Earlier this week Dyadic announced DuPont will acquire its C1 industrial enzyme technology platform for $75 million. While the deal transfers nearly all of Dyadic’s industrial enzyme technology assets to DuPont, the announcement also disclosed that Dyadic will continue to have co-exclusive rights to the C1 technology specifically for pharmaceutical applications. For pharmaceutical applications, DuPont will make royalty payments to Dyadic upon commercialization. Dyadic’s C1 technology is currently licensed to companies such as Abengoa for cellulosic ethanol production and BASF for the animal feed, food, and textile industry. In the pharmaceutical industry, Dyadic licenses its technology to Sanofi-Pasteur for production of vaccines, antibodies, and therapeutic proteins (client registration required).
DuPont is no stranger to bolstering its enzyme technology portfolio through acquisitions, acquiring Danisco in 2011 for a total of $6.3 billion. However, DuPont isn’t alone, as many of the larger companies in the space made similar transactions in the enzyme industry over the last few years. At the start of 2013, Novozymes acquired Iogen Bio-Products, Iogen’s industrial enzyme division that produced enzymes for a range of industries including grain, animal feed, and pulp and paper (client registration required). The transaction totaled $80 million and did not include Iogen’s assets in cellulase enzymes. Later that year, BASF acquired Verenium for approximately $62 million. By this time, BP had already acquired Verenium’s cellulase enzyme portfolio in June 2010 for $98.3 million (client registration required). While all the transactions, except for the Danisco acquisition, are relatively equal in size to the Dyadic acquisition, the economic environment in which they occurred were drastically different.
In January 2013, oil prices were approximately $95 per barrel WTI Crude when Novozymes decided to purchase Iogen without its cellulase enzyme technology. Later that year in October, oil prices were just under $104 per barrel WTI Crude when BASF acquired Verenium. Notably, the Dyadic acquisition stands out, as oil prices have plummeted to approximately $45 per barrel WTI Crude this month. Yet the transaction price is in the same range as the previous examples even though DuPont acquired something more – the cellulase enzyme technology that is licensed to DuPont’s competitor, Abengoa. In May 2012, Abengoa expanded its rights under the non-exclusive license agreement the parties entered into in February 2009. The first iteration of the license agreement gave Abengoa the right to use Dyadic’s C1 platform technology to develop, manufacture and sell enzymes for use in second generation biorefining processes to convert biomass into sugars for the production of fuels, chemicals and/or power in certain territories. This iteration of the license agreement expands the license to worldwide rights and gives Abengoa the ability to produce, use, and sell C1 enzymes in first as well as second generation biofuels and other bio-based processes.
But the reason for the relatively low transaction bill doesn’t necessarily reflect the value of the C1 platform. It’s list of current licensees ranging from small start-ups (client registration required) to large corporations and across various industries made it a prime target and will likely strengthen DuPont’s own enzyme platform. The link to Abengoa’s enzymatic technology is an added bonus as it may mean some leverage over a direct competitor. What it does show is that the current economic climate of low oil prices is ripe for opportunity for those with the capital and long term vision to supplement their current biotechnology portfolios.