What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2023-03-29 compared with 2022-03-29 · 57 added, 72 removed, 149 unchanged (46% of the section changed)

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Treasury Stock

As of December 31, 2021 and 2020, there were 12,253,502 shares of common stock held in treasury, at a cost of approximately $18.9 million, representing the purchase price on the date the shares were surrendered to the Company.

As of December 31, 2022 and 2021, there were 12,253,502 shares of common stock held in t reasury, at a cost of approximately $18.9 million, repre senting the purchase price on the date the shares were surrendered to the Company.

Issuer Purchases of Equity Securities

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Dyadic International, Inc.

(“Dyadic”, “we”, “us”, “our”, or the “Company”) is a global biotechnology platform company based in Jupiter, Florida with operations in the United States and a satellite office in the Netherlands, and it utilizes a number of third-party consultants and research organizations to carry out the Company’s activities.

(“Dyadic”, “we”, “us”, “our”, or the “Company”) is a global biotechnology platform company based in Jupiter, Florida with operations in the United States and a satellite office in the Netherlands, and it utilizes several third-party consultants and research organizations to carry out the Company’s activities.

Over the past two plus decades, the Company has developed a gene expression platform for producing commercial quantities of industrial enzymes and other proteins, and has previously licensed this technology to third parties, such as Abengoa Bioenergy, BASF, Codexis and others, for use in industrial (non-pharmaceutical) applications.

This technology is based on the Thermothelomyces heterothallica (formerly known as 

Myceliophthora thermophila ) fungus, which the Company named C1.

The C1-cell protein production platform is a robust and versatile thermophilic filamentous fungal expression system for the development and production of biologic products including enzymes and other proteins.

This technology is based on the Thermothelomyces heterothallica (formerly known as Myceliophthora thermophila ) fungus, which the Company named C1.

On December 31, 2015, the Company sold its industrial technology business to Danisco USA (“Danisco”), the industrial biosciences business of DuPont (NYSE:

DD) (the “DuPont Transaction”).

DD) (the “DuPont Transaction”).

As part of the DuPont Transaction, Dyadic retained co-exclusive rights to the C1-cell protein production platform for use in all human and animal pharmaceutical applications, and currently the Company has the exclusive ability to enter into sub-license agreements (subject to the terms of the license and to certain exceptions) for use in all human and animal pharmaceutical applications.

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In certain circumstances, Dyadic may owe a royalty to either Danisco or certain licensors of Danisco, depending upon whether Dyadic elects to utilize certain patents either owned by Danisco or licensed in by Danisco.

After the DuPont Transaction, the Company has primarily been focused on the animal and human biopharmaceutical industries, specifically in further improving and applying the proprietary C1-cell protein production platform into a safe and efficient protein production platform to help speed up the development, lower production costs and improve the performance of biologic vaccines and drugs and other biological products at flexible commercial scales.

Some examples of human and animal vaccines and drugs which have the potential to be produced from C1-cells are protein antigens, virus-like particles (“VLPs”), monoclonal antibodies (“mAbs”), Bi/Tri-specific antibodies, Fab antibody fragments, Fc-fusion proteins, as well as other therapeutic enzymes and proteins.

The Company is involved in multiple funded research collaborations with animal and human pharmaceutical companies which are designed to leverage its C1-cell protein production platform to develop innovative vaccines and drugs, biosimilars and/or biobetters. Additionally, the Company has begun to develop other technologies that have potential applications in non-pharmaceutical markets.  

Impact of COVID-19

The outbreak of COVID-19 has led to adverse impacts on the U.S.

and global economies and created uncertainty regarding the potential impact to the Company’s employees, operations, and research projects.

The extent to which the COVID-19 pandemic will directly or indirectly impact our business will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) and SARS-CoV-2 variants and the actions taken and the level of success to contain or treat the SARS-CoV-2 virus and its variants, the economic impact on local, regional, national and international business partners and markets, delays or disruptions in our on-going research projects, and unavailability of the employees of the Company or third-party contract research organizations with whom we conduct business, due to illness or quarantines, all of which are highly uncertain and cannot be predicted at this time.

Management is actively monitoring this situation and the possible effects on its financial condition, liquidity, operations, vendors, industry, and workforce.

Even after the COVID-19 pandemic has subsided, the Company may continue to experience adverse impacts to its business because of economic recession or depression that has occurred or may occur in the future.

