Retains C1 License to Focus in Pharmaceutical Sector
Intends to Initiate Stock Repurchase Program
Provides Update on Ongoing Litigation
Jupiter, Florida, November 10, 2015 (GLOBE NEWSWIRE) — Dyadic International, Inc. (OTCQX: DYAI) announced today that it has entered into a definitive agreement to sell substantially all the assets of its Industrial Technology business to DuPont’s Industrial Biosciences business (“DuPont”) for $75 million in cash (the “Agreement”). Following completion of the transaction, Dyadic intends to focus exclusively on its biopharmaceutical business.
Mark Emalfarb, Dyadic’s founder and CEO, said, “This transaction is an exceptional opportunity to unlock value and provide Dyadic operational flexibility to further develop our pharmaceutical business. We will now focus our C1 technology exclusively on the pharmaceutical sector where we believe it has the potential to help develop and manufacture drugs and vaccines faster and more efficiently than existing production systems.”
Dyadic will sell to DuPont substantially all of its enzyme and technology assets, including its C1 platform, a technology for producing enzyme products used in a broad range of industries. DuPont has granted back to Dyadic co-exclusive rights to the C1 technology for use in human and animal pharmaceutical applications, with exclusive ability to enter into sub-license agreements in that field. DuPont will retain certain rights to utilize the C1 technology for development and production of pharmaceutical products, for which it will make royalty payments to Dyadic upon commercialization.
“We are very proud of the C1 platform and our team responsible for its development over the past decade,” added Michael Tarnok, Dyadic’s Chairman. “We are pleased to be able to provide liquidity and increased value to our stockholders and look forward to building our pharmaceutical business.”
The Agreement provides for $8 million of the purchase price to be held in an escrow account for 18 months to ensure Dyadic’s obligations with respect to certain indemnity claims and working capital adjustments. Dyadic expects to utilize approximately $66 million of its net operating loss carryovers to substantially offset the gain realized from this transaction. Simultaneous with the signing of the Agreement, stockholders owning approximately 26.4% of Dyadic’s shares currently outstanding, including stockholders affiliated with our Chief Executive Officer, entered into a voting agreement pursuant to which, subject to certain limitations, they have agreed to, among other things, vote the shares controlled by them in favor of the transaction.
Completion of the transaction, which is expected by the end of 2015, is subject to approval by a majority of Dyadic’s stockholders and customary closing conditions.
Houlihan Lokey acted as a financial advisor to the Board of Directors in connection with the transaction, along with Cahill Gordon & Reindel LLP and Abrams & Bayliss LLP who served as legal advisors.
Post-Closing Business Opportunity
Dyadic has long believed that the pharmaceutical field is one of the most attractive opportunities in which to apply the C1 technology. Dyadic believes that the C1 technology platform has potential to be a safe and efficient expression system that may help speed up the development and production of biologics at flexible commercial scales. In particular, as the aging population grows in developed and undeveloped countries, Dyadic believes C1 can help bring biologic drugs to market faster, in greater volumes and at lower cost to drug developers and manufacturers and, hopefully, to patients and the healthcare system.
The combination of a portion of the proceeds from this transaction and additional industry and government funding that will be sought are expected to provide Dyadic with the ability to focus on and accelerate the further development and optimization of the C1 technology in the area of biopharmaceuticals. In addition, the unique attributes of C1 may create attractive licensing opportunities through operational efficiencies and reduced requirements for licensee capital expenditures.
Dyadic also intends to continue its existing programs with Sanofi Pasteur and its involvement within the EU-funded ZAPI program. Dyadic plans to focus its research programs on the development and manufacturing of human and animal vaccines, monoclonal antibodies, biosimilars and/or biobetters, and other therapeutic proteins.
Stock Repurchase Program
Dyadic intends to use a minimum of $15 million of the transaction proceeds to initiate a stock repurchase program. The timing and details of such stock repurchase program have not yet been determined. The total amount of proceeds that will be used to repurchase stock will be contingent on several factors, including the amount of debt required to be paid off in connection with the transaction, the amount of transaction expenses, the amount necessary to satisfy retained and contingent liabilities, the outcome of Dyadic’s ongoing litigation described below and the amount management determines will be required to fund the ongoing pharmaceutical business.
Status of Professional Liability Litigation
The Agreement provides that Dyadic will retain all of the potential rights and obligations associated with its ongoing professional services liability litigation against the law firms Greenberg, Traurig, LLP, Greenberg Traurig, P.A. and Bilzin, Sumberg Baena Price and Axelrod, LLP.
On September 29, 2015, the Court removed the professional liability litigation from its trial docket and, in an effort to promote settlement, ordered the parties to non-binding arbitration with an initial hearing to occur before December 16, 2015. The parties are scheduled to appear before the Court on November 13, 2015 for hearings on various pre-trial motions, at which time the Court is also expected to set a 2016 trial date. The parties have also voluntarily agreed to participate in non-binding mediation on November 18, 2015.
