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May 2012
WE TURN DNA INTO PRODUCTS
DYADIC INTERNATIONAL, INC.
(Symbol: DYAI)
2
Safe harbor statement
Certain statements contained in this presentation are forward-looking
statements. These forward-looking statements involve risks and uncertainties
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. Except as required
by law, Dyadic expressly disclaims any intent or obligation to update any
forward-looking statements.
Dyadic overview
3
Leading developer and supplier of enzymes
and other protein-based products
End markets of biofuels and bio-based
chemicals, industrial enzymes and
biopharmaceuticals
Revenue through product sales, funded
research and technology licensing
Licensees and partners include BASF,
Abengoa and Sanofi Pasteur
Seeking capital raise of $5 to $10 million
in Q1 2015 to fund growth and general
business operations
Class-leading technology, used to turn genes
into protein-based products at large volumes
and low cost
Two decades of development with nearly $100
million invested in Dyadic
“High Cellulase” (HC) platform used in textile,
pulp & paper and bioenergy markets
commercialized in 1996
“White Strain” (LC) platform used to develop
enzymes for food, animal nutrition, textile,
pulp & paper and biopharmaceutical
applications commercialized in 2011
Few companies that possess comparable
technology include DuPont, Novozymes,
DSM, Abengoa1 and BASF1
1 Technology access through Dyadic license
Business overview C1 technology overview
Global footprint
4
Jupiter, FL
Warehouse (3rd party)
Corporate headquarters
Toll manufacturing (3rd party)
R&D centers
Wageningen, NL
Tilburg, NL
Hong Kong Charlotte, NC
Sales and distribution
Tlalnepantla, MX
Minneapolis,
MN
Berlin, DE
Business model
5
23%
35%
51% 47%
0%
20%
40%
60%
80%
100%
0
2
4
6
8
10
12
14
16
18
20
2010 2011 2012 2013
Licensing Fees R&D
Enzyme Sales Gross Margin
Historical revenue ($ millions) Proprietary enzyme sales
C1 licensing and partnerships
Currently sell niche products into food,
animal feed, pulp & paper, textile and
other end markets
Several potential new products in
pipeline
Profitable, established business with
recurring revenue and long-term
customers
Currently 7 blue chip strategic partners
and licensees
Projects in pharmaceutical, feed, food
and biofuels
8.4
10.3
15.6
17.1
Funded research
Funded R&D from strategic partners
and government projects
17%
35%
0%
20%
40%
60%
80%
100%
0
3
6
9
12
15
9mo 2013 9mo 2014
Product R&D
Milestones Payments Gross Margin
9 month 2014 highlights
6
Revenue excluding license fees increased
23% for the 9mo 2014 vs 9mo 2013
Enzyme revenue increased 8% to $7.6
million
R&D revenue increased 60% to $1.5 million
Received milestones from BASF and
Abengoa
Gross profit increased 155% to $3.5 million
for the 9mo 2014 vs 9mo 2013 excluding
licensing fee
Gross margins for the 9mo 2014 increased
to 35% from 17% in the 9mo 2013
Enzyme gross margins up 13% percentage
points
Scalability of R&D lab reducing costs per
FTE and driving higher margins
9-mo 2014 vs 9-mo 2013 ex license
fees ($ millions)
8.0
9.8
Memo: Certain figures shown are non-GAAP
Business by end market
7
Cellulosic Sugars Industrial Enzymes Biopharmacuticals
End
mark
ets
Mark
et
siz
e
Part
ners
&
licensees
Biofuels
Bio-based chemicals Animal feed
Food & Beverage
Starch & Alcohol
Pulp & Paper
Textiles
Vaccines
Antibodies (e.g. mAb)
Therapeutic proteins
Biocatalysts for API
$5+ billion today
$5+ billion new
enzymes in
next decade
$90+ billion today
Major
animal
health &
nutrition
company
Market
leading
food and
enzyme
company
Leading
animal
health &
nutrition
company
Leading
pharmaceutical
company
Pro
ducts
Alternafuel CMAX5
On-site licensing model
Enzyme sales to 35+
countries Preclinical drug
development
(ABGOY)
(BASFY)
(SNY)
Abengoa case study
8
November 2006 R&D Agreement
Securities Purchase
(6% ownership of Dyadic)
February 2009 License Agreement
April 2012 Expanded License
Agreement
October 2014 Opening of 25 million
gallon Hugoton facility
using C1 technology
Relationship with Dyadic
One of the largest ethanol producers and alternative energy companies in the world
Agreement overview
Non-exclusive
