10-K
1
form10-k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
For
the fiscal year ended December 31, 2020
For
the transition period from _________ to _________
Commission
file number 001-32188
ORAGENICS,
INC.
(Exact
name of registrant as specified in its charter)
(Address of Principal Executive Offices) (Zip Code)
813-286-7900
(Issuer’s
Telephone Number, Including Area Code)
SECURITIES
REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Trading Symbol Name of each exchange on which registered
Common Stock $0.001 par value per share OGEN NYSE AMERICAN
SECURITIES
REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ]
No [X]
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes [ ] No [X]
Indicate
by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit such files). Yes [X] No [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
[ ] Large accelerated filer [ ] Accelerated filer
[X] Non-accelerated filer [X] Smaller reporting company
[ ] Emerging growth company
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. Yes[ ] No [X]
Indicate
by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes [ ] No [X]
The
aggregate market value of the voting and non-voting common equity stock held by non-affiliates of the registrant, was approximately
$36,813,271 computed based upon a last sales price of $0.69 as reported by the NYSE American as of June 30, 2020.
As of
February 25, 2021, there were 109,646,119 shares of the registrant’s Common stock outstanding.
TABLE
OF CONTENTS
FORWARD-LOOKING STATEMENTS AND CERTAIN CONSIDERATIONS ii
PART I
ITEM 1. BUSINESS 1
ITEM 1A. RISK FACTORS 28
ITEM 1B. UNRESOLVED STAFF COMMENTS 75
ITEM 2. PROPERTIES 75
ITEM 3. LEGAL PROCEEDINGS 75
ITEM 4. MINE SAFETY DISCLOSURES 75
PART II
ITEM 6. SELECTED FINANCIAL DATA 76
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 90
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 90
ITEM 9A CONTROLS AND PROCEDURES 90
ITEM 9B. OTHER INFORMATION 91
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 92
ITEM 11. EXECUTIVE COMPENSATION 96
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 113
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 114
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-2
CONSOLIDATED BALANCE SHEETS F-3
CONSOLIDATED STATEMENTS OF OPERATIONS F-4
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS F-6
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS F-7–F-23
i
FORWARD
LOOKING STATEMENTS AND CERTAIN CONSIDERATIONS
This
report, along with other documents that are publicly disseminated by us, contains or might contain forward-looking statements
within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements included
in this report and in any subsequent filings made by us with the Securities and Exchange Commission (the “SEC”)
other than statements of historical fact, that address activities, events or developments that we or our management expect, believe
or anticipate will or may occur in the future are forward-looking statements. These statements represent our reasonable judgment
on the future based on various factors and using numerous assumptions and are subject to known and unknown risks, uncertainties
and other factors that could cause our actual results and financial position to differ materially. We claim the protection
of the safe harbor for forward-looking statements provided in the Private Securities Litigation Reform Act of 1995, Section 27A
of the Securities Act and Section 21E of the Exchange Act. Examples of forward-looking statements include: (i) projections
of revenue, earnings, capital structure and other financial items, (ii) statements of our plans and objectives, (iii) statements
of expected future economic performance, and (iv) assumptions underlying statements regarding us or our business. Forward-looking
statements can be identified by, among other things, the use of forward-looking language, such as “believes,” “expects,”
“estimates,” “may,” “will,” “should,” “could,” “seeks,”
“plans,” “intends,” “anticipates” or “scheduled to” or the negatives of those
terms, or other variations of those terms or comparable language, or by discussions of strategy or other intentions.
Forward-looking
statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ
materially from those contemplated by the statements. The forward-looking information is based on various factors and was derived
using numerous assumptions. Important factors that could cause our actual results to be materially different from the forward-looking
statements include the following risks and other factors discussed under the Item 1A “Risk Factors” in this Annual
Report on Form 10-K. These factors include:
● Our ability to successfully commercialize our product candidates;
ii
● Our ability to identify, recruit and retain key personnel;
● The safety, efficacy and benefits of our product candidates;
● Our ability to maintain our listing on the NYSE American;
● The impact of laws and regulations, including those that may not yet exist.
We
caution investors that actual results or business conditions may differ materially from those projected or suggested in forward-looking
statements as a result of various factors including, but not limited to, those described above and in the Risk Factors section
of this report. We cannot assure you that we have identified all the factors that create uncertainties. Moreover, new risks emerge
from time to time and it is not possible for our management to predict all risks, nor can we assess the impact of all risks on
our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained
in any forward-looking statements. Readers should not place undue reliance on forward-looking statements. Except as required by
applicable law, we undertake no obligation to publicly release the result of any revision of these forward-looking statements
to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events.
iii
PART
I
ITEM 1. BUSINESS.
