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What changed in DYADIC INTERNATIONAL INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of DYADIC INTERNATIONAL INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+212 added−238 removedSource: 10-K (2024-03-28) vs 10-K (2023-03-29)

Top changes in DYADIC INTERNATIONAL INC's 2023 10-K

212 paragraphs added · 238 removed · 134 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

37 edited+30 added−53 removed36 unchanged
Biggest changeUnder the $690,000 NIIMBL grant, the Company has received approximately 75% of the funding to engineer the Company's proprietary and patented C1-cell thermophilic fungal ( Thermothelomyces heterothallica ) protein production platform to produce two different coronavirus antibodies. ● Third Party C1 Produced COVID-19 Antibody – A non-human primate challenge study completed dosing of a C1 produced COVID-19 monoclonal antibody (mAb) that had previously demonstrated broad neutralization and protection against Omicron (BA.1 and BA.2) and the other earlier variants of concern in hamsters.
Biggest changeA non-human primate challenge study completed dosing of a C1 produced COVID-19 monoclonal antibody that had previously demonstrated broad neutralization and protection against Omicron (BA.1 and BA.2) and the other earlier variants of concern in hamsters. Preliminary results obtained from the challenge study with the SARS-CoV-2 Delta virus on non-human primates demonstrated potential high protection.
The Company continues to evaluate potential opportunities to expand the application of our C1-cell protein production platform, and is currently focused on the following markets: ● Recombinant vaccines and drugs for animal and human health ● New innovative biotherapeutics ● Biosimilars / Biobetters non-Glycosylated/Glycosylated protein markets ● Drug formulation, research diagnostic and reagents 6 ● Alternative proteins for food, health and wellness The use of biologic medicines, for applications such as infectious disease vaccines and therapeutics are growing significantly.
The Company continues to evaluate potential opportunities to expand the application of our C1-cell protein production platform, and is currently focused on the following markets: ● Recombinant vaccines and drugs for animal and human health ● New innovative biotherapeutics ● Biosimilars / Biobetters non-Glycosylated/Glycosylated protein markets ● Drug formulation, research diagnostic and reagents ● Alternative proteins for food, health and wellness 6 The use of biologic medicines, for applications such as infectious disease vaccines and therapeutics are growing significantly.
CHO 41-54 days) Manufacturing ~ 3-4 batches of C1 produced mAbs in the same time it takes to make 1 batch using CHO-cells Faster Product Release –No requirement for viral (i.e., CHO and Baculovirus) or endotoxin (i.e., E. coli) removal allowing for earlier product release Costs High yields and rapid manufacturing cycle times reduce costs and shrink manufacturing footprint C1-cells can be grown using low-cost and readily available cGMP media; C1 media No requirement for viral or endotoxin removal, simplifies processing compared to CHO, Baculovirus & E. coli saving time and money Competition The biotechnology and biopharmaceutical industry is intensely competitive.
CHO 41-54 days) Manufacturing ~ 3-4 batches of C1 produced mAbs in the same time it takes to make 1 batch using CHO-cells Faster product release –No requirement for viral (i.e., CHO and Baculovirus) or endotoxin (i.e., E. coli) removal allowing for earlier product release Costs High yields and rapid manufacturing cycle times reduce costs and shrink manufacturing footprint C1-cells can be grown using low-cost and readily available cGMP media; C1 media No requirement for viral or endotoxin removal, which simplifies processing compared to CHO, Baculovirus and E. coli, saving time and money Competition The biotechnology and biopharmaceutical industry is intensely competitive.
Our Industry and Potential Markets Based on feedback from our collaborators and our ongoing discussions with leading pharmaceutical and biotech companies, contract manufacturing organizations (CMOs), leading academic institutions, as well as U.S. and foreign governmental agencies, we continue to believe that the biopharmaceutical market is an attractive opportunity to apply our C1-cell protein production platform.
Our Industry and Potential Markets Based on feedback received from our collaborators and our ongoing discussions with leading pharmaceutical and biotech companies, contract manufacturing organizations (CMOs), leading academic institutions, as well as U.S. and foreign governmental agencies, we continue to believe that the biopharmaceutical market is an attractive opportunity to apply our C1-cell protein production platform.
These arrangements are typically work for hire on an as need basis, however, certain of these programs, if negatively impacted due to resource availability, disagreements, or for other reasons could lead to delays or inability to realize our research and commercial objectives.
These arrangements are typically work for hire on an as-needed basis, however, certain of these programs, if negatively impacted due to resource availability, disagreements, or for other reasons could lead to delays or inability to realize our research and commercial objectives.
Over the past two plus decades, the Company has developed a gene expression platform for producing commercial quantities of industrial enzymes and other proteins, and has previously licensed this technology to third parties, such as Abengoa Bioenergy, BASF, Codexis and others, for use in industrial (non-pharmaceutical) applications.
Over the past two plus decades, the Company has developed a gene expression platform for producing commercial quantities of industrial enzymes and other proteins, and has previously licensed this technology to third parties, such as Abengoa Bioenergy SA, BASF SE, Codexis, Inc. and others, for use in industrial (non-pharmaceutical) applications.
(4) Alternative Protein Programs Dyadic’s newly developed Dapibus™ filamentous fungal based microbial protein production platform is reengineered to enable the rapid development and large-scale manufacture of low-cost proteins, metabolites, and other biologic products for use in non-pharmaceutical applications, such as food, nutrition, and wellness.
(3) Non-pharmaceutical Programs Dyadic’s newly developed Dapibus™ filamentous fungal based microbial protein production platform is reengineered to enable the rapid development and large-scale manufacture of low-cost proteins, metabolites, and other biologic products for use in non-pharmaceutical applications, such as food, nutrition, and wellness.
The C1-cell protein production platform is a robust and versatile thermophilic filamentous fungal expression system for the development and production of biologic products including enzymes and other proteins for human and animal health.
The C1-cell protein production platform is a versatile thermophilic filamentous fungal expression system customized for the development and production of biologic products including enzymes and other proteins for human and animal health.
Such a platform would facilitate the rapid and high titer production of difficult to express proteins resulting in greater patient access and more affordable biopharmaceuticals.
Such a platform could facilitate the rapid and high titer production of difficult to express proteins resulting in greater patient access and more affordable biopharmaceuticals.
We believe that our microbial fungal based protein production platforms, including C1 and Dapibus™, have great potential to become an alternative to several legacy production technologies currently used in the biopharmaceutical industry to produce vaccines, monoclonal antibodies, and other therapeutic proteins for both the human and animal health markets.
We believe that our microbial fungal based protein production platforms, including C1 and Dapibus™, have significant potential to become an alternative to several traditional production technologies currently used in the biopharmaceutical industry to produce vaccines, monoclonal antibodies, and other therapeutic proteins for both the human and animal health markets.
Our C1-cell protein production platform has the potential to be an alternative to CHO, Baculovirus and other legacy expression systems to produce proteins for vaccines, therapeutics, diagnostics, alternative foods, nutrition and wellness and other biological products.
We believe that our C1-cell protein production platform has the potential to be an alternative to CHO, Baculovirus and other traditional expression systems to produce proteins for vaccines, therapeutics, diagnostics, alternative foods, nutrition and wellness and other biological products.
We believe that in comparison to other cell lines, our cell line has several significant potential operational advantages, which include but are not limited to: Purity High retention of target secreted protein through downstream processing No requirement for viral (i.e., CHO and Baculovirus) or endotoxin (i.e., E. coli ) removal High Productivity Robust & versatile growth conditions High yields of secreted protein Low viscosity due to C1’s unique morphology Robustness Proven at both small and large scale, ranging from laboratory microtiter plates, shaker flasks, single use and/or stainless-steel microbial fermenters Stable and correctly folded monoclonal antibodies (mAbs); having binding, neutralizing and certain other properties similar to CHO produced mAbs 5 Speeds Develop stable C1-cell lines for protein production in ~ 60 days Production time savings of ~30 days over CHO-cell production (C1: 12-14 days vs.
Moreover, we believe that our protein production platforms offer potential competitive advantages in the discovery, development, and manufacturing of biologic medicines and vaccines, compared to certain other legacy biopharmaceutical expression systems, which include but are not limited to: Purity High retention of target secreted protein through downstream processing No requirement for viral (i.e., CHO and Baculovirus) or endotoxin (i.e., E. coli ) removal High Productivity Robust and versatile growth conditions High yields of secreted protein Low viscosity due to C1’s unique morphology Robustness Proven at both small and large scale, ranging from laboratory microtiter plates, shaker flasks, single use and/or stainless-steel microbial fermenters Stable and correctly folded monoclonal antibodies (mAbs), having binding, neutralizing and certain other properties similar to CHO produced mAbs 5 Speeds Develop stable C1-cell lines for protein production in ~ 60 days Production time savings of ~30 days over CHO-cell production (C1: 12-14 days vs.
These potential competitors include the same multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies, universities, governmental agencies, and other research institutions that are operating in the human health and animal health fields. In that respect, smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies.
These potential competitors include multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies, universities, governmental agencies, and other research institutions that are operating in the human health and animal health fields. Moreover, smaller or early-stage companies may emerge as significant competitors, particularly through collaborative arrangements with large, established companies.
