Dyadic files SEC Form 10; key milestone in road to reporting company status

August 17, 2014 |

dyadicIn Florida, Dyadic International filed a Form 10 with the SEC. If accepted by the SEC (they have 60 days to respond with questions), Dyadic will become a fully reporting public company again.

For those newer to the scene, Dyadic imploded in 2006-07 over a series of mishaps relating to an Asian venture, which resulted in CEO and founder Mark Emalfarb being dismissed — before regaining his position in June 2008.

How bad did it get?

As key T. Rowe Price exec Herb Stiles observed in 2009:

In June, 2008, it was essentially insolvent.  Maybe enough cash to last three months, max.  All of the company’s top officers had resigned, along with its legal counsel and outside accountants.  Nearly the entire Board of Directors had to be replaced.  The departing execs had dumped accusations and innuendo on you as a parting gift, and the company’s reputation in the biofuels industry had been demolished. Its business prospects, and its operations,  had been ignored for longer than one year.  There were no reliable financial statements, even going back to the beginning of 2007.   In short, a helluva mess. You had been frozen out of the company for more than one year.

You took control, re-established the company’s business as the development of its intellectual property in the C1 fungus, cut expenses, terminated the commodity businesses in industrial enzymes, and began to rebuild the company’s reputation and credibility in the universe of deep pocketed partners that Dyadic would need in the biofuels area. You enabled the company to survive on the lower expense base by liquidating excess inventory.  Then, you struck a $10 million (cash) deal for a non-exclusive license to Codexis — a major player in the biofuels area, and settled the dispute with Abengoa (another major player in biofuels) and negotiated an non-exclusive license with them, as well.  You now have positioned a very lean Dyadic  for a whole new future.  Operationally, the company is near break-even, and it is sitting on a pile of nearly $10 million in cash.  In addition, you have instituted litigation, on a mostly contingent fee basis, against the former management, and their professionals,  who did so much to cause the Company’s downfall after you were ejected from the company.

Dyadic’s Emalfarb added a more laconic, “This has been a long and winding road, with so many obstacles in our way that we had to overcome. The final chapter is yet to be written, however I am confident that we are destined to do greater things with our technology, and that justice will prevail in our lawsuit against our former professionals and that we can finally get the capital we so desperately need to help develop and commercialize products that will help feed, heal and fuel humankind.

The last time the company publicly reported results, for the 2006 year-end, it had generated $15M in sales. For the 12 months ending December 2013, the company recorded $17M in revenues — which included a one-time $5M license fee.

Dyadic’s technology

Dyadic has developed, optimized and commercialized an industrially proven expression system that turns genes into a broad range of valuable products. At the heart of Dyadic’s technology are specially engineered strains of the filamentous fungi Myceliophthora thermophila, branded as “C1.” The C1 Expression System is one of the few commercially available solutions able to take genes and develop highly scalable industrial processes to produce enzymes and other protein products. Dyadic says that the platform is “robust, flexible, and safe and has produced products in some of the largest fermenters used in the industry.”

Highlights since 2007

2008: Licensed the C1 technology platform for use in biofuels and bio-based chemicals on a non-exclusive basis to Codexis in partnership with Shell

2009: Licensed the C1 technology platform for use in second-generation biofuels and bio-based chemicals on a non-exclusive basis to Abengoa

2011: Began collaborations to develop a vaccine with Sanofi and entered into a license agreement to develop an animal feed enzyme with a confidential leading animal nutrition company

2012: Expanded Abengoa’s non-exclusive rights for use in second-generation biofuels and bio-based chemicals, and first generation ethanol; began EU-funded Bio-Mimetic program with partners including Proctor & Gamble and CIMV

2013: Licensed the C1 technology for use in certain markets on a non-exclusive basis to BASF and expanded our Dutch research center

2014: Further breakthroughs with the White Strain in expressing heterologous genes at even higher levels; established new partnership with CIMV to develop second-generation biofuels; began second funded biopharmaceutical project to develop a therapeutic protein an animal health application.

Financials

At June 30, 2014, cash and cash equivalents were $4.3 million compared to $8.9 million at December 31, 2013.

The Bottom Line

Welcome back, Dyadic. Though we had added DYAI to the Biofuels Digest Index earlier this year in anticipation of this event, there’s reason to believe that the company will be fully reporting by year-end, and sources point towards a NASDAQ listing thereafter.

The revenue numbers are pretty good, all things considered. If the company has a damaged balance sheet compared to some years in its past — well, many have the same problem, who have not had to wade through some of the litigation muck and exclusion from affordable financing instruments. With investor and key customer Abengoa about to launch its cellulosic biofuels plant in October, we see bright opportunities ahead for this company in terms of partnerships and licensing opportunities.

The SEC filing is here.

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