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Item 1A. Risk Factors

2024-03-28 compared with 2023-03-29 · 152 added, 230 removed, 303 unchanged (56% of the section changed)

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In such circumstances, the trading price of our common stock could decline, and in some cases, such declines could be significant, and you could lose part or all of your investment.

In addition to the risks described below, other unforeseeable risks that we currently believe are immaterial may arise that adversely affect our operating results.

In addition to the risks described below, other unforeseeable risks that we currently believe are immaterial may arise that adversely affect our operating results.

Certain statements contained in this Annual Report (including certain statements used in the discussion of our risk factors) constitute forward-looking statements.

Please refer to the section entitled “

Cautionary Note Regarding Forward-Looking Statements ”

appearing on page 4  of this Annual Report for important information regarding reliance on forward-looking statements.

Risk Factor Summary

The following is a summary of the material risks to which we may be exposed.

These risks are more fully described after this summary.

Risks Related to Our Business and Financial Condition

We may not succeed in implementing our business strategy.

We have a history of net losses, and we may not achieve or maintain profitability.

We could fail to manage our growth.

Our revenue growth depends in part on market and regulatory acceptance of the C1-cell protein production platform and our other technologies to develop and manufacture animal and/or human biopharmaceutical products and non-pharmaceutical products.

We may fail to commercialize the C1-cell protein production platform or our other technologies for the expression of therapeutic proteins, antibodies, vaccines, and metabolites or other non-pharmaceutical biologic products.

If our competitors develop technologies and products more quickly and market more effectively than our product candidates, our commercial opportunity will be reduced or eliminated.

Alternative technologies may not require microbial or other cell produced proteins, such as our proprietary C1 cells.

Our SARS-CoV-2 vaccine candidates are at the Phase 1 clinical stage and have not been approved for sale.

We have not developed, manufactured or commercialized any vaccine product in the past, and we may be unable to produce a vaccine that can be used to successfully prevent the SARS-CoV-2 virus or its variants of concern, in a timely and economical manner, if at all.

The results of nonclinical studies and early-stage clinical trials may not be predictive of future results.

We may need substantial additional capital in the future to fund our business.

Changes in global economic and financial markets may have a negative effect on our business.

We face risks related to health epidemics, pandemics and other widespread outbreaks of contagious disease or other biological threats, as well as armed conflict escalated between Russia and Ukraine, any of which could significantly disrupt our operations and have a material adverse effect on our business, employees, directors, consultants, collaborators and other third parties, including business development activities and research and development projects conducted by third party contract research organizations parties.

Our sales and operations are subject to the risks of doing business internationally.

If we lose key personnel, including key management or board members, or are unable to attract and retain additional personnel, it could delay our technology and product development programs and harm our R&D efforts, and we may be unable to pursue research funding, licenses and other forms of collaborations or develop our own products.

We may be sued for product liability.

Foreign currency fluctuations could adversely affect our results.

Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations.

We may make acquisitions, investments and strategic alliances that may use significant resources, result in disruptions to our business or distractions of our management, may not proceed as planned, and could expose us to unforeseen liabilities.

We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents, could harm our ability to operate our business effectively.

Risks Related to Dependence on Third Parties

We are dependent on collaborations with third parties, and if we fail to maintain or successfully manage existing, or enter into new, strategic collaborations, we may not be able to develop and commercialize many of our technologies and products and achieve profitability. 

We have limited or no control over the resources that any collaborator or licensee may devote to our programs, and reductions in collaborators’ R&D budgets may affect our businesses.

We heavily rely on contracts with third-party contract research organizations (“CROs”) and other third-party service providers to conduct our research and development, pre-clinical, CMC and cGMP manufacturing, fill and finish, and potential clinical trials, which may not be available to the Company on commercially reasonable terms or at all.

Conflicts with the CROs, other service providers, collaborators and/or licensees could harm our business.

We rely on our collaborators and other third parties to deliver timely and accurate information in order to accurately report our financial results as required by law.

Risks Related to Government Regulations and Environmental, Social, and Governance Issues

Potential future regulations limiting our ability to sell genetically engineered products could harm our business.

Public views on ethical and social issues may limit use of our technologies.

Our results of operations may be adversely affected by environmental, health and safety laws, regulations and liabilities.

Increasing scrutiny and changing expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks.

We have no experience submitting applications to the FDA or similar regulatory authorities in the past and could be subject to lengthy and/or unfavorable regulatory proceedings.

Risks Relating to Intellectual Property

Failure to protect our intellectual property and the intellectual property of certain third parties could harm our competitive position.

Litigation or other proceedings or third-party claims of intellectual property infringement could require us to spend significant time and resources and could prevent us and our collaborators from commercializing our or their technologies and products or negatively impact our stock price.

Confidentiality agreements with employees and others may not adequately prevent disclosures of trade secrets and other proprietary information.

Risks Related to Our Common Stock

The price of our shares of common stock is likely to be volatile, and you could lose all or part of your investment.

Our quarterly and annual operating results may be volatile.

We do not expect to pay cash dividends in the future.

Our anti-takeover defense provisions may deter potential acquirers and depress our stock price.

Concentration of ownership among our existing officers, directors and principal stockholders may prevent other stockholders from influencing significant corporate decisions and depress our stock price.

Future issuances of shares of our common stock may negatively affect our stock price.

The Company is exposed to credit risk and fluctuations in the values of its investment portfolio. 

We are a smaller reporting company, and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors.

Please refer to the section entitled “ Cautionary Note Regarding Forward-Looking Statements ” appearing on page [ 4 ] of this Annual Report for important information regarding reliance on forward-looking statements.

Risks Related to Our Business and Financial Condition

We may not succeed in implementing our business strategy.

In connection with the December 31, 2015 sale of substantially all of the assets of our industrial technology business to Danisco (the “DuPont Transaction”), Danisco obtained certain rights to utilize the C1-cell protein production platform for development and production of pharmaceutical products, for which it will make royalty payments to Dyadic upon commercialization.

At the same time, Dyadic retained the co-exclusive rights to the C1-cell protein production platform for use in all human and animal pharmaceutical applications, with Dyadic currently having the exclusive ability to enter into sub-license agreements in that field (subject to the terms of the license and certain exceptions).

We cannot predict whether Danisco intends to or will pursue the use of the C1-cell protein production platform to develop or manufacture pharmaceutical products or whether or when we might receive royalties from Danisco.

In connection with the December 31, 2015 sale of substantially all of the assets of our industrial technology business to Danisco (the “DuPont Transaction”), Danisco obtained certain rights to utilize the C1-cell protein production platform for development and production of pharmaceutical products, for which it will make royalty payments to Dyadic upon commercialization.

At the same time, Dyadic retained the co-exclusive rights to the C1-cell protein production platform for use in all human and animal pharmaceutical applications, with Dyadic currently having the exclusive ability to enter into sub-license agreements in that field (subject to the terms of the license and certain exceptions).

We cannot predict whether Danisco intends to or will pursue the use of the C1-cell protein production platform to develop or manufacture pharmaceutical products or whether or when we might receive royalties from Danisco.

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 owned or licensed by Danisco.

Consequently, our business has changed dramatically as compared to the past, as we no longer have any product revenue related to our enzyme business.

We also now apply the C1-cell protein production platform in the biopharmaceutical market, which has higher risks and a higher barrier to entry.

As we attempt to adapt the C1-cell protein production platform and our other technologies for use in the biopharmaceutical and other markets, our business is subject to the execution, integration, and research and development risks that early-stage companies customarily face with new technologies, products and markets.

These risks relate to, among other things, our ability to successfully further develop the C1-cell protein production platform and our other technologies, products and processes, assemble and maintain adequate production and research and development (“R&D”) capabilities, comply with regulatory requirements, construct effective channels of distribution and manage growth.

We also now apply the C1-cell protein production platform in the biopharmaceutical market, which has higher risks and a higher barrier to entry.

