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Dyadic on course to disrupt the status quo in manufacturing biologic vaccines and drugs

Snapshot

The company applies its proprietary C1 gene expression platform to speed up the development of biologic vaccines, drugs

Dyadic's president and CEO Mark A Emalfarb

Quick facts: Dyadic International Inc

Price: 8.72 USD

NASDAQ:DYAI
Market: NASDAQ
Market Cap: $239.53 m
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  • Engaged in the large-scale manufacture of low-cost enzymes and proteins for the US and European markets
  • It leverages its proprietary C1 fungal expression technology to help bring vaccines, enzymes, proteins, biosimilars and drugs to market faster
  • Dyadic has teamed up with The Israel Institute for Biological Research to help combat coronavirus (COVID-19)

What Dyadic International does:

When Mark A Emalfarb started his company, Dyadic International Inc (NASDAQ:DYAI), it was cashing in on a 1980s trend — supplying pumice stones to denim manufacturers to make stonewashed jeans. Forty years later, it is a trendy biotechnology platform company listed on the tech-laden Nasdaq.

Founded in 1979, the Jupiter, Florida-based biotechnology company, engages in the large-scale manufacture of low-cost enzymes and other proteins for markets in the United States and Europe. Dyadic started trading on the Nasdaq on April 17, 2019 after an uplisting.

It leverages its proprietary C1 expression system - a fungal expression technology for producing enzymes - to help bring biologic vaccines, therapeutic enzymes, proteins, biosimilars and drugs to market faster and at a lower cost.

Dyadic has patented its proprietary filamentous fungus, Myceliophthora thermophila, nicknamed C1 and the associated molecular tools used to engineer the C1 cells to express and manufacture large volumes of low-cost biologic products such as enzymes and proteins. The C1 fungus is a living cell that has been bioengineered by Dyadic scientists for more than two decades.

The fungus has been shown in initial results from a ZAPI animal study to help protect cattle and mice from the devastating Schmallenberg virus, which causes congenital malformations in certain animals, although this is not the limit of its applications.

Dyadic boss Emalfarb has presided over Dyadic’s evolution from 'jeans to genes' and is a named inventor on more than 25 US and international biotech patents and patent applications linked to the C1 microorganism.

Around four years ago, Emalfarb sold Dyadic’s industrial technology business to DuPont Inc’s (NYSE:DWDP) industrial biosciences business for $75 million in cash. According to the deal, 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 now enjoys the rights to utilize the C1 technology for use in pharmaceutical applications for which it will make royalty payments to Dyadic upon commercialization. DuPont cut the deal with Dyadic as it was launching its cellulosic ethanol business and was supplying enzymes to Jilin Province New Tianlong Industry Co.

Dyadic has conducted extensive enzyme research relationships in the biofuels area which support DuPont in the cellulosic space.

How is it doing:

The first quarter of 2020 was a busy one for Dyadic, with the firm progressing into the second phase of two initial projects with one of its animal health collaborators. It also developed a library of human-like C1 strains with higher yields, greater purity, and better stability using its self-funded glycoengineering efforts.

President and CEO Mark Emalfarb noted that the efforts are resulting in Dyadic receiving “increased levels of interest” from the pharmaceutical industry.

The company ended the quarter with around $34 million in cash and equivalents, with $$4.6 being in cash and $26.6 million derived from short-term investment securities. Its net loss for the period was approximately $2.2 million or $0.08 per share, which was relatively flat compared to the same period a year ago.

Dyadic is also stepping up its help in the fight against coronavirus (COVID-19) and is working with worldwide research partners to leverage the group's proprietary C1 technology to express an increasing number of potential coronavirus vaccines and antibody candidates.

Speaking to Fox Business in January, Emalfarb described how companies could leverage the group’s C1 technology to speed vaccine development for pandemics like coronavirus.

Dyadic has also joined a campaign to eradicate COVID-19 by collaborating with The Israel Institute for Biological Research (IIBR), a group set up by Israel to combat such threats.

The momentum followed a solid finish to 2019, with the company reporting full-year R&D revenues of nearly $1.7 million, a 29% increase year-over-year from $1.3 million in 2018. Cash on hand, meanwhile, doubled to $4.8 million from $2.4 million, and the carrying value of its investment-grade securities, including interest, dipped to $31.2 million from $39.1 million.

The company's net loss increased by 45% to $8.3 million, or $0.31 per share, from $5.7 million, or $0.21 per share, a year earlier. The dip was due in large part to increases in its general and administrative expenses, up by $1 million, and R&D expenses up by $600,000, in addition to an income tax benefit of $1 million in the previous year.

Over the first three months of 2020, Dyadic has also been making scientific advancements with the C1 technology.

In February, the firm announced that data presented at the 15th European Conference on Fungal Genetics demonstrated that the C1 strain has been glyco-engineered to achieve a core human-like G2 glycan level over 76% on Host Cell Proteins (HCP).

These developments, according to Dyadic’s chief commercial officer Matthew Jones, will “open new doors to apply C1 to a broader array of glycosylated biopharmaceuticals, further extend the company's market opportunities for biologic vaccines and drugs and continue to generate interest from biotech and pharmaceutical companies, academic and other institutes as well as governmental agencies in animal and human health industries".

This progress was followed in late March by a non-exclusive research collaboration with WuXi Biologics, a leading global open-access biologics technology company in China, to evaluate the C1 technology in a GMP facility and to perform certain experiments to the C1 cell lines for any other internal noncommercial purpose.

Inflection points:

  • Further collaboration in fight against coronavirus
  • Progress in animal health market
  • Developments through WuXi collaboration

What the broker says:

In a note on May 19, analysts at Noble Capital Markets rated Dyadic at ‘outperform’ with a price target of $11, saying the firm’s business model had a “favorable risk/reward profile” and that recent positive study data could “potentially act as a positive catalyst for the shares”.

“Dyadic has established multiple research collaborations assessing C1 technology to improve manufacturing of biologics in human and animal health. The proprietary C1 platform can potentially express various biologic products including Fc-fusion proteins, monoclonal antibodies, Fabs, bi or tri-specifics, gene therapy, vaccines, and others. The company is also evaluating C1 to produce vaccines and antibodies against coronavirus”, the Noble analysts said.

“We believe these partnerships increase the probability of success of the C1 platform in biologic manufacturing. In our opinion, the demonstration of improved cost effectiveness and high yield production from any of the research collaborations or in-house efforts could potentially act as a positive catalyst for the shares”, they added.

What the boss says:

In the group’s first-quarter results statement, president and CEO Mark Emalfarb said: "I am very pleased with the substantial progress we made in the first quarter, further executing on our growth strategy and with our efforts increasingly well-aligned to address many of the key global healthcare industry challenges.”

“The data we are generating further highlights the robustness of our C1 gene expression platform and its broad and ever-growing potential applications. As a result, we continue to expand the potential range of commercial opportunities for Dyadic through our relationships with both existing and new partners who are well-established and top tier in their respective sectors,” he added.

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Dyadic working with global research partners to express potential...

Dyadic International Inc (NASDAQ:DYAI) CEO Mark Emalfarb tells Proactive the Florida-based biotech is 'delivering on its promises.' Emalfarb says it saw a busy first quarter where the company stepped up in the global fight against the coronavirus pandemic. Emalfarb says among its recent...

on 05/15/2020

7 min read