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Dyadic International prices public offering of 6.05M shares of common stock

Dyadic International Announces Pricing of $10 Million Public Stock Offering Amid Biotech Expansion Efforts

In a significant move to bolster its financial position and fuel ongoing research initiatives, Dyadic International, Inc. (NASDAQ: DYAI), a global biotechnology company specializing in the development of innovative microbial platforms for protein production, has announced the pricing of an underwritten public offering of its common stock. The offering, detailed in a recent press release and covered extensively in financial news outlets, involves the sale of 6,050,000 shares at a price of $1.65 per share. This strategic capital raise is expected to generate gross proceeds of approximately $10.0 million before deducting underwriting discounts, commissions, and other offering expenses. The announcement comes at a pivotal time for the biotech sector, where companies are increasingly turning to public markets to fund advancements in areas like vaccine development, therapeutics, and industrial enzymes.

Dyadic International, headquartered in Jupiter, Florida, has built its reputation on its proprietary C1 technology platform, which leverages a filamentous fungus called Thermothelomyces heterothallica (formerly known as Myceliophthora thermophila) to produce proteins at high yields and low costs. This platform has applications across multiple industries, including human and animal health, biofuels, and food production. The company's focus on scalable, efficient protein manufacturing has positioned it as a key player in the biomanufacturing space, particularly in the wake of global health challenges that have highlighted the need for rapid and cost-effective vaccine and therapeutic production. By pricing this offering, Dyadic aims to capitalize on investor interest in biotech innovations, especially those that promise to disrupt traditional manufacturing methods dominated by mammalian cell cultures or bacterial systems.

The offering is being led by H.C. Wainwright & Co., acting as the sole book-running manager. In addition to the primary shares, the underwriters have been granted a 30-day option to purchase up to an additional 907,500 shares of common stock at the same public offering price, less the underwriting discounts and commissions. This greenshoe option, a common feature in public offerings, provides flexibility to stabilize the stock price post-offering and could potentially increase the total gross proceeds to about $11.5 million if fully exercised. The transaction is anticipated to close on or about October 31, 2023, subject to the satisfaction of customary closing conditions. Investors and market watchers will be closely monitoring the closing to gauge the offering's success and its impact on Dyadic's stock performance.

Proceeds from the offering are earmarked for general corporate purposes, which may include funding research and development activities, expanding manufacturing capabilities, pursuing strategic partnerships, and supporting working capital needs. This infusion of capital is particularly timely as Dyadic continues to advance its pipeline of projects. For instance, the company has been actively involved in collaborations for COVID-19 vaccine candidates and other infectious disease therapeutics, leveraging its C1 platform to produce antigens and monoclonal antibodies more efficiently than conventional methods. In recent years, Dyadic has reported progress in partnerships with entities like the Israel Institute for Biological Research and various pharmaceutical firms, aiming to bring affordable biologics to market.

The pricing of this offering at $1.65 per share represents a discount to the stock's recent trading levels, which could be seen as an attractive entry point for investors betting on Dyadic's long-term growth. As of the announcement, DYAI shares had been experiencing volatility typical of small-cap biotech stocks, influenced by broader market trends, regulatory developments, and clinical trial outcomes in the sector. The biotech industry as a whole has faced headwinds, including inflationary pressures, supply chain disruptions, and a tightening funding environment following the post-pandemic boom. However, companies like Dyadic that offer platform technologies with broad applicability are often viewed as resilient, as they can pivot across therapeutic areas without being tied to a single drug candidate.

To understand the broader context, it's worth delving into the mechanics of public stock offerings and why they matter for emerging biotech firms. An underwritten public offering involves investment banks purchasing shares from the issuer and then reselling them to the public, thereby assuming the risk of unsold shares. This structure provides certainty to the company in terms of capital raised, which is crucial for funding capital-intensive R&D. For Dyadic, this isn't its first foray into capital markets; the company has previously engaged in similar financings to support its growth trajectory since going public. The decision to offer shares now reflects a calculated strategy to strengthen its balance sheet amid an uncertain economic landscape, where interest rates remain elevated and venture capital funding has slowed.

Market analysts have mixed reactions to the announcement. On one hand, the capital raise demonstrates confidence in Dyadic's technology and its potential to generate revenue through licensing deals, co-development agreements, and product sales. The C1 platform's advantages—such as faster production times, lower costs, and scalability—could position Dyadic as a go-to partner for big pharma companies seeking to optimize their supply chains. Recent milestones, including preclinical data on vaccine candidates and expansions into non-pharmaceutical applications like biofuels, underscore this potential. For example, Dyadic's work on cellulosic ethanol production highlights how its fungus-based system can contribute to sustainable energy solutions, diversifying its revenue streams beyond healthcare.

On the other hand, dilution concerns are inevitable with any stock offering. Existing shareholders may worry about the impact on earnings per share and overall stock value, especially if the market perceives the pricing as too aggressive. At $1.65, the offering price is below the stock's 52-week high, which could signal caution. However, proponents argue that the funds will enable Dyadic to accelerate key programs, potentially leading to value-creating milestones like regulatory approvals or partnership announcements that could drive share price appreciation in the future.

Looking ahead, Dyadic's management has emphasized a commitment to innovation and commercialization. In investor communications, CEO Mark Emalfarb has highlighted the platform's versatility, noting its potential to address unmet needs in global health and industrial biotechnology. The company is also exploring opportunities in animal health, where its technology could produce vaccines for livestock at reduced costs, aiding food security in developing regions. Furthermore, Dyadic's intellectual property portfolio, which includes numerous patents on the C1 system, provides a competitive moat against rivals.

This offering also fits into a larger trend in the biotech sector, where firms are increasingly seeking non-dilutive funding alternatives but often resort to equity raises when necessary. According to industry reports, biotech funding in 2023 has been robust in certain niches, particularly those involving advanced manufacturing and synthetic biology. Dyadic's approach aligns with this, as its microbial platform represents a form of synthetic biology that could revolutionize how proteins are made on an industrial scale.

Investors interested in participating should note that the offering is being made pursuant to an effective shelf registration statement on Form S-3 previously filed with the U.S. Securities and Exchange Commission (SEC). A preliminary prospectus supplement and accompanying prospectus describing the terms of the offering have been filed with the SEC and are available on its website. As with any investment, potential buyers are advised to review these documents carefully, considering the risks inherent in biotech investments, such as clinical trial failures, regulatory hurdles, and market competition.

In summary, Dyadic International's public offering marks a proactive step to secure funding for its ambitious goals in biomanufacturing. By raising up to $11.5 million, the company is positioning itself to advance its C1 platform and capitalize on emerging opportunities in health and beyond. While the immediate effect may include some share price pressure, the long-term outlook hinges on execution and market adoption of its technology. As the biotech landscape evolves, Dyadic's story serves as a reminder of the innovative spirit driving the industry forward, even in challenging times. This development not only underscores the company's growth strategy but also highlights the dynamic interplay between capital markets and scientific progress in the quest for better, more accessible biologics. (Word count: 1,128)

Read the Full Seeking Alpha Article at:
[ https://seekingalpha.com/news/4475573-dyadic-international-prices-public-offering-of-605m-shares-of-common-stock ]