Unlike human and animal health there are other companies who have and are developing filamentous fungal microorganisms for the development and manufacture of low-cost proteins, metabolites, and other biologic products for use in non-pharmaceutical applications, such as food, nutrition, and wellness.
Unlike in human and animal health, several other companies have and are actively engaged in utilizing filamentous fungal microorganisms for the development and manufacture of low-cost proteins, metabolites, and other biological products for use in non-pharmaceutical applications, such as food, nutrition, and wellness.
Generally, our activities in other countries will be subject to regulation that is similar in nature and scope as that imposed in the United States, although there can be important differences. Intellectual Property Patents are important to developing and protecting our competitive position.
Generally, our activities in other countries will be subject to regulation that is similar in nature and scope as that imposed in the United States, although there can be important differences.
Currently, Dyadic owns or has exclusive rights to seven (7) patent families, of which four (4) entered the national phase. The other three (3) applications are at the international (Patent Cooperation Treaty, PCT) phase.
Currently, Dyadic owns or has exclusive rights to seven (7) patent families, of which five (5) entered the national phase. The other two (2) applications are at the international (Patent Cooperation Treaty, PCT) phase.
(“Abic”), an affiliate of Phibro Animal Health Corporation (“Phibro”), based off an existing July 1, 2020, non-exclusive sublicense and development agreement (the “Phibro/Abic Agreement”), to provide services for a targeted disease.
Phibro/Abic Sublicense Agreement On February 8, 2022, the Company entered into an exclusive sublicense agreement with Abic Biological Laboratories Ltd. (“Abic”), an affiliate of Phibro Animal Health Corporation (“Phibro”), based on an existing July 1, 2020, non-exclusive sublicense and development agreement (the “Phibro/Abic Agreement”), to provide services for a targeted disease.
The Company’s Phase 1 randomized, double blind, placebo-controlled trial is designed as a first-in-human trial to assess the clinical safety and antibody response of DYAI-100, a C1-SARS-CoV-2 recombinant protein receptor binding domain vaccine, produced using the C1-cell protein production platform, administered as a booster vaccine at two single dose levels (low dose and high dose cohorts) in healthy volunteers.
The Phase 1 randomized, double-blind, placebo-controlled trial was designed as a first-in-human trial to assess the clinical safety and antibody response of DYAI-100, produced using the C1 platform and administered as a booster vaccine at two single dose levels in healthy volunteers.
We protect such information principally through confidentiality agreements with our employees, consultants, outside scientific collaborators, and other advisers. In the case of our employees, these agreements also provide, in compliance with relevant law, that inventions and other intellectual property conceived by such employees during their employment shall be our exclusive property. 11
In the case of our employees, these agreements also provide, in compliance with relevant law, that inventions and other intellectual property conceived by such employees during their employment shall be our exclusive property.
The Company also developed the Dapibus™ thermophilic filamentous fungal based microbial protein production platform to enable the rapid development and large-scale manufacture of low-cost proteins, metabolites, and other biologic products for use in non-pharmaceutical applications, such as food, nutrition, and wellness.
The Company also developed the Dapibus™ thermophilic filamentous fungal-based microbial protein production platform to enable the rapid development and large-scale manufacture of cost-effective proteins, metabolites, and other biologic products for use in non-pharmaceutical applications, including food, nutrition, and wellness. We believe that our microbial cell line possesses distinctive characteristics compared to conventional filamentous fungal cells.
Our patent position and proprietary rights are subject to various risks and uncertainties. Please read the “Risk Factors” in Item 1A of this Annual Report for information about certain risks and uncertainties that may affect our patent position and proprietary rights. We also rely upon unpatented confidential information to remain competitive.
Please read the “Risk Factors” in Item 1A of this Annual Report for information about certain risks and uncertainties that may affect our patent position and proprietary rights. We also rely upon unpatented confidential information to remain competitive. We protect such information principally through confidentiality agreements with our employees, consultants, outside scientific collaborators, and other advisers.
However, our competitors using other protein production platforms who are significantly larger and better capitalized than us could undertake strategies similar to what we are pursuing and even develop them at a much more rapid rate.
However, our competitors using other protein production platforms who are significantly larger and better capitalized than us, could potentially adopt strategies similar to our and even implement them at a faster pace.
The Company, supplemented by third party funding is also further developing its Dapibus™ protein production platform for use in non-pharmaceutical applications, such as food, nutrition, and wellness. In March 2021, the Company engaged CR2O, a contract research organization, to manage and support further preclinical and clinical development of DYAI-100.
The Company, supplemented by third party funding is also further developing its Dapibus™ protein production platform for use in non-pharmaceutical applications, such as food, nutrition, and wellness.
Some examples of human and animal vaccines and drugs which have the potential to be produced from C1-cells are protein antigens, ferritin nanoparticles, virus-like particles (“VLPs”), monoclonal antibodies (“mAbs”), Bi/Tri-specific antibodies, Fab antibody fragments, Fc-fusion proteins, as well as other therapeutic enzymes and proteins.
Potential applications to be produced from C1-cells include protein antigens, ferritin nanoparticles, virus-like particles (“VLPs”), monoclonal antibodies (“mAbs”), Bi/Tri-specific antibodies, Fab antibody fragments, Fc-fusion proteins, as well as other therapeutic enzymes and proteins. The Company participates in multiple funded research collaborations with certain leading animal and human pharmaceutical companies.
On June 28, 2019, and November 9, 2021, the Company extended its research contract with VTT twice to continue developing Dyadic’s C1-cell protein production platform for therapeutic protein production, including C1 host system improvement, glycoengineering, protease deletion, and management of third-party target protein projects.
The Company has extended its research contract with VTT multiple times to continue developing Dyadic’s C1-cell protein production platform for therapeutic protein production, including C1 host system improvement, glycoengineering, protease deletion, and management of third-party target protein projects. A significant portion of the research and development activities at VTT are being funded by the Company’s third-party collaborators.
Product Development in Alternative Proteins: ● We are currently expanding our portfolio of recombinant proteins and media components for use in food and other applications. ● Animal free recombinant serum albumin projects were initiated for use in potential non-pharmaceutical applications such as a component of cell culture media in nutrition, health, and food.
The Company’s animal-free recombinant serum albumin projects were initiated in late 2022 using Dyadic pharmaceutical cell lines for use in potential therapeutic, product development, research, and/or diagnostic human and animal pharmaceutical applications. Animal-free recombinant serum albumin projects were initiated for use in potential non-pharmaceutical applications such as a component of cell culture media in nutrition, health, and food.
We believe that our microbial protein production platforms have the potential to become leading protein production platforms for developing and manufacturing proteins for use in biopharmaceuticals, food, nutrition, wellness and in drug formulation and research diagnostics due to their potential speed of development, high protein yields, scalability, low-cost media, and hence lower production costs.
We believe that our microbial protein production platforms hold the potential to become leading protein production platforms for developing and manufacturing proteins across various sectors, including biopharmaceuticals, food, nutrition, wellness, drug formulation, and research diagnostics, based on our platform's capability to expedite development processes, achieve high protein yields, scale efficiently, utilize low-cost media, and ultimately reduce production costs.
After the DuPont Transaction, the Company has been focused on building innovative microbial platforms to address the growing demand for global protein bioproduction and unmet clinical needs for effective, affordable, and accessible biopharmaceutical products for human and animal health and for other biologic products for use in non-pharmaceutical applications.
After the DuPont Transaction, the Company has been focused on building innovative microbial protein production platforms to address the growing demand for global protein bioproduction utilizing its advanced microbial platforms to develop and manufacture prophylactic, therapeutic, and nutritional biopharmaceutical products for human and animal health and wellness.
Government Regulation and Product Approval As a small biotechnology company that operates in the United States, we are subject to extensive regulation.
The Patent will cover claims for the development and manufacture of seasonal and pandemic influenza vaccines from the Company’s C1 protein production platform. Government Regulation and Product Approval As a small biotechnology company that operates in the United States, we are subject to extensive regulation.
We have also developed the Dapibus™ filamentous fungal based microbial protein production platform to enable the rapid development and large-scale manufacture of low-cost proteins, metabolites, and other biologic products for use in non-pharmaceutical applications, such as food, nutrition, and wellness.
Additionally, we aim to enable the rapid development and large-scale manufacturing of cost-effective proteins, metabolites, and other biologic products, extending beyond pharmaceutical applications in areas such as food, nutrition, and wellness.
Our Technology Our mission is to use our proprietary highly productive scalable microbial fungal protein production platforms to meet the growing demand for proteins worldwide for human and animal health and to enable the rapid development and large-scale manufacture of low-cost proteins, metabolites, and other biologic products for use in non-pharmaceutical applications, such as food, nutrition, and wellness.
Our Technology Our mission is to leverage our proprietary highly productive, and scalable microbial fungal protein production platforms to meet the growing demand for proteins in both human and animal health markets worldwide.
This was the first time a C1 produced monoclonal antibody was used in a non-human primate study validating the safety and efficacy of a C1 produced antibody for infectious diseases. ● Recombinant Serum Albumin – An animal free recombinant serum albumin project was initiated in late 2022 using Dyadic pharmaceutical cell lines for use in potential therapeutic, product development, research, and/or diagnostic human and animal pharmaceutical applications.
