Dyadic International, Inc. (DYAI) Earnings Call Transcript & Summary

Thank you, and good evening to all of you — we're glad to have you on Dyadic's Third Quarter 2026 Conference Call. I trust you've had an opportunity to review the press release Dyadic issued announcing the financial results for the quarter that concluded on September 30, 2026. You can find that release within the Investors section of the company's website, dyadic.com. Before we begin, I'd like to note that a Microsoft Outlook problem, which has impacted numerous organizations — Dyadic among them — has prevented us from filing our quarterly report on Form 10-Q for the quarter closed September 30, 2026, up to this point. As soon as the system is restored, we anticipate filing the Form 10-Q, and we intend to do so within the SEC filing deadline. The figures we're covering today come from the press release and will also appear in the Form 10-Q. Joining us on this call is Joe Hazelton, our President and Chief Operating Officer, who will walk through business and corporate highlights for Q3 2026 and share his thoughts on where the company is headed strategically. Mark Emalfarb, our CEO, will then bring everyone up to date on the biopharmaceutical programs, and after that I'll take you through the financial results in greater detail. We'll wrap up with a short Q&A session. Before we go further, please be aware that some remarks on today's call may count as forward-looking statements. Those statements carry risks, uncertainties, and other factors that might make Dyadic's actual results—whether performance, scientific outcomes, or achievements—differ materially from what such statements express or imply. Dyadic explicitly disclaims any obligation to update its forward-looking statements, including in response to new information, later events, or anything else. Listeners should review the risk factors described in Dyadic's filings with the SEC. I'm glad now to hand things over to our President and COO, Joe Hazelton. Joe?

