Oragenics, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Oragenics is a development-stage biotechnology company with no significant operating revenue. Its principal programs are the Terra CoV-2 vaccine candidate and lantibiotics, including OG716.
Financial results and liquidity
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Revenue | No significant operating revenue | No significant operating revenue |
| Research and development expense | $3.26 million | $3.71 million; down 12.2% |
| General and administrative expense | $1.98 million | $1.52 million; up 30.1% |
| Total operating expenses | $5.24 million | $5.23 million |
| Net loss | $5.22 million | $5.19 million |
| Basic and diluted loss per share | $0.05 | $0.11 |
| Cash used in operating activities | $4.33 million | $3.82 million |
| Cash and cash equivalents at period-end | $36.50 million | $17.64 million at December 31, 2020 |
No meaningful revenue-based margin is available; the filing reports no significant operating revenue. At March 31, 2021, working capital was $35.85 million, total assets were $37.37 million, and shareholders’ equity was $36.05 million. Current liabilities were $0.87 million. Short-term notes payable were $114,881; the company also reported $627,723 in operating lease liabilities. There was no income tax benefit.
Financing activities provided $23.19 million, primarily from the ATM stock sales and warrant exercises, partly offset by the $5.64 million Series C preferred-stock redemption and note payments. Cash increased by $18.86 million during the quarter. Management believed available working capital would fund the business as presently structured into the third quarter of 2022, but stated that additional financing would be needed for longer-term plans.
Material changes and financing
- R&D expense fell by $451,775, mainly reflecting lower spending on prior clinical and lantibiotic work, partly offset by $2.43 million of Terra CoV-2 program costs and $542,263 of contingent consideration related to the Noachis Terra acquisition.
- G&A expense rose by $457,493, principally due to higher non-employee stock compensation, insurance, board fees, and filing and registration costs. Total stock-based compensation was $1.12 million, versus $865,110 a year earlier.
- The February 2021 ATM program generated approximately $27.8 million in gross proceeds from 21.40 million shares; the sales agent receives a 3% commission. The cash-flow statement reports $26.68 million of net proceeds from common-stock issuance.
- Warrant exercises generated $2.26 million and issued 2.47 million shares. Overall, common shares outstanding increased from 91.77 million at December 31, 2020 to 115.64 million at March 31, 2021. The company also had 18.04 million warrants outstanding at quarter-end.
- All Series C preferred stock was redeemed and cancelled for approximately $5.6 million. Series A and Series B preferred stock remained outstanding, with stated common-stock equivalents of approximately 0.94 million and 1.32 million shares, respectively.
Outlook, programs, and risks
- Terra CoV-2: The candidate remained preclinical. The company reported cell-line and analytical development work and said it anticipated filing an IND in Q4 2021, followed by a Phase 1 study if authorized. These are forward-looking plans, not guarantees. Development beyond the planned near-term work depended on additional funding, grants, or partnerships.
- OG716 and lantibiotics: OG716 remained preclinical. The company planned further candidate, manufacturing, and preclinical work, with IND timing dependent on available financial and other resources.
- Collaboration obligations: Under the Lantibiotic ECC, potential cash payments include $25 million upon regulatory approval, $5 million for an approved new indication, and $5 million for an approved new product; none had been achieved as of March 31, 2021.
- Funding and dilution: Oragenics had recurring losses and negative operating cash flow, an accumulated deficit of $160.78 million, and no committed additional financing. Management warned that financing might not be available on acceptable terms; equity issuance could dilute shareholders, and insufficient funding could delay or curtail development.
- Other risks: Development, clinical, manufacturing, and regulatory outcomes are uncertain. The filing also described potential COVID-19-related workforce, supply, and clinical-trial delays. The NIH license includes milestone, royalty, reporting, and termination provisions.
- Management reported effective disclosure controls as of March 31, 2021 and no significant quarterly change in internal control over financial reporting. The filing reported no material pending legal proceeding.
Important facts for investors to verify
- Whether the Terra CoV-2 IND and clinical-development timelines were achieved, and the funding available to support them.
- Current cash runway against actual operating burn and planned R&D spending; the stated runway is management’s estimate, not a guarantee.
- Subsequent share issuance, ATM usage, warrant exercises, and the resulting fully diluted share count.
- The terms and potential financial impact of the NIH license, Lantibiotic ECC milestone obligations, and contingent consideration tied to warrant exercises.
- Progress and evidence supporting the preclinical programs, including regulatory, manufacturing, and clinical-readiness milestones.