Dyadic (AMEX:DIL)
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Dyadic International, Inc. (AMEX:DIL), a biotechnology
company, today announced financial results for its second quarter
ended June 30, 2005.
Second Quarter 2005 and Subsequent Highlights:
-- Second quarter 2005 revenue from higher-margin industrial
enzyme industries, such as pulp & paper and animal feed,
increased by 46% over net sales for the three-months ended
June 30, 2004, and represented 29% of net sales, as compared
to 19% of net sales in the 2004 second quarter. Sales to the
pulp & paper industry comprised 13% of total net sales for the
quarter as compared with 7% for the same period in 2004, while
sales to the textile industry comprised 69% and 82% for the
corresponding periods. Continued margin pressure in the
textile industry and aggressive pricing by competitors
validates the company's decision to aggressively diversify its
revenue base from textiles.
-- Achieved significant progress in meeting one of the company's
top priorities for 2005 - to sharply expand the introduction
of the company's new pulp & paper enzyme products to that
industry. Currently, the company's enzymes are undergoing
trials in a number of paper companies throughout the world.
The trials seek to evaluate the economic impact the company's
products have on the bleach-boosting, bio-refining and
de-inking processes. Some of these potential improvements
include significant cost-savings in the use of chemicals and
energy, improvements in paper quality, and reduction in
effluent streams.
-- Successfully recruited and assembled a team of seasoned sales
and marketing executives and technical salesmen with relevant
pulp & paper industry experience in promoting and maintaining
sales relationships involving substantial ongoing sales and
technical servicing. The new team includes a Vice President of
Sales & Marketing - Enzymes, a Vice President - Pulp & Paper
Division, and 5 technical sales representatives. The team's
composition reflects the company's understanding of the
company's products exceptional value proposition to the pulp &
paper industry as well as the understanding of complexities of
the sales process into this industry, where its customer
decision makers are responsible for the physical plants
costing, in many instances, several hundred million dollars or
more, and are accustomed to dealing with highly technical
sales teams with strong support competencies, following
long-term trials of new products.
-- Continued the development of the C1 Host Technology for the
production of a wider variety of proteins from diverse
sources, potentially including human therapeutic proteins.
Using gene knock-out technology, the company successfully
eliminated several genes suspected of limiting expression of
foreign proteins in C1 and is in the process of testing the
effect of these knock-outs on the expression levels. Through
the removal of unwanted or interfering genes, our gene
knock-out technology has shown some promise of producing human
proteins at higher yields. Although the initial results are
not at the levels we ultimately desire, the results of
expression experiments in the improved strains suggest higher
stability of the expressed proteins.
Second Quarter 2005 and Year to Date Financial Results:
-- Revenue for the quarter ended June 30, 2005, was $4.0 million,
as compared to $4.4 million for the quarter ended June 30,
2004. The decline in revenue was primarily a result of the
continued, although decreasing, concentration of the company's
sales to the textile markets, adverse effects of competition
in the textiles market and the inability of the company to
expand its sales staff prior to raising capital in the latter
half of 2004. The company is endeavoring to transition its
revenue base from the lower margin textile enzymes to higher
margin areas such as enzymes for the pulp & paper, food and
feed industries.
-- Net loss for the quarter ended June 30, 2005, was $2.3
million, or $0.10 per share, as compared to a $1.1 million net
loss, or $0.07 per share, for the quarter ended June 30, 2004.
The higher net loss was primarily a result of the company's
increased selling, general and administrative expenses to meet
increased financial reporting requirements of being a public
company, expenses associated with hiring additional personnel
to support new marketing initiatives for the company's Enzyme
Business and a $340,000 provision for slow moving inventory
items due to the decrease in textile industry net sales.
-- Research and development expenses for the quarter ended June
30, 2005, were $1.0 million, as compared to $0.9 million for
the quarter ended June 30, 2004. The increase was partially
due to our hiring of additional R&D personnel and outside
contract labor.
-- Selling, general and administrative expenses for the quarter
ended June 30, 2005, were $2.0 million, as compared to $1.1
million for the quarter ended June 30, 2004. The increase in
expenses was partially a result of the addition of personnel
to comply with public company requirements and in an effort to
expand the company's Enzyme Business into new markets.