Thanks, Ping, and thanks to all of you for being with us today. Across the last few quarters, we've talked about how Dyadic is shifting away from mainly developing protein production technologies and toward building commercial businesses around our C1 and Dapibus platforms. In the third quarter, we kept moving that transition forward through first direct product sales, wider distribution, more products commercialized by partners, and advancing conversations with companies that have interest in our technologies and our protein production portfolio. Those developments are encouraging, but I want to give them some perspective. Our direct commercial sales are still modest, and customer qualification and adoption are taking longer than we first expected. There's still work ahead of us before product revenue becomes meaningful and recurring, but we're beginning to demonstrate that our protein production platforms can back commercial products across several business models — direct sales, distribution, licensing, and commercialization led by partners. Just as important, we think our decades of commercial experience put us in a stronger position to pursue larger strategic opportunities. Let's now walk through some of what took place in the quarter and explain how it connects to our broader strategy. Starting with life sciences: in the third quarter, Dyadic booked its first direct commercial sales of protein products, primarily consisting of recombinant transferrin and DNase I. While those revenues don’t yet carry much weight financially, they offer additional evidence that Dyadic is capable of creating and bringing to market recombinant enzymes and proteins—supporting the promise of our patented fungal expression platforms and adding to what our partners already sell. Our near-term focus is converting first orders and continuing customer assessments into recurring revenue. We keep receiving a growing number of sample requests and evaluations, especially involving human and bovine transferrin for research, cell culture, and cultivated meat uses. Transferrin stays a key commercial priority because of the part it plays in cell culture media and the possible need for reliable animal-free substitutes. As we've noted previously, improved production yields and manufacturing economics are important for these products to be competitive, though qualification in higher value segments such as cell culture media takes time. Customers must confirm that a replacement protein performs consistently in their specific applications, satisfies their quality requirements, and can be supplied reliably at acceptable economics. We're backing those evaluations and striving to expand our customer base, but we acknowledge that the shift from sampling to recurring purchases has been slower than expected. In addition to our direct sales efforts, we keep extending our commercial reach via third-party distribution. IBT Bioservices has now introduced a first set of six recombinant protein products made by Dyadic for research use only, offered through its distribution network. Through this relationship, Dyadic gains access to an existing customer base without having to build a large direct sales force of its own. In addition, we are assessing more products for distribution and exploring possibilities with other distributors and commercial partners. Our goal continues to be a capital-efficient commercial model that draws on established channels and partners. A further key element of our strategy involves collaborating with established companies capable of bringing products developed on our platforms into their own markets. Proliant Health & Biologicals relies on Dyadic's C1 platform to manufacture AlbuFree DX, its recombinant human serum albumin, and that company continues to expand commercial activity related to the product. Data on performance and analytical results backing diagnostic assay and protein stabilization uses has been presented by Proliant, and it has laid out plans for more products aimed at cell culture media plus cell and gene therapy applications. Those efforts create a chance to broaden how many commercial applications animal-free albumin can serve, with possible future revenue participation for Dyadic through our commercial arrangements. Over in food and nutrition, Inzymes, our partner, has now brought to market its second chymosin product built on our Dapibus platform. In November, Inzymes told us that the first commercial sale of Dapibus-produced camel chymosin took place in October. Because of that, we expect a $225,000 contractual payment and to recognize the related revenue in the fourth quarter. This comes after bovine chymosin was commercialized earlier and shows further that different products can be developed and commercialized with the Dapibus production system. What matters especially about Proliant Inzymes is that these are established commercial organizations taking products made with Dyadic's technologies to market. The revenue contribution to Dyadic is still at an early stage, yet these relationships offer evidence of commercial applicability that can be valuable when weighing broader licensing, supply, and strategic partnership opportunities. Also within our food and nutrition business, alpha-lactalbumin stays among our highest priority development and commercial opportunities. Our work with BRIG BIO continues to move forward as we develop and scale bovine alpha-lactalbumin made through Dapibus — an animal-free dairy protein that could be used in nutritional products. We recently disclosed a broader strategic collaboration involving BRIG BIO and Strive Nutrition, one that brings together complementary strengths spanning the entire value chain: Dyadic's Dapibus protein production platform and strain optimization know-how, all the way through manufacturing scale-up, commercialization, and incorporation into finished consumer goods. A key point is that this collaboration links protein development and manufacturing capabilities with Strive Nutrition, the intended end customer, which intends to incorporate our precision-fermented animal-free alpha-lactalbumin into its next-generation nutritional products. In our view, this integrated approach provides a more direct route toward commercial-scale production, market adoption, and possible recurring revenue opportunities. Our technical efforts remain centered on boosting production yields, enhancing protein quality, and bettering manufacturing economics so that we can support production at commercial scale that is competitive. Although the progress we've seen is encouraging, we still need additional optimization, application testing, work on regulatory matters, and scale-up before commercial production can be set up. In addition, talks are ongoing with other global firms regarding possible licensing, development, and commercial arrangements for alpha-lactalbumin and other animal-free proteins in our portfolio. Those talks matter especially since the bigger food and nutrition markets call for manufacturing capacity, capital investment, regulatory know-how, and established commercial distribution. Rather than trying to build the whole commercial infrastructure on our own, our strategy is to partner with companies that already have these capabilities. Outside of bovine alpha-lactalbumin, production strains have been created for human alpha-lactalbumin as well as human lactoferrin, and we are actively looking into licensing and strategic partnership possibilities for those products; development of recombinant bovine lactoferrin has also been started, which further widens our portfolio of animal-free nutritional proteins. Beyond that, we're continuing to advance additional dairy proteins and enzymes through both in-house development efforts and partnerships with outside parties, which widens the set of possible uses and commercial prospects for our platforms. From where we sit, this expanding portfolio—combined with growing interest from prospective commercial partners—means Dyadic is well placed to build wider strategic relationships throughout the food nutrition market. In our bioindustrial segment, we're also continuing to expand uses for the Dapibus platform in industrial enzymes and biomass processing. Our partner Fermbox Bio has launched EN3ZYME, an enzyme product produced with Dapibus that targets biomass processing applications. We're also developing further enzymes intended for biofuels, food and feed, and textile and paper processing markets. We're seeing growing interest in EN3ZYME and our other industrial enzyme offerings, especially within biofuels and ethanol markets. There, turbulence in energy markets is helping spark fresh interest in alternative fuels as well as better production economics. This has led to a notable rise in sampling activity and in talks with prospective customers and strategic partners. We think our capacity to build tailored enzyme solutions, together with Dapibus's manufacturing efficiency and scalability, opens up opportunities to serve the changing needs of these sectors.