Given the daily evolution of the COVID-19 outbreak and the ongoing response to curb its spread (including government travel and meeting restrictions) currently we are not able to accurately estimate the effects of the COVID-19 outbreak to our results of operations, financial condition, or liquidity.

After the DuPont Transaction, the Company has been focused on building innovative microbial platforms to address the growing demand for global protein bioproduction and unmet clinical needs for effective, affordable, and accessible biopharmaceutical products for human and animal health and for other biologic products for use in non-pharmaceutical applications.

The C1-cell protein production platform is a robust and versatile thermophilic filamentous fungal expression system for the development and production of biologic products including enzymes and other proteins for human and animal health.

Some examples of human and animal vaccines and drugs which have the potential to be produced from C1-cells are protein antigens, ferritin nanoparticles, virus-like particles (“VLPs”), monoclonal antibodies (“mAbs”), Bi/Tri-specific antibodies, Fab antibody fragments, Fc-fusion proteins, as well as other therapeutic enzymes and proteins.

The Company also developed the Dapibus™

thermophilic filamentous fungal based microbial protein production platform to enable the rapid development and large-scale manufacture of low-cost proteins, metabolites, and other biologic products for use in non-pharmaceutical applications, such as food, nutrition, and wellness.

Critical Accounting Policies, Estimates, and Judgments

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Revenue Recognition

The Company has no products approved for sale at this point.

The Company has no pharmaceutical products approved for sale at this point.

All of our revenue to date has been research revenue from third-party collaborations and government grants, as well as revenue from sublicensing agreements and collaborative arrangements, which may include upfront payments, options to obtain a license, payment for research and development services, milestone payments and royalties, in the form of cash or non-cash considerations (e.g., minority equity interest).

Revenue related to research collaborations and agreements:

 The Company typically performs research and development services as specified in each respective agreement on a best efforts basis, and recognizes revenue from research funding under collaboration agreements in accordance with the 5-step process outlined in ASC Topic 606 (“Topic 606”):

(i) identify the contract(s) with a customer;

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Revenue related to grants:

 The Company may receive grants from governments, agencies, and other private and not-for-profit organizations.

These grants are intended to be used to partially or fully fund the Company’s research collaborations, including opportunities arising in connection with COVID-19 that the Company is pursuing with certain collaborators.

However, most, if not all, of such potential grant revenues, if received, is expected to be earmarked for third parties to advance the research required, including preclinical and clinical trials for SARS-CoV-2 vaccines and/or antibodies candidates. 

The Company may receive grants from governments, agencies, and other private and not-for-profit organizations.

These grants are intended to be used to partially or fully fund the Company’s research collaborations, including opportunities arising in connection with COVID-19 that the Company is pursuing with certain collaborators.

Revenue related to sublicensing agreements:

 If the sublicense to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue allocated to the license when technology is transferred to the customer and the customer is able to use and benefit from the license. 

Customer options:

 If the sublicensing agreement includes customer options to purchase additional goods or services, the Company will evaluate if such options are considered material rights to be deemed as separate performance obligations at the inception of each arrangement.

Milestone payments:

 At the inception of each arrangement that includes development, commercialization, and regulatory milestone payments, the Company evaluates whether the achievement of the milestones is considered probable and estimates the amount to be included in the transaction price.

If the milestone payment is in exchange for a sublicense and is based on the sublicensee’s subsequent sale of product, the Company recognizes milestone payment by applying the accounting guidance for royalties.

To date, the Company has not recognized any milestone payment revenue resulting from any of its sublicensing arrangements. 

 With respect to licenses deemed to be the predominant item to which the sales-based royalties relate, including milestone payments based on the level of sales, the Company recognizes revenue at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

To date, the Company has not recognized any royalty revenue resulting from any of its sublicensing arrangements.

With respect to licenses deemed to be the predominant item to which the sales-based royalties relate, including milestone payments based on the level of sales, the Company recognizes revenue at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

To date, the Company has not recognized any royalty revenue resulting from any of its sublicensing arrangements. 

We invoice customers based on our contractual arrangements with each customer, which may not be consistent with the period that revenues are recognized.

When there is a timing difference between when we invoice customers and when revenues are recognized, we record either a contract asset (unbilled accounts receivable) or a contract liability (deferred research and development obligations), as appropriate.

If upfront fees or considerations related to sublicensing agreement are received prior to the technology transfer, the Company will record the amount received as deferred revenue from licensing agreement.

