10-Q: Dyadic Reports Increased Losses Amid Strategic Shift & Grants

Dyadic International, Inc. reported a significant increase in net loss for Q3 and the nine months ended September 30, 2025, despite securing new grants and completing a public offering to fund its strategic shift towards commercializing non-therapeutic protein platforms.

Summary

• Net loss for the three months ended September 30, 2025, increased to $(1,976,012) from $(203,460) in the prior year period.
• Net loss for the nine months ended September 30, 2025, increased to $(5,797,365) from $(4,258,279) in the prior year period.
• Total revenue for the nine months ended September 30, 2025, decreased to $2,524,819 from $2,678,013 in the prior year, primarily due to lower license and milestone revenue.
• Grant revenue significantly increased to $1,528,224 for the nine months ended September 30, 2025, compared to $0 in the prior year, driven by new Gates Foundation and CEPI grants.
• Research and development expenses increased to $1,696,230 for the nine months ended September 30, 2025, from $1,498,593 in the prior year, due to increased internal research initiatives.
• Completed an underwritten public offering on August 1, 2025, raising net proceeds of $4.9 million by issuing 6,052,000 shares at $0.95 per share.
• Secured a $3.09 million grant from the Gates Foundation and a $4.5 million grant from CEPI (Dyadic eligible for up to $2.4 million) to advance its C1 platform.
• Rebranded to Dyadic Applied BioSolutions, signaling a strategic transition to a commercially focused enterprise emphasizing non-therapeutic proteins.
• Regained compliance with Nasdaq's Market Value of Listed Securities (MVLS) and Minimum Bid Price requirements.
• Cash, cash equivalents, restricted cash, and investment securities totaled approximately $10.4 million as of September 30, 2025, expected to be sufficient for at least the next 12 months.

Sentiment

Score: 4

Explanation: While the company has made significant strategic advancements, secured substantial grants, and completed a capital raise, the financial performance shows a notable increase in net loss and operating loss, alongside higher cash burn from operations. The positive strategic shifts are somewhat overshadowed by the worsening financial results, indicating continued challenges in achieving profitability despite commercialization efforts.

Positives

• Successfully completed an underwritten public offering, raising $4.9 million in net proceeds, enhancing liquidity.
• Secured significant non-dilutive funding through grants, including $2.4 million received from the Gates Foundation and eligibility for up to $2.4 million from the CEPI grant.
• Rebranded to Dyadic Applied BioSolutions, reflecting a strategic shift towards commercializing high-value, non-therapeutic proteins for faster revenue generation and broader market reach.
• Expanded genetic engineering capabilities by entering into a non-exclusive CRISPR/Cas9 license with ERS Genomics.
• Achieved a $500,000 final milestone payment from Proliant for recombinant serum albumin, with commercial launch expected in late 2025 or early 2026.
• Received a $250,000 milestone payment from Inzymes for productivity achievements related to a second non-animal dairy enzyme.
• Demonstrated comparable performance of C1-produced monoclonal antibodies to traditional CHO cell lines in Gates Foundation collaboration.
• C1 platform validated for vaccine antigen production in a peer-reviewed publication in Vaccine.
• Launched EN3ZYME with Fermbox Bio for converting agricultural residue into fermentable cellulosic sugars, with a 50/50 profit share model.
• Regained compliance with Nasdaq's MVLS and Minimum Bid Price requirements, removing immediate delisting risk.
• Progress in multiple product candidates including recombinant transferrin, growth factors, and DNase-1, with initial purchase orders or sampling expected by end of 2025 or early 2026.

Negatives

• Net loss significantly increased to $(5.797) million for the nine months ended September 30, 2025, compared to $(4.258) million in the prior year.
• Loss from operations increased to $(5.657) million for the nine months ended September 30, 2025, from $(4.371) million in the prior year.
• Total revenue for the nine months ended September 30, 2025, decreased by $153,194 compared to the prior year, primarily due to a substantial decrease in license and milestone revenue.
• Net cash used in operating activities increased to $(3.932) million for the nine months ended September 30, 2025, from $(3.278) million in the prior year, indicating higher cash burn.
• Research and development revenue decreased for both the three-month and nine-month periods due to a reduction in active collaborations.
• The company has a history of net losses and expects to continue incurring losses and negative net cash flows from operating activities.
• Reliance on a few significant customers and contract research organizations (CROs) poses concentration risk, with three customers accounting for 67.4% of nine-month revenue and two CROs accounting for 87.6% of research services purchased.