Just like our other commercial businesses, the main thing for us is partnering with companies that already have solid manufacturing operations, sector knowledge, and customer ties, so commercialization moves faster while Dyadic avoids having to put up all the capital on its own. Looking across the businesses, we think the strides made in commercializing products, whether directly or with partners, are boosting the strategic worth of our C1 and Dapibus platforms; there are now multiple instances of our technology backing commercial products and bringing in revenue via various business models. Proliant has brought recombinant human albumin to market with C1. Inzymes has launched two chymosin products based on Dapibus, and EN3ZYME has stepped into the industrial market. Such relationships show we can create products that established partners are able to commercialize. More recently, working with BRIG BIO and Strive Nutrition pulls together the essential pieces of the commercial value chain for alpha-lactalbumin made with Dapibus, spanning strain development and manufacturing scale-up all the way to Strive, the intended end customer. This vertically integrated partnership offers a clear route toward possible commercial supply, contingent on successful development, scale-up, and product qualification. Alongside our initial direct protein sales and a growing distribution network, we think these steps represent meaningful progress and commercial validation for our platforms in life sciences, food and nutrition, and bioindustrial markets. Although commercial revenues remain modest, we believe this expanding track record helps lower the technical and commercial uncertainties that prospective strategic partners have to assess, which puts Dyadic in a stronger spot to chase larger opportunities. That is increasingly where we plan to concentrate our efforts. Instead of funding development and commercialization of every product on our own, we think more value can be generated by teaming up with companies that possess the capital, manufacturing infrastructure, and commercial capabilities to take our technologies and products to market at scale. So we are putting more weight on larger strategic partnerships, licensing and supply arrangements, and other potential transactions involving our platforms, products, and commercial programs; we keep assessing all options to maximize the value of our platforms and assets, including financing alternatives, strategic partnerships, and other opportunities to strengthen our balance sheet, speed up commercialization, and support long-term shareholder value. Our aim is to build on the commercial foundation already in place and turn that progress into larger opportunities capable of delivering meaningful financial and strategic value for Dyadic and its shareholders. With that, I will hand the call to Mark to cover our biopharmaceutical programs and the ongoing development of our C1 platform. Mark?