We are not required to disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

The Company adopted a practical expedient to expense sales commissions when incurred because the amortization period would be one year or less.

Provision for Contract Losses

The Company assesses the profitability of our collaboration agreements to provide research services to our contracted business partners and identifies those contracts where current operating results or forecasts indicate probable future losses.

If the anticipated contract cost exceeds the anticipated contract revenue, a provision for the entire estimated loss on the contract is recorded and then accreted into the statement of operations over the remaining term of the contract.

The provision for contract losses is based on judgment and estimates, including revenues and costs, where applicable, the consideration of our business partners’

reimbursement, and when such loss is deemed probable to occur and is reasonable to estimate.

Accrued Research and Development Expenses

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We periodically confirm the accuracy of our estimates with the service providers and adjust if necessary.

Examples of accrued research and development expenses include amounts owed to contract research organizations, to service providers in connection with research and development activities.

Examples of accrued research and development expenses include amounts ow ed to contract research organizations, to service providers in connection with research and development activities.

Stock-Based Compensation

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As a result, if other assumptions had been used, our recorded share-based compensation expense could have been materially different from that reported.

In addition, because some of the performance-based options issued to employees, consultants and other third-parties vest upon the achievement of certain milestones, the total ultimate expense of share-based compensation is uncertain.

Accounting for Income Taxes

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The Company currently is not subject to U.S.

federal, state and local tax examinations by tax authorities for the years before 2016.

The United States Internal Revenue Service (the “IRS”) completed its review of the Company’s 2016 tax filing on June 8, 2020, and no changes were required.

See Note 4 to the Consolidated Financial Statements.

federal, state and local tax examinations by tax authorities for the years before 2017. See Note 4 to the Consolidated Financial Statements.

Non-Marketable Investments

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Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021

Revenue, Cost of Revenue, and Provision for Contract Losses

The following table summarizes the Company’s revenue, cost of research and development revenue, and provision for contract losses for the years ended December 31, 2021 and 2020:

Revenue and Cost of Revenue

The following table summarizes the Company’s revenue and cost of research and development revenue for the years ended December 31, 2022 and 2021:

Year Ended December 31,

Research and development revenue

License revenue

Cost of research and development revenue

Provision for contract losses

For each of the years ended December 31, 2021 and 2020, the Company’s revenue was generated from fourteen collaborations .

The increase in revenue and cost of research and development revenue was due to a number of larger research collaborations conducted during 2021. Provision for contract losses for the year ended December 31, 2020 was related to one research collaboration.

At December 31, 2021, the Company recorded the $500,000 upfront payment received from the collaboration and license agreement with Janssen as deferred license revenue. 

For each of the years ended December 31, 2022 and 2021 , the Company’s revenue was generated from fourteen collaborations.

The increase in revenue and cost of research and development revenue was due to a number of larger research collaborations conducted during 2022.

The license revenue recorded in the year ended 

December 31, 2022  

was in connection with the Phibro/Abic and Janssen license agreements.

Research and Development Expenses

Research and development costs are expensed as incurred and primarily include salary and benefits of research personnel, third-party contract research organization services and supply costs. 

Research and development expenses for the year ended December 31, 2021 increased to approximately $8,392,000 compared to $3,868,000 for the year ended December 31, 2020. The increase primarily reflected the engagement of a contract research organization and pharmaceutical quality and regulatory consultants to manage and support pre-clinical and clinical development as well as an increase in cGMP manufacturing costs as the Company moves towards its anticipated Phase 1 clinical trial of DYAI-100 COVID-19 vaccine candidate in the amount of approximately $5,145,000 offset by a decrease of $ 621,000 in other internal research and development costs.

Research and development expenses for the year ended December 31, 2022 decreased to approximately $4,501,000 compared to $8,392,000 for the year ended December 31, 2021. The decrease primarily reflected the winding down of activities for contract research organization and pharmaceutical quality and regulatory consultants to manage and support the pre-clinical and clinical development as well as a decrease in cGMP manufacturing costs as the Company started the dosing of Phase 1 clinical trial of DYAI-100 COVID-19 vaccine candidate in January 2023.

General and Administrative Expenses

General and administrative expenses for the year ended December 31, 2021, increased 10.1% to approximately $6,698,000 compared to $6,085,000 for the year ended December 31, 2020.

The increase principally reflected increases in legal expenses of $447,000, insurance premiums and other outside services of $220,000, payroll and share based compensation related costs of $40,000, offset by reductions in business development and investor relations costs of $94,000.

