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Wednesday, June 24, 2020 6:42:46 AM
This Revolutionary Biotech Is Shrouded in Mystery. Is It a Buy?
This small-cap stock is developing a technology that could revolutionize biotech.
Zhiyuan Sun
Zhiyuan Sun
(TMFZhiyuanSun)
Jun 24, 2020 at 6:23AM
Since the beginning of the year, shares of an under-the-radar biotech company called Dyadic International (NASDAQ:DYAI) have rallied more than 87%. Without a doubt, the company is a tough nut to crack. Wading through Dyadic's presentations reveals technical jargon such as "thermophilic fungus" and "gene expression systems" that pose a barrier for potential investors trying to understand its business.
However, beneath all the scientific language is what I believe a company that can revolutionize the biotechnology industry. Even though shares have gone up a lot over the past few months, I think Dyadic is significantly underpriced compared to its future potential. Let's take a look at why.
Laboratory Scientist Conducts Experiments by Synthesising Compounds with use of Dropper and Plant in a Test Tube.
IMAGE SOURCE: GETTY IMAGES.
What are gene expression systems?
Currently, many vaccines, antibodies, drugs, and animal health products in development by biotechnology companies use five different types of gene expression systems, which are genetic constructs that are designed to produce a therapeutic protein in the lab. These five different types are bacteria, yeast, insect cell lines, and mammalian cell lines, and genetically modified plants. Together, these expression systems comprise the heart of the global biologics market, which is expected by Credence Research to grow to $580.5 billion by 2026. Each type has its own unique set of pros and cons.
For example, E. coli (bacteria) and yeast expression systems are used to produce high volumes of enzymes and small-protein molecules for a low cost but are not useful for creating complex proteins. On the other hand, while mammalian cell lines can morph into antibodies (such as for cancer treatments) and complex protein structures, their production yields are abysmal.
What is Dyadic's new technology?
Dyadic, however, claims it has discovered a new class of gene expression systems that are not only low cost and high yield (like E. coli), but can be used to produce complex proteins (like mammalian cell lines). The expression system that merges the best of both worlds is C1, a fungus that can survive at high temperatures.
Studies demonstrated C1 could be used as a foundation for producing antigens, virus-like particles, monoclonal antibodies, and antigen-binding proteins. Additionally, C1 may possess the potential to have higher potency than mammalian and insect cell expression systems when used as a basis for vaccines. In addition, C1 may be able to accomplish these tasks while yielding 29 to 100 times more volume than traditional E. coli during its production process based on fermentation data.
Is the company a good investment?
The company's technology is in the development stage and has been vetted by three biopharmaceutical firms. In a partnership agreement with Sanofi (NASDAQ:SNY), Dyadic's C1 was able to express all seven of Sanofi's therapeutic and vaccine proteins in a feasibility study and is currently awaiting the next stage of collaboration by Q2 or Q3. If successful, Dyadic would be entitled to research funding, milestone payments, and royalties for 15 years beginning from the first commercialized sale.
Dyadic is contracted to use its C1 platform to produce up to 12 antibodies for the Serum Institute of India, the world's largest vaccine manufacturer. In fact, 65% of children in the world receive at least one vaccination from the Serum Institute. Finally, the Israel Institute of Biological Research will use C1 in developing vaccines and antibodies for COVID-19.
The financial case for investing in Dyadic is also excellent. Despite being a development-stage company, Dyadic has more than $36 million in cash and equivalents, possesses no debts or warrants, and is operating at a net loss of only $2.2 million per quarter in Q1.
If C1 achieves recognition in the biotech sector, the company could either be acquired or license its technology for royalties, as C1 could pose a serious threat to current gene expression systems. Hence, I think biotech investors are getting this $270 million market cap company for essentially pennies on the dollar, and would not be surprised if the company eventually emerges as a leader in the gene technology sector.
Zhiyuan Sun owns shares of Dyadic International, Inc. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Recent DYAI News
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/14/2024 01:26:02 AM
- Form 8-K - Current report • Edgar (US Regulatory) • 06/11/2024 08:31:42 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 06/06/2024 09:36:45 PM
- Dyadic to Attend Industry Events in June • GlobeNewswire Inc. • 05/30/2024 08:30:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/23/2024 07:42:57 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 05/14/2024 08:47:41 PM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 05/14/2024 08:47:30 PM
- Dyadic Announces First Quarter 2024 Financial Results and Highlights Recent Company Progress • GlobeNewswire Inc. • 05/14/2024 08:00:00 PM
- Dyadic to Attend Industry and Investor Events in May • GlobeNewswire Inc. • 05/08/2024 12:30:00 PM
- Form EFFECT - Notice of Effectiveness • Edgar (US Regulatory) • 05/08/2024 04:15:21 AM
- Dyadic to Report First Quarter 2024 Financial Results on Tuesday, May 14, 2024 • GlobeNewswire Inc. • 04/30/2024 08:30:00 PM
- Dyadic Reports 2023 Full Year Results and Recent Company Progress • GlobeNewswire Inc. • 03/28/2024 08:00:00 PM
- Dyadic Announces Change in Board and Management Leadership Roles • GlobeNewswire Inc. • 03/28/2024 12:30:00 PM
- Dyadic to Attend Industry Events in April • GlobeNewswire Inc. • 03/27/2024 12:30:00 PM
- Dyadic Announces Publication of C1 Monoclonal Antibody in Nonhuman Primate Study in Nature Communications • GlobeNewswire Inc. • 03/26/2024 12:30:00 PM
- Dyadic to Attend Future Food Tech Event March 21 – 22, 2024 in San Francisco, California • GlobeNewswire Inc. • 03/21/2024 12:30:00 PM
- Dyadic to Report Full Year 2023 Financial Results and Host Conference call on Thursday, March 28, 2024 • GlobeNewswire Inc. • 03/14/2024 08:30:00 PM
- CORRECTION – Dyadic Announces Closing of Private Placement of $6.0 Million Convertible Notes to Accelerate Near-Term Revenue Growth and Commercialization • GlobeNewswire Inc. • 03/11/2024 01:57:14 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 03/11/2024 12:45:28 PM
- Dyadic Announces Closing of Private Placement of $6.0 Million Convertible Notes to Accelerate Near-Term Revenue Growth and Commercialization • GlobeNewswire Inc. • 03/11/2024 12:30:00 PM
- Dyadic to Attend Industry Events in March • GlobeNewswire Inc. • 03/01/2024 01:30:00 PM
- Dyadic Announces Strategic Partnership Agreement to Develop Affordable Rabies Prophylactics and Vaccines Using its Proprietary C1 Cell Microbial Protein Production Platform • GlobeNewswire Inc. • 02/28/2024 01:30:00 PM
- Dyadic Advances Collaboration with Israel Institute for Biological Research (IIBR) Targeting Bio-Threats and Emerging Disease Solutions • GlobeNewswire Inc. • 02/21/2024 01:30:00 PM
- Form SC 13G/A - Statement of acquisition of beneficial ownership by individuals: [Amend] • Edgar (US Regulatory) • 02/13/2024 09:41:59 PM
- Dyadic and Cygnus Technologies Announce Partnership To Provide C1 HCP ELISA Assay to Enhance Quality Assurance in Biomanufacturing • GlobeNewswire Inc. • 02/13/2024 01:30:00 PM
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