This
description contains certain forward-looking statements that involve risks and uncertainties. Our actual results could differ
materially from the results discussed in the forward-looking statements as a result of certain of the risks set forth herein.
We assume no obligation to update any forward-looking statements contained herein.
Overview
We
are focused on the creation of the Terra CoV-2 immunization product candidate to combat the novel coronavirus pandemic and the
further development of novel antibiotics against infectious disease.
Our
SARS-CoV-2 Vaccine Product Candidate— Terra CoV-2
As
a result of our acquisition of one hundred percent (100%) of the total issued and outstanding common stock of Noachis Terra, Inc.
(“Noachis Terra”) we are now focused on the development and commercialization of a vaccine product candidate to provide
long lasting immunity from the novel Severe Acute Respiratory Syndrome coronavirus (“SARS-CoV-2”), which causes the
coronavirus disease 2019 (“COVID-19”). Noachis Terra is a party to a worldwide, nonexclusive intellectual property
and biological materials license agreement with the National Institute of Allergy and Infectious Diseases (“NIAID”),
an institute within the National Institutes of Health (“NIH”), relating to certain research, patent applications and
biological materials involving pre-fusion stabilized coronavirus spike proteins and their use in the development and commercialization
of a vaccine to provide specific, long lasting immunity from SARS-CoV-2.
Coronaviruses
are a family of viruses that can lead to upper-respiratory infections in humans. Recent clinical reports also suggest that the
SARS-CoV-2 virus can affect other body-systems, including the nervous, cardiovascular, gastrointestinal and renal systems. Among
the recent iterations of coronaviruses to move from animal to human carriers is SARS-CoV-2 (often referred to as COVID-19), which,
beginning in Wuhan, China, in late 2019, caused a global pandemic due to its rapid spread and the relatively high mortality rate
(as compared to the seasonal influenza). In late January of 2021, the World Health Organization’s estimates indicate the
number of worldwide COVID-19 infections have exceeded 100,000,000 and the number of deaths directly attributed to COVID-19 have
exceeded 2,000,000. Both Pfizer and Moderna have announced preliminary safety and efficacy data from their Phase 3 COVID-19 vaccine
studies and recent Emergency Use Authorization by the FDA. We believe given the size of the worldwide pandemic that even with
multiple vaccines projected to be available in the coming months, there will be demand for the Terra CoV-2 vaccine,
once development is successfully completed. We intend to combine the research, patent applications and biological materials covered
by our NIAID license with our existing clinical research and manufacturing capabilities to respond rapidly to this ongoing, global,
public health crisis. We believe our Terra CoV-2 vaccine holds the possibility of playing an important role in addressing
this crisis.
Coronaviruses,
such as SARS -CoV-2, possess signature protein spikes on their outer capsule. The NIAID license covers patents and data on a vaccine
candidate that were created based on a stabilized pre-fusion spike trimeric protein. By stabilizing the spike protein in the pre-fusion
state, the number of immunogenic centers is increased thereby allowing for a greater likelihood of successful antibody binding,
resulting in an improved immunogenic response. The genetic code, acquired from the NIH, for the stabilized pre-fusion spike protein
was provided to Aragen Bioscience, Inc. (“Aragen”) for the purpose of insertion of the spike protein gene sequence
into a Chinese Hamster Ovary (“CHO”) cell line. Aragen is a leading contract research organization focused on accelerating
preclinical biologics product development, has extensive experience building CHO cell lines for recombinant proteins, such as
monoclonal antibodies. Aragen has successfully inserted the NIH pre-fusion spike protein gene sequence into a CHO cell line and
is currently developing both the analytical tests and identifying preliminary cell line growth conditions to optimize the spike
protein titers. Currently, “mini-pool” production and analytical development is underway. The process to transfer
to full-scale manufacture has begun.
