Dyadic International Reports Third Quarter 2018 Financial Results

Dyadic International, Inc.

Companies Mentioned:

Primary Exchange: OTCQX
Under the Symbol: DYAI

$1.90

-0.02

-1.04%


Dyadic International Reports Third Quarter 2018 Financial Results

Wednesday, November 7, 2018 4:30 PM
  • Initial registration statement on Form 10 filed with the SEC
  • Fully funded proof of concept research collaboration signed with Sanofi-Aventis Deutschland GmbH
  • Progress in productivity and stability in Company’s research programs

JUPITER, FL / ACCESSWIRE / November 7, 2018 / Dyadic International, Inc. ("Dyadic") (OTCQX: DYAI), a global biotechnology company focused on further improving and applying its proprietary C1 gene expression platform to speed up the development and lower the cost of biologic vaccines and drugs at flexible commercial scales, announced its financial results for the quarter and nine months ended September 30, 2018.

BUSINESS HIGHLIGHTS AND RECENT DEVELOPMENTS

  • On November 5, 2018, the Company filed a Form 10 registration statement with the U.S. Securities and Exchange Commission (''SEC''), in order to register its common stock under the Securities Exchange Act of 1934, as amended.
  • Entered into a fully funded proof of concept research collaboration to produce multiple types of biologic vaccines and drugs of interest for human health indications with Sanofi-Aventis Deutschland GmbH, a company of the Sanofi group, bringing the total collaborations to seven since the beginning of this year.
  • Demonstrated that C1 can be used to produce high levels of biologics (i.e. Certolizumab) in single-use bioreactors as well as in traditional stainless-steel fermenters.
  • Demonstrated further increased levels of productivity of Certolizumab as high as 2.6 grams per liter per day or 12/g/l in 112 hours.
  • Demonstrated 7 times the initial target productivity of an antigen against the Schmallenberg virus (SBV) in our ZAPI project. C1 produced SBV antigen is expected to be used in animal trials in the ZAPI project that we anticipate will begin in early 2019.
  • We further improved protein stability and productivity by eliminating additional targeted C1 protease genes.

"We have entered into seven research collaborations this year, and we anticipate entering into additional funded research collaborations in Q4 and during 2019 year", said Mark Emalfarb, President and CEO of Dyadic. He further commented that "we continue to be encouraged by the research data generated to date and believe that additional research milestones will continue to be reached in our internal research programs as well as in our research collaborations with third parties. Additionally, with the recent filing of our Form 10 with the SEC, and our continued progress on both the business development and research fronts, we expect to create greater industry and investor awareness that we believe will enhance shareholder value."

FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2018

At September 30, 2018, cash and cash equivalents were approximately $1.7 million compared to $5.8 million at December 31, 2017. The carrying value of investment grade securities, including interest receivable as of September 30, 2018, was approximately $41.1 million compared to $43.3 million at December 31, 2017.

As of September 30, 2018, there were approximately 26.7 million shares outstanding, after purchases of approximately 1.4 million shares at a weighted average price of $1.40 per share in open market transactions under our stock repurchase program during the third quarter of 2018.

Research and development revenue for the three months ended September 30, 2018, decreased to approximately $263,000 compared to $272,000 for the same period a year ago. Research and development revenue for the nine months ended September 30, 2018, increased to approximately $609,000 compared to $601,000 for the same period a year ago.

Cost of research and development revenue for the three months ended September 30, 2018, increased to approximately $243,000 compared to $221,000 for the same period a year ago. Cost of research and development revenue for the nine months ended September 30, 2018, decreased to approximately $519,000 compared to $542,000 for the same period a year ago.

The changes in revenue and cost of research and development revenue reflects different research collaborations completed in 2017 and new research collaborations started in 2018.

Interest income for the three months ended September 30, 2018, increased 56.7% to approximately $242,000 compared to $154,000 for the same period a year ago. Interest income for the nine months ended September 30, 2018, increased 61.6% to approximately $648,000 compared to $401,000 for the same period a year ago. The increase in interest income reflects the higher yield on the Company's investment grade securities, which are classified as held-to-maturity.

Provision for contract losses for the nine months ended September 30, 2018, was $0 compared to approximately $221,000 for the same period a year ago. The provision for contract losses recorded in 2017 was associated with the Company's extended involvement in the ZAPI program and another research collaboration completed in 2017.