As we attempt to adapt our microbial protein production platforms, including C1 and Dapibus™ and our other technologies for use in the biopharmaceutical and other markets, our business is subject to the execution, integration, and research and development risks that early-stage companies customarily face with new technologies, products and markets.

These risks relate to, among other things, our ability to successfully further develop our protein production platforms and our other technologies, products and processes, assemble and maintain adequate production and research and development (“R&D”) capabilities, comply with regulatory requirements, construct effective channels of distribution and manage growth.

We have encountered and will continue to encounter risks and difficulties frequently experienced by early-stage companies in expanding and upgrading our intellectual property, regulatory, marketing, sales and R&D capabilities, improving our accounting and financial reporting and internal controls infrastructure, and adapting to the rapidly evolving industries in which we operate.

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Also, the market for developing and manufacturing pharmaceutical proteins produced from a filamentous fungus, such as the C1 fungus, is a market that is not yet established and is subject to a high level of regulatory hurdles from the U.S.

Food and Drug Administration (the “FDA”) and other governmental bodies, and there is a risk that such technologies will not be adopted by the pharmaceutical industry or governmental agencies and therefore not succeed and/or not grow at the rates projected or at all.

We have also developed the Dapibus™

filamentous fungal based microbial protein production platform use in non-pharmaceutical applications, such as food, nutrition, and wellness. 

We have not yet commercialized any products based on our platforms and technologies, and we may never be able to do so.

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Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to predict the timing or amount of increased expenses or when, or if, we will be able to achieve certain technology, product and/or commercial milestones, access fees and royalties, launch products and/or processes, or achieve profitability.

In addition, our expenses could increase if we are required by the FDA or other domestic and foreign regulatory authorities to perform studies or trials in addition to those currently expected, or if there are delays in completing additional safety studies such as toxicology and pathogenicity studies, clinical trials, preclinical studies, animal or human studies or the development of any of our or our collaborators’

product candidates.

We have a history of net losses, and we may not achieve or maintain profitability.

As of December 31, 2022 , we have an accumulated deficit of approximately $ 73.5 million . Our profitability has strongly relied on, and will be even more reliant going forward on, third party industry and government research funding, licensing partnerships and other forms of collaborations.

We believe that it is likely that if we do not sign license agreements or other forms of collaborations, we will incur losses because of our planned levels of R&D and additional general and administrative expenditures that we believe are necessary to operate our business and further develop the C1-cell protein production platform and our other technologies for use in the pharmaceutical and non-pharmaceutical industries.

As of December 31, 2023 , we had an accumulated deficit of approximately $ 80.3 million .

Our profitability has strongly relied on, and will be even more reliant going forward on, third party industry and government research funding, licensing partnerships and other forms of collaborations.

We believe that it is likely that if we do not sign license agreements or other forms of collaborations, we will incur losses because of our planned levels of R&D and additional general and administrative expenditures that we believe are necessary to operate our business and further develop our microbial protein production platforms and other technologies for use in the pharmaceutical and non-pharmaceutical industries.

The amount of our future net losses will depend, in part, on the rate of increase in our expenses along with other potential cost of unforeseen circumstances, our ability to generate research funding, government grants, receipt of access fees, milestones, royalty and other payments, and whether we are able to generate revenues by entering into license agreements or other forms of collaborations, launch new products and/or processes from future licensees or collaborators, and our ability to raise additional capital.

The net losses we anticipate incurring over the next several years will have an adverse effect on our stockholders’

equity and working capital.

The R&D efforts needed to enhance and leverage the C1-cell protein production platform and our other technologies, such as 

Dapibus™

, for use in developing and manufacturing human and animal biopharmaceuticals and other non-pharmaceutical products will require significant funding and increased staffing.

The net losses we anticipate incurring over the next several years will have an adverse effect on our stockholders’ equity and working capital.

The R&D efforts needed to enhance and leverage our microbial protein production platforms, including C1 and Dapibus™ , for use in developing and manufacturing human and animal biopharmaceuticals and other non-pharmaceutical products will require significant funding and increased staffing.

Therefore, we expect near-term operating and research expenses to continue, and maybe even accelerate, as we further develop our research and business plans, and our goals and objectives.

Consequently, we will require significant additional revenue to achieve profitability.

We cannot provide assurance that we will be able to generate any revenues from our focus and efforts as we intend to apply the C1-cell protein production platform and our other technologies into the biopharmaceutical and non-pharmaceutical industries.

We cannot provide assurance that we will be able to generate any revenues from our focus and efforts as we intend to apply our C1-cell and Dapibus™ into the biopharmaceutical and non-pharmaceutical industries.

If we fail to enter into new license agreements or other forms of collaborations or generate revenues and profit from additional research projects and government grants, the market price of our common stock will likely decrease.

Further regulatory complications, competition from other technologies, or delays in our research programs and the adoption and use of the C1-cell protein production platform and our other technologies by the biopharmaceutical and non-pharmaceutical industries may force us to reduce our staffing and research and development efforts, which may further affect our ability to generate cash flow.

Further regulatory complications, competition from other technologies, or delays in our research programs and the adoption and use of the C1-cell and Dapibus™ protein production platforms and our other technologies by the biopharmaceutical and non-pharmaceutical industries may force us to reduce our staffing and research and development efforts, which may further affect our ability to generate cash flow.

We could fail to manage our growth.

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Balance our cash burn with technology and product development;

Maintain and add additional CROs (Contract Research Organizations), other third-party service providers or other technology collaborators;

Maintain and add additional CROs (Contract Research Organizations), other third-party service providers or other technology collaborators;

Maintain and add additional collaborators, strategic partners technology licensees or other forms of structures;

Recruit, hire and maintain the required employees necessary to maintain and grow our business and to advance our technologies and products;

Achieve technical and commercial success in our research and product development programs;

Achieve technical and commercial success in our research and product development programs;

Access required manufacturing capacity;

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Manage scientific risks and uncertainties that may arise during our R&D and regulatory programs.

Our revenue growth depends in part on market and regulatory acceptance of our microbial protein production platforms and other technologies to develop and manufacture animal and/or human biopharmaceutical and non-pharmaceutical products.

The success of our biopharmaceutical business will depend on our ability to develop, register, and introduce similar, new and improved technologies and products in a timely manner, at significantly lower manufacturing costs that address the evolving requirements of the pharmaceutical industry and potential customers.

There is no assurance that the C1-cell protein production platform or any product expressed from C1, or our other technologies, will perform the same or better, save our customers money relative to existing gene expression technologies or those of our competitors, provide our customers with other benefits, obtain governmental safety and regulatory approvals, be registered or gain market acceptance.

If we fail to develop similar, new and better performing technologies, products and processes at significantly lower manufacturing costs, make fermentation yield improvements on our existing production processes, generate the necessary safety and regulatory data or gain registration and market acceptance of the C1-cell protein production platform, or our other technologies, products or processes, we could fail to recoup our R&D investments and fail to capitalize on potential opportunities or gain market share from our competitors.

There is no assurance that the C1-cell protein production platform or any product expressed from C1, or our other technologies, will perform the same or better, save our customers money relative to existing gene expression technologies or those of our competitors, provide our customers with other benefits, obtain governmental safety and regulatory approvals, be registered or gain market acceptance.

If we fail to develop similar, new and better performing technologies, products and processes at significantly lower manufacturing costs, make fermentation yield improvements on our existing production processes, generate the necessary safety and regulatory data or gain registration and market acceptance of the C1-cell and Dapibus TM protein production platforms, or our other technologies, products or processes, we could fail to recoup our R&D investments and fail to capitalize on potential opportunities or gain market share from our competitors.

Any failure, for technological, quality, safety, regulatory, or other reasons, to develop and launch improved technologies and new products, could negatively impact our business, financial condition and results of operation.

The dynamic and conservative nature of the biopharmaceutical industry, the unpredictable nature of the product development process and the time and cost of new technology adoption in the biopharmaceutical industry may affect our ability to meet the requirements of the marketplace or achieve market and/or regulatory acceptance. 

