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Note 3 - Research and Collaboration Agreements, Sublicense Agreements, and Investments in Privately Held Companies | 9 Months Ended
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Sep. 30, 2024
Notes to Financial Statements |
Collaborative Arrangement Disclosure [Text Block] | Note 3: Research and Collaboration Agreements, Sublicense Agreements, and Investments in Privately Held Companies Proliant On June 27, 2024, the Company entered into a License and Development Agreement (the “Proliant Agreement”) with Proliant Biologicals, LLC d/b/a Proliant Health and Biologicals (“Proliant”), pursuant to which Proliant will license Dyadic’s proprietary fungal microbial expression and production platforms and microbial strains for the production of recombinant serum albumin. Under the terms of the Proliant Agreement, Dyadic has received an initial upfront payment of $500,000, a second payment of $500,000 upon the completion of the transfer of a Production Strain (as defined in the Proliant Agreement.) and will receive a final payment of $500,000 upon the meeting of a certain productivity threshold. Upon commencing commercial sales of animal-free recombinant serum albumin products produced pursuant to the Proliant Agreement, the Company will receive royalties based on a certain percentage of the gross margin received by Proliant, as defined in the Proliant Agreement. For the three and nine months ended September 30, 2024, the Company recognized $1.0 million in license revenue related to the Proliant Agreement, as the performance obligation to deliver the production strains has been completed. Inzymes ApS On September 18, 2023, Dyadic International (USA) Inc., a subsidiary of the Company, signed a Development and Exclusive License Agreement (the “Inzymes Agreement”) with Inzymes ApS (“Inzymes”), a Denmark corporation, to develop and commercialize certain non-animal dairy enzymes used in the production of food products using Dyadic’s proprietary Dapibus™ platform. On October 11, 2024, the Inzymes Agreement was amended (“the Amended Inzymes Agreement”). Under the terms of the Amended Inzymes Agreement, a research collaboration to develop a basket of dairy enzymes will be fully funded by Inzymes with an upfront payment of $0.6 million. Dyadic will also be eligible to receive success fees upon the achievement of certain target yields, milestone payments upon first commercial sale of each product and royalties. In October 2023, the Company received an upfront payment of $0.6 million in accordance with the terms of the Inzymes Agreement. The payment consisted of funding for specified product research and development efforts and right of first refusal for certain product candidates. For the three and nine months ended September 30, 2024, the Company recorded research and development revenues of $0 and $25,000, respectively. For the three months ended September 30, 2024, the Company recognized $425,000 license revenue from success fees upon the achievement of target yield for one product. The Company will continue evaluating the achievement of success fees related to target yields and product commercialization of each product when they are considered probable and estimable under the Inzymes Agreement. A Global Food Ingredient Company On May 10, 2022, the Company entered into a Joint Development Agreement (the “JDA”) with a Global Food Ingredient Company (“GFIC”) to develop and manufacture several animal free ingredient products using the Company’s biotechnologies. Under the initial terms of the JDA, Dyadic was to develop its proprietary production cell lines for the manufacture of animal free ingredient product candidates. The GFIC has completed its one-year funding commitment for the initial phase of research collaboration in an amount approximating $1.35 million, and, pursuant to the GFIC’s rights under the JDA, the Company and the GFIC are in discussions related to the potential development of other animal free ingredient products. The Company is also considering other funding sources to continue the original project. For the three and nine months ended September 30, 2024, there was no revenue recognized related to this JDA. For the three and nine months ended September 30, 2023, the Company recorded research and development revenues of approximately $0 and $565,000, as well as success fees of approximately $65,500 in connection with the JDA, respectively. Janssen On December 16, 2021, the Company entered a Research, License, and Collaboration Agreement (the “Janssen Agreement”) for the manufacture of therapeutic protein candidates using its C1-cell protein production platform with Janssen Biotech, Inc., one of the Janssen Pharmaceutical Companies of Johnson & Johnson (“Janssen”). On October 2, 2023, Janssen provided written notice to Dyadic that it has decided to wind down the collaboration with an effective end date of December 31, 2023. For the three and nine months ended September 30, 2024, there was no revenue recognized related to the Janssen Agreement. For the three and nine months ended September 30, 2023, the Company recognized approximately $44,000 and $132,000 of license revenue, respectively. For the three and nine months ended September 30, 2023, the Company recorded research and development revenues of approximately $127,000 and $507,000, respectively, in connection with the Janssen Agreement. Alphazyme In 2019 the Company entered into a sub-licensing agreement with Alphazyme, LLC (“Alphazyme”) that was subsequently amended (the “Amended Alphazyme LLC Agreement”). Under the Amended Alphazyme LLC Agreement, Alphazyme obtained additional capital contribution and Dyadic’s ownership was diluted to 1.99%. The Company evaluated the nature of its equity interest investment in Alphazyme and determined that Alphazyme is a VIE due to the capital structure of the entity. However, the Company is not the primary beneficiary of Alphazyme as Dyadic does not have the power to control or direct the activities of Alphazyme that most significantly impact the VIE. As a result, the Company does not consolidate its investment in Alphazyme. The Company reports its investment in Alphazyme under the cost method of accounting, given that it does not have the ability to exercise significant influence or control over Alphazyme. On January 18, 2023, the Company entered into a Securities Purchase Agreement, under which the Company agreed to sell its equity interest in Alphazyme, LLC (the “Alphazyme Sale Agreement”). The Company continues to have the potential to receive additional payments based on the future sales of Alphazyme’s existing products, pursuant to the Alphazyme Sale Agreement. The Amended Sublicense Agreement between Dyadic and Alphazyme, which was previously entered on June 24, 2020, remains in effect. Under the Amended Alphazyme Sub-License Agreement, Dyadic is entitled to potential milestone and royalty payments upon the commercialization of Alphazyme products using Dyadic’s proprietary C1-cell protein production platform. For the year ended December 31, 2023, the Company received a total cash payment of $1.3 million from the sale of its equity interest in Alphazyme, LLC. In the first quarter of 2024, the Company received an additional cash payment of $60,977, which was recorded as gain on sale of Alphazyme in the consolidated statement of operations.

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