The
NIH’s preclinical study shows that this spike protein, adjuvanted with the mouse specific TLR-4-agonist Sigma Adjuvant System
(“SAS”, a TLR-4 agonists) that induces T cell activation), generates neutralizing antibody titers in both a pseudovirus
neutralization assay and a plaque reduction neutralization titer (PRNT) assay. Recently released information indicated that pretreatment
of mice with the NIH-created COVID-19 spike protein in combination with an adjuvant (TLR-4 agonist Sigma Adjuvant System) completely
inhibited viral growth in the nasal cavities and lungs of infected animals compared to unvaccinated control animals. In October
2020, we received feedback to our Type B Pre-IND Meeting Request from the FDA. The response indicated that the FDA broadly supported
our planned approach to the pre-clinical program that will support the clinical development of the Terra CoV-2, vaccine. As a
result, we anticipate filing the Investigational New Drug (“IND”) application in the fourth quarter of 2021
and immediately upon the receipt of approval from the FDA, commencing the Phase 1 clinical study, the protocol for which is currently
under development.
We
recently announced we had entered into an agreement with Adjuvance Technologies Inc. for the
use of TQL1055, a novel, rationally designed semi-synthetic analogue of the saponin adjuvant QS-21 with potential improved
attributes, including stability and manufacturing efficiency. We also anticipate that our Terra CoV-2 vaccine will provide long
lasting protection from the SARS-CoV-2 virus with only one or two doses, with a more rapid immune response compared to vaccines
developed without the inclusion of an adjuvant.
As
presently designed, we believe the Terra CoV-2 vaccine is expected to permit cost effective storage and distribution at
refrigerated temperatures, which should facilitate the distribution and thereby avoid challenges facing the two mRNA vaccines
currently available under the FDA’s Emergency Use Authorization in the U.S.
We
expect to use our currently available cash resources to continue to advance the development of Terra CoV-2 through IND-enabling
studies, including immunogenicity, viral challenge studies, toxicology studies, and the Phase 1 trial with further
clinical development being contingent upon the receipt of additional funding, including non-dilutive government grant funding
which we continue to pursue or partnering or out-licensing opportunities.
Our
Antibiotic Product Candidate-OG716
Members
of our scientific team discovered that a certain bacterial strain. Streptococcus mutans, produces MU1140, a molecule belonging
to the novel class of antibiotics known as lantibiotics. Lantibiotics, such as MU1140, are highly modified peptide antibiotics
made by a small group of Gram-positive bacterial species. Approximately 60 lantibiotics have been discovered, to date. We believe
lantibiotics are generally recognized by the scientific community to be potent antibiotic agents.
In
nonclinical testing, MU1140 has shown activity against all Gram-positive bacteria against which it has been tested, including
those responsible for a number of healthcare associated infections, or HAIs. A high percentage of hospital-acquired infections
are caused by highly antibiotic-resistant bacteria such as methicillin-resistant Staphylococcus aureus (MRSA) or multidrug-resistant
Gram-negative bacteria. We believe the need for novel antibiotics is increasing as a result of the growing resistance of target
pathogens to existing FDA approved antibiotics on the market along with the increased use of currently available antibiotics due
to secondary infections in SARS-CoV-2 infected patients.
Lantibiotics
have been difficult to investigate for their clinical usefulness as therapeutic agents in the treatment of infectious diseases
due to a general inability to produce or synthesize sufficient quantities of pure amounts of these molecules. Traditional fermentation
methods can only produce minute amounts of the lantibiotic.
In
June 2012, we entered into a worldwide exclusive channel collaboration agreement with Precigen (formerly known as Intrexon
Corporation) for the development and commercialization of the native strain of MU1140 and related homologs to use its
advanced transgene and cell engineering platforms. At that time we also entered into a stock issuance agreement with Precigen.
Through our work pursuant to the collaboration agreement, we have been able to produce a significant increase in the
fermentation titer of MU1140 compared to standard fermentation methods and have discovered a new purification process for MU1140.
Our work generated a substantial number of homologs of MU1140 and the exclusive channel collaboration was thereafter amended
to clarify the applicable field and to adjust the milestone payments and provide that they will be paid in cash. In January
2020 Precigen consummated a reorganization of its ongoing active pharmaceutical ingredients (API) fermentation operations
and assets which included transfer of the exclusive collaboration agreement and related stock issuance agreement. Following
such reorganization, Precigen divested certain of its assets to TS Biotechnology Holdings, LLC which included shares of Oragenics
securities and the subsidiary Eleszto Genetika, Inc. (“EGI” formerly known as ILH Holdings, Inc.) that held the collaboration
agreement and stock issuance agreements with us, and. On March 1, 2021, due to such prior amendments, assignments and transfers
we entered into an amended and restated exclusive channel collaboration agreement with EGI which (i) included the prior amendments,
(ii) updated the names of the parties, and (iii) incorporated any remaining applicable terms from the stock issuance agreement
and thereafter terminated the stock issuance agreement(the “Lantibiotic ECC”). We expect to continue our research
and development and collaboration efforts with EGI to develop potential derivatives of the MU1140 molecule using genetically modified
bacteria.
