Oragenics, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; balance-sheet comparisons are with December 31, 2021. Oragenics is a development-stage biotechnology company focused primarily on its preclinical intranasal COVID-19 vaccine candidate, NT-CoV2-1, and on lantibiotic antibiotic research. It has not generated significant operating revenue.
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Grant revenue | $15,083 | $0 |
| Research and development expense | $4.74 million | $3.26 million; up 45.3% |
| General and administrative expense | $1.33 million | $1.98 million; down 32.6% |
| Net loss | $6.04 million | $5.22 million |
| Basic and diluted loss per share | $0.05 | $0.05 |
| Cash used in operations | $5.64 million | $4.33 million |
There was no meaningful operating margin to assess given minimal grant revenue and no material product sales. R&D growth primarily reflected higher NT-CoV2-1 program costs; lower G&A largely reflected reduced non-employee stock compensation, partly offset by higher filing, insurance, legal and accounting costs.
Cash and cash equivalents were $21.37 million at March 31, down from $27.27 million at year-end. Working capital was $20.24 million, versus $26.26 million at December 31. Total assets were $22.20 million and shareholders’ equity was $20.54 million. Current liabilities totaled $1.41 million, including $122,175 of short-term notes payable; operating lease liabilities totaled $446,463, current and long-term combined. The filing reports no significant conventional long-term borrowings beyond lease liabilities.
Investing activities used $75,047; financing activities used $181,241, primarily for short-term note payments. Cash fell by $5.89 million during the quarter. No common shares were issued in Q1 2022; 116,394,806 were outstanding as of April 30, 2022. The company had 18.04 million warrants outstanding at quarter-end.
Material changes and business developments
- R&D expense rose 45.3% year over year, while G&A expense declined 32.6%; net loss increased by approximately $815,000.
- Operating cash use increased by approximately $1.31 million year over year. Q1 2021 included substantial equity and warrant financing; Q1 2022 had no financing proceeds from share issuance.
- The company prioritized NT-CoV2-1, an intranasal vaccine candidate, over its intramuscular candidate. Preclinical work included animal studies; a rabbit toxicology study had been initiated and was required before a Phase 1 study.
- Management expected to request an FDA Type B pre-IND meeting on NT-CoV2-1, anticipated by mid-July 2022, and to file an IND after completion of the toxicology study. The Phase 1 protocol was still in development.
- The NRC license field of use was expanded to cover diseases caused by coronaviruses and their genetic variants. The company also reported the February 2022 shareholder approval of an increase in authorized common shares from 200 million to 250 million and adoption of the 2021 Equity Incentive Plan.
- The prior lantibiotic collaboration with EGI had been terminated in September 2021; the company said it would continue independent research to identify candidates.
Outlook, risks and contingencies
Management said existing cash was expected to fund the business as currently structured through the fourth quarter of 2022, but disclosed substantial doubt about the company’s ability to continue as a going concern beyond that period. Additional funding is required, and there are no committed financing sources. Management is pursuing grants, partnering, sublicensing and public or private financing; availability and terms are uncertain. Failure to raise funds could delay or curtail research, clinical development and other operations, while equity financing could dilute shareholders.
All described product candidates remained preclinical, with no commercial product revenue. Development depends on successful studies, regulatory progress and sufficient capital. The filing also identifies risks from clinical and manufacturing delays, reliance on third parties, competition, regulatory requirements, intellectual property and the continuing effects of the COVID-19 pandemic. NIH and NRC license agreements include royalties, milestone or other payment obligations, and the NRC agreement includes company indemnification obligations. The company reported no material pending legal proceeding. Disclosure controls were assessed as effective, with no significant quarterly change in internal control over financial reporting.
Key facts for investors to verify
- Cash runway assumptions and the timing, amount and terms of any additional financing.
- Progress and results of NT-CoV2-1 toxicology work, FDA discussions, IND submission and Phase 1 readiness.
- Quarterly cash burn and R&D spending, particularly as vaccine development advances.
- Grant funding received and remaining availability, as well as material license milestones, royalties and contingent obligations.
- Potential dilution from future share issuance, the expanded authorized share count, outstanding warrants and equity-plan awards.