This was the first time a C1-produced monoclonal antibody was used in a non-human primate study validating the safety and efficacy of a C1 produced antibody for infectious diseases.
There are currently four (4) pending patent applications in the United States, and nineteen (19) additional patent applications in a variety of jurisdictions including Europe and China. Our success is significantly dependent on our ability to obtain and maintain patent protection for C1 and Dapibus™, both in the United States and abroad.
Our success is significantly dependent on our ability to obtain and maintain patent protection for C1 and Dapibus™, both in the United States and abroad. Our patent position and proprietary rights are subject to various risks and uncertainties.
We are actively applying our proprietary Dapibus™ platform and other technologies to address the unmet need of reducing the production cost in the global market for non-pharmaceutical recombinant proteins. Food and Nutrition: ● In May 2022, we launched a strategic partnership with a global food ingredient company.
We are actively applying our proprietary Dapibus™ platform and other technologies to address the unmet need to reduce the production cost in the global market for non-pharmaceutical recombinant proteins. 9 Cell Culture Media Products o Recombinant Serum Albumin: In March 2024, the Company executed a term sheet with a global albumin manufacturer and distributor to develop and license Dyadic’s recombinant serum albumin initially for diagnostic and research-grade purposes.
This project has proved the concept that C1-cell protein production platform can be applied to several very high value therapeutic or preventative monoclonal antibodies. (2) Animal Health Programs ZAPI Biologic Vaccines Program We have completed our participation in the €20 million Zoonosis Anticipation Preparedness Initiative (“ZAPI”) program.
This project has proved the concept that C1-cell protein production platform can be applied to several very high value therapeutic or preventative monoclonal antibodies. (2) Pharmaceutical Programs DYAI-100, a C1-SARS-CoV-2 recombinant protein RBD vaccine candidate, is the first C1-expressed protein tested in humans.
In July 2022, the Company expanded the Phibro/Abic Agreement to include an additional research project to develop an additional animal vaccine for livestock. 8 Monoclonal Antibodies Collaboration In 2022, the Company initiated a fully funded research and development collaboration with a top five animal health company to produce therapeutic monoclonal antibodies for use in treating diseases in companion animals.
Since then, the Company has expanded the Phibro/Abic Agreement to include additional research projects to develop vaccines and treatments for companion and livestock animal diseases.
The Company is involved in multiple funded research collaborations with animal and human pharmaceutical companies which are designed to leverage its C1-cell protein production platform to develop innovative vaccines and drugs, biosimilars and/or biobetters.
These partnerships are strategically engaged to leverage the potential of our C1-cell protein production platform in the development of innovative vaccines and drugs, as well as biosimilars and/or biobetters, which we believe will contribute to advancements in medical science and healthcare.
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We rely on our existing cash and cash equivalents, investments in debt securities, and cash inflows from operating activities to provide the working capital needs for our operations.
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These entities include but are not limited to CR2O, a contract research organization, to manage and support further preclinical and clinical development of DYAI-100, and Eleszto Genetika (Budapest, Hungary).
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We believe that our existing cash position, investments in investment grade securities, and additional cash received from the sale of certain equity and debt investments will be adequate to meet our operational, business, and other liquidity requirements for at least the next twelve (12) months.
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Following the regulatory clearance from the South African Health Products Regulatory Authority (SAHPRA), the trial was initiated in 1Q 2023 with the last patient visit occurring in 3Q 2023.
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However, in the event our financing needs for the foreseeable future are not able to be met by our existing cash, cash equivalents and investments, we would seek to raise funds through public or private equity offerings, and/or other means to meet our financing requirements.
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On November 29, 2023, the Company announced the top-line safety results, indicating that the study had met its primary endpoint that both the low and high dose levels of the vaccine are safe and well tolerated among participants.
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The Company has self-funded the development and cGMP manufacturing costs of its proprietary COVID-19 vaccine candidate, DYAI-100, and in February 2023 completed the dosing of all patients related to the Phase 1 clinical trial to demonstrate the safety in humans of a protein produced from our C1-cell protein production platform.
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Additionally, the vaccine has been shown to induce immune responses at both dose levels, suggesting its potential efficacy in generating protective immunity against the target virus. On March 25, 2024, the Company entered into a funded research collaboration with a top ten pharmaceutical company to develop a vaccine antigen and a monoclonal antibody produced from the C1 technology.
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The Company does not anticipate the need to spend significant additional capital to support the continued development, manufacturing and testing of DYAI-100 in 2023 and beyond.
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On March 15, 2024, the Company expanded its collaboration with Phibro Animal Health/Abic Biological Laboratories Ltd to develop vaccines and treatments for companion and livestock animal diseases. In March 2024, a manuscript of preclinical studies on C1 produced monoclonal antibody in non-human primates and hamsters was published in the prestigious peer-reviewed journal Nature Communications.
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We believe that our C1 cell line is unique compared to traditional filamentous fungal cells, and the C1-cell protein production platform has the potential to be used in the discovery, development and manufacturing of biologic medicines and vaccines, given its anticipated competitive advantages compared to certain other legacy biopharmaceutical expression systems, such as insect cells (i.e., baculovirus) and CHO (“Chinese Hamster Ovary”) cells.
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At the NIIMBL conference in February 2024, the Company showcased our project data and research results generated from the NIIMBL Grant received by the Company under the previously announced White House’s American Rescue Plan.
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On September 12, 2022, the Company further extended its research contract (the “Amendment”) through December 2023 with VTT. A significant portion of the research and development activities at VTT are being funded by the Company’s third-party collaborators.
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On February 28, 2024, the Company’s Dutch subsidiary, Dyadic Nederland BV, entered into a strategic partnership agreement and collaboration with Rabian BV (“Rabian”), a Dutch innovative SME founded by experienced entrepreneurs and vaccine scientists.
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CR2O engaged Bio-Technology General (Israel) Ltd., (“BTG”), a cGMP subcontractor, to produce the DYAI-100 drug substance and perform certain other analytical tests required to release the final drug product.
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Awarded by Eurostars for the AVATAR project, a part of the European Partnership on Innovative SMEs, and co-funded by the European Union through Horizon Europe, Rabian will use the total funding leveraging its expertise in virology to develop a rabies vaccine using Dyadic’s C1 protein production platform to tackle the challenges posed by rabies, particularly in lower- and middle-income countries.
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ZAPI (www.zapi-imi.eu) is a five-year research and development project funded as part of IMI EU program (Zoonoses Anticipation and Preparedness Initiative (ZAPI project; IMI Grant Agreement n°115760)), with the assistance and partial financial support of IMI and the European Commission, and in-kind contributions from EFPIA partners.
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Dyadic is expected to receive an equity stake in Rabian, fully funded research and development costs, and specified product milestones and royalties upon commercialization. 8 On February 21, 2024, the Company announced it has advanced its collaboration with the Israel Institute for Biological Research (IIBR) and its commercial arm Life Science Research Israel (LSRI), to target emerging disease solutions.
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This project aims to develop a suitable platform for the rapid development and production of vaccines and protocols to fast-track registration of product developed to combat pandemic Zoonotic diseases that have the potential to affect human and animal populations.
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This partnership aims to leverage Dyadic’s expertise in microbial platforms for flexible scale protein bioproduction and the IIBR’s antibodies and antigens discovery capabilities to develop and manufacture innovative solutions for addressing emerging diseases and potential bio-threats.
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The Company’s C1 recombinant protein production platform has been selected by ZAPI as a production host of antigens for the SBV and RVFV, and ZAPI has expanded its program with the Company and provided additional funding in 2019 and 2021, respectively.
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Through this collaboration, both parties are working towards the development of effective treatments and vaccines to combat global health challenges with the intention of future commercialization (to date, the framework is non-binding and subject to the execution of a binding agreement to be negotiated by the parties) through collaborative out-licensing initiatives.
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The SBV antigen from C1 was produced at approximately 300 times greater yields than the SBV antigen from baculovirus and was more stable. Additionally, the C1 SBV antigen was shown to be safe and very effective (full protection) in protecting cattle, sheep and mice from the SBV.
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On February 13, 2024, the Company announced a strategic partnership with Cygnus Technologies®, part of Maravai LifeSciences® (Nasdaq: MRVI), which has developed the C1 Host Cell Protein ELISA Kit for the quality release of products produced using Dyadic’s protein expression platforms.
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Based on these results, additional fully funded animal trials are continuing in 2021 with C1 expressed antigens for SBV and RVFV and to generate additional safety and efficacy data.
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On February 6, 2024, the Company announced it has signed a fully funded evaluation agreement including a commercial option with an undisclosed leading global biopharmaceutical company to design and produce recombinant proteins using Dyadic’s C1 filamentous fungal-based microbial protein production platform.
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ZAPI brought together experts in human and animal health to create new platforms and technologies that will facilitate a fast, coordinated, and practical response to new pandemic threats as soon as they emerge.
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On October 25, 2023, the Company announced that it has entered into a new research collaboration with the Vaccine and Immunotherapy Center (“VIC”) at Massachusetts General Hospital to express vaccine antigens for influenza A and other infectious diseases, as part of VIC's $5.88 million award from the Department of Defense (“DoD”).