The expenses or losses associated with unsuccessful technology and product development activities or lack of market acceptance of our new technologies and products could harm our business, financial condition and results of operations.

We have not yet completed the necessary safety, efficacy, cost and regulatory studies, or the commercialization of any therapeutic proteins, antibodies and vaccines, and metabolites or other non-pharmaceutical biologic products based on C1 or our other technologies, such as Dapibus™

We may fail to commercialize our microbial protein production platforms or other technologies for the expression of therapeutic proteins, antibodies, vaccines, and metabolites or other non-pharmaceutical biologic products.

We have not yet completed the necessary safety, efficacy, cost and regulatory studies, or the commercialization of any therapeutic proteins, antibodies and vaccines, and metabolites or other non-pharmaceutical biologic products based on C1 or Dapibus™ .

To date, drug companies have developed and commercialized only a small number of gene-based products in comparison to the total number of drug molecules available in the marketplace.

Our biopharmaceutical business should be evaluated as having the same risks as those inherent to early-stage biotechnology companies because the application of the C1-cell protein production platform for the expression of pre-clinical and clinical quantities of therapeutic proteins, antibodies and vaccines is still in early development.

Successful development of the C1-cell protein production platform and our other technologies, such as Dapibus™

, for biopharmaceutical and non-pharmaceutical purposes will require significant research, development and capital investment, including testing, to prove its safety, efficacy and cost-effectiveness.

Our biopharmaceutical business should be evaluated as having the same risks as those inherent to early-stage biotechnology companies because the application of the C1-cell protein production platform for the expression of pre-clinical and clinical quantities of therapeutic proteins, antibodies and vaccines is still in early development.

Successful development of our microbial protein production platforms, including C1 and Dapibus™ , for biopharmaceutical and non-pharmaceutical purposes will require significant research, development and capital investment, including testing, to prove its safety, efficacy and cost-effectiveness.

In general, our experience has been that each step in the process has been longer and costlier than originally projected, and we anticipate that this is likely to remain the case with respect to the continuing development efforts of our biopharmaceutical and non-pharmaceutical business.

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The biopharmaceutical industry is characterized by rapid technological change, and the area of gene and protein research and platform development is a rapidly evolving field.

Any biopharmaceutical products we or our current or collaborators or licensees develop through the C1-cell protein production platform, or through our other technologies, will compete in highly competitive and regulated markets.

Any biopharmaceutical products we or our current collaborators or licensees develop through the C1-cell protein production platform, or through our other technologies, will compete in highly competitive and regulated markets.

Many of the organizations competing with us in the market for such products have more capital resources, larger R&D and marketing staff, facilities and capabilities, and greater experience in research and development, regulatory approval, manufacturing and commercialization of technology and products.

Accordingly, our competitors may be able to develop technologies and products more rapidly. 

Our future success will depend on our ability to maintain a competitive position with respect to technological advances in terms of product and process quality, stability, safety, productivity and cost. 

If a competitor develops superior technology or products, or more cost-effective alternatives to our and our collaborators’

or licensees’

technologies, products or processes, it could have a material adverse effect on our business, financial condition and results of operations.

Accordingly, our competitors may be able to develop technologies and products more rapidly.

If a competitor develops superior technology or products, or more cost-effective alternatives to our and our collaborators’ or licensees’ technologies, products or processes, it could have a material adverse effect on our business, financial condition and results of operations.

Well-known and highly competitive biotechnology companies offer comparable or alternative technologies for the same products and services as our biopharmaceutical and non-pharmaceutical business.

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Alternative technologies may not require microbial or other cell produced proteins, such as our proprietary C1 cells.

Research is being conducted with cell or gene-based therapies and other technologies that offer a possible alternative to producing proteins as they are being produced today based on microbial, organic matter containing Carbon, Hydrogen, and Oxygen or other organisms, such as our proprietary C1 cells.

Alternative methods may allow genes to be directly inserted into cells that can be implanted into animals and humans directly, displacing the need for the existing methods used for the development of biologic vaccines and drugs.

If they are successful, these new methods may supplant or greatly reduce the need for microorganisms, Carbon, Hydrogen, and Oxygen or other organisms, including our C1 cells, to produce these proteins externally as the injected cells in animals and humans may be able to do so internally. 

Our SARS-CoV-2  

vaccine  

candidates are at the Phase 1 clinical stage and have not been approved for sale.

We have not developed, m anufactured or commercialized any  

vaccine  

product in the past, and we may be unable to produce a  

vaccine  

that can be used to successfully prevent the SARS-CoV-2 virus or its variants of concern, in a timely and economical manner, if at all.

Our DYAI-100, SARS-CoV-2 vaccine candidate has received regulatory approval for Phase 1 clinical trial in South Africa, and we have completed dosing of all patients by the end of February 2023. However, we could experience delays in clinical trials or unsatisfactory clinical trial results. Moreover, adverse events, or the perception of adverse events, relating to vaccine product candidates and delivery technologies may negatively impact our ability to develop commercially successful products and also may lead to greater government regulation, which could have a material effect on our ability to develop and market our SARS-CoV-2 vaccine product candidates.

Uncertainties exist surrounding the longevity and severity of COVID-19 as a global health concern.

If they are successful, these new methods may supplant or greatly reduce the need for microorganisms, Carbon, Hydrogen, and Oxygen or other organisms, including our C1 cells and Dapibus™ , to produce these proteins externally as the injected cells in animals and humans may be able to do so internally.

Our SARS-CoV-2 vaccine candidates are at the clinical stage and have not been approved for sale.

We have not developed, m anufactured or commercialized any vaccine product in the past, and we may be unable to produce a vaccine that can be used to successfully prevent the SARS-CoV-2 virus or its variants of concern, in a timely and economical manner, if at all.

Our DYAI-100, SARS-CoV-2 vaccine candidate has successfully completed its Phase 1 clinical trial in South Africa.

However, we do not plan to continue Phase 2/3 clinical trials of DYAI-100 unless we obtain funding from our partners and collaborators.

Moreover, adverse events, or the perception of adverse events, relating to vaccine product candidates and delivery technologies may negatively impact our ability to develop commercially successful products and also may lead to greater government regulation, which could have a material effect on our ability to develop and market our SARS-CoV-2 vaccine product candidates.

The success of our efforts to develop and commercialize our vaccine product candidates could fail for a number of reasons.

Accordingly, we may be unable to produce a vaccine that successfully targets SARS-CoV-2 in a timely and economical manner, if at all.

For example, we expect to commit significant financial resources and personnel to the development of SARS-CoV-2 vaccine product candidates, which may cause delays in or otherwise negatively impact our other product candidate development program.

Accordingly, we may be unable to produce a vaccine that successfully targets SARS-CoV-2 in a timely and economical manner, if at all.

For example, we expect to commit significant financial resources and personnel to the development of SARS-CoV-2 vaccine product candidates, which may cause delays in or otherwise negatively impact our other product candidate development program.

The outcome of any research and development program is highly uncertain.

Only a small fraction of biotechnology and vaccine development programs ultimately result in commercial products or even product candidates, and a number of events could delay our development efforts and negatively impact our ability to obtain regulatory approval for, and to manufacture, market and sell, a vaccine.

Additionally, our ability to develop an effective vaccine will depend on our ability to work on an accelerated timeline, with limited access to financial resources beyond those that we currently possess, and in competition with a significant number of better-funded and more experienced vaccine-development companies.

Moreover, given the COVID-19 pandemic is now relatively contained and the risk of further spread is diminished, we may be unable to identify strategic partners willing to work with and support us in our development efforts and/or the market that we anticipate for this product candidate may not exist or may be much smaller than we previously anticipated.

Alternatively, even if a market exists, our vaccine product candidates could be found to be ineffective or unsafe, or otherwise fail to receive necessary regulatory clearances.

Our vaccine product candidates, even if safe and effective, could be difficult to manufacture on a large scale or uneconomical to market, or our competitors could develop superior products more quickly and efficiently or more effectively market their competing products.