Thanks, Joe. Regarding biopharmaceutical development, validation, and strategic operations and opportunities, as Joe mentioned, our expanding commercial efforts demonstrate how broadly applicable our C1 and Dapibus protein production platforms are. Within biopharmaceuticals, we keep building on that foundation by producing technical and preclinical data on complex proteins, such as monoclonal antibodies and vaccine antigens. Our biopharma strategy continues to center on development programs funded externally and strategic collaborations instead of independently bankrolling expensive clinical development programs. Through work with established research institutions, foundations, and industry partners, we seek to show C1's advantages in development, speed, productivity, protein quality, scalability, and manufacturing economics, while furthering its potential adoption by pharmaceutical and biotech companies. I'd like to walk through four key areas where we've made progress. First up are the Gates Foundation programs that have moved into animal studies. Through our Gates-funded initiative, which is roughly $3.1 million, C1 reached productivity yields of about 12.1 g/L for the RSV monoclonal antibody RSM01, and 13.2 g/L for the malaria monoclonal antibody MAM01, using seven-day fermentations. A key point: both antibodies produced with C1 showed roughly 90% human N-like glycan structures, which backs up C1's capacity to make complex monoclonal antibodies with glycosylation profiles relevant to humans. On top of that, independent assessments from Duke University and IQVIA showed binding and neutralization activity on par with their CHO-produced equivalents in the respective assays that were run. After the quarter closed in October 2026, the Gates Medical Research Institute began preclinical animal studies, paid for directly by the Gates organization, that compare how C1-produced RSV and malaria antibodies behave pharmacokinetically against their respective GMP CHO-produced equivalents. We expect results in the first quarter of 2027. These studies mark a meaningful step past lab testing toward possible clinical development. Taken together, the high production yields, human-like glycosylation profiles, and comparable biological functionality back C1's potential to make complex monoclonal antibodies more efficiently and economically than traditional mammalian cell production platforms. Second, we finished a rapid vaccine antigen development project, cutting timelines from months down to roughly 15 days. With a $4.5 million program funded by the Coalition for Epidemic Preparedness Innovations, CEPI, in partnership with Fondazione Biotecnopolo di Siena, FBS, Dyadic created a rapid C1 production workflow that cut their earlier development timeline from several months down to roughly 15 days, going from plasmid to C-tag purified recombinant protein; we first showed this using our DYAI-100 SARS-CoV-2 antigen. That progress was tested during the Bundibugyo Ebola outbreak, when we produced and purified two antigens designed by Scripps Research in about 15 days and delivered them to FBS for preclinical studies. These accomplishments rest on encouraging results across several preclinical vaccine programs and our completed phase I DYAI-100 clinical trial, which showed safety, tolerability, and both humoral and cellular immune responses. Jointly, those capabilities underpin C1's promise for speeding vaccine work and sharpening how quickly we react to new infectious disease dangers. Next, our monoclonal antibody work has moved further along in both development and validation. Expanding on earlier findings published in Nature Communications that showed a SARS-CoV-2 monoclonal antibody made with C1 protected non-human primates, we reached a further significant milestone involving Bundibugyo Ebola. We demonstrated a rapid development path that took us from plasmid to a clonal production strain and a protein A purified Bundibugyo Ebola monoclonal antibody in about seven weeks. Beyond the RSV and malaria antibody findings backed by Gates money, these wins further demonstrate C1's ability to generate monoclonal antibodies that work biologically, at strong yields and on short timelines—reinforcing its promise as a substitute for conventional mammalian cell production. Lastly, we keep advancing C1 partnerships paid for by outside parties, including CEPI, FBS, Scripps Research, the Gates Foundation, and investigators funded through NIAID, NIH, among others. Our collaboration with FBS has led to C1 being evaluated as part of the EUR 170 million Vaccines Hub Initiative — funding there went to the consortium as a whole, not to Dyadic directly. Through these ties, we gain useful chances to study C1 further alongside top vaccine and biological developers, which bolsters its scientific and manufacturing validation and helps pave the way for possible commercial uptake. As Joe noted, the commercial worth of our protein production platforms isn't dependent on Dyadic alone developing, advancing, or manufacturing each product. That point carries particular weight in biopharmaceuticals, a field where clinical development and commercialization often require considerable capital and specialized infrastructure. Instead, what we're trying to do is take the technical results and independent validation that came out of these externally funded programs and use them to go after licensing arrangements, funded development programs, technology access agreements, and broader strategic relationships with pharmaceutical and biotechnology companies. We think our proven capacity to quickly produce complex vaccine antigens and monoclonal antibodies at high yields while keeping biological functionality intact makes C1 an appealing option for organizations that want faster, more scalable, and potentially lower-cost alternatives to conventional manufacturing technologies. More validation and development are still required, but the continuing animal studies, rapid development milestones, and growing collaborations keep reinforcing the technical foundation and potential strategic value of C1. Ultimately, what we're aiming for is converting these strengths into business collaborations capable of speeding up how biologic medicines get developed and produced, boosting readiness for pandemics, lowering costs in healthcare, and widening global availability of vaccines and treatments. Beyond the commercial strides Joe described, we think these advances put Dyadic in position to chase additional chances to generate revenue from our technology platforms, production capabilities, and manufacturing know-how. With that said, I'll return the call to Ping for the financial review.