Risks

• History of net losses and expectation to continue incurring losses and negative net cash flows from operating activities.
• Uncertainty regarding market and regulatory acceptance of microbial protein production platforms and other technologies.
• Risk of failure to commercialize microbial protein production platforms or other technologies.
• Intense competition from alternative technologies in the life sciences, food and nutrition, and bio-industrial markets.
• Uncertainty of results from nonclinical studies and clinical trials.
• Significant capital needs and the ability to raise additional capital on favorable terms, which could be dilutive to existing shareholders.
• Exposure to changes in global economic and financial conditions.
• Reliance on information technology systems and potential risks associated with cybersecurity.
• Dependence on third parties for research, development, manufacturing, and commercialization, including collaborators, CROs, and CDMOs.
• Impact of government regulations and environmental, social, and governance issues on operations and product development.
• Intellectual property risks, including the ability to protect proprietary technology and potential infringement claims.
• Risk of future non-compliance with Nasdaq listing standards, which could lead to delisting and adverse effects on stock liquidity and market price.
• Litigation is inherently unpredictable and costly, with potential material adverse effects on financial condition or results of operations.
• Grant funds received in advance may need to be refunded if not used or committed to the funded projects.
• Operating plan estimates for liquidity are based on assumptions that may prove to be wrong, potentially requiring additional capital sooner than anticipated.

Future Outlook

The company expects to continue incurring losses and negative net cash flows from operating activities as it develops its microbial platforms and products. Existing cash, cash equivalents, restricted cash, and investment securities totaling approximately $10.4 million as of September 30, 2025, are projected to meet operational and liquidity requirements for at least the next twelve months. However, this estimate is based on assumptions that may prove incorrect, and the company may seek additional capital through equity offerings, collaboration agreements, or debt instruments, which could be dilutive to shareholders.

Management Comments

• Our proprietary platforms—Dapibus and C1—are designed for rapid, cost-effective, and flexible production of high-value proteins, enabling partners to reduce development timelines and manufacturing costs.
• While Dyadic's primary focus is on non-therapeutic applications, both platforms retain the capability to produce biologics, such as vaccines and therapeutic proteins, for external partners.
• This rebranding initiative marks a strategic transition from a research-driven organization to a commercially focused enterprise.
• Our focus is to commercialize high-value, non-therapeutic proteins in the life sciences, food, nutrition and industrial bioprocessing sectors. These proteins avoid the regulatory complexity and high costs associated with therapeutic biologics, enabling faster time to revenue, broader market reach, and long-term supply agreements.
• Dyadic expects to commercialize multiple Dapibus-enabled products starting in 2025 through a combination of strategic partnerships and internal manufacturing initiatives.
• Dyadic continues to evaluate licensing, collaboration, and commercialization opportunities to unlock C1's full potential in the biologics sector.
• These legacy programs provide critical third-party validation of the C1 platform's biopharmaceutical potential while generating non-dilutive capital and enabling future commercial opportunities.
• The Company expects its existing cash, cash equivalents, restricted cash and cash equivalents and its investment securities, including accrued interest, totaling approximately $10.4 million as of September 30, 2025, will be sufficient to meet its 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 Quarterly Report.

Industry Context

Dyadic is strategically positioning itself within global trends towards sustainability, animal-free manufacturing, and bio-based innovation. Its C1 platform is presented as a competitive alternative to traditional biopharmaceutical production systems like CHO, yeast, and insect cells, addressing bottlenecks in cost, development cycles, and yield. The company is expanding its commercial footprint into growing biopharma markets in Asia, particularly Japan and South Korea, and is actively engaged in emerging sectors such as cultured meat, non-animal dairy, and various bio-industrial applications like biomass processing and biofuels.

Comparison to Industry Standards

• C1-produced monoclonal antibodies (mAbs) in collaboration with the Gates Foundation perform comparably to mAbs produced from traditional CHO cell lines.
• A peer-reviewed study demonstrated that C1-produced SARS-CoV-2 spike protein exhibited comparable structure, stability, and immunogenicity to mammalian cell-derived antigens.
• Dyadic's animal-free recombinant transferrin has performed consistently with leading recombinant reference standards in cell proliferation testing for animal muscle cell growth.
• Dyadic's recombinant Fibroblast Growth Factor (FGF) has shown comparable efficacy to reference standards in supporting animal muscle cell growth.

Corporate Governance

Legal Proceedings

• Not currently involved in any litigation believed to have a materially adverse effect on financial condition or results of operations.
• Subject to legal proceedings, asserted claims, and investigations in the ordinary course of business, which management considers immaterial, individually and in the aggregate.

