Oragenics, Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021; interim financial statements are unaudited. Oragenics is a development-stage biotechnology company focused on its Terra CoV-2 vaccine candidate and lantibiotic antibiotics. It reported no significant operating revenue.
Financial performance and liquidity
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Research and development expense | $3.55 million | $3.50 million | $9.28 million | $18.76 million |
| General and administrative expense | $0.85 million | $1.01 million | $4.19 million | $3.34 million |
| Total operating expenses | $4.39 million | $4.51 million | $13.47 million | $22.09 million |
| Net loss | $4.38 million | $4.50 million | $13.42 million | $22.02 million |
| Basic and diluted loss per share | $0.04 | $0.08 | $0.12 | $0.42 |
- For the nine months, operating cash use was $11.59 million, versus $13.32 million a year earlier. Investing cash use was $24,123; financing provided $23.92 million. Cash increased by $12.31 million to $29.95 million.
- At September 30, 2021, current assets were $30.54 million and current liabilities $2.20 million; reported working capital was $28.34 million. Total assets were $31.09 million and shareholders’ equity $28.55 million.
- Short-term notes payable were $482,258, primarily insurance-premium financing. Operating lease liabilities totaled $539,380. The filing reports no significant revenue, so revenue-based margins are not meaningful.
- Common shares outstanding increased to 116.4 million from 91.8 million at December 31, 2020. The increase included 21.4 million shares sold through the ATM program, generating approximately $27.8 million gross, and shares issued on warrant and option exercises. The company also redeemed Series C preferred stock for approximately $5.6 million.
Material changes versus prior periods
- Nine-month R&D expense fell 50.5%, mainly because 2020 included Noachis Terra acquisition-related and oral-mucositis clinical costs; increased Terra CoV-2 spending partially offset the decrease. Q3 R&D was broadly level year over year as vaccine-program costs rose.
- Nine-month G&A increased 25.7%, primarily from non-employee stock compensation, board costs, insurance, filing fees, and salaries; Q3 G&A declined 16.1% year over year.
- Nine-month net loss narrowed from $22.02 million to $13.42 million, while weighted-average shares rose substantially, reflecting equity issuance.
Outlook, developments, and risks
- Management said available cash was expected to fund the business as then structured into Q3 2022. The company expects substantial continuing R&D spending and stated it would need additional funding thereafter; no committed financing source was identified. Additional capital may be unavailable or dilutive, and funding shortfalls could delay or curtail development.
- Oragenics planned to focus Terra CoV-2 development on intranasal delivery. It expected another FDA pre-IND meeting and an IND filing in Q2 2022, followed, if cleared, by a Phase 1 study. These are forward-looking targets, dependent on funding, study results, regulatory review, and other factors.
- The company reported completion of mouse immunogenicity studies supporting further evaluation of intramuscular or intranasal routes; a hamster challenge study was ongoing, with completion expected by the end of November 2021. The vaccine remained preclinical.
- A July 2021 NRC technology license supports vaccine development and cell-line production. The agreement includes annual fees, development and regulatory milestone payments, low-single-digit royalties on product sales, and company indemnification obligations. The NIH license also provides for royalties and milestone payments and may be terminated for specified breaches or missed milestones.
- In September 2021, Oragenics and Eleszto Genetika mutually terminated their lantibiotic collaboration. The company ceased preclinical development of OG716 and related compounds under that agreement and said it would pursue independent lantibiotic research. It also reported a $250,000 research grant for lantibiotic development.
- Management identified continuing losses, negative operating cash flow, development and regulatory uncertainty, financing needs, and possible COVID-19-related operational or trial delays as risks. The company also warned that failure to hold its annual shareholder meeting by December 31, 2021 could threaten NYSE American listing compliance; the meeting had been rescheduled for November 22, 2021 after prior adjournments for lack of a quorum.
- Management assessed disclosure controls as effective at September 30, 2021 and reported no significant changes in internal control over financial reporting during the quarter. No material pending legal proceedings were reported.
Key facts for investors to verify
- Cash runway assumptions and the timing, availability, and terms of additional financing.
- Progress against the planned FDA pre-IND meeting, Q2 2022 IND target, and vaccine preclinical milestones.
- Actual cash requirements and obligations under the NIH and NRC licenses, including milestone, royalty, and indemnity terms.
- Effects of share issuance, outstanding warrants and options, and any future financing on dilution.
- Whether the annual shareholder meeting was completed and NYSE American listing requirements were maintained.