In
our pre-clinical studies to support a potential IND filing with the FDA, we tested a total of six homologs of MU1140 for certain
compound characteristics, including but not limited to: drug activity (based on minimum inhibitory concentration or “MIC”)
equal or better than “standard of care” drugs against certain drug-resistant bacteria, safety, toxicity, stability,
and manufacturability. An animal study specifically evaluated homolog efficacy in relation to survival, measurable amounts of
Clostridium difficile (“C. diff”) colony forming units, and toxin levels. Three homologs demonstrated promising
results with one homolog, OG253 achieving a 100% survival rate throughout the entire study in contrast to an approximately 30%
survival rate for the vancomycin positive control.
Based
on these early results, we selected a lead candidate, OG253, for which we had a pre-IND meeting with the FDA in November of 2015
regarding the pursuit of an IND for OG253. Following additional research and development on second generation lantibiotics, in
August of 2016, we opted to select a second generation lantibiotic, OG716, for treatment of C. diff as our new lead candidate.
OG716 is a new, orally-active homolog, that has exhibited positive results in an animal model for potential treatment of C.
diff. Generated from our MU1140 platform, this new lantibiotic showed promising efficacy in reducing clinically relevant C.
diff infections as measured by increased animal survival and decreased relapse as well as reduced production of toxins A &
B and C. diff spores.
The
timing of the filing of an IND regarding OG716 is subject to our having sufficient available human, material and financing capital,
which includes research subjects, both animal and human, given all of our anticipated needs and expected requirements in connection
with our ongoing research and development initiatives. We will continue to advance the OG716 program to the IND filing based on
the availability of both human and financial capital. Based upon the current funding available we will continue to conduct some
of the requisite studies. While we commenced certain of these studies at the end of 2019, we expect to focus on efficient and
cost-effective improvements in the manufacturing process of the product as we move to complete the pre-clinical studies required
to support our first in man Phase 1 clinical study.
Product
Candidates.
Through
our wholly-owned subsidiary, Noachis Terra, we began the research and development stage for our new Terra CoV-2 vaccine product
candidate. We hold a nonexclusive, worldwide intellectual property license agreement for certain research, patent applications
and biological materials relating to the use of pre-fusion coronavirus spike proteins for the development and commercialization
of a vaccine against SARS-CoV-2.
Additionally,
we are developing our lead lantibiotic candidate, OG716, to treat Clostridium difficile while also creating semi-synthetic
lantibiotic analogs that may be effective against systemic gram (+) multidrug infections, and analogs that may be effective in
treating gram (-) infections. We seek to protect our product candidates through patents and patent applications pursuant to
the terms of our license agreements.
Product/Candidate Description Application Status
Our
Business Development Strategy
Success
in the biopharmaceutical and product development industry relies on the continuous development of novel product candidates. The
large majority of product candidates do not make it past all clinical trials which forces companies to look externally for innovation.
Accordingly, we expect from, time to time, to seek strategic opportunities through various forms of business development, which
can include strategic alliances, licensing deals, joint ventures, collaborations, equity-or debt-based investments, dispositions,
mergers and acquisitions. We view these business development activities as a necessary component of our strategies, and we
seek to enhance shareholder value by evaluating business development opportunities both within and complementary to our current
business as well as opportunities that may be new and separate from the development of our existing product candidates.
Our
SARS-CoV-2 Vaccine Product Candidate-Terra CoV-2
Market
Opportunity
The
worldwide market size for COVID-19 vaccines is expected to approach $38.5 billion. Following the pandemic period, the post-pandemic
maintenance phase is expected to be approximately $6 billion in annual sales beginning in 2025.
In late January of 2021, the World Health Organization’s estimates indicate the number of worldwide COVID-19 infections
have exceeded 100,000,000 and the number of deaths directly attributed to COVID-19 have exceeded 2,000,000. About 40% of US deaths
have occurred in long-term care facilities as the disease disproportionately affects the elderly.
We
believe overall disease burden will continue to increase during 2021 even with vaccine introductions. Global and country policymakers
have pursued immediate vaccination of healthcare workers and elderly populations as vaccine becomes available and thereafter seek
to vaccinate the adult population as more vaccine volume is released and disseminated based on the FDA’s emergency use authorization.