Related Party Transactions

• On March 8, 2024, $2.0 million of the $6.0 million Senior Secured Convertible Promissory Notes were sold to related parties, including immediate family members and family trusts related to Mark Emalfarb (CEO).
• On September 15, 2025, the Mark A. Emalfarb Trust (where CEO Mark A. Emalfarb is the sole beneficiary and trustee) purchased and was assigned $1.0 million of the Convertible Notes from an existing note holder.
• The Francisco Trust, where Mr. Thomas Emalfarb (nephew of CEO) is trustee, holds $1.0 million in Convertible Notes.
• Bradley Emalfarb (brother of CEO) converted $500,000 of Convertible Notes into 294,891 shares of Common Stock in 2024.
• Bradley Scott Emalfarb Irrevocable Trust (CEO is trustee, Bradley S. Emalfarb is beneficiary) converted $410,000 of Convertible Notes into 261,732 shares of Common Stock in 2024.
• The Emalfarb Descendant Trust (where Messrs. Thomas Emalfarb, Scott Emalfarb, and Michael Emalfarb, nephews of CEO, are co-trustees) holds $90,000 in Convertible Notes.
• Joseph Hazelton, President and Chief Operating Officer, purchased 26,000 shares of the company's Common Stock in the public offering on August 1, 2025.

Stakeholder Impact

• Shareholders experienced dilution from the public offering of 6,052,000 shares and face potential future dilution from additional capital raises, alongside an increased net loss per share.
• Shareholders benefit from the company regaining compliance with Nasdaq listing standards, reducing delisting risk.
• Employees continue to receive stock-based compensation and are involved in ongoing research and development activities.
• Customers and partners benefit from the continued development and commercialization of the Dapibus and C1 platforms, new product launches, and ongoing collaborations with entities like the Gates Foundation, CEPI, Proliant, and Inzymes.
• Creditors holding the Senior Secured Convertible Promissory Notes have senior, secured claims, with some notes held by related parties.

Next Steps

• Commercial launch of animal-free recombinant serum albumin with Proliant expected in late 2025 or early 2026, with anticipated ongoing revenue sharing in 2026.
• Actively expanding validation efforts for recombinant transferrin for diagnostic, research, and cell culture uses, with initial purchase orders expected by the end of 2025.
• Ongoing optimization and validation for recombinant Fibroblast Growth Factor (FGF), with initial purchase orders received in October 2025.
• Sampling for research-grade RNase-free DNase-1 actively underway, with initial purchase orders expected by the end of 2025.
• Ongoing optimization for the expanded Nucleic Acid Enzymes Portfolio (RNase Inhibitors, T7 RNA Polymerase) expected to yield additional improvements and data through late 2025 and into 2026.
• Characterization ongoing for Alpha-Lactalbumin, with sampling for research and nutritional markets expected early 2026.
• Continued optimization and characterization underway for Human Lactoferrin, with sampling for research use beginning early 2026.
• Scale-up and commercialization efforts for Inzymes' first non-animal dairy enzyme progressing toward a late 2025 or early 2026 launch, with additional enzymes in development.
• Evaluation of milestones related to product commercialization of two Inzymes products expected in 2026.
• Sampling efforts for EN3ZYME expanded into healthcare applications, with ongoing negotiations in biomass processing, biofuels, and pulp & paper markets.
• The next phase of the CEPI grant will focus on selecting a CEPI-priority pathogen antigen if the current phase is successful.
• Awaiting funding from the Eurostars program for a rabies vaccine project with Rabian BV.
• The VTT Technical Research Centre of Finland Ltd. contract for C1 fungal expression system development was extended to January 31, 2026.

Key Dates

Recommendation

Dyadic is in a transitional phase, strategically shifting towards commercializing its protein production platforms in non-therapeutic markets, which is a positive long-term move. The company has successfully secured significant grants and completed a public offering, bolstering its liquidity. However, the financial results for the nine months ended September 30, 2025, show a substantial increase in net loss and operating loss, along with higher cash burn from operations. While the technological advancements and new partnerships are promising, the worsening financial performance indicates that profitability is still some time away. The stock is a 'hold' as the long-term potential is present, but current financial metrics warrant a cautious approach, requiring investors to closely monitor the execution of commercialization strategies and progress towards revenue generation.

Keywords

Biotechnology, Protein Production, Dapibus, C1 Platform, Non-Therapeutic Proteins, Biopharmaceuticals, Vaccines, Monoclonal Antibodies, Cell Culture Media, Food and Nutrition, Industrial Enzymes, SEC Filing, 10-Q, Financial Results, Grants, Capital Raise, Commercialization