Accordingly, our inability to develop a commercially-successful vaccine product could materially harm our business.

Only a small fraction of biotechnology and vaccine development programs ultimately result in commercial products or even product candidates, and a number of events could delay our development efforts and negatively impact our ability to obtain regulatory approval for, and to manufacture, market and sell, a vaccine.

Additionally, our ability to develop an effective vaccine will depend on our ability to work on an accelerated timeline, with limited access to financial resources beyond those that we currently possess, and in competition with a significant number of better-funded and more experienced vaccine-development companies.

Moreover, uncertainties exist surrounding the longevity and severity of COVID-19 as a global health concern, and given the COVID-19 pandemic is now relatively contained and the risk of further spread is diminished, we may be unable to identify strategic partners willing to work with and support us in our development efforts and/or the market that we anticipate for this product candidate may not exist or may be much smaller than we previously anticipated.

Alternatively, even if a market exists, our vaccine product candidates could be found to be ineffective or unsafe, or otherwise fail to receive necessary regulatory clearances.

Our vaccine product candidates, even if safe and effective, could be difficult to manufacture on a large scale or uneconomical to market, or our competitors could develop superior products more quickly and efficiently or more effectively market their competing products.

Accordingly, our inability to develop a commercially successful vaccine product could materially harm our business.

The results of nonclinical studies and early-stage clinical trials may not be predictive of future results.

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There is a high failure rate for drugs proceeding through clinical trials, and a number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in clinical development even after achieving promising results in earlier studies.

There can be no assurance that any of our current or future clinical trials will ultimately be successful or support further clinical development of any of our vaccine and drug candidates.

There can be no assurance that any of our current or future clinical trials will ultimately be successful or support further clinical development of any of our vaccine and drug candidates.

Even if our clinical trials are completed, the results may not be sufficient to obtain regulatory approval of any products.

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We may need substantial additional capital in the future to fund our business.

Our future capital requirements may be substantial, particularly as we continue to further develop, engineer and optimize the C1-cell protein production platform and our other proprietary technologies, products and processes for licensing for research and development, and commercialization of potential animal and human pharmaceutical products.

Our future capital requirements may be substantial, particularly as we continue to further develop, engineer and optimize our microbial protein production platforms and other proprietary technologies, products and processes for licensing for research and development, and commercialization of potential animal and human pharmaceutical products.

We currently have very little leverage, and if our capital resources are insufficient to meet our capital requirements, we will have to raise additional funds to continue the development of our technologies and complete the development and commercialization of products, if any, resulting from our technologies.

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Any change in market conditions that negatively impacts our operations or the demand of our current or prospective customers could adversely affect our business operations.

For example, economic uncertainty and volatility, including as a result of high-interest rates and inflation, have had and may continue to have a material adverse effect on our business.

Changes in the global financial, pharmaceutical and biotech markets may make it difficult to accurately forecast operating results.

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We are also limited in our ability to reduce costs to offset the results of a prolonged or severe economic downturn given certain fixed costs associated with our operations and difficulties if we over strained our resources.

The timing and nature of a sustained recovery in the credit and financial markets remains uncertain, and there can be no assurance that market conditions will significantly improve in the near future or that our results will not continue to be materially and adversely affected.

Significant outbreaks of contagious diseases, and other adverse public health developments, could have a material impact on our business operations, financial condition, and operating results.

The COVID-19 pandemic has significantly impacted the operation of business in the United States and Europe, where several of our key executive management members and our third-party contract research organizations are located.

The COVID-19 pandemic and various governmental responses in the United States and Europe has adversely affected our ability to carry on certain business development activities in the past, including restrictions in business-related travel, 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, among others, and it may adversely affect our business operations if any health epidemics and pandemics and other widespread outbreaks of contagious disease or other biological threats in the future.

In addition, we rely on third parties in the United States and Europe to conduct our research and development projects and to provide other services, and COVID-19 has affected and may continue to affect service providers of such third-party contract research organizations and therefore negatively affect the operations of our on-going research projects, which could materially and negatively affect our business, financial condition, and results of operations.

The COVID-19 pandemic has adversely affected and may continue to adversely affect the economies and financial markets worldwide, resulting in an economic downturn that could impact our business, financial condition and results of operations.

As a result, our ability to fund through public or private equity offerings, debt financings, and through other means at acceptable terms, if at all, may be disrupted, in the event our financing needs for the foreseeable future are not able to be met by our existing balances of cash, cash equivalents and investments. In addition, the COVID-19 pandemic has posed and may continue to pose significant challenges for our supply chains, particularly as a result of mandatory shutdowns in locations where our products are manufactured or held for distribution. The extent to which COVID-19 could impact our business and research and development activities will depend on future developments, which are uncertain and cannot be predicted with confidence, and will depend on many factors.

As such, we cannot presently predict the scope and extent of any potential business shutdowns or disruptions.

The Company is currently working on several COVID-19 related vaccine and antibody opportunities.

However, there is no assurance that any of these opportunities will materialize or that the C1-cell protein production platform or any product expressed from C1 or any of the various other steps in a vaccine or drug development process will perform, provide benefits, obtain governmental safety and regulatory approvals, be registered or gain market acceptance.

In addition, our C1-cell protein production platform has yet to be used to produce a vaccine, antibody or other biologic product that has entered the clinical trial phase, and we are competing with more experienced companies for grants or funding of this type.

As a result, there is no assurance that we will receive these grants or funding resulting from these proposals.

In February 2022, armed conflict escalated between Russia and Ukraine.

The sanctions announced by the U.S.

and other countries following Russia’s invasion of Ukraine against Russia to date include restrictions on selling or importing goods, services, or technology in or from affected regions and travel bans and asset freezes impacting connected individuals and political, military, business, and financial organizations in Russia.

and other countries could impose wider sanctions and take other actions should the conflict further escalate.

It is not possible to predict the broader consequences of this conflict, which could include further sanctions, embargoes, regional instability, geopolitical shifts and adverse effects on macroeconomic conditions, currency exchange rates and financial markets, all of which could impact our business, financial condition, and results of operations. Our business is not directly impacted by the war as we do not operate in either Russia or the Ukraine.

However, the war might potentially amplify the disruptive impact of the COVID pandemic.

The timing and nature of a sustained recovery in the credit and financial markets remain uncertain, and there can be no assurance that market conditions will significantly improve in the near future or that our results will not continue to be materially and adversely affected.

In addition, geopolitical risks, including those arising from political turmoil, trade tension or the imposition of trade tariffs and/or sanctions, terrorist activity and acts of civil or international hostility, are increasing.

For instance, the ongoing military conflict between Russia and Ukraine, as well as conflicts in the Middle East have had negative impacts on the global economy and is expected to have further global economic consequences.

Any such events and responses, including regulatory developments, may cause significant volatility and declines in the global markets, disproportionate impacts to certain industries or sectors, disruptions to commerce (including to economic activity, travel and supply chains), loss of life and property damage, and may materially and adversely affect the global economy or capital markets, as well as our business and results of operations.

Should an economic slowdown occur in the U.S.

or globally, our business and results of operations may be materially adversely affected.

We face risks related to widespread outbreaks of contagious disease or other biological threats, any of which could significantly disrupt our operations and have a material adverse effect on our business, employees, directors, consultants, collaborators and other third parties, including business development activities and research and development projects conducted by third party contract research organizations parties.

Significant outbreaks of contagious diseases, and other adverse public health developments, have had and could have a material impact on our business operations, financial condition, and operating results.

Pandemics and other outbreaks of contagious disease have in the past and could in the future significantly impact the operation of our business.

For example, pandemics have in the past adversely affected our ability to carry on certain business development activities, including as a result of restrictions in business-related travel, 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.

In addition, pandemics and other outbreaks of contagious disease have in the past and may in the future exacerbate other risks disclosed in this Annual Report.

See, for example, “— Changes in global economic and financial markets may have a negative effect on our business.

