Jupiter, Florida, November 10, 2015 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.
For more information, please contact Thomas Dubinski at 561-743-8333 or firstname.lastname@example.org