Oragenics, Inc. — Q3 2023 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2023. Oragenics is a development-stage biotechnology company focused on intranasal drug-delivery programs. Its lead candidate, NT-CoV2-1, is a preclinical intranasal COVID-19 vaccine. The company has no products authorized for commercial sale and reports only limited grant revenue.
Financial performance and position
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Grant revenue | $7,466 | $86,047 | $37,653 | $131,521 |
| Operating expenses | $2.10 million | $3.99 million | $8.15 million | $12.25 million |
| Operating loss | $(2.09) million | $(3.91) million | $(8.11) million | $(12.12) million |
| Net loss | $(2.01) million | $(3.87) million | $(7.91) million | $(12.05) million |
| Basic and diluted loss per share | $(0.85) | $(1.99) | $(3.70) | $(6.21) |
- Research and development expense was $769,350 in Q3 and $4.45 million for the nine months. General and administrative expense was $1.33 million and $3.70 million, respectively. The company has no meaningful product gross margin to report.
- Cash and cash equivalents were $5.77 million at September 30, 2023, down from $11.43 million at December 31, 2022. Nine-month operating cash use was $6.19 million, versus $12.80 million in the prior-year period.
- Working capital was $6.41 million, compared with $12.68 million at year-end 2022. Total assets were $7.90 million and shareholders’ equity was $6.50 million.
- Short-term notes payable were $493,420, primarily insurance-premium financing at 9.55%; current liabilities totaled $1.40 million. No long-term debt was reported at September 30.
Changes and notable developments
- Nine-month net loss narrowed by about $4.14 million year over year, mainly as research and development spending fell by about $4.21 million. Management attributed the decline largely to lower COVID-vaccine development costs. Q3 R&D expense also decreased substantially year over year.
- Grant revenue fell as the $250,000 lantibiotic research grant reached completion in July 2023. The reported grant revenue is not recurring product sales.
- In August, the company raised approximately $850,000 gross in a private placement, issuing 404,728 common shares and 404,728 Series E mirroring preferred shares. No shares were sold under its ATM program through September 30.
- In September, Oragenics terminated its Alachua laboratory lease, paid a termination fee equivalent to about nine months’ rent, eliminated staff positions, and paused lantibiotic R&D. It also transferred certain biological samples and data to Lantern Bioworks for $50,000, an option to buy 1 million Lantern shares for $1, and a 10% royalty on net income from resulting products.
- After quarter-end, Oragenics agreed to acquire specified neurological-therapy assets from Odyssey Health for $1 million cash and 8 million Series F preferred shares. The agreement covers candidates for concussion and Niemann-Pick Type C, plus a formulation and nasal-delivery device. Closing was expected in Q4 2023 but remained subject to conditions, including shareholder approvals, at least $5 million cash at closing, and satisfactory due diligence. The company disclosed a $500,000 payment at signing and a further $500,000 payment upon specified events.
Outlook, risks, and controls
- Going concern: Management said existing working capital would fund the current operating plan only through Q1 2024 and disclosed substantial doubt about the company’s ability to continue as a going concern beyond that period. Further financing is necessary; availability and terms are uncertain. Failure to raise capital could force further cuts, delays, or discontinuation of development programs.
- Oragenics plans to advance NT-CoV2-1 through IND-enabling work, but filing an IND and starting a Phase 1 trial depend on additional funding, grants, or partnering. The candidate remains preclinical; timing and clinical or commercial success are uncertain.
- The Odyssey transaction is not assured. Its closing conditions include approval to increase authorized common shares from 4,166,666 to 350 million and approval of Series F conversion. The company may not recover the initial cash payment if the transaction fails, according to its risk disclosure. The acquired candidates are early stage; the filing also notes that Odyssey owns only 50% of the NPC-related intellectual property and its joint venture with the other owner was not finalized.
- Potential future equity or convertible financing may dilute existing holders or carry senior rights. The company’s outstanding common shares were 2,569,385 as of November 7, 2023; all historical share and per-share figures reflect the January 2023 1-for-60 reverse split.
- Management identified a material weakness in controls over review of R&D contracts. The company restated its Q1, Q2, and Q3 2022 financial statements in April 2023 after certain vendor prepayments had been incorrectly expensed rather than recorded as prepaid expenses. Management concluded disclosure controls and internal control over financial reporting were not effective and said remediation was underway, without assurance on timing or success.
- The filing reports no material pending legal proceedings. It gives no formal numerical revenue or earnings guidance.
Key facts for investors to verify
- Cash runway and financing progress, including whether the company can fund operations beyond Q1 2024.
- Status of Odyssey closing conditions, shareholder votes, cash requirements, and the treatment and potential dilution of Series F preferred shares.
- NT-CoV2-1 development milestones, regulatory path, and funding needed to reach an IND and clinical testing.
- Progress in remediating the material weakness and whether subsequent filings report any further control issues or restatements.
- Share-count and dilution effects of private placements, preferred securities, warrants, options, and any proposed increase in authorized common shares.