Oragenics, Inc. — FY 2023 Form 10-K
Reporting period: Year ended December 31, 2023; filed March 29, 2024. The filing is an annual report, not a standalone fourth-quarter report. Oragenics is a development-stage biotechnology company with no products authorized for commercial sale. Following its December acquisition of neurology assets, its principal development focus is ONP-002, an intranasal candidate for mild traumatic brain injury (concussion).
Financial results and liquidity
| Metric | FY 2023 | FY 2022 |
|---|---|---|
| Grant revenue (no product sales reported) | $37,653 | $131,521 |
| Research and development expense | $15.49 million | $10.07 million |
| General and administrative expense | $5.45 million | $4.48 million |
| Total operating expenses | $20.94 million | $14.55 million |
| Net loss | $20.66 million | $14.29 million |
| Net loss per share, basic and diluted | $9.18 | $7.11 |
| Cash used in operating activities | $7.29 million | $15.23 million |
Revenue consisted of grant revenue; the filing reports no commercial product revenue. Operating margins are not meaningful for this pre-revenue company. The 2023 loss includes a $10.27 million noncash charge for acquired in-process research and development (IPR&D).
- Cash and cash equivalents: $3.48 million at December 31, 2023, down from $11.43 million a year earlier. Cash used in investing was $0.94 million, primarily reflecting the $1.0 million cash payment for the neurology asset acquisition. Financing provided $0.28 million in 2023.
- Liquidity: Working capital was $2.07 million, versus $12.69 million at year-end 2022. Total assets were $4.97 million; shareholders’ equity was $3.17 million.
- Debt and obligations: Short-term notes payable were $312,703, principally insurance-premium financing; current lease liabilities were $9,811. The company reported no off-balance-sheet arrangements.
- Going concern: The auditor’s report includes an explanatory paragraph stating that recurring losses and negative operating cash flows raise substantial doubt about the company’s ability to continue as a going concern. Management estimated year-end cash would support operations through Q2 2024.
Material changes and business developments
- Research and development expense rose 53.8%, mainly because the December acquisition generated the $10.27 million IPR&D charge. Lower spending on the vaccine and lantibiotic programs partly offset that increase.
- On December 28, 2023, Oragenics acquired Odyssey Health’s neurology assets, including ONP-002, ONP-001, related intellectual property, a powder formulation and a nasal delivery device. Consideration included $1.0 million cash, assumed liabilities of $325,672 and Series F preferred stock valued at $8.95 million. The transaction was accounted for as an asset purchase.
- Research and development on the NT-CoV2-1 vaccine and lantibiotic programs was inactive at year-end because of limited funds. The company terminated its Alachua laboratory lease in September and reported a one-time early termination fee of approximately $162,000.
- The 2023 net loss increased approximately 44.6%. Cash used in operations declined from 2022, in part because of noncash adjustments and changes in operating assets and liabilities; it does not indicate operating profitability.
Outlook, risks and contingencies
- ONP-002 completed a Phase 1 study in 40 healthy volunteers; the company reports that a safety review board found it safe and well tolerated at tested dose levels. Phase 2a was projected to start in Australia in Q2 or Q3 2024, with Phase 2b projected for Q4 2024 and Phase 3 for Q4 2026. These are estimates dependent on funding, technical progress and regulatory approvals; Oragenics planned to seek an FDA IND for U.S. development.
- In March 2024, the company completed an offering of 1.4 million common shares at $1.50 per share, reporting approximately $1.8 million net proceeds. Management expected the proceeds to fund planned operations through Q3 2024. Additional financing will be necessary, and the filing warns it may not be available on acceptable terms or at all.
- Ladenburg Thalmann claims a $2.5 million fee related to the neurology asset purchase. Oragenics disputes the claim and filed a confidential FINRA arbitration action on March 12, 2024 seeking a ruling that no fee is owed. The outcome and potential cash impact are unresolved.
- Oragenics said its stockholders’ equity was below NYSE American continued-listing requirements and that it anticipated a new noncompliance notice; it may need to raise capital to regain compliance. Potential dilution also arises from preferred stock, options and warrants. Odyssey’s Series F preferred stock is convertible into common shares subject to stated conversion conditions.
- The company restated certain 2022 interim financial statements after identifying errors in accounting for research and development contracts. Management says the related material weakness was remediated in 2023 and controls were effective at year-end; the auditor did not issue an internal-control effectiveness opinion.
- Other key risks include clinical and regulatory failure, dependence on a single ONP-002 supplier, limited development-stage resources and personnel, competitive and intellectual-property risks, and the absence of approved products or established revenue.
Most important facts for investors to verify
- Current cash runway and the use of proceeds from the March 2024 offering, together with the timing, terms and dilution of any further financing.
- Whether ONP-002 Phase 2a began as planned, the status of the FDA IND, and the clinical evidence supporting safety and efficacy claims.
- The status and potential financial exposure of the $2.5 million Ladenburg arbitration claim.
- NYSE American listing compliance, stockholders’ equity requirements and the conversion terms and potential dilution from preferred securities and warrants.
- Whether spending remains focused on ONP-002 and whether paused vaccine and lantibiotic programs or associated license obligations create further costs or risks.