General and administrative expenses for the year ended December 31, 2022, decreased to approximately $6,422,000 compared to $6,698,000 for the year ended December 31, 2021.

The decrease principally reflected a decrease in legal expenses of $500,000, offset by increases in incentives of $133,000, insurance premiums of $56,000, business development and investor relations costs of $16,000, and other increases of $19,000.

Foreign Currency Exchange

Foreign currency exchange loss for the year ended December 31, 2022, was approximately $50,000 compared to $97,000 for the year ended December 31, 2021.

The increase reflected the currency fluctuation of the Euro in comparison to the U.S.

The decrease reflected the currency fluctuation of the Euro in comparison to the U.S.

Interest Income

Interest income for the year ended December 31, 2021, decreased to approximately $52,000 compared to $447,000 for the year ended December 31, 2020.

The decrease was primarily due to a decrease in interest rate and yield on the Company’s investment grade securities, which are classified as held-to-maturity.

For the year ended December 31, 2021, the Company recorded a gain from the sale of its investment in BDI in the amount of approximately $1,606,000. For the year ended December 31, 2020, the Company recorded an unrealized gain from its investment in Alphazyme resulting from a third-party capital contribution in the amount of approximately $285,000.

The Company had net operating loss (“NOL”) carryforwards available as of December 31, 2021, and 2020, in the amount of approximately 

$39.9 million and 

$27.3 million, respectively.

Interest income for the year ended December 31, 2022, increased to approximately $180,000 compared to $52,000 for the year ended December 31, 2021.

The increase was primarily due to an increase in interest rates and yield on the Company’s investment grade securities, which are classified as held-to-maturity.

For the year ended December 31, 2022, the Company recorded $250,000 related to a settlement payment we received from the termination of a proposed license and collaboration.

For the year ended December 31, 2021, the Company recorded a gain from the sale of its investment in BDI in the amount of approximately $1,606,000.

The Company had net operating loss (“NOL”) carryforwards available as of December 31, 2022 and 2021, in the amount of approximately $44.0 million and $39.9 million, respectively.

Approximately $41.1 million of the net operating loss carryforwards will be carried forward indefinitely and will be available to offset 80% of taxable income.

The remaining amount of the net operating loss carryforwards will expire at varying dates through 2037.

Income generated in India is subject to Tax Deducted at Source (“TDS”), which is a means of collecting income tax at the source when income is generated rather than at later by the Indian government.

The TDS amount paid can be used as foreign tax credit for US tax purposes.

However, we do not expect to use the credit due to our operating losses.

As a result, the Company recorded a provision for income taxes of approximately $31,000 as a result of TDS for the year ended December 31, 2020.

There was no provision for income taxes related to TDS for the year ended December 31, 2021.

Net loss for the year ended December 31, 2021 was approximately $ 13.1  million compared to a net loss of $ 9.3  million for the year ended December 31, 2020 . The increase in net loss of approximately $3.8 million was principally due to the increase in research and development expenses of $4.5 million, general and administrative expenses of $0.7 million, and cost of research and development revenue of $0.3 million, offset by increases in revenue and other income.

Net loss for the year ended December 31, 2022 was approximately $9.7 million compared to a net loss of $13.1 million for the year ended December 31, 2021. The decrease in net loss of approximately $3.4 million was principally due to an increase in revenue of $0.5 million, decreases in research and development expenses of $3.9 million and general and administrative expenses of $0.3 million, partially offset by a decrease in other income of $1.2 million.

Liquidity and Capital Resources

Our primary source of cash has been the cash received from the DuPont Transaction in December 2015, interest income received from investment grade securities, funding from our research collaboration agreements and license revenue, and funding from the exercise of employee stock options.

In August 2021, the Company received approximately $1.6 million from the BDI Sale, In December 2021, the Company received an upfront payment of $0.5 million for a non-exclusive license from Janssen. 

These receipts improved our cash position and liquidity in 2021.

Our primary source of cash has been the cash received from the DuPont Transaction in December 2015, interest income received from investment grade securities, revenues from our research collaboration agreements and license agreements, and funds from the exercise of employee stock options.

In addition, in August 2021, the Company received approximately $1.6 million from the BDI Sale, In December 2021, the Company received an upfront payment of $0.5 million for a non-exclusive license from Janssen.

In January 2023, the Company received cash payment of approximately $1.27 million from the sale of its equity interest in Alphazyme, LLC. 