” Whether and to what extent future pandemics and other outbreaks of contagious diseases may impact our financial and operational performance will depend on developments that include the duration, spread and severity of the outbreak, the timetable for administering and efficacy of vaccines, the duration and geographic scope of related travel advisories and restrictions and the extent of the impact of the pandemic or outbreak on overall demand for our products, technologies and services, and other factors beyond our control, all of which are highly uncertain and cannot be predicted.

Our sales and operations are subject to the risks of doing business internationally.

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Foreign currency fluctuations could adversely affect our results.

In the conduct of our business, in certain instances, we are required to receive payments or pay our obligations in currencies other than U.S.

Especially since a large portion of our research and development is done in Europe, our CROs and certain consultants request payments in Euros.

In the conduct of our business, in certain instances, we are required to receive payments or pay our obligations in currencies other than U.S.

Especially since a large portion of our research and development is done in Europe, our CROs and certain consultants request payments in Euros.

As a result, we are exposed to changes in currency exchange rates with respect to our business transactions denominated in non-US dollars.

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) to offset future taxable income may be subject to certain limitations.

In general, under Section 382 of the Internal Revenue Code, a corporation that undergoes an “ownership change”

is subject to limitations on its ability to utilize its NOLs, to offset future taxable income.

In general, under Section 382 of the Internal Revenue Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its NOLs, to offset future taxable income.

If the Internal Revenue Service challenges our analysis that our existing NOLs are not subject to limitations arising from previous ownership changes, our ability to utilize NOLs could be limited by Section 382 of the Internal Revenue Code.

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Moreover, we may need to raise additional funds through public or private debt or equity financing to acquire any businesses or to provide funding for such business, which would result in dilution for stockholders or the incurrence of indebtedness and may not be available on terms which would otherwise be acceptable to us.

We may not be able to oversee such investments nor operate acquired businesses profitably or otherwise implement our growth strategy successfully.

We may not be able to oversee such investments nor operate acquired businesses profitably or otherwise implement our growth strategy successfully.

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System failures, accidents, or security breaches could cause interruptions in our operations and could result in a material disruption of our research activities and business operations, in addition to possibly requiring substantial expenditures of resources to remedy.

To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and delays in our research efforts and financial reporting compliance, as well as significant increase in costs to recover or reproduce the data.

While we have experienced and continue to experience system failures, accidents and security breaches from time to time, none has been material to date.

To the extent that any disruption or security breach was to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and delays in our research efforts and financial reporting compliance, as well as a significant increase in costs to recover or reproduce the data.

Of special note is our risk when implementing new capabilities.

The implementation of new systems and information technology could adversely impact our operations by requiring substantial capital expenditures, diverting management’s attention, or causing delays or difficulties in transitioning to new systems.

As we implement new systems, many times both new and old systems run in parallel until all processes have successfully transferred to the new system and thorough testing has been performed.

These events could impact our customers, suppliers, subcontractors, employees, our financial reporting and our reputation and lead to financial losses from remediation actions, loss of business or potential liability, or an increase in expense, all of which may have a material adverse effect on our business.

Our systems implementations may also not result in productivity improvements at the levels anticipated.

In addition, the rapid evolution and increased adoption of artificial intelligence technologies may intensify our cybersecurity risks.

Likewise, cyber incidents, including malicious cyber-attacks perpetrated on our employees and cyber incidents caused by third parties surreptitiously accessing our systems by other means, are an on-going risk to the security of the systems, networks, information and data of ours, our customers, subcontractors and suppliers.

While we have security, internal control and technology measures in place to protect our systems and networks, confidential business information, personal data of ours, our customers, employees, suppliers and subcontractors, our information technology systems and those of our third-party service providers have been and may in the future be subject to system breaches.

System breaches can lead to disclosure, modification and destruction of proprietary business data, personally identifiable information, other sensitive information, production downtime or loss of business, and damage to our reputation, competitiveness and operations.

In addition, flexible working arrangements and remote working for overseas consultants may adversely impact our ability to maintain the security, proper function and availability of our information technology and systems since remote working by our employees and consultants could strain our technology resources and introduce operational risk, including heightened cybersecurity risk.

Remote working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts that have sought, and may seek, to exploit remote working environments.

In addition, current and future laws and regulations governing data privacy and the unauthorized disclosure of confidential information, including, but not limited to rules implemented by the SEC in 2023, may pose complex compliance challenges and result in additional costs.

A failure to comply with such laws and regulations could result in penalties or fines, legal liabilities or reputational harm.

The continuing and evolving threat of cyber-attacks has also resulted in increased regulatory focus on risk management and prevention.

New cyber-related regulations or other requirements could require significant additional resources and cause us to incur significant costs, which could have an adverse effect on our results of operations and cash flows.

Changes to our outsourced software or infrastructure vendors as well as any sudden loss, breach of security, disruption or unexpected data or vendor loss associated with our information technology systems could have a material adverse effect on our business.

We rely on third-party software and infrastructure to run critical accounting, project management and financial information systems.

If software or infrastructure vendors decide to discontinue further development, integration or long-term maintenance support for our information systems, or there is any system interruption, delay, breach of security, loss of data or loss of a vendor, we may need to migrate some or all of our accounting, project management and financial information to other systems.

These disruptions could increase our operational expense as well as impact the management of our business operations, which could have a material adverse effect on our financial position, results of operations, cash flows and liquidity.

Risks Related to Dependence on Third Parties

Our R&D revenue is generated from a small number of research collaborations.

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Any failure to enter into such arrangements on favorable terms could delay or hinder our ability to develop and commercialize our technologies, products and processes and could increase our costs of research and development and commercialization.

We have limited or no control over the resources that any collaborator or licensee may devote to our programs, and reductions in collaborators ’

R&D budgets may affect our businesses.

We have limited or no control over the resources that any collaborator or licensee may devote to our programs, and reductions in collaborators ’ R&D budgets may affect our businesses.

Any of our current or future collaborators or licensees may breach or terminate their agreements with us or otherwise fail to perform and conduct their required activities successfully and in a timely manner.

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Our businesses could be seriously damaged by significant decreases in life sciences and/or pharmaceutical R&D expenditures by government agencies and existing and potential partners.

We heavily rely on contracts with third-party contract research organizations ( “

CROs ”

and other third party service providers to conduct our research and development, 

pre-clinical, CMC and cGMP manufacturing, fill and finish, and potential clinical trials, 

which may not be available to the Company on commercially reasonable terms or at all.

As a result of the DuPont Transaction, we no longer own a research and development laboratory and we became dependent upon the performance and research capacity of a number of third-party contract research organizations and other service providers to conduct our research and development projects, pre-clinical, CMC and cGMP manufacturing, fill and finish, and potential clinical trials, which include services and programs in connection with the modification and enhancement of the Company’s C1-cell protein production platform and to support our business development efforts for C1’s use in biopharmaceutical applications.

We heavily rely on contracts with third-party contract research organizations ( “ CROs ” ) and other third-party service providers to conduct our research and development, pre-clinical, CMC and cGMP manufacturing, fill and finish, and potential clinical trials, which may not be available to the Company on commercially reasonable terms or at all.

As a result of the DuPont Transaction, we no longer own a research and development laboratory and we became dependent upon the performance and research capacity of a number of third-party contract research organizations and other service providers to conduct our research and development projects, pre-clinical, CMC and cGMP manufacturing, fill and finish, and potential clinical trials, which include services and programs in connection with the modification and enhancement of the Company’s C1-cell protein production platform and to support our business development efforts for C1’s use in biopharmaceutical applications.

The licensing and service arrangements with these third parties are not guaranteed to be obtained, renewed or continued on reasonable terms, if at all.

The Company may be unable to obtain, maintain or expand its access to third party CROs and other service providers to conduct these services.

Failure to obtain, maintain and expand access to certain third party CROs and other service providers could have a material adverse impact on the Company’s research projects, financial condition and operating results. In addition, from time to time there are disagreements with such third parties that if not resolved can have a material adverse effect on our business, financial condition and operating results.