Thanks, Mark. I'd now like to walk through the key financial results for Q3 2026 in more detail. Additional information is available in our earnings press release and Form 10-Q, which we expect to file within the SEC filing deadline once the system is restored. Revenue for the three months ended September 30, 2026 was approximately $449,000, versus about $1.165 million in the third quarter of 2025. That 61% decline was driven by a $538,000 decrease in grant revenue, reflecting lower activity under the Gates Foundation and CEPI grants, along with a $188,000 reduction in research and development revenue, as several collaboration projects concluded during the prior-year period. In the quarter, revenue consisted of approximately $162,000 in research and development revenue, $276,000 in grant revenue, and $10,000 in license fee revenue. Total revenue for the first nine months of 2026 was $2.5 million, essentially flat compared with the same period in 2025. Cost of revenue for the quarter was approximately $375,000, down 63% from about $1,024,000 in the prior period, 2025. That decrease was primarily due to lower activity levels associated with our grant-funded programs. Internal R&D expenses declined 25% year-over-year to approximately $430,000, compared with roughly $572,000 in the third quarter of 2025. The decrease largely reflects a $199,000 reduction in third-party contract research services, as we continue advancing programs through externally funded collaborations while maintaining discipline in internal R&D spending. Internal R&D expenses for the nine months were approximately $1.2 million, 27% below the approximately $1.7 million reported a year ago. G&A expenses decreased $31,000, or 2%, year-over-year, to about $1.45 million from approximately $1.48 million in the third quarter of 2025. Over the nine months, G&A expenses were approximately $4.9 million, up 8.5% year-over-year, compared with approximately $4.8 million in the prior year period, an increase of 0.6% year-over-year. The quarterly loss from operations was approximately $1.8 million, compared with roughly $1.9 million in the same period last year. Other income, net, was approximately $455,000. That figure includes a non-cash net gain of about $546,000 related to the change in fair value of the warrant liability for warrants issued in our August offering, net of issuance costs allocated to those warrants. This gain involves no cash and will fluctuate with our share price in the coming quarters. For the quarter, net loss was approximately $1.4 million, or $0.04 per share, versus roughly $2 million, or $0.06 per share, in the third quarter of 2025. Over the nine months, net loss was approximately $5.4 million, or $0.15 per share, compared with $5.8 million, or $0.18 per share, during the first nine months of 2025. Turning now to our balance sheet and cash position: as of the end of Q3, we held approximately $6 million in cash equivalents, restricted cash, and investment-grade securities, including accrued interest — versus about $8.6 million at year-end. During the quarter we completed a registered direct offering alongside concurrent private placements of warrants, generating $2.9 million in gross proceeds. When it comes to cash burn, operations used about $5.3 million in net cash across the first nine months — roughly $590,000 a month on average. That figure takes in costs for the Gates-funded program, and those are paid out of restricted cash. Our expectation is that cash burn will stay in a similar range, though quarter to quarter it will move around based on the timing of R&D work, grant money, and commercial efforts. As Joe mentioned, in Q3 we booked our first sales of commercial products we made ourselves, and our partners kept broadening commercialization of products built on our platforms. Also, after the quarter closed, Inzymes confirmed the first commercial-scale production of our second chymosin product. These efforts remain early stage, but we're still focused on building recurring revenue from products and partnerships while watching operating costs and capital needs closely. That compares with roughly $4.8 million in the prior year period, an increase of 0.6% year-over-year. With that, I'll hand things to the operator to start our Q&A session. Each caller gets one question plus one follow-up so everyone has a chance to take part. If time permits, the operator will allow additional questions from those who have already spoken. I'll now have the operator open our Q&A session, and afterward Joe Hazelton will give closing remarks. Operator?

Hi there, and thanks for taking my questions. Tollef Kohrman here from Matt Hewitt. Going back to what you said at the start, could you explain why adoption has been slower than you first expected? Thank you.