Fields: Biofuels and bio-based chemicals
Territory: Worldwide
Rights: Abengoa has the right to produce,
improve, use, sell C1 enzymes
Terms: License fee, funded research,
milestones and per gallon royalties
Abengoa’s 25 million gallon plant in Hugoton, Kansas came online in October 2014 and is using Dyadic C1 enzyme technology
BASF case study
9
One of the largest chemical companies in the world
Industrial enzymes Target
Product and platform development Current Phase
$6 million up front license
Funded research and development
R&D and commercialization milestone payments
Royalties based on revenue of products sold
Terms
Ongoing funded research continues at Dyadic
Netherlands
Scientific results to-date continue to be very exciting
Timeline and
next steps
10
Sanofi Pasteur case study
Vaccine using C1 expression system Target
Preclinical testing Current Phase
Expressed, purified and delivered
protein to Sanofi
Modifications to the protein are ongoing Status
Project began in 2011
Project funding recently extended
Additional preclinical trials expected to
follow
Timeline and
next steps
One of the largest vaccine companies in the world
Dyadic 3-year outlook
11
• BASF license
agreement
• Initiation of New Product
Development Program
• Abengoa plant online
• CIMV biofuel agreement
• C1 White Strain
achieves 50g/L of target
enzyme
BASF
• BASF, Sanofi and
animal feed R&D funding
extension
• Expected court date for
lawsuit
• New licensees, licensing
new products in
development
• Targeted cash
flow break even
• CIMV demo plan
online
• New licensees,
licensing new
products in
development
• Initial potential
launch of new
products in
development
2013 2014 2016 2017 2015
New product
development &
Abengoa plant
Key project
extensions & Court
date
Cash flow
break even &
CIMV demo
plant online
New
products to
market
License agreement
Hugoton plant opening
Milestone payment
Commercial agreement
Project extension
Demo plant opening
R&D and potential milestones
Hugoton plant royalties
Hugoton plant royalties Hugoton plant royalties
2016-2017 and later potential for:
Abengoa and CIMV commercial plants
New products to market
New partnerships and licensees
Additional milestones and royalties from
current licensees Pote
ntial m
ilesto
nes
Active new products being developed in many industries
12
Type of project # o
f
pro
jec
ts
Bio
fue
ls &
bio
-ba
se
d
ch
em
icals
An
ima
l
He
alt
h
Sta
rch
&
alc
oh
ol
Fo
od
&
be
ve
rag
e
Pu
lp &
pa
pe
r
Ph
arm
a-
ce
uti
ca
ls
Internal new product
development 6
Ongoing EU funded
projects 9
Applied for EU funded
projects 4
3rd party funded projects1 3
1 BASF end market undisclosed
We have identified six key new products in development
Commercialization in 2017
Potential nearer-term revenue from licensing of these new products
Based on our past success in obtaining EU and other government funding we have applied
for four new European Union subsidized projects for 2015, 2 have already been approved
We believe the tangible progress in C1 can be applied to many different end markets
13
Potential upside from lawsuit of former legal counsel
We are currently engaged in litigation with three former professional service
providers
In 2009, we sued our former professional service providers in connection
with events relating to alleged improprieties at our former Asian subsidiaries,
which we abandoned in May 2007
Claimed damages in excess of $200 million
Defendants include Greenberg Traurig, Bilzin Sumberg and Moscowitz
& Moscowitz
Jenkens & Gilchrist, one of the defendants, has already settled
Court ordered mediation occurred on November 10 & 11, 2014
Expected trial date in Q2 or Q3 of 2015
THE C1 EXPRESSION
SYSTEM
14
Expression systems turn DNA into products
15
Enzymes and other
proteins control
particular chemical
reactions
Dyadic Inside® Protein products
C1 Expression
System turns genes
into products
A template for
enzymes and other
proteins
Genes
C1 expression system advantages
16
Track record of producing at industrial scale
Identified over 500 potentially useful enzymes in genome, of which over
100 already been expressed
Many enzymes active in broad pH and temperature range
Excellent safety record and has Generally Recognized as Safe (GRAS)