In addition, from time to time there are disagreements with such third parties that if not resolved can have a material adverse effect on our business, financial condition and operating results.

We are heavily dependent upon the availability and performance of third-party research organizations.

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This could have a material adverse effect on our business, revenues or operating results.

Additionally, if we were to be unsuccessful in retaining a CRO with the requisite experience and skills we require and were required to build our own research facility, it could take a year or longer before such owned research facility were able to be brought online to carry out the necessary technology and product development efforts of the Company. 

Conflicts with the CROs, 

other service providers, 

collaborators and/or licensees could harm our business.

Conflicts with the CROs, other service providers, collaborators and/or licensees could harm our business.

An important part of our strategy includes involvement in proprietary research programs.

We may pursue opportunities in the pharmaceutical field that could conflict with those of our collaborators and licensees.

Moreover, disagreements with Danisco, our current and/or future CROs, other service providers, collaborators or licensees could develop over rights to our intellectual property, over further licensing of our technologies to other parties in certain pharmaceutical fields, or for other reasons.

Any conflict with Danisco, our current and/or future CROs, other service providers, collaborators or licensees could reduce our ability to obtain future collaboration agreements and negatively impact our relationship with existing collaborators or licensees, which could reduce our revenues and profits.

Some of our current and/or future CROs, other service providers, collaborators and/or licensees could also become competitors in the future.

Our current and/or future CROs, other service providers, collaborators and/or licensees could develop competing technologies or products, preclude us from entering into collaborations or license agreements with their customers, fail to obtain timely regulatory approvals, terminate their agreements with us prematurely or fail to devote sufficient resources to the development and commercialization of their technology and products and processes.

Moreover, disagreements with Danisco, our current and/or future CROs, other service providers, collaborators or licensees could develop over rights to our intellectual property, over further licensing of our technologies to other parties in certain pharmaceutical fields, or for other reasons.

Any conflict with Danisco, our current and/or future CROs, other service providers, collaborators or licensees could reduce our ability to obtain future collaboration agreements and negatively impact our relationship with existing collaborators or licensees, which could reduce our revenues and profits.

Some of our current and/or future CROs, other service providers, collaborators and/or licensees could also become competitors in the future.

Our current and/or future CROs, other service providers, collaborators and/or licensees could develop competing technologies or products, preclude us from entering into collaborations or license agreements with their customers, fail to obtain timely regulatory approvals, terminate their agreements with us prematurely or fail to devote sufficient resources to the development and commercialization of their technology and products and processes.

Any of these developments could harm our technology development and value, product development efforts, revenue, profits and overall business.

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We rely on third parties to provide us with complete and accurate information regarding research developments and data, revenues, expenses and payments owed to or by us on a timely basis.

We rely on the proper controls and procedures related to obtaining and reporting information from our CROs, licensees and collaborators related to research results and other data, when milestones are earned, if any, when royalties are earned, if any, as well as other types of potential revenues and expenses.

We rely on the proper controls and procedures related to obtaining and reporting information from our CROs, licensees and collaborators related to research results and other data, when milestones are earned, if any, when royalties are earned, if any, as well as other types of potential revenues and expenses.

If the information that we receive is not accurate, our consolidated financial statements may be materially incorrect and may require restatement.

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Potential future regulations limiting our ability to sell genetically engineered products could harm our business.

We, our current and future collaborators and licensees expect to develop biologic products using genetically engineered microorganisms (“GMOs”).

Products derived from GMOs may in some instances be subject to bans or additional regulation by federal, state, local and foreign government agencies.

These agencies may not allow us or our collaborators and licensees to produce and market products derived from GMOs in a timely manner or under technically or commercially feasible conditions.

Compliance with FDA, Environmental Protection Agency (“EPA”) and EU regulations could result in expenses, delays or other impediments to our product development programs or the commercialization of resulting products.

The FDA currently applies the same regulatory standards to products made through genetic engineering as those applied to products developed through traditional methodologies.

Regardless of GMO status, a product may be subject to lengthy FDA reviews and unfavorable FDA determinations due to safety concerns or changes in the FDA’s regulatory policy.

The EPA regulates biologically-derived enzyme-related chemical substances not within the FDA’s jurisdiction.

Regardless of GMO status, a product may be subject to lengthy FDA reviews and unfavorable FDA determinations due to safety concerns or changes in the FDA’s regulatory policy.

The EPA regulates biologically derived enzyme-related chemical substances not within the FDA’s jurisdiction.

An unfavorable EPA ruling could delay commercialization or require modification of the production process or product in question, resulting in higher manufacturing costs, thereby making the product uneconomical.

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Public views on ethical and social issues may limit use of our technologies.

Our success will depend in part upon our ability, and our current and future collaborators’ or licensees’ ability, to develop pharmaceutical and non-pharmaceutical products discovered, developed and manufactured through the C1- cell protein production platform, and our other technologies .

Our success will depend in part upon our ability, and our current and future collaborators’ or licensees’ ability, to develop pharmaceutical and non-pharmaceutical products discovered, developed and manufactured through the C1- cell protein production platform, and our other technologies .

Governmental authorities could, for social, ethical or other purposes, limit the use of genetic processes or prohibit the practice of using a modified C1 organism to produce biologic vaccines, drugs and other biologic products.

Concerns about the C1- cell protein production platform and our other technologies,  and particularly about the expression of genes from C1 for pharmaceutical purposes, could adversely affect their market acceptance.

The commercial success of our current and future collaborations and our licensees’

potential products will depend in part on public acceptance of the use of genetically engineered products including enzymes, vaccines, drugs and other protein products produced in this manner.

Concerns about the C1- cell protein production platform and our other technologies, and particularly about the expression of genes from C1 for pharmaceutical purposes, could adversely affect their market acceptance.

The commercial success of our current and future collaborations and our licensees’ potential products will depend in part on public acceptance of the use of genetically engineered products including enzymes, vaccines, drugs and other protein products produced in this manner.

Claims that genetically engineered products are unsafe for consumption or pose a danger to the environment, animals or humans may influence public attitudes.

Our and our licensees’

genetically engineered products may not gain public acceptance.

Our and our licensees’ genetically engineered products may not gain public acceptance.

Negative public reaction to GMOs and products could result in increased government regulation of genetic research and resulting products, including stricter labeling laws or other regulations, and could cause a decrease in the demand for our products.

If we and/or our collaborators are not able to overcome the ethical, legal, and social concerns relating to genetic engineering, some or all of our products and processes may not gain public acceptance, which could have a material adverse effect on our business, financial condition and results of operations.

If we and/or our collaborators are not able to overcome the ethical, legal, and social concerns relating to genetic engineering, some or all of our products and processes may not gain public acceptance, which could have a material adverse effect on our business, financial condition and results of operations.

Our results of operations may be adversely affected by environmental, health and safety laws, regulations and liabilities.

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A violation of these laws and regulations or permit conditions could result in substantial fines, criminal sanctions, permit revocations and/or facility shutdowns.

In addition, new laws, new interpretations of existing laws, increased government enforcement of environmental laws, or other developments could require us or our CROs or other service providers to make additional significant expenditures.

Present and future environmental laws and regulations and interpretations thereof, more vigorous enforcement of policies and discovery of currently unknown conditions may require substantial expenditures that could have a material adverse effect on our results of operations and financial position.

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Any of the factors mentioned above, or the perception that we or those with whom we conduct business have not responded appropriately to the growing concern for such issues, regardless of whether we are legally required to do so, may damage our reputation and have a material adverse effect on our business, financial condition, results of operations cash flows and/or the price of our common stock.

We have no experience submitting applications to the FDA or similar regulatory authorities in the past and could be subject to lengthy and/or unfavorable regulatory proceedings.

We have no experience submitting applications to the FDA or similar regulatory authorities in the past and could be subject to lengthy and/or unfavorable regulatory proceedings.

While we understand that many of our current and future collaborators or licensees may have a proven track record of experience submitting application to the FDA or other applicable regulatory authorities, we have no such experience in the past.

