Research, License, and Collaboration Agreement with Janssen
On December 17, 2021, Dyadic International Inc. DYAI released news that the company had entered into a research, license, and collaboration agreement with Janssen Biotech, Inc. one of the Janssen Pharmaceutical Companies of Johnson & Johnson JNJ. The agreement was facilitated by Johnson & Johnson Innovation. Details of the structure of the Janssen agreement are provided in Dyadic's latest 8-K; however, parameter specifics, including strategic targets and payment amounts, have been redacted. According to the provided exhibit, the therapeutic proteins that Dyadic is helping Janssen to produce are likely monoclonal antibodies, which was mentioned in the addendum to the 8-K that Dyadic supplied to the SEC. The antibody target(s), however, remain undisclosed, but the partnership is a testament to the abilities for Dyadic's C1, fungal-based technology, to produce complex therapeutic proteins.
Under the terms of the agreement:
➢ Dyadic will receive an upfront payment of $500,000 for non-exclusive rights to utilize the C1 platform to develop C1 production cell lines for the manufacturing of Janssen's therapeutic protein candidates against several biologic targets;
➢ Janssen will provide R&D funding of up to $1.8 million1 to develop and assess C1 production cell lines for its candidates;
➢ Janssen has option to pay mid-seven figure payment for exclusive license to use C1 for manufacturing of therapeutic proteins directed to a single, specific target;
➢ Janssen also has the option to obtain the following rights from Dyadic:
◦ In exchange for milestone payment of mid-seven figures, Janssen will have the right to add additional, non-exclusive targets to the collaboration;
◦ In exchange for milestone payment of low-seven figures, Janssen will receive complete C1 platform technology transfer fully enabling internal development of C1 cell lines against licensed targets;
➢ For each product candidate, Dyadic could receive development and regulatory milestones in the mid-seven figures;
➢ Dyadic could receive commercial milestone payments in the low-nine figures per product, subject to limit on number of products, and will depend on cumulative amount of active pharmaceutical ingredient produced by Janssen for each product using the C1 platform.
In this agreement, Janssen will provide the financial support for Dyadic to do the preliminary (feasibility) work to produce Janssen's protein of interest (monoclonal antibody) using Dyadic's C1 platform. If successful, Janssen has the option to secure exclusive license to use C1 for manufacturing of said proteins for a single, specific target, in exchange for a mid-seven figure payment to Dyadic. Janssen will also have the options to add additional, non-exclusive targets to the collaboration for mid-seven figures, and to receive complete C1 technology transfer to develop C1 cell lines against licensed targets. Each product candidate could yield mid-seven figures to Dyadic, and Dyadic could receive commercial milestone payments in the low-nine figures per product. Naturally, the deal, and resulting cashflows, will progress in stepwise fashion as milestones are met, but the deal could represent as much as several hundred million dollars to Dyadic for each product that is eventually commercialized.
Addition to Executive Leadership Team
Dyadic added Joe Hazelton to the executive leadership team as Chief Business Officer in November. We had a chance to meet Joe recently who shared some of the details of his background at Novartis and his other responsibilities. The CBO role will support the global commercialization of the company's business initiatives in corporate strategy, business development and licensing. Mr. Hazelton offers 20 years of pharmaceutical industry experience in product and business development, licensing, and commercialization. He joins Dyadic from Charleston Laboratories where he served as Chief Operating Officer and Chief Commercial Officer, responsible for the strategic management of Charleston's product and portfolio management, alliance management, regulatory oversight, and global commercialization activities. Mr. Hazelton began his career at Novartis Pharmaceuticals Corporation, where over a 15 year period he ascended to roles of increasing responsibility. While at Novartis, he held leadership positions within the core functions of sales, marketing, market access, pricing, contracting, and strategic alliances for various retail and specialty pharmaceuticals across a broad spectrum of therapeutic areas and several blockbuster products. Mr. Hazelton earned his Bachelor of Arts from the College of the Holy Cross in Worcester, MA.
Two New Fully Funded R&D Collaborations
In conjunction with its third quarter financial update on November 10th, Dyadic announced that it had signed two fully funded research and development collaborations with academia and industry. New details were also provided for DYAI-100 as the GLP animal toxicology study has demonstrated preliminary safety and has generated SARS-CoV-2 virus specific antibodies in animal models in the various studies being conducted. CMC development for DYAI-100 drug substance is near final stages of purification and drug substance manufacturing.
C1 COVID vaccine collaborations are in full swing, with technology transfer taking place between Dyadic and Rubic Consortium, Syngene International, Medytox and Sorrento Therapeutics. Further advancements with these partners have also taken place such as discussions about other vaccine targets, development of nanoparticle vaccine, and delivery of the Delta strain of the receptor binding domain (RBD). Dyadic and Sorrento continue to negotiate the details of the license agreement.
Other collaborations were mentioned as ongoing including non-specific commentary regarding the animal health and human health work. The ZAPI project has published a peer reviewed article entitled "Development of a Modular Vaccine Platform for Multimeric Antigen Display Using an Orthobunyavirus Virus Model" in the journal Vaccines.
