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Dyadic's red-hot C1 gene expression technology gets biologic vaccines, drugs to market swiftly at lower cost

Published: 14:01 04 Jun 2019 EDT

Dyadic Dyadic International founder and CEO Mark Emalfarb
Founder and CEO Mark Emalfarb has presided over Dyadic International's evolution from 'jeans to genes' to become a leading biotech company

When Mark A Emalfarb started Dyadic International Inc (NASDAQ:DYAI), it was cashing in on a 1980s trend — supplying pumice stones to denim makers to help make stonewashed jeans more fashionable and comfortable. Forty years later, Dyadic is a sought-after biotechnology platform company listed on the tech-laden Nasdaq. 

Founded in 1979, the Jupiter, Florida, biotechnology platform company, sold a variety of industrial enzymes worldwide for more than two decades to the biofuel, animal nutrition, pulp and paper, food and beverage and textile industries. 

Dyadic leverages its proprietary C1 technology — an industrially proven fungal gene expression technology for producing large amounts of low cost biologic products — to help bring biologic vaccines, therapeutic enzymes, proteins, biosimilars, drugs and potentially other types of biologics such as metabolites and viral vectors such as AAV to market faster and at a lower cost.

The company has patented its proprietary filamentous fungus, Myceliophthora thermophila, nicknamed C1 and the associated molecular tools used to engineer the C1 cells to express and manufacture large volumes of low-cost biologic products such as enzymes and proteins. 

The C1 fungus, is a living cell that has been bioengineered by Dyadic scientists for more than two decades. Through a series of serendipitous mutations, the C1 cells morphed into what the company calls microscopic propagules — this change in the shape and form of the C1 cells led to both hyper productivity and robust and reproducible growth characteristics. This scientific anomaly improved C1’s productivity several hundred-fold and allowed for the large industrial scale production of enzymes and other proteins.

Dyadic, which started trading on the Nasdaq on April 17 this year, is ripe with opportunities. Proactive Investors sat down with Dyadic International’s founder and CEO Mark Emalfarb to learn more about those opportunities.

Emalfarb is a named inventor on over 25 US and international biotech patents and patent applications linked to the patented and proprietary C1 microorganism.

How did you end up in the biotechnology industry and what is the genesis of Dyadic International?

I was a journalism major and a member of the University of Iowa NCAA championship wrestling team coached by Dan Gable. I started out helping to pioneer the stonewash jeans industry by supplying pumice stones to soften and fade denim to Levi Strauss & Co (NYSE:LEVI), Guess Jeans, Wrangler, Lee as well as many other jean manufacturers and garment wet processers. Sales of pumice grew to around $15 million per year by the mid 80’s which yielded a profit of nearly $5 million.

In the 80’s cellulase enzymes were coming on the scene as a more environmentally friendly alternative to the use of pumice in the stone wash process. Since Dyadic had the customer relationships with the laundries performing the stone wash services for the blue jean manufactures Dyadic began to offer the cellulase enzymes to its customers to supplement and/or replace the pumice.

As the enzyme manufacturers began to open up additional distributors our margins were contracting, so I embarked on a search to find scientists who could help us develop our own cellulase enzyme products. The next step in Dyadic’s evolution “from jeans to genes” was to become a biotech company, to develop and manufacture our own line of enzymes.

We found top scientists at Moscow State University that had been carrying out research on cellulases since the 1970’s. We worked with both Russian and American scientists and launched our first commercial cellulase product, ACE, in 1994 and followed that quickly in the Fall of 1996 with a neutral cellulase enzyme (NCE) which was produced from C1. We obtained our first of over two dozen patents on C1 in the Fall of 1998.

We then embarked on a two-plus decade-long R&D effort which takes us to where we are today, with a potentially significant biopharmaceutical gene expression platform based on the fungus Myceliophthora thermophila, named C1.

How would you explain the C1 expression technology to investors who may not be familiar with the science behind it?

C1 is a novel industrially proven fungus, a living cell that has been engineered to produce large volumes of low-cost enzymes and other proteins. The first breakthrough moment came in the process of developing C1 when we bred the natural C1 isolate, a fungus which was isolated from Russia’s alkaline soil, to make more and more of what we wanted.

After several rounds of UV & chemical mutagenesis we had a serendipitous mutation that micronized the C1 fungus, which meant it could be cultivated industrially with greater productivity, under lower viscosity to produce the desired C1 neutral cellulases at a very low cost.

How can the C1 gene expression platform disrupt the status quo in bio-manufacturing, and potentially help bring biologic vaccines and drugs to market faster at lower cost to drug developers?

The C1 microorganism, which enables the development and large-scale manufacture of low cost proteins, has the potential to be further developed into a safe and efficient expression system that may help speed up the development, lower production costs and improve the performance of biologic vaccines and drugs at flexible commercial scales. We have already demonstrated C1’s potential for use in helping to speed the development and lower the cost of biologic vaccines and drugs by demonstrating high productivity in several internal and externally funded research programs with many different types and classes of pharmaceutical proteins of interest to both animal and human pharmaceutical companies.