I'll handle that. Adoption has been somewhat slower since they're folding it into their workflows. With cell culture media — say, for mammalian cell lines — when you swap in something like transferrin or even an albumin, you have to make sure it performs in the process before moving over to your commercial cell line. That's taking a bit longer because there are somewhat more regulatory hurdles for them to get past. Research products, on the other hand, are gaining traction, since those don't demand the same degree of, say, regulatory oversight or regulatory scrutiny as some of the products used to make human therapeutics do. These aren't human therapeutic products — they don't actually go into a human being. When you use it for cell culture media or cell and gene therapy, those products are actually being used to produce a human therapeutic. They do need to assess those products to make sure they meet the quality metrics and perform just like the transferrin they use today, so they don't wind up, obviously, with problems. That's what's behind the slow pace — or at least the somewhat longer time than we had anticipated — for them to finish these and obviously bring them into workflows.

Awesome. Great. Is there any commentary you can share from customers who are working with your platforms — how they believe it might progress, and what their initial thoughts are on that? Thank you.

In cell culture, I'd say the feedback has been very good. So far, the products have been working in cell culture applications; we've gotten good feedback and even data from some customers showing that in certain models — whether that's cultured meat, mammalian cell lines, or even HEK cell lines — our transferrin is working. The feedback has been good that our products are performing as they should, which is obviously what we hope for. Proliant has actually put out some very good data on the recombinant human albumin that they're producing using our technology, and it's actually performing better than serum-derived albumin that you get from human blood. I think the feedback is good, and I think we're obviously moving in the right direction.

Yes. Hi, Joe, and hi, Mark. This one's for you, Joe. Regarding the announcement we made a day or so ago, involving those two entities where you have some kind of partnership going, obviously I don't know, and I can't be sure what you're able to say about how sharing works and what revenue that partnership will generate; it seems the next step is a single product you mentioned, and at roughly 200 metric tons a year, that product looks like a $10 million-$16 million business on its own. Could you elaborate a bit more on how that three-way arrangement functions and how we could bring in additional products within that space to expand the market opportunity beyond the $10 million to $16 million range.

Dick, that's a wonderful question, and yes, absolutely. Naturally, I'm not in a position to give guidance regarding what the financials will look like for it. That said, your point is spot on. This involves a single product and a single end customer. What sets this partnership apart from prior ones, I suppose, is that the end customer here is Strive Nutrition. Their products are available in the U.S. market at retailers such as Walmart and CVS. Their FREEMILK products are what you'll find there. In effect, we have now vertically integrated the partnership so that it includes the end customer. Looking at all these products—or at least with Strive—they're beginning to shift toward animal-free options, or clearly those premium proteins for their nutrition lines. You've got items such as lactoferrin, or perhaps human alpha-lactalbumin, and maybe casein down the road. When you consider alpha-lactalbumin—and I brought up lactoferrin too—those represent the next-generation offerings. Keep in mind that Strive is just one customer, and they're a truly fantastic partner. They'll be evaluating some of the protein we're making right now in application, checking how it works in their products; then naturally, the hope is they'll incorporate it into their commercial offerings eventually. Our aim, clearly, is to extend that to additional prospective commercial partners. And it wouldn't be limited to a single 200-metric-ton order. That figure applies only to Strive — it's simply the volume they're looking to use. Someone else might take another 200, 300, or 400 metric tons. That's how these systems, or these markets, expand: through the count of customers you can bring in or reach as time goes on, and then through how many products they incorporate into their various formulations. Whether they're focused on, say, early life or infant nutrition, or healthy aging — those kinds of products — each one calls for differing quantities of different proteins, be it alpha-lactalbumin, lactoferrin, caseins, or beta-lactoglobulin; everything hinges on the products they intend to make. Once more, this varies from one customer to another — that said, this is only a single customer, and clearly a strong partner with whom to kick the process off.