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The Company’s C1 recombinant protein production platform was selected by ZAPI as a production host of antigens for the Schmallenberg virus (“SBV”) and Rift Valley Fever virus (“RVFV”). The C1 expressed SBV antigen was produced in less time and at approximately 300 times greater yield than the SBV antigen expressed from insect (baculovirus) cells and was more stable.
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On September 26, 2023, the Company entered into a development and commercialization agreement with bYoRNA combining bYoRNA’s novel eukaryotic “bio” RNA platform with Dyadic’s industrially proven C1 protein production platform to provide the pharmaceutical industry with a potentially more cost-efficient platform for manufacturing large quantities of lower cost mRNA, enabling access to mRNA vaccines and drugs to a broader global population.
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Additionally, the C1 SBV antigen was shown to be safe and effective to provide full protection to cattle, sheep and mice.
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Rubic One Health, South Africa In April 2023, the Company expanded the license agreement with South Africa’s Rubic One Health (“Rubic”) to include vaccines and therapeutic proteins beyond COVID-19 for both human and animal health markets.
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Based on these results, ZAPI provided the Company with additional funding in 2021 to produce both the SBV and RVFV antigens in order to perform expanded animal trials with the C1 expressed antigens which is expected to generate additional safety and efficacy data.
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This is a collaboration to develop end-to-end solutions to develop, manufacture, commercialize, and distribute affordable vaccines and biologics for human and animal health in underserved African countries. Tech transfer of the C1-cell protein production platform has been completed. Under the license agreement, Dyadic is expected to receive certain marketing rights and other considerations, including milestones and royalty payments, from Rubic.
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In the first quarter of 2021, ZAPI expanded its program with Dyadic by providing additional funding to C1 research and development efforts as well as to conduct additional animal studies using the SBV and RVFV antigens produced from C1. Phibro Sublicense Agreement On February 8, 2022, the Company entered into an exclusive sublicense agreement with Abic Biological Laboratories Ltd.
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The Company has completed the initial analysis of its recombinant albumin products and has Certificates of Analysis for recombinant human and bovine albumin that demonstrate comparability to reference standards used in the testing. o In March 2024, the Company entered into a co-promotion agreement with Biftek Co. for the promotion of growth media supplement for cell culture. o The Company has commenced a development program to produce recombinant transferrin for use in cell culture media for the alternative protein industry, and initial production via our microbial platform was successful. o The Company is currently providing samples of recombinant bovine serum albumin for application testing as growth media for the cultured meat industry.
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The project is currently underway and on target to meet development milestones per the research agreement. (3) Human Health Programs COVID-19 DYAI-100 Vaccine Candidate As a result of the positive results generated from the use of the Company’s C1-cell protein production platform in the ZAPI project, the Company expanded its in-house and third-party vaccine-based antigen research and development efforts.
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Non-animal Dairy Products o In September 2023, the Company entered into a development and exclusive license agreement to commercialize certain non-animal dairy enzymes used in the production of food products using Dapibus™ and received an upfront payment of $0.6 million in October 2023.
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The Company has invested more than $7.0 million in the development of its proprietary DYAI-100 COVID-19 vaccine candidate to date. DYAI-100, also known as C1-SARS-CoV-2 RBD vaccine, is a novel receptor binding domain (RBD) recombinant protein booster vaccine candidate, highly expressed in Dyadic's proprietary C1-cell protein production platform for the prevention of COVID-19.
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The Company believes it has achieved the specified target yield level required for a milestone payment. o The Company has developed a highly productive strain and is providing samples of recombinant alpha-lactalbumin, a whey protein, to interested collaborators. o The Company has initiated a beta-lactoglobulin animal-free recombinant whey protein project in early 2024. o The Company has commenced a recombinant lactoferrin development program and expects to provide samples of the product in the third quarter of 2024. o The Company has expressed four casein proteins and is in active discussions with potential collaborators.
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The C1-SARS-CoV-2 RBD vaccine drug product consists of the SARS-CoV-2 RBD adjuvanted with Alhydrogel 85® 2%. The DYAI-100 vaccine candidate has demonstrated excellent results in several pre-clinical animal studies.
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Bio Industrial Products o The Company has developed several enzymes that have the potential for use in multiple industries, such as nutrition, biofuels and biorefining.
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In particular, the Company relied on the preclinical animal studies conducted by the Israel Institute for Biological Research (IIBR) who were using the SARS-CoV-2 RBD antigen from the Company’s RBD C1 strain.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

54 edited+27 added−23 removed175 unchanged
Biggest changeThe 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. 16 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.
Biggest changeShould an economic slowdown occur in the U.S. or globally, our business and results of operations may be materially adversely affected. 15 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.
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.
Our sales and operations are subject to the risks of doing business internationally, as we have customers and partners located outside of the United States.
Our sales and operations are subject to the risks of doing business internationally. Our sales and operations are subject to the risks of doing business internationally, as we have customers and partners located outside of the United States.
If that happens, we may need to license these technologies, and we may not be able to obtain licenses on reasonable terms, if at all, which could harm our business, financial condition and results of operations. 22 Confidentiality agreements with employees and others may not adequately prevent disclosures of trade secrets and other proprietary information.
If that happens, we may need to license these technologies, and we may not be able to obtain licenses on reasonable terms, if at all, which could harm our business, financial condition and results of operations. Confidentiality agreements with employees and others may not adequately prevent disclosures of trade secrets and other proprietary information.
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.
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 or Dapibus™ .
Other changes in regulatory requirements, laws and policies, or evolving interpretations of existing regulatory requirements, laws and policies, may result in increased compliance costs, delays, capital expenditures and other financial obligations that could adversely affect our business or financial results. 20 Public views on ethical and social issues may limit use of our technologies.
Other changes in regulatory requirements, laws and policies, or evolving interpretations of existing regulatory requirements, laws and policies, may result in increased compliance costs, delays, capital expenditures and other financial obligations that could adversely affect our business or financial results. Public views on ethical and social issues may limit use of our technologies.
Inability to obtain sufficient insurance coverage at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of products developed by us, or our collaborators and licensees. Foreign currency fluctuations could adversely affect our results.
Inability to obtain sufficient insurance coverage at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of products developed by us, or our collaborators and licensees. 16 Foreign currency fluctuations could adversely affect our results.
Our directors and consultants may be affiliated with or employed by other parties, and some may have consulting or other advisory arrangements with other entities that may conflict or compete with their obligations to us. 17 We may be sued for product liability.
Our directors and consultants may be affiliated with or employed by other parties, and some may have consulting or other advisory arrangements with other entities that may conflict or compete with their obligations to us. We may be sued for product liability.
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; • Announcements by us, Danisco or our collaborators and licensees relating to our relationships with third parties; • Coverage of, or changes in financial estimates by us or securities and industry analysts; • 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 the market valuations of other biotechnology companies; • Limitations or expanded uses in the areas within the biopharmaceutical or other industries into which we can apply our technologies and products; • Actual or anticipated changes in our growth rate relative to our competitors; • Developments in domestic and international governmental policy or regulations; • Announcements by us, Danisco, our current and future collaborators and licensees, or our competitors of significant acquisitions, divestures, strategic partnerships, license agreements, joint ventures or capital commitments; • The position of our cash, cash equivalents and marketable securities; • Any changes in our debt position; • Developments in patent or other proprietary rights held by us, Danisco or by others; • 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; • 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; • Lawsuits initiated by or against us, Danisco, or our current and future collaborators and licensees; • Period-to-period fluctuations in our operating results; • 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; • Short positions taken in our common stock; • Sales of our common stock or other securities in the open market; • Stock buy-back programs; • Stock splits; and • 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.
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; • Announcements by us, Danisco or our collaborators and licensees relating to our relationships with third parties; • Coverage of, or changes in financial estimates by us or securities and industry analysts; • 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 market valuations of other biotechnology companies; • Limitations or expanded uses in the areas within the biopharmaceutical or other industries into which we can apply our technologies and products; • Actual or anticipated changes in our growth rate relative to our competitors; • Developments in domestic and international governmental policy or regulations; • Announcements by us, Danisco, our current and future collaborators and licensees, or our competitors of significant acquisitions, divestures, strategic partnerships, license agreements, joint ventures or capital commitments; • The position of our cash, cash equivalents and marketable securities; • Any changes in our debt position; • Developments in patent or other proprietary rights held by us, Danisco or by others; • 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; • 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; • Lawsuits initiated by or against us, Danisco, or our current and future collaborators and licensees; • Period-to-period fluctuations in our operating results; • 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; • Short positions taken in our common stock; • Sales of our common stock or other securities in the open market; • Stock buy-back programs; • Stock splits; and • 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.
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.
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.
Any of these developments could harm our technology development and value, product development efforts, revenue, profits and overall business. 19 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.
Any of these developments could harm our technology development and value, product development efforts, revenue, profits and overall business. 18 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.
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. 23 Our quarterly and annual operating results may be volatile.
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. 22 Our quarterly and annual operating results may be volatile.
If we fail to achieve one or more of these, it could have a material adverse effect on our business, financial condition and results of operations. ● 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 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; ● Access required manufacturing capacity; ● Access additional capital; ● Recruit and maintain consultants, board members and scientific advisory board members; and ● Manage scientific risks and uncertainties that may arise during our R&D and regulatory programs. 14 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 and non-pharmaceutical products.