Neither we nor any collaborator or licensee has yet submitted any application with the FDA or any other regulatory authority for any product candidate generated through the use of the C1- cell protein production platform  as it relates to the development and manufacture of pharmaceutical products.

Neither we nor any collaborator or licensee has yet submitted any application with the FDA or any other regulatory authority for any product candidate generated through the use of the C1- cell protein production platform as it relates to the development and manufacture of pharmaceutical products.

The FDA may not have substantial experience with technology similar to ours, which could result in delays or regulatory action against us.

We and our current and future collaborators and licensees may not be able to able to obtain regulatory approval for C1 expressed products, which would harm our business.

The C1- cell protein production platform  has been tested for use in the manufacturing of an enzyme in the production of wine, beer and fruit juices, and has generated promising safety and toxicity data for that enzyme.

The C1- cell protein production platform has been tested for use in the manufacturing of an enzyme in the production of wine, beer and fruit juices, and has generated promising safety and toxicity data for that enzyme.

The C1-cell protein production platform could produce vaccines, antibodies, or therapeutic products and enzymes tha t have safety, toxicity, pathogenicity, immunogenicity and other issues associated with them.

The C1- cell protein production platform and our other technologies may be subject to lengthy regulatory reviews and unfavorable regulatory determinations if they raise safety questions which cannot be satisfactorily answered or if results from studies do not meet regulatory requirements.

An unfavorable regulatory ruling could be difficult to resolve and could delay or possibly prevent a product from being commercialized, or even delay or prevent the use of the C1- cell protein production platform or our other technologies to produce future products, which would have a material adverse effect on our growth and prospects.

Additionally, future products produced by us or our current and future collaborators or licensees using the C1- cell protein production platform  or our other technologies may not be approved by the FDA or other regulatory agencies in the U.S.

The C1- cell protein production platform and our other technologies may be subject to lengthy regulatory reviews and unfavorable regulatory determinations if they raise safety questions which cannot be satisfactorily answered or if results from studies do not meet regulatory requirements.

An unfavorable regulatory ruling could be difficult to resolve and could delay or possibly prevent a product from being commercialized, or even delay or prevent the use of the C1- cell protein production platform or our other technologies to produce future products, which would have a material adverse effect on our growth and prospects.

Additionally, future products produced by us or our current and future collaborators or licensees using the C1- cell protein production platform, or our other technologies may not be approved by the FDA or other regulatory agencies in the U.S.

or worldwide.

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Risks Relating to Intellectual Property

Failure to protect our intellectual property 

and the intellectual property of certain third parties could harm our competitive position.

and licensees’

ability to maintain adequate protection of our and their intellectual property.

Failure to protect our intellectual property and the intellectual property of certain third parties could harm our competitive position.

Our success will depend in part on our ability to obtain patents and on our and Danisco’s (as part of the DuPont Transaction, patents were assigned to Danisco) and our current and future collaborators’ and licensees’ ability to maintain adequate protection of our and their intellectual property.

If we, Danisco, or our current and future collaborators and licensees do not adequately protect our intellectual property, competitors may be able to practice our technologies and erode our competitive advantage.

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However, the patent positions of biotechnology companies, including our patent position, are generally uncertain and involve complex legal and factual questions.

proprietary technologies, are covered by valid and enforceable patents or are effectively maintained as trade secrets.

We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our, and in certain instances the C1 patents assigned to Danisco, and our current and future collaborators’ and licensees’ proprietary technologies, are covered by valid and enforceable patents or are effectively maintained as trade secrets.

We intend, from time to time, to apply for patents covering both our technologies and our products, while at other times, we only maintain such knowledge as trade secrets without applying for patents, as we deem appropriate.

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Even if a patent is obtained, it may not be sufficiently broad to prevent others from practicing our technologies or from developing competing products.

Others, including Danisco and our current and future collaborators and licensees, may independently develop similar or alternative technologies or design around our, Danisco’s or our current and future collaborators’

and licensees’

patented technologies.

In addition, Danisco, our current and future collaborators, licensees, or other third parties may challenge or invalidate our patents, or our patents may fail to provide us with any competitive advantages.

If any third party is able to gain intellectual property protections for technology similar to our own, they may be successful in blocking us and our licensees from using the C1-cell protein production platform or our other technologies and/or commercializing products derived from them.

We cannot ensure that any of our pending patent applications will result in issued patents, or even if issued, predict the breadth of the claims upheld in our and other companies’

If any third party is able to gain intellectual property protections for technology similar to our own, they may be successful in blocking us and our licensees from using the C1-cell protein production platform or our other technologies and/or commercializing products derived from them.

We cannot ensure that any of our pending patent applications will result in issued patents, or even if issued, predict the breadth of the claims upheld in our and other companies’ patents.

Given that the degree of future protection for our proprietary rights is uncertain, we cannot ensure that we were the first to invent the inventions covered by our pending patent applications, or that we were the first to file patent applications for these inventions or the patents we have obtained.

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Our commercial success depends in part on neither infringing patents and proprietary rights of third parties, nor breaching any licenses that we have entered into with regard to our technologies and products.

Others have filed, and in the future are likely to file, patent applications covering genes or gene fragments, genetic elements, screening, gene expression and fermentation processes and other intellectual property that we may wish to utilize with the C1-cell protein production platform or our other technologies or products and systems that are similar to those developed with its use.

Others have filed, and in the future are likely to file, patent applications covering genes or gene fragments, genetic elements, screening, gene expression and fermentation processes and other intellectual property that we may wish to utilize with the C1-cell protein production platform or our other technologies or products and systems that are similar to those developed with its use.

If these patent applications result in issued patents and we wish to use the claimed technology, we may need to obtain a license from the appropriate third party.

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Such third parties may then try to import into the United States or other territories products, or information leading to potentially competing products, made using our inventions in countries where we do not have patent protection for those inventions.

If competitors are able to use our technologies, our ability and our current and future collaborators’

and licensees’

ability to compete effectively could be harmed.

If competitors are able to use our technologies, our ability and our current and future collaborators’ and licensees’ ability to compete effectively could be harmed.

Moreover, others may independently develop and obtain patents for technologies that are similar to or superior to our technologies.

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We require employees and consultants to execute confidentiality agreements upon the commencement of an employment or consulting arrangement with us.

These agreements generally require that all confidential information developed by the individual or made known to the individual by us during the course of the individual’s relationship with us be kept confidential and not disclosed to third parties.

These agreements also generally provide that inventions conceived by the individual in the course of rendering services to us shall be our exclusive property.

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Factors that may result in fluctuations in our stock price include, but are not limited to, the following:

Changes in the public’s perception of the prospects of biotechnology companies;

Sales of our common stock in the public market by such stockholders or other significant stockholders, executive officers, or directors;

Announcements of new technological innovations, patents or new products or processes by us, Danisco or our current or future collaborators, licensees and competitors;

Changes in the public’s perception of the prospects of biotechnology companies;

Sales of our common stock in the public market by such stockholders or other significant stockholders, executive officers, or directors;

Announcements of new technological innovations, patents or new products or processes by us, Danisco or our current or future collaborators, licensees and competitors;

Announcements by us, Danisco or our collaborators and licensees relating to our relationships with third parties;

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Conditions or trends in the biotechnology industry;

Changes in investor interest in the areas in which we and/or our collaborators and licensees are applying our technologies, such as COVID-19; 

Changes in the state of the COVID-19 pandemic or other diseases and/or types of vaccines and/or treatments related thereto;

Changes in investor interest in the areas in which we and/or our collaborators and licensees are applying our technologies, such as COVID-19;

Changes in the market valuations of other biotechnology companies;

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Negative effects related to the stock or business performance of Danisco, our current and future collaborators and licensees, or the abandonment of projects using our technology by our collaborators and/or licensees;

Scientific risks inherent to emerging technologies such as t he 

C1-cell protein production platform or our other technologies;