Professional fees of $393,000 in connection with the company's
transition to a public company and an increase in insurance
premiums of $78,000 for directors and officers insurance also
impacted the company's results.
-- Cash and cash equivalents were $14.4 million as of June 30,
2005, as compared to $1.1 million at June 30, 2004. The
Company anticipates that the rate at which it has used cash to
fund its operations in the first two quarters of 2005 will
likely decrease in the near term.
-- Revenue for the six-months ended June 30, 2005 was
approximately $7.7 million, as compared to approximately $8.4
million for the comparable period ended June 30, 2004. The
decline in revenue was primarily a result of the continued,
although decreasing concentration of the company's sales to
the textiles market, adverse effects of competition in the
textiles market and the inability of the company to expand its
sales staff prior to raising capital in the latter half of
2004.
-- Net loss for the six-months ended June 30, 2005, was $5.4
million, or $0.25 per share, as compared to a $2.1 million net
loss, or $0.14 per share, for the six-months ended June 30,
2004. The higher loss was primarily a result of the company's
increased selling, general and administrative expenses to meet
increased financial reporting requirements of being a public
company, expenses associated with hiring additional personnel
to support new marketing initiatives for the company's Enzyme
Business, increased R&D expenses to continue the development
of the company's proprietary C1 Host Technology, including the
one-time expense of sequencing the C1 genome, and a $331,000
provision for slow moving inventory items due to the decrease
in textile industry net sales.
"In the second quarter of 2005, we completed our transition to a
public company, listed our common stock on the American Stock
Exchange, were added to the Russell Microcap Index, and put in place a
solid infrastructure to accelerate our pulp & paper sales effort,"
said Mark Emalfarb, Dyadic's President and CEO. "During the second
half of 2005 and into 2006 we intend to expand our pulp & paper sales
and marketing initiatives, as we work to capture both an increasing
number of new customer trials and convert existing and new customer
trials into significant and sustained levels of pulp & paper product
sales. We continue to estimate the addressable market for our existing
enzyme products in the pulp & paper industry and potential enzyme
products for the pulp & paper industry currently in our research and
development pipeline to be in excess of $1.0 billion."
"We are encouraged by the opportunities created from the
sequencing of the C1 genome and have identified a number of enzymes
that have the potential to become new products for several industries,
such as pulp & paper, food and feed," continued Mr. Emalfarb.
"Additional value will come later when the genome is fully annotated.
The fully annotated sequence will serve as a blueprint for the C1 host
strain and will facilitate further development of C1-based technology
as a platform for discovery and production of a wider variety of
proteins from diverse sources, including high-value therapeutics. With
an annotated genome, the genes and proteins involved with these
various processes can be identified, isolated, and ultimately
manipulated to provide a system of optimal utility."
About Dyadic
Dyadic International, Inc., is engaged in the development,
manufacture and sale of biological products (proteins, enzymes,
peptides and other bio-molecules), as well as the licensing of its
enabling proprietary technology to business collaborators for the
discovery, development and manufacture of biological products from
genes. Dyadic markets its products and services for applications in
the textile, chemical, agricultural, pulp & paper, pharmaceutical,
biotechnology and other industries, using its proprietary C1 Host
Technology and C1 Expression and Screening Systems for the discovery,
development and production of biological products.
Cautionary Statement for Forward-Looking Statements
Statements contained in this press release may contain information
that includes or is based upon certain "forward-looking statements"
relating to our business. For a discussion of the factors that could
cause actual results to vary from these forward-looking statements,
please see our filings from time to time with the Securities and
Exchange Commission, which are available free of charge on the SEC's
web site at http://www.sec.gov, including our Annual Report on Form
10-KSB for the year ended December 31, 2004, which was filed with the
SEC on April 15, 2005, and our Quarterly Report for the quarter ended
June 30, 2005 on Form 10-QSB, which was filed on August 15, 2005.
Except as required by law, we expressly disclaim any intent or
obligation to update any forward-looking statements.
Our Quarterly Report on Form 10-QSB
Information contained in this press release should be read in
conjunction with our Quarterly Report on Form 10-QSB for the quarter
ended June 30, 2005, that was filed with the Securities and Exchange
Commission on August 15, 2005, which contains our unaudited financial
statements and other information for the quarter ended June 30, 2005
and the six month period ended June 30, 2005.