If we fail to achieve one or more of these, it could have a material adverse effect on our business, financial condition and results of operations. ● 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 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; ● Access required manufacturing capacity; ● Access additional capital; ● Recruit and maintain consultants, board members and scientific advisory board members; and ● Manage scientific risks and uncertainties that may arise during our R&D and regulatory programs. 13 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.
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.
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.
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.
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. 15 Our SARS-CoV-2 vaccine candidates are at the Phase 1 clinical stage and have not been approved for sale.
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. 14 Our SARS-CoV-2 vaccine candidates are at the clinical stage and have not been approved for sale.
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.
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.
We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. 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. 25 Item 1B. Unresolved Staff Comments None.
We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. 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. Item 1B. Unresolved Staff Comments Not applicable.
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 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™ .
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.
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.
These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. As of December 31, 2022 , there were 28,563,100 shares of our common stock outstanding.
These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. 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. Our common stock has a relatively small public float.
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.
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.
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.
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.
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.
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 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.
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.
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. 12 We have a history of net losses, and we may not achieve or maintain profitability.
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 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.
These provisions include the following: • We may issue preferred stock with rights senior to those of our common stock; • We have a classified board of directors; • Action by written consent by stockholders is not permitted; • Our board of directors has the exclusive right to fill vacancies and set the number of directors; • Cumulative voting by our stockholders is not allowed; and • We require advance notice for nomination of directors by our stockholders and for stockholder proposals. 24 These provisions may discourage certain types of transactions involving an actual or potential change in control.
These provisions include the following: • We may issue preferred stock with rights senior to those of our common stock; • We have a classified board of directors; • Action by written consent by stockholders is not permitted; • Our board of directors has the exclusive right to fill vacancies and set the number of directors; • Cumulative voting by our stockholders is not allowed; and • We require advance notice for nomination of directors by our stockholders and for stockholder proposals.
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 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.
Uncertainties exist surrounding the longevity and severity of COVID-19 as a global health concern. 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.
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.
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.
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.
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. Additionally, any such developments may have a negative impact on our contract manufacturers, which could harm our business.
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.
Emalfarb and stockholders affiliated with Mr. Emalfarb controlled approximately 27.8% of our outstanding common stock as of December 31, 2022 . Mr. 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. The interests of Mr.
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. The interests of Mr.
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.
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. 20 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.
We also now apply the C1-cell protein production platform in the biopharmaceutical market, which has higher risks and a higher barrier to entry. 13 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.
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.
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.
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.
There is no assurance that safety, toxicity, pathogenicity, immunogenicity and other issues will not arise in current or future product development and manufacturing programs due to media, fermentation, inherent properties or genetic changes in the C1 and other strains and fermentation processes. 21 If these therapeutic protein products, antibodies or vaccines or other non-pharmaceutical products are not approved by regulators, we or our current and future customers or collaborators and licensees will not be able to commercialize them, and we may not receive research funding, upfront license fees, milestone and royalty payments, which are based upon the successful advancement of these products through the drug development and approval process.
If these therapeutic protein products, antibodies or vaccines or other non-pharmaceutical products are not approved by regulators, we or our current and future customers or collaborators and licensees will not be able to commercialize them, and we may not receive research funding, upfront license fees, milestone and royalty payments, which are based upon the successful advancement of these products through the drug development and approval process.
Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.
Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position. 21 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.
Changes in the global financial, pharmaceutical and biotech markets may make it difficult to accurately forecast operating results. These changes have had, and may continue to have, a negative effect on our business, results of operations, financial condition and liquidity.
These changes have had, and may continue to have, a negative effect on our business, results of operations, financial condition and liquidity.
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. Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social and governance practices.
Additionally, any such developments may have a negative impact on our contract manufacturers, which could harm our business. 19 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.
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.
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. 17 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.
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. 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 .
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.
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 .
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.
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.
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. 11 Risks Related to Our Business and Financial Condition We may not succeed in implementing our business strategy.
The valuations of many biotechnology companies without consistent product sales and earnings are extraordinarily high based on conventional valuation standards such as price-to-earnings and price-to-sales ratios. These trading prices and valuations may not be sustained.
The trading price of our common stock has been, and is likely to continue to be, volatile. Biotechnology company stocks generally tend to experience extreme price fluctuations. The valuations of many biotechnology companies without consistent product sales and earnings are extraordinarily high based on conventional valuation standards such as price-to-earnings and price-to-sales ratios.
In addition, our customers may adopt policies that include social and environmental requirements, or may seek to include such provisions in their contract terms and conditions.
Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation and the price of our common stock. In addition, our customers may adopt policies that include social and environmental requirements or may seek to include such provisions in their contract terms and conditions.
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.
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.
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. 18 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 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.
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 . We have historically been partially controlled, managed and partially funded by Mr. Emalfarb, and affiliates of Mr. Emalfarb. Collectively, 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. Emalfarb, and affiliates of Mr. Emalfarb. Collectively, Mr. Emalfarb and stockholders affiliated with Mr. Emalfarb controlled approximately 28.0% of our outstanding common stock as of December 31, 2023 . Mr.
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.
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.
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.
We have not yet commercialized any products based on our platforms and technologies, and we may never be able to do so.
Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, supply chain management, diversity and human rights. Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation and the price of our common stock.
Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social and governance practices. Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, supply chain management, diversity and human rights.
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.
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.
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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.
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Certain statements contained in this Annual Report (including certain statements used in the discussion of our risk factors) constitute forward-looking statements.
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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.
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We also now apply the C1-cell protein production platform in the biopharmaceutical market, which has higher risks and a higher barrier to entry.
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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.
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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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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. 12 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.
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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.
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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. ● 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.
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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.
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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.
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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.
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Risks Related to Our Business and Financial Condition We may not succeed in implementing our business strategy.
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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.
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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 .
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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.
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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.
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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.
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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.
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While we have experienced and continue to experience system failures, accidents and security breaches from time to time, none has been material to date.
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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.
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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.
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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.
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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.
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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.
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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.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe lease expires on January 31, 2024, and thereafter, the Company will reconsider the leased space to align with the future operations of the Company.
Biggest changeThe Company occupies a flexible office space for an annual rental rate of approximately $4,800. The lease expires on January 31, 2025, and thereafter, the Company will reconsider the leased space to align with the future operations of the Company.
We believe that our current and anticipated facilities are adequate to meet our needs for the immediate future, and that, should it be needed, suitable additional space is available to accommodate any expansion of our operations, but such space may not be available in the same building if and when such space is needed.
We believe that our current office spaces are adequate to meet our needs for the immediate future, and that, should it be needed, suitable additional space is available to accommodate any expansion of our operations, but such space may not be available in the same building if and when such space is needed.
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Item 2. Properties Leases Jupiter, Florida Headquarters The Company’s corporate headquarters are located in Jupiter, Florida. The Company occupies approximately 2,000 square feet with a monthly rental rate and common area maintenance charges of approximately $4,500. The lease will expire on September 1, 2023.
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Item 2. Properties Leases Jupiter, Florida Headquarters The Company’s prior lease for its corporate headquarters located at 140 Intracoastal Pointe Dr. located in Jupiter Florida, expired on August 31, 2023.
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The Company will reconsider the square footage of the leased space to align with the staffing requirements of the future operations of the Company. The Netherlands Office The Company maintains a small satellite office in Wageningen, The Netherlands. The Company occupies a flexible office space for an annual rental rate of approximately $4,000.
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In August 2023, the Company entered into a new lease comprising approximately 1,719 square feet of office space located at 1044 N US 1, Jupiter, Florida, commencing September 1, 2023 (“Commencement Date”). Rent is subject to three percent (3%) annual increases, and the Company is responsible for certain common area maintenance charges and taxes throughout the life of the lease.
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The lease has an initial term of three (3) years, following the Commencement Date with an option to extend for two (2) successive one (1) year terms.
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The option to extend were not included in the lease term used in determining the right-of-use asset or lease liability, as the Company did not consider it reasonably certain that it would exercise the option. The Netherlands Office The Company maintains a small satellite office in Wageningen, The Netherlands.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeHowever, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
Biggest changeHowever, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. Item 4.
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Mine Safety Disclosures Not applicable for our operations. 25 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeEffective April 17, 2019, our common stock began trading on the NASDAQ Stock Market LLC’s NASDAQ Capital Market, under the symbol “DYAI”. There were no shares of preferred stock outstanding for the reported period. The number of record holders of our common stock as of December 31, 2022 was 51.
Biggest changeThere were no shares of preferred stock outstanding for the reported period. The number of record holders of our common stock as of December 31, 2023 was 50 , including The Depository Trust Company, which holds shares of our common stock on behalf of an indeterminate number of beneficial owners.
There have been no stock dividends within the last three years. Any future determination to pay dividends will be at the discretion of our Board of Directors (the “Board”). Securities Authorized for Issuance Under Equity Compensation Plans See Part III, Item 12.
We have never declared or paid any dividends in the past. Any future determination to pay dividends will be at the discretion of our Board of Directors (the “Board”). Securities Authorized for Issuance Under Equity Compensation Plans See Part III, Item 12.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities Principal Market or Markets As of December 31, 2022 , Dyadic had two classes of capital stock authorized, common stock and preferred stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities Market Information As of December 31, 2023 , Dyadic had two classes of capital stock authorized, common stock and preferred stock. Effective April 17, 2019, our common stock began trading on the NASDAQ Stock Market LLC’s NASDAQ Capital Market, under the symbol “DYAI”.