Set-backs, and/or failures, and or delays in our or our current and future collaborators’ and licensees’ R&D and commercialization programs;

Scientific risks inherent to emerging technologies such as t he C1-cell protein production platform or our other technologies;

Set-backs, and/or failures, and or delays in our or our current and future collaborators’ and licensees’ R&D and commercialization programs;

Delays or failure to receive regulatory approvals by us, Danisco and/or our current and future collaborators and licensees;

Loss or expiration of our or Danisco’s intellectual property rights;

Theft, misappropriation or expiration of owned or licensed proprietary and intellectual property, genetic and biological material owned by us and/or Danisco US, Inc., and VTT Technical Research Centre of Finland Ltd;

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Future royalties from product sales, if any, by Danisco, our current or future strategic partners, collaborators or licensees;

Future royalties may be owed to Danisco by us, our collaborators, licenses, or sub-licensees under certain circumstances related to our Danisco Pharma License;

Future royalties may be owed to Danisco by us, our collaborators, licenses, or sub-licensees under certain circumstances related to our Danisco Pharma License;

Short positions taken in our common stock;

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Stock splits;

Decisions made by the board related to potential registration of Dyadic’s stock under the Securities Act of 1933 (as amended (the “Securities Act”), and/or up listing to another stock exchange.

If we were to become party to a securities class action suit, we could incur substantial legal fees and our management’s attention and resources could be diverted from operating our business to responding to litigation.

Decisions made by the board related to potential registration of Dyadic’s stock under the Securities Act of 1933, as amended (the “Securities Act”), and/or up listing to another stock exchange.

Our quarterly and annual operating results may be volatile.

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Expiration of or cancellations of our research contracts with current and future collaborators and/or licensees, which may not be renewed or replaced;

Setbacks or failures in our and our current and future collaborators’

and licensees’

research, development and commercialization efforts;

Setbacks or failures in our and our current and future collaborators’ and licensees’ research, development and commercialization efforts;

Setbacks, or delays in our research and development efforts to develop and produce biologics;

Setbacks, or delays in our research and development efforts to re-engineer the C1-cell protein production platform or our other technologies for their applications and use in developing and producing biologics;

Setbacks, or delays in our research and development efforts to re-engineer the C1-cell protein production platform or our other technologies for their applications and use in developing and producing biologics;

The speed, and success rate of our discovery and research and development efforts leading to potential licenses, or other forms of collaborations, access fees, milestones and royalties;

The timing and willingness of current and future collaborators and licensees to utilize C1 to develop and commercialize their products which would result in potential upfront fees, milestones and royalties;

General and industry specific economic conditions, which may affect our current and future collaborators’ and licensees’ R&D expenditures;

The adoption and acceptance of the C1-cell protein production platform and our other technologies by biopharmaceutical and non-pharmaceutical companies and regulatory agencies;

General and industry specific economic conditions, which may affect our current and future collaborators’ and licensees’ R&D expenditures;

The adoption and acceptance of the C1-cell protein production platform and our other technologies by biopharmaceutical and non-pharmaceutical companies and regulatory agencies;

The addition or loss of one or more of the collaborative partners, grants, research funding, or licensees we are working with to further develop and commercialize our technologies and products in the pharmaceutical industry;

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Our ability to enter into new research projects, grants, licenses or other forms of collaborations and generate revenue from such parties;

Scientific risk associated with emerging technologies such as the C1-cell protein production platform;

Failure to bring on the necessary research 

and manufacturing capacity, e.g., CRO, CMO (contract manufacturing organization), and CDMO (contract development and manufacturing organization), if required;

Uncertainty regarding the timing of research funding, grants or upfront license fees for new C1-cell protein production platform, our other technologies, collaborations, license agreements or expanded license agreements;

Scientific risk associated with emerging technologies such as the C1-cell protein production platform;

Failure to bring on the necessary research and manufacturing capacity, e.g., CRO, CMO (contract manufacturing organization), and CDMO (contract development and manufacturing organization), if required;

Uncertainty regarding the timing of research funding, grants or upfront license fees for new C1-cell protein production platform, our other technologies, collaborations, license agreements or expanded license agreements;

Delays or failure to receive upfront fees, milestones and royalties and other payments.

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These provisions may discourage certain types of transactions involving an actual or potential change in control.

These provisions may also limit our stockholders’

ability to approve transactions that they may deem to be in their best interests and discourage transactions in which our stockholders might otherwise receive a premium for their stock over the current market price.

These provisions may also limit our stockholders’ ability to approve transactions that they may deem to be in their best interests and discourage transactions in which our stockholders might otherwise receive a premium for their stock over the current market price.

Our executive officers, directors and principal stockholders (5% stockholders) together control approximately 34.5%  of our 28,563,100 shares of outstanding common stock as of 

December 31, 2022 .

Our executive officers, directors and principal stockholders (5% stockholders) together control approximately 35.1% of our 28,811,061 shares of outstanding common stock as of December 31, 2023 .

Our Founder and Chief Executive Officer Mark Emalfarb, through the Mark A.

Emalfarb Trust U/A/D October 1, 1987, as amended (the “MAE Trust”) of which he is the trustee and beneficiary, owned approximately 15.4%  of our outstanding common stock as of 

December 31, 2022 .

Further, the Francisco Trust U/A/D February 28, 1996 (the “Francisco Trust”), whose beneficiaries are the descendants and spouse of Mr.

Emalfarb, owned approximately 12.4% of our outstanding common stock as of 

December 31, 2022 .

Emalfarb Trust U/A/D October 1, 1987, as amended (the “MAE Trust”) of which he is the trustee and beneficiary, owned approximately 15.7% of our outstanding common stock as of December 31, 2023 .

Further, the Francisco Trust U/A/D February 28, 1996 (the “Francisco Trust”), whose beneficiaries are the descendants and spouse of Mr.

Emalfarb, owned approximately 12.3% of our outstanding common stock as of December 31, 2023 .

We have historically been partially controlled, managed and partially funded by Mr.

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Emalfarb and stockholders affiliated with Mr.

Emalfarb controlled approximately 27.8%  of our outstanding common stock as of 

December 31, 2022 .

Emalfarb controlled approximately 28.0% of our outstanding common stock as of December 31, 2023 .

Emalfarb may be able to control or significantly influence all matters requiring approval by our stockholders, including the election of directors and the approval of mergers or other business combination transactions.

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As of December 31, 2023 , there were 28,811,061 shares of our common stock outstanding.

Approximately 

34.5%  of these outstanding common shares are beneficially owned or controlled by our executive officers, directors and principal stockholders. 

Approximately 35.1% of these outstanding common shares are beneficially owned or controlled by our executive officers, directors and principal stockholders.

Our common stock has a relatively small public float.

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The Company is exposed to credit risk and fluctuations in the values of its investment portfolio.

The Company’s investments can be negatively affected by liquidity, credit deterioration, financial results, market and economic conditions, political risk, sovereign risk, interest rate fluctuations or other factors.

As a result, the value and liquidity of the Company’s cash, cash equivalents, and marketable and non-marketable securities may fluctuate substantially, which could result in significant losses and could have a material adverse impact on the Company’s financial condition and operating results.

We are a smaller reporting company, and the reduced disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors.

We are a smaller reporting company and are therefore entitled to rely on certain reduced disclosure requirements, such as an exemption from providing selected financial data and executive compensation information.

We are also exempt from the requirement to obtain an external audit on the effectiveness of internal control over financial reporting provided in Section 404(b) of the Sarbanes-Oxley Act.

We are also exempt from the requirement to obtain an external audit on the effectiveness of internal control over financial reporting provided in Section 404(b) of the Sarbanes-Oxley Act.

These exemptions and reduced disclosures in our filings with the Securities and Exchange Commission due to our status as a smaller reporting company mean our auditors do not review our internal control over financial reporting and may make it harder for investors to analyze our results of operations and financial prospects.

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If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock prices may be more volatile.

Unresolved Staff Comments

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 1A. Risk Factors