In the US, the CDC is monitoring this dynamic closely to advise the states on rollout allocations. We believe label expansions
to children to follow with the CDC’s expected lower age recommendations as well as data released by Pfizer in 16-17 years
was acknowledged by the CDC so that this population was included in the current recommendation. We believe the global population
remains at risk for COVID and policy maker recommendations might be expected to cover the vast majority of the populations
to stop the pandemic.
It
is generally expected to take at least 12 months to achieve a broader level of immunity (herd immunity) which assumes 60-80% of
the eligible population is fully vaccinated with two doses with vaccines currently available under Emergency Use Authorizations
(EUA). Based on publicly available vaccine data and the spread of variants, the current timelines for the pandemic are
not expected to end soon and continue to change. Current vaccines in development are based on safety/efficacy in reducing
disease, not on transmission and post-marketing surveillance of licensed vaccines is expected to be monitored closely to determine
whether /when to vaccinate in the post-pandemic period. To the extent COVID transmission continues despite vaccine availability,
we believe that continued broad vaccination (or revaccination) will be recommended by policy makers.
As
with other vaccines, COVID disease epidemiology is expected to be closely monitored and as such recommendations as to vaccinations
and treatments would be expected to likewise evolve accordingly. The identification of new COVID-19 variants from South Africa,
England and Brazil, and the spread of such variants are expected to alter the dynamics of not only introduction of initial immunity
but the requirement of booster shots to help facilitate control of the newer viral strains.
Our
Strategy
We
seek to develop Terra CoV-2 vaccine candidate to the point of entering into a licensing deal or strategic partnership. In connection
with the development of our Terra CoV-2 vaccine candidate we expect to focus on differentiation of our vaccine product candidate,
including but not limited to, costs of the vaccine, distribution and storage at refrigerated temperatures and dosing schedules.
We believe that development of a vaccine that has differentiated attributes to those currently being used based on the FDA’s
Emergency Use Authorization will be beneficial in helping to control the SARS–CoV-2 pandemic. Should the current COVID-19
pandemic be brought under control quickly and result in the inability to commercialize our Terra-CoV-2 vaccine, we believe we
have developed the experience to identify and acquire other vaccines to develop that are capable of preventing new infectious
disease threats.
Regulatory
We
held a pre-Investigational New Drug (IND) meeting with the U.S. Food and Drug Administration (FDA), with agreements that allow
us to save three to six months on pre-IND development timelines. The broad support for our approach by the FDA included a number
of activities, including: (i) use of the Research Cell Bank in the early manufacturing process development; (ii) use of
early pilot batch manufacture under Good Manufacturing Processes (GMP) for the anticipated Phase 1 clinical trials; and, (iii)
submission of draft toxicology reports during IND filing. We have organized the conduct of the pre-clinical studies including
the Syrian Hamster virus challenge study, the mouse immunogenicity study and rodent toxicology study. All will be submitted as
part of the IND filing prior to initiation of the Phase 1 human clinical trial. We anticipate filing the IND application in the
fourth quarter of 2021 and immediately upon the receipt of approval from the FDA, commencing the Phase 1 clinical study, the protocol
for which is currently under development.
Manufacturing
The
creation of the Research Cell Bank is now complete and manufacturing has been transferred to our dedicated biologics contract
development and manufacturing organization Avid Bioservices, Inc. for upstream and downstream processing. Creation of the Master
Cell Bank, required for later stage manufacturing will begin in 1Q21. This step is required for later stage manufacturing of clinical
supplies for Phases 2 and 3. We have entered into an agreement with a company that will provide the adjuvant for our
vaccine candidate. We expect to continue to seek other sources of adjuvants for our manufacturing needs. We also have an agreement
with a company that is expected to formulate the vaccine and candidate. In addition, a separate company will provide services
for fill/finish and packaging and labeling that will be required for both clinical trial material and commercial product.
OG716,
Homologs of MU1140 and Other Lantibiotics
In
the course of research and development, MU1140 was found to be a potent antibiotic that is naturally produced by the parent of
the SMaRT strain. MU1140 shows antibacterial activity against all Gram-positive bacteria against which it has been tested, including
those responsible for a variety of healthcare-associated infections, or HAIs.