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Treasury Stock As of December 31, 2022 and 2021, there were 12,253,502 shares of common stock held in t reasury, at a cost of approximately $18.9 million, repre senting the purchase price on the date the shares were surrendered to the Company.
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Equity Performance Graph We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities None.
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Issuer Purchases of Equity Securities Stock Repurchase Programs There were no repurchases of any class of the Company’s capital stock in 2022.
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Open Market Sale Agreement℠ On August 13, 2020, we entered into an Open Market Sale Agreement℠ with Jefferies LLC, (“Jefferies”), with respect to an at the market offering program under which we may offer and sell, from time to time at our sole discretion, shares of our common stock, par value $0.001 per share, having an aggregate offering price of up to $50.0 million through Jefferies as our sales agent or principal.
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We have not and are not obligated to sell any shares under the sale agreement.
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Subject to the terms and conditions of the sale agreement, Jefferies will use commercially reasonable efforts, consistent with its normal trading and sales practices and applicable laws and regulations, to sell shares of our common stock from time to time based upon our instructions, including any price, time or size limits or other customary parameters or conditions we specify, subject to certain limitations.
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Under the sale agreement, Jefferies may sell shares of our common stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended.
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We will pay Jefferies a commission equal to 3.0% of the gross proceeds from each sale of shares of our common stock sold through Jefferies under the sale agreement and will provide Jefferies with customary indemnification and contribution rights.
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In addition, we agreed to reimburse certain legal expenses and fees by Jefferies in connection with the offering up to a maximum of $50,000, in addition to certain ongoing disbursements of Jefferies’ counsel, if required.
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The sale agreement will terminate upon the sale of all $50.0 million of shares under the sale agreement, unless earlier terminated by either party as permitted therein.
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The issuance and sale, if any, of shares of our common stock by us under the sale agreement will be made pursuant to a registration statement on Form S-3 filed with the SEC on August 13, 2020 and declared effective by the SEC on August 25, 2020 and the accompanying Prospectus, as supplemented by a Prospectus Supplement.
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As of the date of this filing, there have been no sales made under the Open Market Sale Agreement℠. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

37 edited+15 added−15 removed39 unchanged
Biggest changeThe decrease in net loss of approximately $3.4 million was principally due to an increase in revenue of $0.5 million, decreases in research and development expenses of $3.9 million and general and administrative expenses of $0.3 million, partially offset by a decrease in other income of $1.2 million. 31 Liquidity and Capital Resources Our primary source of cash has been the cash received from the DuPont Transaction in December 2015, interest income received from investment grade securities, revenues from our research collaboration agreements and license agreements, and funds from the exercise of employee stock options.
Biggest changeLiquidity and Capital Resources Our primary source of cash to date has been the cash received from the DuPont Transaction in 2015, interest income received from investment grade securities, revenues from our research collaboration agreements and license agreements, and funds from the exercise of employee stock options.
All of our revenue to date has been research revenue from third-party collaborations and government grants, as well as revenue from sublicensing agreements and collaborative arrangements, which may include upfront payments, options to obtain a license, payment for research and development services, milestone payments and royalties, in the form of cash or non-cash considerations (e.g., minority equity interest).
All our revenue to date has been research revenue from third-party collaborations and government grants, as well as revenue from sublicensing agreements and collaborative arrangements, which may include upfront payments, options to obtain a license, payment for research and development services, milestone payments and royalties, in the form of cash or non-cash considerations (e.g., minority equity interest).
Differences between tax positions taken or expected to be taken in a tax return and the net benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits.” A liability should be recognized (or amount of net operating loss carry forward or amount of tax refundable is reduced) for unrecognized tax benefits, because it represents a company’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provision of ASC 740.
Differences between tax positions taken or expected to be taken in a tax return and the net benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits.” A liability should be recognized (or amount of net operating loss carry forward or amount of tax refundable is reduced) for unrecognized tax benefits, because it represents a company’s potential future obligation to the taxing authority for a tax position that was not recognized because of applying the provision of ASC 740.
All forward-looking statements included in this Annual Report are based on information available to us as of the time we file this Annual Report and, except as required by law, we undertake no obligation to update publicly or revise any forward-looking statements. 27 Overview Description of Business Dyadic International, Inc.
All forward-looking statements included in this Annual Report are based on information available to us as of the time we file this Annual Report and, except as required by law, we undertake no obligation to update publicly or revise any forward-looking statements. Overview Description of Business Dyadic International, Inc.
Actual results may differ from these estimates under different assumptions or conditions. Such differences could be material to the consolidated financial statements. We define critical accounting policies as those that are reflective of significant judgments and uncertainties and which may potentially result in materially different results under different assumptions and conditions.
Actual results may differ from these estimates under different assumptions or conditions. Such differences could be material to the consolidated financial statements. We define critical accounting estimates as those that are reflective of significant judgments and uncertainties and which may potentially result in materially different results under different assumptions and conditions.
(“Dyadic”, “we”, “us”, “our”, or the “Company”) is a global biotechnology platform company based in Jupiter, Florida with operations in the United States and a satellite office in the Netherlands, and it utilizes several third-party consultants and research organizations to carry out the Company’s activities.
(“Dyadic”, “we”, “us”, “our”, or the “Company”) is a global biotechnology company based in Jupiter, Florida with operations in the United States and a satellite office in the Netherlands, and it utilizes several third-party consultants and research organizations to carry out the Company’s activities.
Net cash used in operating activities for the year ended December 31, 2022 of approximately $ 8.1 million resulted from a net loss of $ 9.7 million adjusted for share-based compensation expenses of $ 1.9 million, offset by changes in operating assets and liabilities of $0.3 million.
Net cash used in operating activities for the year ended December 31, 2022 of $8.1 million resulted from a net loss of $9.7 million adjusted for share-based compensation expenses of $1.9 million, offset by changes in operating assets and liabilities of $0.3 million.
After the DuPont Transaction, the Company has been focused on building innovative microbial platforms to address the growing demand for global protein bioproduction and unmet clinical needs for effective, affordable, and accessible biopharmaceutical products for human and animal health and for other biologic products for use in non-pharmaceutical applications.
After the DuPont Transaction, the Company has been building innovative microbial platforms to address the growing demand for global protein bioproduction and unmet clinical needs for effective, affordable, and accessible biopharmaceutical products for human and animal health and for other biologic products for use in non-pharmaceutical applications.
Revenue related to sublicensing agreements: If the sublicense to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue allocated to the license when technology is transferred to the customer and the customer is able to use and benefit from the license.
Revenue related to sublicensing agreements: If the sublicense to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue allocated to the license when technology is transferred to the customer and the customer can use and benefit from the license.
Over the past two plus decades, the Company has developed a gene expression platform for producing commercial quantities of industrial enzymes and other proteins, and has previously licensed this technology to third parties, such as Abengoa Bioenergy, BASF, Codexis and others, for use in industrial (non-pharmaceutical) applications.
Over the past two plus decades, the Company has developed a gene expression platform for producing commercial quantities of industrial enzymes and other proteins, and has previously licensed this technology to third parties, such as Abengoa Bioenergy SA, BASF SE, Codexis, Inc. and others, for use in industrial (non-pharmaceutical) applications.
In applying these critical accounting policies, our management uses its judgment to determine the appropriate assumptions to be used in making certain estimates. These estimates are subject to an inherent degree of uncertainty. Our critical accounting policies include the following: Revenue Recognition The Company has no pharmaceutical products approved for sale at this point.
In applying these critical accounting estimates, our management uses its judgment to determine the appropriate assumptions to be used in making certain estimates. These estimates are subject to an inherent degree of uncertainty. Our critical accounting estimates include the following: Revenue Recognition The Company has no products approved for sale.
Interest Income Interest income for the year ended December 31, 2022, increased to approximately $180,000 compared to $52,000 for the year ended December 31, 2021. The increase was primarily due to an increase in interest rates and yield on the Company’s investment grade securities, which are classified as held-to-maturity.
Interest Income Interest income for the year ended December 31, 2023, increased to $417,000 compared to $180,000 for the year ended December 31, 2022. The increase was primarily due to an increase in interest rates and yield on the Company’s investment grade securities, which are classified as held-to-maturity.
Foreign Currency Exchange Foreign currency exchange loss for the year ended December 31, 2022, was approximately $50,000 compared to $97,000 for the year ended December 31, 2021. The decrease reflected the currency fluctuation of the Euro in comparison to the U.S. dollar.
Foreign Currency Exchange Foreign currency exchange loss for the year ended December 31, 2023 was $38,000 compared to $50,000 for the year ended December 31, 2022. The decrease reflected the currency fluctuation of the Euro in comparison to the U.S. dollar.
However, most, if not all, of such potential grant revenues, if received, is expected to be earmarked for third parties to advance the research required, including preclinical and clinical trials for SARS-CoV-2 vaccin es and/or antibodies candidates.
However, most, if not all, of such potential grant revenues, if received, is expected to be earmarked for third parties to advance the research required, including preclinical and clinical trials for vaccines and/or antibodies candidates.