On July 31, 2015, the Company reached a settlement with another defendant law firm and on August 12, 2015, the Company received full payment of this low seven-figure settlement, which is net of fees and expenses which will be reported in the Company’s consolidated statement of operations for the quarter ending September 30, 2015.
Dyadic will hold a conference call to discuss the transaction beginning at 4:30 PM Eastern time on November 10th 2015. In order to participate in the live session, please use the following dial-in numbers five to ten minutes prior to start time:
Calling from the United States or Canada: 888-438-5493
Calling from other countries: 719-325-2201
Confirmation Code: 7602402
A replay of the conference call will be available on Dyadic’s website (www.dyadic.com) within 24 hours after the live event.
Special Meeting and Proxy Statement
Dyadic will hold a special meeting of stockholders on Friday December 11th, 2015 at 12:00 PM, New York City time, at the Wyndham Grand Jupiter at Harbourside Place, 122 Soundings Ave, Jupiter, FL 33477.
The Board of Directors of Dyadic has fixed the close of business on November 13th, 2015 as the record date for the determination of stockholders entitled to notice of, and to vote at, the special meeting and any adjournments or postponements thereof.
A notice of the special meeting and a proxy statement to solicit the votes of Dyadic stockholders to approve the proposed transaction (the “Proxy Statement”) will be posted to Dyadic’s website (www.dyadic.com) and the OTC Marketplace Portal (http://www.otcmarkets.com/stock/DYAI/filings) and mailed to Dyadic stockholders as of the record date.
About Dyadic International
Dyadic International, Inc. is a global biotechnology company that uses its patented and proprietary technologies to conduct research, development and commercial activities for the discovery, development, manufacture and sale of enzymes and other proteins for the bioenergy, bio-based chemical, biopharmaceutical and industrial enzyme industries. Dyadic utilizes an integrated technology platform based on its patented and proprietary C1 microorganism, which enables the development and large scale manufacture of low cost enzymes and other proteins for diverse market opportunities. The C1 platform technology can also be used to screen for the discovery of novel genes. In addition to the sale of proprietary enzyme products, Dyadic actively pursues licensing arrangements and other commercial opportunities to leverage the value of these technologies by providing its partners and collaborators with the benefits of manufacturing and/or utilizing the enzymes and other proteins which these technologies help produce. Please visit Dyadic’s website at www.dyadic.com.
Dyadic trades on the OTCQX tier of the OTC marketplace. Investors can find real-time quotes, market information and financial reports for Dyadic, as well as additional information related to its professional liability lawsuit, in the company’s annual and quarterly reports which are filed with the OTC markets. Please visit the OTC markets website at www.otcmarkets.com/stock/DYAI/quote.
Safe Harbor Regarding Forward-Looking Statements
Certain statements contained in this press release are forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks, uncertainties and other factors that could cause Dyadic’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Investors are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Any forward-looking statements speak only as of the date of this press release and, except as required by law, Dyadic expressly disclaims any intent or obligation to update or revise any forward-looking statements to reflect actual results, any changes in expectations or any change in events. Factors that could cause results to differ materially include, but are not limited to: (1) the likelihood that the transaction is consummated on a timely basis or at all, including whether the conditions required to complete the transaction will be met, (2) general economic conditions, including the recent conditions in the global markets; (3) Dyadic’s ability to retain and attract employees during the pendency of the transaction and following the closing of the transaction; (4) competitive pressures and reliance on key customers and collaborators; (5) Dyadic’s research and development efforts, (6) the outcome of the current litigation by Dyadic against its former counsel, (7) Dyadic’s ability to obtain additional debt or equity financing sources and (8) other factors discussed in Dyadic’s Proxy Statement and other publicly available filings, including information set forth under the caption “Risk Factors” in our December 31, 2014 Annual Report filed with OTC Markets on March 27, 2015. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us.
Additional Information and Where to Find It
The transactions referenced in this communication have not yet commenced, and no proxies are yet being solicited. This communication is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell shares. It is also not a substitute for the Proxy Statement or any other documents that Dyadic may post to its website, the OTC Marketplace Portal or send to stockholders in connection with the proposed transaction. THE PROXY STATEMENT WILL CONTAIN IMPORTANT INFORMATION ABOUT DYADIC AND THE TRANSACTIONS. DYADIC STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT CAREFULLY AND IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE BEFORE MAKING ANY DECISION REGARDING VOTING ON THE PROPOSED TRANSACTION.
Dyadic’s annual and quarterly reports and other important information regarding Dyadic, including the Proxy Statement, once it is posted, are available free of charge at www.dyadic.com and http://www.otcmarkets.com/stock/DYAI/filings.
Participants in the Solicitation
Dyadic and its directors and executive officers may be deemed to be participants in any solicitation of proxies from Dyadic’s stockholders in connection with the proposed transaction. Information regarding Dyadic’s directors and executive officers is available in its proxy statement for its 2015 annual meeting of stockholders, which is available on its website and on the OTC Marketplace Portal. Other information regarding the interests of such potential participants will be contained in the Proxy Statement when it becomes available.
Dyadic International, Inc.
Thomas L. Dubinski
Chief Financial Officer