In
June 2012, we entered into a worldwide exclusive channel collaboration agreement with Precigen (formerly known as Intrexon Corporation)
for the development and commercialization of the native strain of MU1140 and related homologs to use its advanced transgene and
cell engineering platforms. At that time we also entered into a stock issuance agreement with Precigen. Through our work pursuant
to the collaboration agreement, we have been able to produce a significant increase in the fermentation titer of MU1140 compared
to standard fermentation methods and have discovered a new purification process for MU1140. Our work generated a substantial number
of homologs of MU1140 and the exclusive channel collaboration was thereafter amended to clarify the applicable field and to adjust
the milestone payments and provide that they will be paid in cash. In January 2020 Precigen consummated a reorganization of its
ongoing active pharmaceutical ingredients (API) fermentation operations and assets which included transfer of the exclusive collaboration
agreement and related stock issuance agreement. Following such reorganization, Precigen divested certain of its assets to TS Biotechnology
Holdings, LLC which included shares of Oragenics securities and the subsidiary Eleszto Genetika, Inc. (“EGI” formerly
known as ILH Holdings, Inc.) that held the collaboration agreement and stock issuance agreements with us, and. On March 1, 2021,
due to such prior amendments, assignments and transfers we entered into an amended and restated exclusive channel collaboration
agreement with EGI which (i) included the prior amendments, (ii) updated the names of the parties, and (iii) incorporated any
remaining applicable terms from the stock issuance agreement and thereafter terminated the stock issuance agreement (the “Lantibiotic
ECC”). We expect to continue our research and development and collaboration efforts with EGI to develop potential derivatives
of the MU1140 molecule using genetically modified bacteria.
Through
this collaboration we intend to develop lantibiotics, a novel class of antibiotics, as active pharmaceutical ingredients toward
the goal of commercialization for the treatment of infectious diseases in humans. We previously selected a lead candidate, OG253,
and had a pre-IND meeting with the FDA in November of 2015 regarding the pursuit of an IND on OG253. Following additional research
and development on second generation lantibiotics, in August of 2016, we selected a second generation lantibiotic, OG716, for
treatment of C. diff. OG716 is a new, orally-active homolog, that has exhibited positive results in an animal model for
potential treatment of C. diff. Generated from our MU1140 platform, this new lantibiotic showed promising efficacy in reducing
clinically relevant C. diff infections as measured by increased animal survival and decreased relapse as well as reduced
production of C. diff spores and toxin levels when compared to a vancomycin positive control. We had our pre-IND meeting
with FDA for OG716 during the third quarter of 2017. We have transferred manufacturing to a contract manufacturer and conducted
our initial rat toxicology program in support of our anticipated upcoming IND filing. The timing of the filing of an IND regarding
OG716 is subject to our having sufficient available capital given all of our anticipated needs and expected requirements in connection
with our ongoing research and development initiatives. We currently expect the IND for a first-in-human clinical trial of OG716
to be filed with the FDA based on our ability to complete the requisite studies, contingent on sufficient funding. Based upon
the funding available we expect to conduct some of the requisite studies. While we commenced certain of these studies at the end
of 2019, we expect to focus on efficient and cost-effective manufacturing of the product to support and be able to conduct further
broad-based studies. In addition, we have undertaken research programs to expand our capabilities to improve the physical chemical
characteristics (i.e., solubility and stability) of lantibiotics for use to treat systemic gram (+) infections and also exploring
lantibiotic structures that may treat gram (-) infections.
Market
Opportunity
The
most common gram (+) HAIs are caused by drug-resistant bacteria, including methicillin-resistant Staphylococcus aureus,
or MRSA; vancomycin-resistant Enterococcus faecalis, or VRE; and Clostridium difficile, or C. diff. According
to the Centers for Disease Control and Prevention, or CDC, HAIs are estimated to occur in approximately 5% of all acute-care hospitalizations.
The CDC also estimates that the total direct medical cost to the U.S. healthcare system from HAIs is between $28.4 billion to
$45 billion annually. Cubicin, a Gram positive lipopeptide antibiotic which was launched in the US market in November 2003 by
the biotechnology company Cubist, had 2012 global sales of $926.4 million. In 2013, Cubist announced the acquisition of two companies
Optimer and Trius each of which was for consideration over $800M. In 2015, Cubist was acquired by Merck for a total transaction
value of $9.5 billion.
The
need for novel antibiotics is increasing due to an increased pattern of resistance development by target pathogens to existing
FDA approved antibiotics on the market. The CDC has estimated that up to 77% of certain nosocomial pathogenic bacteria are resistant
to drugs of last resort (vancomycin-resistant E. faecium and vancomycin, respectively, in this example). HAIs are not exclusively
a problem in the United States as the rest of the world has also seen a dramatic rise in HAIs during the last decade. We believe
novel antibiotics have become increasingly scarce as major pharmaceutical companies focus more research and development resources
on lifestyle drugs and fewer resources on specialty pharmaceuticals such as antibiotics. Between 1983 and 1987, 16 new antibiotics
were approved by the FDA. Twenty years later, over an equivalent time period from 2003 to 2007, only five new antibiotics were
approved by the FDA, of which only two possessed a novel mechanism of action. Since 2008, there have been no new antibiotics classes
approved by FDA.