Has your C1 technology platform gained traction in the biotech industry after Dyadic sold its industrial enzyme business to DuPont for $75 million?

After selling our industrial enzyme business three years ago to DuPont for $75 million, we developed a newly focused strategy to apply the industrially proven C1 cell line for use in the animal and human health biopharmaceutical industries to lower the COGS and speed up drug development and manufacturing.

C1 has and continues to show great potential to manufacture biologic vaccines and drugs in larger amounts with less capital required and at lower costs than existing production systems.

Dyadic has co-exclusive rights to the C1 technology for use in human and animal pharmaceutical applications, with the exclusive ability to enter into current sub-license agreements. DuPont enjoys rights to utilize the C1 technology for use in pharma applications, but it will make royalty payments to Dyadic on commercialization.

One attraction of the biopharma industry towards C1 are its attributes over the existing platforms of ‘standard’ choice like, for example, the CHO cell lines.

We ended 2018 with nine funded proof-of-concept research collaborations and two new collaborations this year. It was another year of continued progress with many favorable milestones. We have a research collaboration with Mitsubishi Tanabe Pharma Corp where we have expressed and provided Mitsubishi with their protein of interest for further analysis which we hope will be moved into clinical trials and commercialized by Mitsubishi in the future. We also have an ongoing research collaboration with Sanofi-Aventis Deutschland GmbH, to explore the potential of our C1 technology to produce various types of therapeutic compounds for manufacturing protein-based vaccine and biologic drugs.

In 2018, the company also inked a proof of concept research collaboration to produce biologic vaccines for human and animal health with the Israel Institute of Biologic Research (IIBR), a top 20 pharmaceutical company and two top tier academic institutions, including the Structural Genomics Consortium, which is part of the University of Oxford and the Fraunhofer USA Center for Molecular Biotechnology.

We ended 2018 entering into another research collaboration with a top twenty biopharmaceutical company and we are continuing to gain momentum and awareness within both the animal health and human biopharmaceutical industry regarding the potential for our C1 gene expression platform to disrupt the status quo in manufacturing biologic vaccines and drugs.

How is the year going for Dyadic?

In the first quarter of 2019, we signed two new research collaboration agreements — both with top 25 drug companies. One of the world's largest vaccine makers, Serum Institute of India Private Limited will collaborate with Dyadic on up to 12 antibodies and vaccines (8 MABs and 4 rVaccines) using Dyadic's proprietary C1 gene expression platform. We also inked a sub-licensing agreement with Alphazyme LLC, a developer, manufacturer and global distributor of molecular biology enzymes.

We inked a worldwide sub-licensing pact with Luina Bio Pty Ltd, one of Australia's most experienced biopharma contract manufacturing organizations, for the development of targeted antigen, and biological products for pets. These programs demonstrate that the market and the industry are taking notice of Dyadic and the perceived capability of our C1 gene expression platform.

Our R&D revenue for the year ended December 31, 2018, increased to $1,295,000 compared to $758,000 for the previous year. These results demonstrate that our business development efforts are bearing fruit.

We had several corporate achievements which include:

  • Uplisting to NASDAQ and initiated trading on April 17
  • Form 10 effective on February 12, 2019

Two Sublicensing Agreements

  • Luina Bio/Novovet: with equity stake and royalties to use C1 to develop biologic vaccines and drugs for companion animals
  • Alphazyme: with equity stake, milestone payments, and royalties upon the commercialization of C1

Serum Institute of India

  • Research and commercialization collaboration to develop and manufacture up to 12 antibodies and vaccines using C1.

Our business model is to apply C1 by sublicensing it as widely and broadly as we can to help bring more accessible and affordable cures and treatments for disease to patients globally.

Additionally, we continue to update the pharmaceutical industry on how and where our C1 technology may be used by them potentially even earlier in their discovery and development programs to help them overcome gene expression challenges they may be facing. We have been able to demonstrate expression levels of up to 1 milligram per 4 milliliter in microtiter wells.

We believe the yields of protein expressed that C1 offers in microtiter wells may provide pharma companies with sufficient quantities of protein to identify and characterize promising new vaccine and drug candidates using the same host production organism from discovery through manufacturing.

The pharma industry is beginning to recognize the potential productivity advantages of our C1 technology versus CHO, E.coli, baculovirus and yeast from the various classes and types of proteins which have been expressed from C1 to date. Our fully programmable C1 gene expression platform is robust, and flexible and has been used industrially for over two decades to produce products in some of the largest fermenters used in the biotechnology industry.

The industry is also encouraged by our progress on both the protein stability and glyco-engineering research that is ongoing. However, with proper government support and assistance we can all do a whole lot more a lot quicker.

Contact Uttara Choudhury at uttara@proactiveinvestors.com

Follow her on Twitter@UttaraProactive 

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