Oragenics(OGEN) - 2023 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements Oragenics, Inc.'s September 30, 2023, unaudited financial statements reflect significant asset declines, ongoing net losses, and substantial going concern doubt, alongside a strategic shift to neurological drug therapies Condensed Consolidated Balance Sheets As of September 30, 2023, total assets decreased to $7.9 million from $14.8 million at year-end 2022, primarily due to reduced cash and a decline in shareholders' equity Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $5,766,644 | $11,426,785 | | Total current assets | $7,814,092 | $14,271,583 | | Total assets | $7,899,428 | $14,758,025 | | Liabilities & Equity | | | | Total current liabilities | $1,402,107 | $1,596,284 | | Total liabilities | $1,402,107 | $1,748,723 | | Total shareholders' equity | $6,497,321 | $13,009,302 | Condensed Consolidated Statements of Operations For the three and nine months ended September 30, 2023, net losses significantly decreased to $2.0 million and $7.9 million, respectively, primarily due to reduced research and development expenses Condensed Consolidated Statements of Operations (Unaudited, in $) | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Grant Revenue | 7,466 | 86,047 | 37,653 | 131,521 | | Research and Development | 769,350 | 2,777,068 | 4,448,623 | 8,660,761 | | General and Administrative | 1,332,562 | 1,215,498 | 3,697,609 | 3,592,361 | | Loss from Operations | (2,094,446) | (3,906,519) | (8,108,579) | (12,121,601) | | Net Loss | (2,012,885) | (3,870,113) | (7,908,308) | (12,050,649) | | Net Loss Per Share | (0.85) | (1.99) | (3.70) | (6.21) | Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2023, net cash used in operating activities significantly decreased to $6.2 million, with overall cash and cash equivalents declining by $5.7 million Cash Flow Summary (Unaudited, for the nine months ended September 30) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(6,188,335) | $(12,795,647) | | Net cash provided by (used in) investing activities | $63,715 | $(112,081) | | Net cash provided by (used in) financing activities | $464,479 | $(406,921) | | Net decrease in cash and cash equivalents | $(5,660,141) | $(13,314,649) | Notes to Consolidated Financial Statements Key notes detail the company's strategic shift to neurological drug therapies, ongoing COVID-19 vaccine focus, critical going concern doubt beyond Q1 2024, and recent financing activities - The company's lead product is an intranasal vaccine candidate, NT-CoV2-1, for SARS-CoV-2[20] - On October 4, 2023, the company signed a definitive agreement to acquire proprietary assets from Odyssey Health, Inc. related to neurological drug therapies, including treatments for concussion and Niemann Pick Disease Type C[21][70] - There is substantial doubt about the company's ability to continue as a going concern beyond the first quarter of 2024, as current working capital is insufficient to fund operations past that point[25] - To conserve cash, the company terminated its Alachua research facility lease in September 2023, and research activities for its lantibiotic program are currently inactive[22][25] - A 1-for-60 reverse stock split was effected on January 20, 2023 All historical share and per-share amounts have been adjusted[5][42] - In August 2023, the company raised gross proceeds of $850,000 through a private placement of common and preferred stock[44] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's strategic shift to neurological drug assets, ongoing COVID-19 vaccine development, significant R&D expense reductions, and critical liquidity challenges raising substantial going concern doubt Overview and Product Candidates Oragenics, a development-stage company, is strategically expanding into neurological drug therapies via acquisition while continuing its intranasal COVID-19 vaccine development and pausing its lantibiotic program to conserve cash - The company's lead product is the intranasal vaccine candidate NT-CoV2-1, which is currently in pre-clinical development[81][107] - The company has paused its lantibiotic program and closed its Alachua research facility to conserve cash resources[104][109] - A definitive agreement was signed to acquire assets from Odyssey Health, Inc. for treating mild traumatic brain injury (concussion) and Niemann Pick Disease Type C, signaling a strategic expansion into neurological therapies[110] - In September 2023, the company partnered with Lantern Bioworks, transferring certain lantibiotic-related assets for a $50,000 cash payment and a 10% royalty on future net income[105] Results of Operations For the three and nine months ended September 30, 2023, the company significantly reduced its net loss, primarily driven by a 72% and 49% decrease in Research and Development expenses, respectively Comparison of Results for the Three Months Ended September 30, (in $) | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Grant Revenue | $7,466 | $86,047 | -91.3% | | R&D Expenses | $769,353 | $2,777,068 | -72.0% | | G&A Expenses | $1,332,562 | $1,215,498 | +10.0% | Comparison of Results for the Nine Months Ended September 30, (in $) | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Grant Revenue | $37,653 | $131,521 | -71.4% | | R&D Expenses | $4,448,623 | $8,660,761 | -49.0% | | G&A Expenses | $3,697,609 | $3,592,361 | +3.0% | Liquidity and Capital Resources The company's liquidity is critical, with current cash sufficient only through Q1 2024, requiring substantial additional capital to fund future operations and development programs - The company believes its current cash resources will only be sufficient to fund its operating plan through the first quarter of 2024[139][148] - Working capital decreased from $12.7 million at Dec 31, 2022, to $6.4 million at Sep 30, 2023[136] - The company raised approximately $850,000 in gross proceeds from a private placement in August 2023[121][144] - Future capital requirements are substantial, particularly if the Odyssey asset purchase is completed The company will need to raise additional funds to continue development programs[147][149] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Oragenics, Inc. is exempt from providing quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[157] Controls and Procedures Management identified a material weakness in internal controls related to R&D contract accounting, leading to financial statement restatements for 2022, and is actively pursuing remediation - A material weakness was identified in internal controls related to the review of research and development contracts[163] - This control deficiency resulted in errors in accounting for R&D prepayments and required the restatement of the unaudited financial statements for Q1, Q2, and Q3 of 2022[153][161][162] - Due to this material weakness, management concluded that the company's disclosure controls and procedures were not effective as of the reporting date[163] PART II – OTHER INFORMATION Legal Proceedings The company is not a party to any material pending legal proceedings impacting its financial condition or business - The company reports no material pending legal proceedings[171] Risk Factors This section highlights critical risks including significant losses, substantial going concern doubt, uncertainties surrounding the Odyssey Health asset purchase, and the need for substantial additional capital to fund development programs - Going Concern Risk: The company has incurred significant losses and its existing cash will only fund operations through Q1 2024, raising substantial doubt about its ability to continue as a going concern[173][174] - Acquisition Risk: The closing of the Odyssey Asset Purchase is subject to numerous conditions, including shareholder approvals, and there is no assurance it will be consummated Failure could result in the loss of cash payments already made[175] - Capital Needs: The company requires significant additional capital to fund its business plan, especially if the Odyssey acquisition proceeds Difficulty in raising funds could force it to scale back or delay R&D on all its programs[176][178] - Development Risk: The product candidates to be acquired from Odyssey are in early stages and require extensive testing, with no guarantee of regulatory approval or commercial success[180][183] Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities The company reports no new unregistered sales of equity securities during the period beyond prior disclosures - No new unregistered sales of equity securities were reported in this filing[192] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[193] Mine Safety Disclosures This item is not applicable to the company - Not Applicable[194] Other Information The company reports no other information for this item - None[195] Exhibits This section lists all exhibits filed with the report, including corporate governance documents, material contracts, and officer certifications