DYAI: Dyadic’s Fourth Quarter Operational Update

By John Vandermosten, CFA

NASDAQ:DYAI

In a press release issued earlier this week Dyadic International Inc. (NASDAQ:DYAI) provided an update on achievements during the fourth quarter 2019. The summary was provided prior to meetings and presentations at conferences over the next week.

Dyadic announced yet another agreement with a big pharma company which will be the second top 10 pharma partner (“Pharma 5” in the exhibit) in their portfolio. The identity of the partner was not disclosed. The agreement is for proof of concept research for an as yet undisclosed protein. Dyadic has also expanded its relationship with the top tier pharma partner that was announced in August 2019 in conjunction with second quarter earnings (“Top Tier Pharma” in the exhibit). This relationship has multiple parts. The primary component is a collaboration to express three different types and classes of proteins. A secondary focus is the evaluation of C1 for internal use by the microbial fermentation group. The most recently announced and third part of the arrangement is with an affiliate of the company which will allow experiments and manipulations of C1 cell lines to create licensed products. Management had hinted at this possibility in the 2Q:19 conference call. This could potentially lead to third party commercialization of C1 products, which would act as a multiplier for Dyadic’s efforts for adoption of C1 use globally.

Dyadic’s success in the ZAPI program has led to an expansion of this relationship as well. The company recently received positive preliminary results from animal studies that demonstrated strong performance protecting cattle and mice from the Schmallenberg virus. The consortium has since contracted with Dyadic to express two additional proteins in animal health.

The collaboration with the Israeli Institute of Biological Research (IIBR) continues to bear fruit. C1 has been able to express an Fc-fusion enzyme: acetyl choline esterase. It has demonstrated the ability to provide protection against nerve agents including sarin and VX gas. Historically, acetyl choline esterase has been produced in low-yield HEK293 cells which have difficulty producing sufficient quantities of the desired enzyme. C1 may be able to produce the enzyme more rapidly and economically than what is currently being achieved in HEK293 cells or with other expression platforms.

The release reminded us of the November 25th announcement that VTT had achieved an important milestone in glycosylation on Dyadic’s behalf, successfully expressing the core human like G0 glycan structure at high levels. The achievement was presented at the Protein and Antibody Engineering Summit (PEGS Europe) and is a bridge towards the creation of more complex glycoforms such as G0F, G2 and G2F. We discuss this further in our article Glycosylation Milestone Opens Doors for mAb Production.

Dyadic also filed two patents during the last three months of 2019 in metabolites and glycoengineering.

2019 was a year full of achievements for Dyadic and it ended on a strong note. We anticipate the filing of the company’s 10-K in late March along with a financial update. Below is a summary of Dyadic’s collaborations, most of which do not provide the identity of the partner. The partnerships provide a way to leverage the capabilities of C1 and provide funding and expertise to improve the expression system. Stay tuned to management’s participation at upcoming events for further information.

Summary of Collaborations1

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1. Copyright Zacks Investment Research. Source: Dyadic Press Releases and Financial Filings and Zacks’ Analysis. Green highlight indicates animal health collaboration. Blue highlight indicates academic collaborator.

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