Conversation with Executive Team on 10/10/19 Notes:
I had a conference call with Matt Jones, Marc Emalfarb and Ping Rawson yesterday. We were on the call for over 1 hour. I have to say I came away quite happy to be a shareholder and adding more under 6 for sure. The stock appears still underfollowed, and frankly investors are not putting pieces of the puzzle together. This is one you could wake up to $30 a share overnight on one development, deal, breakthrough etc.
They AAV (Viral Vector) area alone is possibly worth 1 Billion plus, see my notes. Also animal health is expanding, and they are looking into Flu sector as well. To me this is like owning a venture cap fund with an underlying business worth possibly billions.
All my notes are below as I wrote them while on the call: You can reach me at dave@themarketanalysts.com I run several subscription services at Themarketanalysts.com
Conversations: On the Call 10/10/19 with Dave
Matt Jones- Chief Business Development Officer, Marc Emalfarb, CEO and Founder, Ping Rawson- CFO
Matt Jones- Life sciences , 20 years, small biotechs. CRO's, CDMOS. Joined 3 years ago at DYAI. Was in Global position for BD and M and A with large firm. Worked with cell lines, mammalian etc, expression levels and productivity etc. He saw the C1 protein opportunity and joined with Marc.
Comments on Business from Matt:
Express genes that can produce drugs cheaply and quickly. Dupont got C1 for industrial enzyme use for 75 million, DYAI kept human and animal health rights. R and D was then transitioned into Life sciences, as in biologics, antibodies, vaccines etc. How can we get our C1 power cell line to smash competitors? Dyadic had to re package to talk same language as big pharma etc. They have been able to express a range of molecules, working with many named and many unnamed biotechs now with joint ventures picking up speed and developing quickly.
Matt Jones Comments (Chief Business Development Officer)
Dyadic has a broad range of programs, lots of shots on goal, and the C1 platform is expanding. Lots of inquiries on a diverse range of molecules now and next generation biologics. Opportunities are noteworthy and when we can announce publicly we will do so. We are not just a one trick pony. A range of conversations are ongoing now in animal health and human both etc. We will have alot more to say when we are good to go, lots of verticals in the space. Our platform is expanding, so far we have found C1 has multiple uses and will change the game. The big boys have deep pockets, clinical trial support, regulations etc. Also we are talking with large conservative companies that take awhile to move. We are entering into whole range of NDA's with companies where C1 can play in a number of ways. We are not just focused on one area, we are agnostic if you will. Hoping to announce key milestones soon.
Wanted Institutional Investors to be able play along, so with the help of Ping Rawson, CFO who had lots of wall street experirence, they up listed to Nasdaq in April of this year.
Ping Rawson Comments:
CFO, 3 years now with Dyadic. Started in public accounting at Deloitte working with big banks and broker-dealers etc. Long journey but got the up listing to NASDAQ in April. Dyadic has strong balance sheet, cash position etc. 38.8mm cash. Many active and ongoing collaborations etc. Matter of how can we get more exposure to market and people, and have them developing with our C1 platform etc.
Marc Emalfarb, CEO and Founder notes:
Long term investor and shareholder. We are not burning money, we are investing in making the C1 platform quicker,faster, cheaper etc. Vaccines, viral vectors, metabollites and more we are expanding into. We believe we have the best opportunity out there. We are already equity partners with 4 private firms, Dyadic could be like Orbimed on steroids in that we have equity stakes in potential moonshot private companies. We are just taking equity not needing to put in cash to get ownership stakes, plus Milestones and Royalties. Almost like call options if you will.
SANOFI one of our collaborators is a top 5 pharma, multiple genes and peptides under review and testing, in it for bigger broader collaboration, maybe 1 molecule, or a whole class of them, vaccines, therapeutics, AAV etc. Research stops at end of 2019, then Sanofi will have an evaluation etc. The next steps after that are unknown, could be any number of opportunities from outright buyout offer, to licensing, partnerhips, equity stake, division purchase etc. We know the data looks good, they are excited about it. Multiple groups within Sanofi are working with us. Possible platform for allof the groups.
SERUM- Working with 8 anti bodies and 4 vaccines in the lab. Gene expressions are coming in and already started, others are in progress. Goal is to bring those to the world at lower price etc. Gates foundation, WHO and others working with them. Presented to John Hopkins institutes recently on C1 platform which was a strong endorsement of our technology.
Recent deal within a Microbial group within a top 25 big pharma as announced with 2nd quarter conference call, their success gets bigger with DYAI success. They have champions internally pushing the C1 protein platform for drug development instead of fighting with CHO divisions. This could expand rapidly.
Many partnerships are expanding from 1-2 gene expressions to more as the months have gone by since initial collaboration agreements.
Animal health side of business, they are much shorter trials and less risky etc and investors should not ignore this area for Dyadic. Expecting more of those agreements to come. Novovet, we have a 20% equity interest in this Australian company. Luna Bio ties in with Novanet, like a small WUXI, have beeng doing vaccines for animal house guys for years. They are spinning off the companion animal health company, like a Kindred Bio and we have a piece of that.
Seasonal flu platform is sitting on DYAI shelf- Could take a Billion dollar market and make it a 10 billion market as affordable to third world for example. Not for lack of opportunities, a lack of time and people at least now. This info came public in February a nd we are exploring the flu platform.
Valuation: PFNX discusssion
Pfenex, (PFNX recently got FDA approval for a Biosimilar using NON CHO platform, a bacterial based platform. PFNX though cant do Glyco engineering like Dyadic can. Good news for Dyadic though as it shows FDA is responsive to other methods to produce drugs and biologics. PFNX took a new platform and got it approved. Believes Dyadic though has much broader proteins, Humira for example would be a candidate for Dyadic C1 vs. small drugs. Pfenix also cant do monoclonal anti-bodies for example. However this is more validation the world is moving in right direction.
Valuation comments: (Daves note: 600mm would be $22 a share for DYAI)
Protein sciences got bought for 600 million by Sanofi several years ago, and the platform was never approved for human use etc, and only insect based. DYAI can make 35x more and 17x more target levels in terms of yield than Protein Sciences. C1 is a better mousetrap in cost of goods and ease of use.
Daves Note: 1.2 Billion would be $45 per share for DYAI
Viral Vectors are binary and difficult to produce. Thermo Fisher bought a company for 1.7 Billion last year, and another for 1.2 Billion for their viral vector technologies. If C1 can compete, which has 10-20x higher yield, worth investing and maybe spun off on its own to shareholders or sold to a big pharma.
Selling off division: If we can produce AAV viral vectors cheaper with similar performance, then we can either sell technology outright, license it, or turned it into division or separate company.
Glyco Human Trials- Engineering the yeast, a quasi-fungi. Merck paid 420mm for a company which is 1/5 as productive as what we are producing in early testing. Genetic tools are better than they used to be, we should be able to apply to C1 if they can do it with yeast.
Company Strategy:
Blocking and tackling now, not throwing hail mary's. Potential cash up front deals, then can expand what we are doing. Scientists and business development people at industry conferences are the ones that matter. Started with therapeutics and vaccines, now adding metabollites and viral vectors etc. We expect announcements ahead of more to be added to the C1 platform, many not publicly known, and then they open up and become known. Often we keep quiet in order to not let the competition know what we are working on.
Value Creation :
When the first domino falls (Licensing deal etc with one of these partners) then the rest could follow. All of that money flows to the bottom line etc.
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