The Company classifies accrued interest and penalties related to its tax positions as a component of income tax expense. The Company currently is not subject to U.S. federal, state and local tax examinations by tax authorities for the years before 2017. See Note 4 to the Consolidated Financial Statements.
The Company classifies accrued interest and penalties related to its tax positions as a component of income tax expense. The Company currently is not subject to U.S. federal, state and local tax examinations by tax authorities for the years before 2017. See Note 4 to the Consolidated Financial Statements. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements.
The remaining amount of the net operating loss carryforwards will expire at varying dates through 2037. Net Loss Net loss for the year ended December 31, 2022 was approximately $9.7 million compared to a net loss of $13.1 million for the year ended December 31, 2021.
The remaining amount of the net operating loss carryforwards will expire at varying dates through 2037. Net Loss Net loss for the year ended December 31, 2023 was $6.8 million compared to a net loss of $9.7 million for the year ended December 31, 2022.
These grants are intended to be used to partially or fully fund the Company’s research collaborations, including opportunities arising in connection with COVID-19 that the Company is pursuing with certain collaborators.
These grants are intended to be used to fund the Company’s research collaborations partially or fully, including opportunities and projects that the Company is pursuing with certain collaborators.
Research and Development Expenses Research and development costs are expensed as incurred and primarily include salary and benefits of research personnel, third-party contract research organization services and supply costs. Research and development expenses for the year ended December 31, 2022 decreased to approximately $4,501,000 compared to $8,392,000 for the year ended December 31, 2021.
Research and Development Expenses Research and development costs are expensed as incurred and primarily include salary and benefits of research personnel, third-party contract research organization services and supply costs. Research and development expenses for the year ended December 31, 2023 decreased to $3.3 million compared to $4.5 million for the year ended December 31, 2022.
Income Taxes The Company had net operating loss (“NOL”) carryforwards available as of December 31, 2022 and 2021, in the amount of approximately $44.0 million and $39.9 million, respectively. Approximately $41.1 million of the net operating loss carryforwards will be carried forward indefinitely and will be available to offset 80% of taxable income.
Income Taxes The Company had net operating loss (“NOL”) carryforwards available as of December 31, 2023 and 2022, in the amount of approximate ly $45.9 million and $44.0 million, respectively. Approximately $42.9 milli on of the net operating loss carryforwards will be carried forward indefinitely and will be available to offset 80% of taxable income.
Accrued Research and Development Expenses In order to properly record services that have been rendered but not yet billed to the Company, we review open contracts and purchase orders, communicate with our personnel and we estimate the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost.
The Company adopted a practical expedient to expense sales commissions when incurred because the amortization period would be one year or less. 28 Accrued Research and Development Expenses In order to properly record services that have been rendered but not yet billed to the Company, we review open contracts and purchase orders, communicate with our personnel and we estimate the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost.
These estimates are neither predictive nor indicative of the future performance of our stock. As a result, if other assumptions had been used, our recorded share-based compensation expense could have been materially different from that reported.
The estimates utilized in the Black-Scholes calculation involve inherent uncertainties and the application of management judgment. These estimates are neither predictive nor indicative of the future performance of our stock. As a result, if other assumptions had been used, our recorded share-based compensation expense could have been materially different from that reported.
Cash flows from investing activities in 2021 were primarily related to proceeds from maturities, net of purchases of investment grade debt securities, and proceeds from the sale of our equity interest in BDI.
Cash flows from investing activities in 2023 were primarily related to proceeds from maturities, net of purchases of investment grade debt securities, and proceeds from the sale of investment in Alphazyme. Cash flows from investing activities in 2022 were primarily related to proceeds from maturities, net of purchases of investment grade debt securities.
Recent Accounting Pronouncements See Note 1 to the Consolidated Financial Statements for information about recent accounting pronouncements . 30 Results of Operations Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 Revenue and Cost of Revenue The following table summarizes the Company’s revenue and cost of research and development revenue for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 Research and development revenue $ 2,683,244 $ 2,403,831 License revenue $ 247,059 $ — Cost of research and development revenue $ 2,123,193 $ 1,944,438 For each of the years ended December 31, 2022 and 2021 , the Company’s revenue was generated from fourteen collaborations.
Recent Accounting Pronouncements See Note 1 to the Consolidated Financial Statements for information about recent accounting pronouncements . 29 Results of Operations Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Revenue and Cost of Revenue The following table summarizes the Company’s revenue and cost of research and development revenue for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 Research and development revenue $ 2,545,865 $ 2,683,244 License revenue $ 352,941 $ 247,059 Cost of research and development revenue $ 1,975,849 $ 2,123,193 For the years ended December 31, 2023 and 2022 , the Company’s revenue was generated from sixteen and fourteen collaborations, respectively.
Net cash provided by financing activities for the year ended December 31, 2022 was approximately $ 0.5 million compared to $ 1.2 million for the year ended December 31, 2021 . Cash flows from financing activities in 2022 and 2021 were primarily related to proceeds received from the exercise of stock options.
There was no net cash provided by financing activities for the year ended December 31, 2023 compared to $544,000 for the year ended December 31, 2022 . Cash flows from financing activities in 2022 were primarily related to proceeds received from the exercise of stock options.
Net cash used in operating activities for the year ended December 31, 2021 of approximately $11.3 million resulted from a net loss of $13.1 million adjusted by a gain from the sale of investment in BDI of $1.6 million, offset by share-based compensation expenses of $1.8 million, amortization of held-to-maturity securities of $0.3 million, and changes in operating assets and liabilities of $1.3 million.
Net cash used in operating activities for the year ended December 31, 2023 of $ 6.7 million resulted from a net loss of $ 6.8 million adjusted for share-based compensation expenses of $ 1.2 million, partially offset by sale of our investment in Alphazyme of $1.0 million, and changes in operating assets and liabilities of $0.1 million.
The decrease principally reflected a decrease in legal expenses of $500,000, offset by increases in incentives of $133,000, insurance premiums of $56,000, business development and investor relations costs of $16,000, and other increases of $19,000.
The decrease principally reflected a decrease in management incentives of $466,000, business development and investor relations costs of $219,000, and legal expenses of $39,000, partially offset by increases insurance premiums of $96,000, and other increases of $24,000.
Our primary future cash needs are expected to be for general operating activities, including our business development and research expenses, Phase 1 clinical trial, as well as legal and administrative costs as an SEC reporting and NASDAQ listed company.
Our primary future cash needs are expected to be for general operating activities, including our business development and research expenses, as well as legal and administrative costs as an SEC reporting and NASDAQ listed company. Our future cash requirements will depend on many factors, including those factors discussed under Item 1A. Risk Factors.
The carrying value of investment grade securities, including accrued interest at December 31, 2022 was approximately $ 6.9 million compared to $ 4.6 million at December 31, 2021 .
At December 31, 2023 , cash and cash equivalents were $ 6.5 million compared to $ 5.8 million at December 31, 2022 . The carrying value of investment grade securities, including accrued interest at December 31, 2023 was $ 0.8 million compared to $ 6.9 million at December 31, 2022 .
However, in the event our financing needs are not able to be met by our existing cash, cash equivalents and investments, we would seek to raise funds through public or private equity offerings, and/or other means to meet our financing requirements.
In the event our financing needs are not able to be met by our existing cash, cash equivalents and investments, we would seek to raise additional capital through strategic financial opportunities that could include, but are not limited to, future public or private equity offerings, collaboration agreements, and/or other means.
Depending on how the performance obligation under our license and collaboration agreements is satisfied, we elected to recognize the revenue either at a point in time or over time by using the input method under Topic 606 to measure the progress toward complete satisfaction of a performance obligation. 28 Under the input method, revenue will be recognized based on the entity’s efforts or inputs to the satisfaction of a performance obligation (e.g., resources consumed, labor hours expended, costs incurred, or time elapsed) relative to the total expected inputs to the satisfaction of that performance obligation.
Depending on how the performance obligation under our license and collaboration agreements is satisfied, we recognize the revenue either at a point in time or over time by using the input method under Topic 606 to measure the progress toward complete satisfaction of a performance obligation.
Other Income For the year ended December 31, 2022, the Company recorded $250,000 related to a settlement payment we received from the termination of a proposed license and collaboration. For the year ended December 31, 2021, the Company recorded a gain from the sale of its investment in BDI in the amount of approximately $1,606,000.
Other Income For the year ended December 31, 2023, the Company had a gain of approximately $1.0 million from the sale of the Company’s equity interest in Alphazyme, LLC. For the year ended December 31, 2022, the Company received a settlement payment of $250,000 from the termination of a proposed license and collaboration.
Net cash used in investing activities for the year ended December 31, 2022 was approximately $ 2.4 million compared to net cash provided by investing activities of $ 5.2 million for the year ended December 31, 2021 . Cash flows from investing activities in 2022 were primarily related to proceeds from maturities, net of purchases of investment grade debt securities.
Net cash provided by investing activities for the year ended December 31, 2023 was $ 7.5 million compared to net cash used in investing activities of $ 2.4 million for the year ended December 31, 2022 .
The Company reviews its volatility assumption on an annual basis and has used the Company’s historical volatilities since 2016, as the DuPont Transaction resulted in significant changes in the Company’s business and capital structure. 29 The estimates utilized in the Black-Scholes calculation involve inherent uncertainties and the application of management judgment.