Our ability to achieve profitability depends on many factors, including our scientific results and our ability to continue to obtain funded research and development collaborations from industry and government programs, as well as sub-license agreements.

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with Jefferies LLC, or Jefferies, with respect to an at the market offering program under which we may offer and sell, from time to time at our sole discretion, shares of our common stock at an aggregate offering price of up to $50.0 million through Jefferies as our sales agent or principal.

This program adds to our financial flexibility to pursue additional opportunities that leverage the broad application potential of C1.

However, as of the date of this filing, there have been no sales made under the Open Market Sale Agreement ℠.

We rely on our existing cash and cash equivalents, investments in debt securities, and operating cash flow to provide the working capital needs for our operations.

We believe that our existing cash position and investments in investment grade securities will be adequate to meet our operational, business, and other liquidity requirements for at least the next twelve (12) months. However, in the event our financing needs for the foreseeable future are not able to be met by our existing cash, cash equivalents and investments, we would seek to raise funds through public or private equity offerings, and through other means to meet our financing requirements.

Currently, the Company is self-funding the development and cGMP manufacturing costs of its proprietary COVID-19 vaccine candidate, DYAI-100 towards a Phase 1 clinical trial to demonstrate the safety in humans of a protein produced from the C1-cell protein production platform. 

We rely on our existing cash and cash equivalents, investments in debt securities, and operating cash flows to provide the working capital needs for our operations.

We believe that our existing cash position and investments in investment grade securities will be adequate to meet our operational, business, and other liquidity requirements for at least the next twelve (12) months. However, in the event our financing needs are not able to be met by our existing cash, cash equivalents and investments, we would seek to raise funds through public or private equity offerings, and/or other means to meet our financing requirements.

The Company has self-funded the development and cGMP manufacturing costs of its proprietary COVID-19 vaccine candidate, DYAI-100 and in February 2023 completed the dosing of its related Phase 1 clinical trial to demonstrate the safety in humans of a protein produced from the C1-cell protein production platform.

The Company does not anticipate the need to spend significant additional capital to support the continued development, manufacturing and testing of DYAI-100 in 2023 and beyond. 

At December 31, 2022 , cash and cash equivalents were approximately $ 5.8  million compared to $ 15.7  million at December 31, 2021 .

The carrying value of investment grade securities, including accrued interest at December 31, 2022 was approximately $ 6.9  million compared to $ 4.6  million at December 31, 2021 .

Net cash used in operating activities for the year ended December 31, 2021 of approximately $11.3 million resulted from a net loss of $13.1 million adjusted by a gain from the sale of investment in BDI of $1.6 million, offset by share-based compensation expenses of $1.8 million, amortization of held-to-maturity securities of $0.3 million, and changes in other operating assets and liabilities of $1.3 million.

Net cash used in operating activities for the year ended December 31, 2020 of approximately $6.6 million resulted from a net loss of $9.3 million adjusted by an unrealized gain from investment in Alphazyme of $0.3 million, offset by share-based compensation expenses of $1.7 million, amortization of held-to-maturity securities of $0.3 million, and changes in other operating assets and liabilities of $1.0 million.

Net cash provided by investing activities for the year ended December 31, 2021 was approximately $5.2 million compared to $22.1 million for the year ended December 31, 2020.

Cash flows from investing activities in 2021 were primarily related to proceeds from maturities, net of purchases of investment grade debt securities, and proceeds from the sale of our equity interest in BDI.

Cash flows from investing activities in 2020 were primarily related to proceeds from maturities, net of purchases of investment grade debt securities.

Net cash used in operating activities for the year ended December 31, 2022 of approximately $ 8.1  million resulted from a net loss of $ 9.7  million adjusted for share-based compensation expenses of $ 1.9  million, offset by changes in operating assets and liabilities of $0.3 million.

Net cash used in investing activities for the year ended December 31, 2022 was approximately $ 2.4  million compared to net cash provided by investing activities of $ 5.2  million for the year ended December 31, 2021 .

Cash flows from investing activities in 2022 were primarily related to proceeds from maturities, net of purchases of investment grade debt securities.

Cash flows from investing activities in 

2021  were primarily related to proceeds from maturities, net of purchases of investment grade debt securities, and proceeds from the sale of our equity interest in BDI.

Net cash provided by financing activities for the year ended December 31, 2022 was approximately $ 0.5 million compared to $ 1.2  million for the year ended December 31, 2021 .

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity