Dyadic Reports 2005 Second Quarter Financial Results
16 August 2005 - 7:00AM
Business Wire
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.
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