Sorrento Collaboration
In August, Dyadic energized investors with the announcement of a deal with Sorrento Therapeutics SRNE that included upfront cash and a host of other financial benefits. However, the initial terms of the deal became less certain as management updated details regarding the ongoing negotiations, noting that the ultimate terms of the license agreement may be materially different than the ones outlined in the binding term sheet. The parties have not executed the out-license agreement within the 45 day time period first promulgated. In its initially announced form, the arrangement anticipated not only reimbursement for research and development expenses but also $10 million in an up-front payment, milestones and royalty payments. Upon signing a definitive agreement, Sorrento was to be granted exclusive rights in North and South America, Europe, Asia and certain other countries to advance C-1 produced proteins for development and commercialization of vaccines, therapeutic antibodies, protein therapeutics and diagnostics for coronaviruses. The $10 million up-front payment was to be denominated in equal parts cash and Sorrento stock followed by an additional reimbursement of up to $4 million for preclinical and clinical development costs incurred by Dyadic up to the point that Sorrento takes over the program. An additional $33 million in development milestones as well as royalty payments based on sales were also outlined in the term sheet.
While a final agreement has not yet been completed and may be different from the details outlined above, a technology transfer to Sorrento for DYAI-100 and the C1 platform has been initiated. As far as we can tell, negotiations are ongoing with respect to the terms of the deal with Sorrento.
Technology Transfer and Licensing Agreement with Rubic Consortium
Adding to recent geographical expansion throughout the Asian sphere, Dyadic announced on July 27, 2021 that it had entered into a technology transfer and licensing agreement with Rubic Consortium for research, development and commercialization of COVID-19 vaccine candidates throughout the African continent. Including recent successes with Syngene, Medytox and others, the deal expands C1's potential reach as a COVID-19 vaccine production solution to ~40% of the global population.
The Rubic Consortium comprises representatives from public health, medical, academia, vaccine technology, technology transfer and economics sectors. Development and implementation of vaccine technologies will be overseen by leading academics directed by the University of the Witwatersrand, Johannesburg (Wits) academic team with the support of Wits Health Consortium. Shabir Madhi, professor of vaccinology, Dean Faculty of Health Sciences at Wits stated, "The need to quickly acquire and commercialize technology and manufacturing capabilities, which addresses the infrastructure necessary to deploy vaccinations for broad populations affordably and timeously has never been a more strategic imperative of African nations than today," and expressed optimism regarding the high yields and low cost that Dyadic's C1 platform represents even beyond COVID-19.
Dyadic's COVID-19 vaccine milestones include:
➢ C1 expression of SARS-CoV-2 mAb achieved - 2H:20
➢ Record expression of SARS-CoV-2 RBD antigen - 2H:20
➢ VTT C1 engineering of full spike protein & RBD antigen of SARS-CoV-2 - 2H:20
➢ Non-exclusive technology usage agreement with Epygen Biotech - 2H:20
➢ 10 ongoing animal trials of SARS-CoV-2-S-RBD - 2020/2021
➢ CR2O master services agreement - March 2021
➢ ZAPI Update - March 2021
➢ Medytox collaboration - March 2021
➢ CR2O antibody research collaboration - April 2021
➢ DYAI-100 toxicology study - April 2021
➢ Syngene collaboration for development of COVID-19 vaccine in India - May 2021
➢ Technology Transfer and Licensing Agreement with Rubic Consortium - July 2021
➢ Sorrento Therapeutics Binding Term Sheet - August 2021
➢ DYAI-100 Phase I initiation - 1H:22
Summary
Dyadic adds an impressive partnership with Janssen for the development and potential production and commercialization of Janssen's antibody candidates, the target(s) for which are currently undisclosed. In this agreement, Janssen will provide the financial support for Dyadic to do the preliminary (feasibility) work to produce Janssen's protein of interest using Dyadic's C1 platform. If successful, Janssen has the option to secure an exclusive license to use C1 for manufacturing of the proteins for a single, specific target, in exchange for a mid-seven figure payment to Dyadic. Janssen will also have the options to add additional, non-exclusive targets to the collaboration for mid-seven figures, and to receive complete C1 technology transfer to develop C1 cell lines against licensed targets. Each product candidate could yield mid-seven figures to Dyadic, and Dyadic could receive commercial milestone payments in the low-nine figures per product. Naturally, the deal, and resulting cashflows, will progress in stepwise fashion as milestones are met and it could represent several hundred million per successful candidate to the company.
In other recent achievements, Dyadic announced two fully funded R&D collaborations in conjunction with its 3Q:21 results which provide additional opportunity to expand C1 into R&D programs. To further advance success of collaborations, in early November, Dyadic appointed Joe Hazelton as its Chief Business Officer to support the global commercialization of the company's business initiatives in corporate strategy, business development and licensing.
The recently announced Sorrento deal has yet to crystallize, but may represent a step up from previous arrangements due to the potential for reimbursements, upfronts, milestones and royalties throughout the duration of the agreement. Although management has not updated us on details, we think that the conclusion of a deal with Janssen may catalyze the negotiation process.
The deal with JNJ's Janssen, a subsidiary of the largest pharma company in the world,2 is a feather in Dyadic's cap. We have expected a deal like this for some time and we believe that this validates the assumptions in our model that anticipate penetration into the over $300 billion in biologics that are sold globally. There is substantial value in Dyadic's broad portfolio of options and in its exciting technology that can revolutionize the protein expression industry. Future favorable catalysts include the addition of more collaborators, achieving output milestones and launching the planned clinical trial.
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1. Dyadic stated that it would receive 1.6 million EUR, which we have approximated as of 12/18/21 to be 1.8 million USD
2. At least until the split takes place.
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