The expected stock price volatility was calculated based on the Company’s own volatility since the DuPont Transaction. The Company reviews its volatility assumption on an annual basis and has used the Company’s historical volatilities since 2016, as the DuPont Transaction resulted in significant changes in the Company’s business and capital structure.
Critical Accounting Policies, Estimates, and Judgments The preparation of these consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and judgments that affect the reported amount of assets and liabilities and related disclosure of contingent assets and liabilities at the date of our consolidated financial statements and the reported amounts of revenues and expenses during the applicable period.
The Company also developed the Dapibus™ thermophilic filamentous fungal based microbial protein production platform to enable the rapid development and large-scale manufacture of low-cost proteins, metabolites, and other biologic products for use in non-pharmaceutical applications, such as food, nutrition, and wellness. 27 Critical Accounting Estimates The preparation of these consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates that affect the reported amount of assets and liabilities and related disclosure of contingent assets and liabilities at the date of our consolidated financial statements and the reported amounts of revenues and expenses during the applicable period.
The increase in revenue and cost of research and development revenue was due to a number of larger research collaborations conducted during 2022. The license revenue recorded in the year ended December 31, 2022 was in connection with the Phibro/Abic and Janssen license agreements.
The license revenue for the year ended December 31, 2023 was in connection with the Janssen license agreement, and for the year ended December 31, 2022 was in connection with the Phibro/Abic and Janssen license agreements.
We rely on our existing cash and cash equivalents, investments in debt securities, and operating cash flows to provide the working capital needs for our operations. We believe that our existing cash position and investments in investment grade securities will be adequate to meet our operational, business, and other liquidity requirements for at least the next twelve (12) months.
We expect our existing cash and cash equivalents and cash raised from the Convertible Notes, investments in debt securities, and operating cash flows will be sufficient to meet our operational, business, and other liquidity requirements for at least the next twelve (12) months from the date of issuance of the financial statements contained in this Form 10-K.
The decrease primarily reflected the winding down of activities for contract research organization and pharmaceutical quality and regulatory consultants to manage and support the pre-clinical and clinical development as well as a decrease in cGMP manufacturing costs as the Company started the dosing of Phase 1 clinical trial of DYAI-100 COVID-19 vaccine candidate in January 2023.
The decrease primarily reflected the winding down of activities related to the Company’s Phase 1 clinical trial of DYAI-100 COVID-19 vaccine candidate. General and Administrative Expenses General and administrative expenses for the year ended December 31, 2023, decreased to $5.8 million compared to $6.4 million for the year ended December 31, 2022.
Removed
The Company also developed the Dapibus™ thermophilic filamentous fungal based microbial protein production platform to enable the rapid development and large-scale manufacture of low-cost proteins, metabolites, and other biologic products for use in non-pharmaceutical applications, such as food, nutrition, and wellness.
Added
Under the input method, revenue will be recognized based on the entity’s efforts or inputs to the satisfaction of a performance obligation (e.g., resources consumed, labor hours expended, costs incurred, or time elapsed) relative to the total expected inputs to the satisfaction of that performance obligation.
Removed
The Company adopted a practical expedient to expense sales commissions when incurred because the amortization period would be one year or less.
Added
The decrease in revenue and cost of research and development revenue was due to higher individual contract amounts on certain research funding and related work performed during 2022.
Removed
The expected stock price volatility was calculated based on the Company’s own volatility since the DuPont Transaction.
Added
The decrease in net loss of $2.9 million was principally due to decreases in research and development expenses of $1.2 million, general and administrative expenses of $605,000, and partially offset by an increase in other income of $768,000.
Removed
Non-Marketable Investments The Company also holds investments in non-marketable equity securities of privately-held companies, which usually do not have a readily determinable fair value. Our policy is to measure these investments at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.
Added
For the year ended December 31, 2023, the Company received $1.3 million from the sale of its equity interest in Alphazyme, LLC and $600,000 upfront payment for a product development and licensing agreement. 30 On March 8, 2024, the Company sold and issued an aggregate principal amount of $6.0 million of its 8.0% Senior Secured Convertible Promissory Notes due March 8, 2027 (the “Convertible Notes”) in a private placement in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).
Removed
Such observable price changes may include instances where the investee issues equity securities to new investors, thus creating a new indicator of fair value, as an example. On a quarterly basis, we perform a qualitative assessment considering impairment indicators to evaluate whether these investments are impaired and also monitor for any observable price changes.
Added
The purchasers of the Convertible Notes include immediate family members and family trusts related to Mark Emalfarb, our President and Chief Executive Officer and a member of our Board of Directors, including The Francisco Trust, an existing holder of more than 5% of the Company’s outstanding common stock, (collectively, the “Purchasers”).
Removed
If indicators of impairment exist, we will prepare a quantitative assessment of the fair value of our equity investments, which may include using both the market and income approaches which require judgment and the use of estimates, including discount rates, investee revenues and costs, and available comparable market data of private and public companies, among others.
Added
The net proceeds from the sale of the Convertible Notes, after deducting offering expenses, are approximately $5,850,000. The Company intends to use the net proceeds from the offering of the Convertible Notes for working capital and general corporate purposes.
Removed
Valuations of such privately-held companies are inherently complex and uncertain due to the lack of liquid market for the company’s securities.
Added
The Convertible Notes will be senior, secured obligations of Dyadic and its affiliates, and interest will be payable quarterly in cash on the principal amount equal to 8% per annum. The Convertible Notes will mature on March 8, 2027 (the “Maturity Date”), unless earlier converted, repurchased, or redeemed in accordance with the terms of the Convertible Notes.
Removed
In addition, such investments are inherently risky in that such companies are typically at an early stage of development, may have no or limited revenues, may not be or may never become profitable, may not be able to secure additional funding or their technologies, services or products may not be successfully developed or introduced into the market.
Added
The Convertible Notes will be convertible into shares of Dyadic’s Class A common stock (the “Common Stock”), at the option of the holders of the Convertible Notes (the “Noteholders”) at any time prior to the Maturity Date.
Removed
The Company bases its fair value estimates on assumptions it believes to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from those estimates. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements.
Added
The conversion price is $1.79 per share of the Common Stock, which is equal to 125% of the trailing 30-day VWAP of the Common Stock ending on the trading day immediately preceding the date of the securities purchase agreement. For more information regarding the Convertible Notes, including the covenants related thereto see Note 8 to the Consolidated Financial Statements.
Removed
General and Administrative Expenses General and administrative expenses for the year ended December 31, 2022, decreased to approximately $6,422,000 compared to $6,698,000 for the year ended December 31, 2021.
Added
This private placement funding strengthened our financial position, and it will support our near term revenue growth and accelerate our strategic objective of commercialization opportunities for pharmaceutical and non-pharmaceutical applications. The Company has received successful top-line results for the Phase 1 clinical trial of DYAI-100, and we do not plan to continue Phase 2/3 clinical trials unless funding is secured.
Removed
In addition, in August 2021, the Company received approximately $1.6 million from the BDI Sale, In December 2021, the Company received an upfront payment of $0.5 million for a non-exclusive license from Janssen. In January 2023, the Company received cash payment of approximately $1.27 million from the sale of its equity interest in Alphazyme, LLC.
Added
As of December 31, 2023, we had an accumulated deficit of $ 80.3 million.
Removed
On August 13, 2020, we entered an Open Market Sale Agreement℠ with Jefferies LLC, or Jefferies, with respect to an at the market offering program under which we may offer and sell, from time to time at our sole discretion, shares of our common stock at an aggregate offering price of up to $50.0 million through Jefferies as our sales agent or principal.
Added
We expect to incur losses and have negative net cash flows from operating activities as we continue developing our microbial platforms and related products, and as we expand our pipeline and engage in further research and development activities for internal products as well as for our third-party collaborators and licensees.
Removed
This program adds to our financial flexibility to pursue additional opportunities that leverage the broad application potential of C1. However, as of the date of this filing, there have been no sales made under the Open Market Sale Agreement ℠.
Added
The success of the Company depends on its ability to develop its technologies and products to the point of regulatory approval and subsequent revenue generation or through sublicensing of the Company’s technologies and products, to raise enough capital to finance these developmental efforts.
Removed
The Company has self-funded the development and cGMP manufacturing costs of its proprietary COVID-19 vaccine candidate, DYAI-100 and in February 2023 completed the dosing of its related Phase 1 clinical trial to demonstrate the safety in humans of a protein produced from the C1-cell protein production platform.
Added
However, we have based this estimate on assumptions that may prove to be wrong, and our operating plan may change because of many factors currently unknown.
Removed
The Company does not anticipate the need to spend significant additional capital to support the continued development, manufacturing and testing of DYAI-100 in 2023 and beyond. At December 31, 2022 , cash and cash equivalents were approximately $ 5.8 million compared to $ 15.7 million at December 31, 2021 .
Added
Any amounts raised may be used for the further development and commercialization of product candidates, and for other working capital purposes. There is no guarantee that any of these strategic or financing opportunities will be executed or realized on favorable terms, if at all, and some could be dilutive to existing shareholders.

Other DYAI 10-K year-over-year comparisons