Lantibiotics
such as MU1140 are highly modified peptide antibiotics made by a small group of Gram-positive bacterial species. Approximately
60 lantibiotics have been discovered since the first lantibiotic, nisin, was discovered. Lantibiotics are generally known to be
potent antibiotic agents; however, attempts to investigate their clinical usefulness have generally met with failure due to the
inability to produce sufficient pure amounts of any of these molecules to be able to test them as a therapeutic agent for the
treatment of infectious diseases. Standard fermentation methods, such as those used to make a variety of other antibiotics, have
historically resulted in the production of only minute amounts of the lantibiotic.
Our
Solution
To
develop homologs of MU1140 paired with high producing strains to the point of partnership, and to develop additional lantibiotics
in connection with our work on MU1140. MU1140 has demonstrated activity against a wide variety of disease-causing Gram-positive
bacteria, including MRSA, VRE, C. diff, Mycobacterium tuberculosis and Bacillus anthracis.
Our
Strategy
In
collaboration with EGI, we are developing and testing recombinantly derived homologs of the native MU1140 molecule with
improved therapeutic profiles and physical-chemical characteristics. The data generated in collaboration with Precigen over the
past few years enabled us to engineer hundreds of homologs of MU1140, and select those homolog candidates with improved profiles,
including homologs of higher activity and stability, lower toxicity and with a scalable manufacturability. The best homolog candidates
were further developed internally and through the use of several Contract Research Organizations (“CROs”). We believe
that this strategy represented the best and most efficient path to produce sufficient quantities of MU1140 homologs, to support
continued research, selection of a lead candidate, nonclinical studies, clinical studies and ultimately commercialization. We
selected a lead candidate, OG716, in 2016 targeted toward combating C. diff infections. In addition, we intend to continue
research activities to identify additional MU1140 homologs to treat other HAIs.
Regulatory
Status
We
have performed nonclinical testing on MU1140 which has demonstrated the molecule’s novel mechanism of action. We began additional
nonclinical activities on MU1140 under the Lantibiotic ECC with EGI in the second half of 2013 and activities have expanded
with new identified homologs as available. These nonclinical activities are expected to include toxicity results, pharmacokinetic
studies, and efficacy studies in animals for selected candidates, including our lead candidate OG716 under development for Clostridium
difficile associated diarrhea. This work is being done primarily through the use of outside contractors. Pursuit of clinical
trials toward the goal of ultimately obtaining regulatory approval will depend upon further successful advancements in our research
collaboration efforts with Precigen and our efforts to have additional product manufactured. Developments from these efforts will
dictate our regulatory path. We initially selected a lead candidate, OG253 and had a pre-IND meeting with the FDA in November
of 2015 regarding the pursuit of an IND for OG253. Following additional research and development on second generation lantibiotics,
in August of 2016, we selected a second generation lantibiotic homolog, OG716, for treatment of C. diff. We had a pre-IND
meeting with FDA for OG716 during the third quarter of 2017. We expect to continue our research and development activities on
OG716 subject to the availability of adequate financing as we move towards the filing of an IND.
Manufacturing
While
we have been able to produce a significant increase in the fermentation titer of our lead compound OG716, we continue to work
to improve on the manufacturing through collaborations with fermentation and purification experts and third party CROs. We will
need to further optimize and scale up the production/purification scheme internally and through third party vendors. The need
to examine many new homologs of MU1140 has resulted in the need to reproduce the fermentation and purification steps on each individual
homolog candidate being studied. Each homolog requires different optimizations for both the fermentation and purification steps
and in some cases requires a new approach. As such, our work on the research and development of new lantibiotic homologs using
genetically modified bacteria continues. We believe these developments represent progress toward our goal of commercial production
of sufficient quantities of our MU1140 homologs, including our lead compound OG716 and deliver a step in validating the lantibiotics
platform targeting infectious diseases.
We
are working with a third-party manufacturer to produce additional quantities of designated homologs including our lead compound
OG716, based upon the developments achieved from our work with our collaboration partners and outside contractors. The production
of additional quantities of designated homologs including OG716, that are needed for the consummation and pursuit of our nonclinical
testing activities supporting the IND filing are currently ongoing. We will continue to explore improved methods of manufacturing
to improve our yields and ultimately, potentially reduce our cost of manufacture.