status acknowledged by the FDA
Platform
technology
Extensive molecular toolbox with genome sequenced and annotated
Programmable to produce tailored “pure” enzymes and mixtures
Effective homologous and heterologous gene expression
Serves as both a research and production host
Cost
effective
product
development
Freedom to
operate
Dyadic is the sole owner of the C1 expression system and has broad
patent claims
Two commercial platforms allow for broad applications
17
HC White Strains
HC vs. White Strain
End
Market 1
Enzyme 2
(thermostable)
(12 g/L)
Enzyme 3
(thermostable)
(15 g/L)
End
Market 2
White Strain (LC) product development
Enzyme 1
(20 g/L)
The White Strain expresses dedicated enzyme mixture
Composition can be easily adapted for various applications
New HC strains can be constructed from the White Strain
Effectively degrade or
modify a wide range of
biomass into sugars
HC Strain (1996) White Strain (2011)
Textiles, pulp & paper, biofuels Animal nutrition, dairy, baking, brewing, pharmaceuticals
Enzyme productivity improvements by generation
Gen 3 commercial product:
12x cost reduction
Gen 2 commercial product:
4x cost reduction
Project resources included approximately 1 scientist over 2 years
C1-cellulase accepted by FDA on
September 29, 2009
GRAS Notification letter is a public
statement by FDA acknowledging Dyadic’s
safety determination for the intended uses
of C1
GRAS Notification letters are broadly
recognized in the food and consumer
products industries as the safety standard
C1 strain non-toxic
Pathogenicity and toxigenicity data:
strain is non-infectious and no
known toxins are produced
Peer-reviewed scientific literature
have confirmed — no known
pathogencity
No mycotoxins found
C1 enzyme testing
In vivo feeding trails:
14 day dose study in rats
13 week subchronic rat study
Genotoxicity testing:
AMES bacterial mutagenesis
Chromosomal aberration test
Genetic mutation test
No adverse effects observed
No foreign DNA
Safety confirmed
C1 has an excellent safety profile
Generally Recognized as Safe (GRAS) status
acknowledged by the FDA
19
CELLULOSIC BIOFUELS AND
BIO-BASED CHEMICALS
20
C1 is one of only three leading enzymatic platforms
21
C1 biofuel enzymes have several key advantages
22
Industry-leading enzyme performance at breaking down biomass
Robust enzymes that work at high temperature and pH
Effective
performance
Proven at 500,000 liter scale production
Morphology and other characteristics allows for low viscosity Scalable
production
On-site
production
Producing enzymes on site at biorefineries eliminates downstream
processing, stabilization ingredients, warehousing, shipping and
handling (representing 30-50% of total enzyme cost)
On-site licensing business model unique to Dyadic among Tier-1
players
Can be grown on low cost media with low glucose inhibition
Organism is rich in enzyme encoding genes allowing for low cost
product development and customization
Low cost
platform
C1 has twice the enzyme-encoding genes than competing
systems for biofuels and bio-based chemicals
23
0
50
100
150
200
C1 Trichoderma
186
84
Large variety of lignocellulolytic enzymes enables development of efficient
dedicated enzyme mixtures (produced by a single engineered C1-strain)
26
3
Example: C1 has 26 GH61 genes vs. 3 for
Trichoderma
Several countries, such as Japan, consider
self cloned strains as non-GMO
BIOPHARMACEUTICALS
24
25
Influenza vaccine
(human)
Viral influenza
vaccine
(veterinary)
Antibodies
(diagnostic and
therapeutic)
C1 has many high-potential opportunities in biologics
Prospective game-changing platform for biologics market
Biocatalysts for
API production
Therapeutic
proteins
Antiviral (HIV and
other)
Extremely high yield, industrial scale production in world’s largest
fermenters
Ability to more quickly modify cell lines to create and modify biologics
Near human glycosylation
Track record of expressing therapeutic proteins in C1
Potential to fight epidemics at global scale
Fast response to an emerging new strains of infectious disease at global scale
Origin of recent
diverse or serious
outbreaks of
emerging
infectious diseases
26
FINANCIAL OVERVIEW
27
28
Income statement
29
Balance sheet
30
Cap table as of September 30, 2014