Description of Business:
Dyadic International, Inc. is a global biotechnology company based in Jupiter, Florida with a foreign subsidiary, Dyadic Nederland, BV, which maintains a small satellite office in Wageningen, the Netherlands. Over the past two decades, the Company has developed a method for producing commercial quantities of enzymes and other proteins required for the production of industrial enzymes and has successfully licensed this technology to third parties such as Abengoa Bioenergy, BASF, Codexis and others. This technology is based on the Myceliophthora thermophila fungus, which the Company named C1. The C1 technology is a robust and versatile fungal expression system for gene discovery, development, expression and production of enzymes and other proteins.
OUR VISION FOR LEVERAGING C1 INTO THE PHARMACEUTICAL INDUSTRY
The Company believes that the pharmaceutical sector is an attractive opportunity where the C1 technology may be applied. The C1 technology platform is being further developed to become a safe and efficient expression system with the prime objective of speeding up the development and production of commercial scale biologics. In particular, as the global population ages, the Dyadic vision is for C1 to transform the speed and efficiency with which drugs are brought to market. This could improve access and reduce the cost for patients and the healthcare system, and most importantly save lives.
On December 31 2015, the Company sold its industrial technology business to DuPont’s (NYSE: DD) industrial Biosciences business for $75 million. The transaction included $8 million of the purchase price to be held in escrow for 18 months to ensure Dyadic’s obligations with respect to certain indemnity claims and working capital adjustments. In connection with the DuPont Transaction, DuPont granted Dyadic co-exclusive rights to the C1 technology for use in human and animal pharmaceutical applications, with the exclusive ability to enter into sub-license agreements. DuPont will retain certain rights to utilize the C1 technology for use in pharmaceutical applications, including development and production of pharmaceutical products, for which it will make royalty payments to Dyadic upon commercialization. In certain circumstances, Dyadic may owe a royalty to either DuPont or certain licensor’s of DuPont depending upon whether Dyadic elects to utilize certain patents either owned by DuPont or licensed in by DuPont. The current escrow amount of $7,362,116 in the accompanying balance sheet is net of contractual working capital adjustments already agreed to by the parties.
The combination of a portion of the proceeds from the DuPont transaction and additional industry and government funding that is being sought is expected to provide Dyadic with the opportunity to accelerate further development and optimization of the C1 technology in the area of biopharmaceuticals. In addition, the unique attributes of C1 may create attractive research, licensing, collaboration and other opportunities, if C1 demonstrates operational efficiencies and reduced capital requirements for biologic drug manufacturers.
We intend to continue our participation in the existing EU-funded ZAPI vaccination program. Additionally, the Company has initiated internally funded research & development pharmaceutical programs at the Company’s former research center in Wageningen, the Netherlands, which was acquired by DuPont. The Company anticipates engaging an additional third party Contract Research Organization (CRO) to further modify and improve the Company’s C1 technology for its use in developing and manufacturing biologic vaccines and drugs. We are continuing to review our options regarding existing and future internal and external pharmaceutical research and development initiatives. Encouraging results, knowledge and experience which we gained from our prior research collaboration with Sanofi Pasteur (which was discontinued in August, 2016) includes test results from mice trials in which the data generated by Sanofi Pasteur indicated that the C1 produced antigen generated an equal, or better, immune response in mice than the industry standard antigen. Dyadic is evaluating if, and how we can leverage the data, knowledge and experience gained through our interactions with Sanofi Pasteur to advance the C1 technology’s use in developing & manufacturing vaccines on our own, or more likely in collaboration with other parties. Dyadic is evaluating if, and how we may move this potential vaccine technology forward on its own, or in collaboration with other parties. The Company plans to initially use contract research organizations to carry out its research and development activities. When the Company has successfully demonstrated C1’s capabilities in developing biologics, management will consider setting up its own research and development site to carry out its business plan.
Going forward, the Company’s focus will be on leveraging the patented and proprietary C1 expression system to help speed up the development and production of biologic drugs at flexible commercial scales for its use in the discovery, development, and manufacturing of human and animal vaccines, monoclonal antibodies, biosimilars and/or biobetters, and other therapeutic proteins.
Please see our March 31, 2019 Quarterly Report filed with the SEC on the Form 10-Q on May 9, 2019 and our December 31, 2018 Annual Report filed with the SEC on the Form 10-K on March 27, 2019.