Research and development expenses for the three months ended September 30, 2018 was approximately $477,000 compared to $625,000 for the same period a year ago. Research and development expenses for the nine months ended September 30, 2018 was approximately $1,655,000 compared to $1,364,000 for the same period a year ago. The changes primarily reflect the fluctuation in costs of internal research activities with third-party contract research organizations.

Research and development expenses - related party, for the three months ended September 30, 2018, increased to approximately $288,000 compared to $167,000 for the same period a year ago. Research and development expenses - related party, for the nine months ended September 30, 2018, increased to approximately $1,022,000 compared to $167,000 for the same period a year ago. The increase reflects the research and development costs related to the Company's R&D Agreements with BDI, which started in July 2017.

General and administrative expenses for the three months ended September 30, 2018, decreased 9.1% to approximately $1,024,000 compared to $1,127,000 for the same period a year ago. The decrease primarily reflects reductions in legal and litigation costs of $196,000, compensation costs associated with the departure of our former CFO of $84,000, and other cost reductions of approximately $8,000, offset by increases in business development and investor relationship costs of $104,000 and SEC registration related costs of $81,000.

General and administrative expenses for the nine months ended September 30, 2018, decreased 21.9% to approximately $3,238,000 compared to $4,151,000 for the same period a year ago. The decrease primarily reflects reductions in litigation costs of $541,000, legal costs of $356,000 and share-based compensation expenses of $148,000, compensation costs associated with the departure of our former CFO of $72,000 and other cost reductions of $37,000, offset by increases in business development and investor relationship costs of $158,000 and SEC registration related costs of $83,000.

Foreign currency exchange loss for the three months ended September 30, 2018, was approximately $12,000 compared to a gain of $37,000 for the same period a year ago. Foreign currency exchange loss for the nine months ended September 30, 2018, was approximately $2,000 compared to a gain of $243,000 for the same period a year ago. The changes reflect the reduction in cash balance carried in Euro and the currency fluctuation of the Euro in comparison to the U.S. dollar.

Net loss for the three months ended September 30, 2018 was approximately $(1.5) million, or $(0.06) per basic and diluted share, compared to $(1.5) million, or $(0.05) per basic and diluted share, for the same period a year ago. Net loss for the nine months ended September 30, 2018 was approximately$(5.2) million, or $(0.19) per basic and diluted share, compared to $(0.8) million, or $(0.03) per basic and diluted share, for the same period a year ago. The change was primarily due to the receipt of a litigation settlement of $4.4 million in 2017.

CONFERENCE CALL INFORMATION

Dyadic management will host a conference call today, Wednesday, November 7, 2018, at 5:00 PM ET to discuss the financial results for the quarter ended September 30, 2018. In order to participate in the conference call, please dial (877) 407-8033 for U.S./Canada callers and + (201) 689-8033 for International callers or use webcast link: http://www.investorcalendar.com/event/39710.

An archive of the webcast will be available approximately three hours after completion of the live event and will be accessible on the Investor Relations section of the Company's website at http://www.dyadic.com for a limited time. To access the replay of the webcast, please follow this link http://www.investorcalendar.com/event/39710. A dial-in replay of the call will also be available to those interested until November 21, 2018. To access the replay, dial (877) 481-4010 for U.S./Canada callers and + (919) 882-2331 for International callers and enter replay pass code: 39710.

About Dyadic International, Inc.

Dyadic International, Inc. is a global biotechnology company which is developing what it believes will be a potentially significant biopharmaceutical gene expression platform based on the fungus Myceliophthora thermophila, named C1. The C1 microorganism, which enables the development and large scale manufacture of low cost proteins, has the potential to be further developed into a safe and efficient expression system that may help speed up the development, lower production costs and improve the performance of biologic vaccines and drugs at flexible commercial scales. Dyadic is using the C1 technology and other technologies to conduct research, development and commercial activities for the development and manufacturing of human and animal vaccines (such as virus like particles (VLPs) and antigens), monoclonal antibodies, Fab antibody fragments, FC-Fusion proteins, biosimilars and/or biobetters, and other therapeutic proteins. Dyadic pursues research and development collaborations, licensing arrangements and other commercial opportunities with its partners and collaborators to leverage the value and benefits of these technologies in development and manufacture of biopharmaceuticals. In particular, as the aging population grows in developed and undeveloped countries, Dyadic believes the C1 technology may help bring biologic drugs to market faster, in greater volumes, at lower cost, and with new properties to drug developers and manufacturers and, hopefully, improve access and cost to patients and the healthcare system, but most importantly save lives.

