Oragenics, Inc. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Amounts are in U.S. dollars. Oragenics is a development-stage biotechnology company focused on its Terra CoV-2 vaccine and lantibiotic antibiotic programs; it reported no significant operating revenue.
Financial performance and position
| Metric | Three months ended June 30, 2021 | Six months ended June 30, 2021 | Comparable 2020 period |
|---|---|---|---|
| Revenue | None reported | None reported | None reported |
| Research and development expense | $2.47 million | $5.73 million | $11.54 million and $15.26 million, respectively |
| General and administrative expense | $1.37 million | $3.35 million | $0.81 million and $2.33 million, respectively |
| Net loss | $3.82 million | $9.04 million | $12.34 million and $17.53 million, respectively |
| Basic and diluted loss per share | $0.03 | $0.08 | $0.24 and $0.36, respectively |
For the six months, operating cash use was $6.41 million, versus $8.66 million in 2020. Cash and cash equivalents were $34.57 million at June 30, 2021, up from $17.64 million at year-end 2020; working capital was $32.55 million. Shareholders’ equity was $32.73 million and accumulated deficit was $164.60 million.
Current liabilities totaled $2.12 million, including $1.93 million of accounts payable and accrued expenses. Short-term notes payable were zero, compared with $228,227 at year-end. Operating lease liabilities totaled $583,866, comprising $185,689 current and $398,177 long-term. The filing reports no conventional long-term borrowings.
Material changes and financing
- Six-month R&D expense fell 62.5%, principally because the 2020 period included the $9.96 million Noachis Terra acquisition charge and higher oral-mucositis program costs. Lower lantibiotic and stock-compensation costs also contributed; Terra CoV-2 program expense increased by $4.12 million.
- Six-month G&A expense rose 43.8%, mainly due to non-employee stock compensation, filing fees, salaries, insurance and board fees.
- Financing activities provided $23.34 million in the first half. The company raised approximately $27.8 million gross through its ATM program in Q1, receiving $26.68 million net for the six months; it issued 21.40 million ATM shares. Warrant exercises generated $2.26 million, and option exercises generated $267,140.
- The company redeemed all Series C preferred stock in March for approximately $5.6 million. Common shares outstanding increased from 91.77 million at December 31, 2020 to 116.19 million at June 30, 2021. Series A and B preferred stock remained outstanding.
Outlook, developments and risks
- Management said available working capital was expected to fund the business plan, as then structured, into the third quarter of 2022. The company expects substantial future R&D spending and says additional funding will be needed; it had no committed financing source. Failure to raise capital could delay or curtail development. Equity financing could dilute shareholders.
- Terra CoV-2 remained preclinical. The company reported preclinical work on adjuvants and manufacturing, and said it expected an FDA pre-IND meeting and IND filing in Q1 2022, followed by a Phase 1 study if authorized. These timelines depend on funding and successful development.
- On July 26, 2021, after quarter-end, Oragenics entered a non-exclusive license agreement with the National Research Council of Canada for cell-line technologies to support SARS-CoV-2 spike-protein development. The agreement includes annual fees, transfer and development milestones, and low-single-digit royalties on product sales.
- OG716, the company’s lantibiotic candidate for C. difficile, remained preclinical. Under its collaboration agreement, specified regulatory approval milestones could require cash payments of $25 million, $5 million and $5 million; none had been achieved by June 30, 2021.
- The company cited clinical, regulatory, manufacturing, funding and COVID-19-related execution risks. It also warned that failure to hold its adjourned annual shareholder meeting by December 31, 2021 could threaten NYSE American listing compliance. The June 30 meeting had been adjourned for lack of a quorum and rescheduled for August 23.
- The former CEO resigned; the board appointed its chairman Executive Chairman and the CFO Interim Principal Executive Officer on May 2. The filing states disclosure controls were effective as of June 30, 2021 and reports no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether cash burn, development costs and actual fundraising needs remain consistent with management’s stated runway into Q3 2022.
- Progress toward the Terra CoV-2 pre-IND meeting, IND filing and Phase 1 plans, including the impact of NRC-licensed technology and funding availability.
- Current share count, potential dilution from future financing, outstanding warrants and preferred-stock conversion rights.
- Terms, fees, milestones and potential obligations under the NRC and lantibiotic collaboration agreements, and whether any milestones have since been triggered.
- Whether the annual meeting was held and NYSE American listing requirements were satisfied.