million at-the-market offering authorization remained unused as of the filing date.
Outlook, risks, and unusual items
- Management stated that cash and investments should fund operational and other liquidity needs for at least 12 months. It cautioned that further financing could be needed and might be sought through equity or other means.
- A proposed Sorrento license was not finalized by the filing date. The August term sheet contemplated $10 million upfront, partly in cash and partly in Sorrento stock, reimbursement of up to $4 million of development costs, potential milestones up to $33 million, and royalties. The parties continued negotiating; terms could differ materially, and management gave no assurance the agreement would be executed. Technology transfer had begun.
- Key risks include continued losses and cash burn; dependence on successful research, clinical development, commercialization, and adoption of C1; reliance on collaborators and a small number of CROs; customer concentration; and uncertainty from COVID-19 and potential project disruptions. Two CROs accounted for 97.2% of Q3 research services purchased.
- Management reported no material litigation, no off-balance-sheet arrangements, and no change to previously disclosed risk factors. Disclosure controls were assessed as effective; no material change in internal control over financial reporting was reported.
Important facts for investors to verify
- Whether the Sorrento license was ultimately executed, and the final consideration, rights, and obligations.
- DYAI-100 clinical-trial timing, regulatory progress, trial funding, and evidence supporting safety and efficacy.
- Cash burn and available liquidity relative to management’s stated 12-month runway, including any subsequent financing or ATM share sales.
- Whether collaboration revenue can scale and whether customer and CRO concentration creates material operating or collection exposure.
- Potential dilution from outstanding options and any future equity issuance.