Please visit Dyadic's website at http://www.dyadic.com for additional information, including details regarding Dyadic's plans for its biopharmaceutical business.

Dyadic trades on the OTCQX tier of the OTC marketplace. Investors can find real-time quotes, market information and financial reports for Dyadic in the Company's annual and quarterly reports which are filed with the OTC markets. Please visit the OTC markets website at http://www.otcmarkets.com/stock/DYAI/quote.

Safe Harbor Regarding Forward-Looking Statements

This press release contains forward-looking statements. All statements other than statements of historical fact are forward-looking statements, which are often indicated by terms such as "anticipate," "believe," "could," "estimate," "expect," "goal," "intend," "look forward to," "may," "plan," "potential," "predict," "project," "should," "will," "would" and similar expressions. Forward-looking statements are based on management's beliefs and assumptions and on information available to management only as of the date of this press release. These forward-looking statements involve risks, uncertainties and other factors that could cause Dyadic's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Investors are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Dyadic expressly disclaims any intent or obligation to update or revise any forward-looking statements to reflect actual results, any changes in expectations or any change in events. Factors that could cause results to differ materially include, but are not limited to: (1) general economic, political and market conditions; (2) our ability to generate the required productivity, stability, purity, performance, cost, safety and other data necessary to carry out and implement our biopharmaceutical research and business plans and strategic initiatives; (3) our ability to retain and attract employees, consultants, directors and advisors; (4) our ability to implement and successfully carry out Dyadic's and third parties research and development efforts; (5) our ability to obtain new license and research agreements; (6) our ability to maintain our existing access to, and/or expand access to third party contract research organizations in order to carry out our research projects for ourselves and third parties; (7) competitive pressures and reliance on key customers and collaborators; (8) the pharmaceutical and biotech industry, governmental regulatory and other agencies' willingness to adopt, utilize and approve the use of the C1 gene expression platform; and (9) other factors discussed in Dyadic's publicly available filings, including information set forth under the caption "Risk Factors" in our December 31, 2017 Annual Report filed with the OTC Markets on March 27, 2018, and our September 30, 2018 Quarterly Report filed with the OTC Markets on November 7, 2018. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us.

Contact:

Dyadic International, Inc.
Ping W. Rawson
Chief Accounting Officer
Phone: (561) 743-8333
Email: mailto:prawson@dyadic.com

DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Revenues:
Research and development revenue
$ 262,960 $ 272,491 $ 608,576 $ 601,420
Costs and expenses:
Costs of research and development revenue
243,406 220,526 519,331 541,848
Provision for contract losses
- - - 220,715
Research and development
476,633 624,969 1,654,716 1,364,243
Research and development - related party
288,175 167,082 1,021,573 167,082
General and administrative
1,023,606 1,126,641 3,238,145 4,150,733
Foreign currency exchange loss (gain), net
12,279 (37,371 ) 1,921 (243,484 )
Total costs and expenses
2,044,099 2,101,847 6,435,686 6,201,137
Loss from operations
(1,781,139 ) (1,829,356 ) (5,827,110 ) (5,599,717 )
Other income:
Settlement of litigation, net
- - - 4,358,223
Interest income, net
241,644 154,146 647,686 400,575
Total other income
241,644 154,146 647,686 4,758,798
Loss before income taxes
(1,539,495 ) (1,675,210 ) (5,179,424 ) (840,919 )
Provision for income taxes
- (160,437 ) - (72,980 )
Net loss
$ (1,539,495 ) $ (1,514,773 ) $ (5,179,424 ) $ (767,939 )
Basic and diluted net loss per common share
$ (0.06 ) $ (0.05 ) $ (0.19 ) $ (0.03 )
Basic and diluted weighted-average common shares outstanding
27,774,436 28,709,266 27,996,754 29,007,682


Consolidated balance sheet information:
September 30, 2018 December 31, 2017*
(Unaudited) (Audited)
Cash and cash equivalents
$ 1,714,705 $ 5,786,348
Investment securities, short-term, long-term and interest receivable
41,117,306 43,311,243
Prepaid research and development (current and non-current)
461,603 1,167,439
Total assets
43,745,614 50,744,159
Accumulated deficit
(32,530,781 ) (27,351,357 )
Stockholders' equity
$ 42,909,938 $ 49,975,264
*Condensed from consolidated audited financial statements

SOURCE: Dyadic International, Inc.


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