Our
License Agreements
Our
NIH License Agreement
Through
our wholly-owned subsidiary, Noachis Terra, we are party to a Patent License and Biological Materials License Agreement (the “License
Agreement” or “NIH License”), dated March 23, 2020, with the United States Department of Health and Human Services
(the “HHS”), as represented by the NIAID, an Institute of the NIH. Under the terms of the License Agreement, we hold
a nonexclusive, worldwide license to certain specified patent rights (including patent applications, provisional patent applications
and Patent Cooperation Treaty (“PCT”) patent applications) and biological materials relating to the use of prefusion
coronavirus spike proteins to exploit products (“Licensed Products”) and practice processes (“Licensed Processes”)
that are covered by the licensed patent rights and biological materials for the purpose of developing and commercializing a vaccine
product candidate for SARS-CoV-2. The License Agreement is subject to certain statutory limits and reserved rights, as required
under federal law and NIH requirements, including the requirement to provide reasonable quantities of Licensed Products or materials
made through the Licensed Processes for NIH research and to manufacture Licensed Products or materials made through the Licensed
Processes substantially in the United States. We may not sublicense the intellectual property or biological materials licensed
to us under the License Agreement.
Pursuant
to the License Agreement, we must use reasonable commercial efforts to manufacture, practice or operate the Licensed Products
and the Licensed Processes, including adhering to a commercial development plan and achieving certain benchmarks. Additionally,
following the first commercial sale of any Licensed Products or the practice of any Licensed Processes, we must use reasonable
commercial efforts to make the Licensed Products and the Licensed Processes reasonably accessible to the United States public
and reasonable quantities of the Licensed Products and the Licensed Processes available to patient assistance program, among other
educational support activities. The NIAID has agreed to assume responsibility for the preparation, filing, prosecution and maintenance
of all patent applications and patents covered by the licensed patent rights.
Under
the terms of the License Agreement, the NIAID is entitled to receive a noncreditable, nonrefundable upfront license issue royalty
(which has already been paid), as well as reimbursement for our pro rata share of the NIAID’s past and future patent prosecution-related
expenses. Additionally, the NIAID is entitled to receive nonrefundable minimum annual royalties, which increase each year after
the first commercial sale of any Licensed Products or the practice of any Licensed Processes, as well as benchmark royalties following
our completion of certain commercial development and sales-related benchmarks. The NIH is entitled to receive earned royalties
on the annual net sales of Licensed Products and the practice of any Licensed Processes (subject to certain reductions), at certain
low- to mid-single digit royalty rates, which rates vary based on the total amount of annual net sales and the geographic market
in which those sales occur. We must provide regular written reports to the NIAID on the development status of and royalty payments
relating to the Licensed Products and the Licensed Processes.
We
must indemnify and hold the NIAID and its associates harmless from and against all liability and damages in connection with or
arising out of (a) the use or beneficial use of the Licensed Patent rights by us, our directors, employees or third parties and
(b) the design, manufacture, distribution or use of any Licensed Products or Licensed Processes, including other products or processes
developed in connection with the Licensed Patent Rights.
Unless
terminated earlier, the License Agreement will terminate upon the earlier of (a) twenty (20) years from the first commercial sale
where no licensed patent rights exist or have ceased to exist or (b) the expiration of the last to expire of any licensed patent
rights. At this time, no patents covered by the licensed patent rights have been issued. We may terminate the License Agreement
at any time, subject to advance notice. Subject to certain cure and appeal rights, the NIAID may terminate or modify the License
Agreement in the event of a material breach or default, including, among others, the following:
(i) We become insolvent or the subject of a bankruptcy petition;
(iv) We cannot reasonably satisfy public health and safety needs; or
Our
Lantibiotic ECC
On
March 1, 2021, we entered into an amended and restated
worldwide exclusive channel collaboration agreement with EGI (the “Lantibiotic ECC”) in which we will use its
advanced transgene and cell engineering platforms for the development and production of lantibiotics, a class of peptide antibiotics
that are naturally produced in Gram-positive bacteria and contain the characteristic polycyclic thioether amino acids lanthionine
and methyllanthonine (collectively, the “Lantibiotics Program”).
The
Lantibiotic ECC provides for the establishment of committees comprised of our representatives and representatives from EGI
(“Collaboration Partner”) following the assignment by Precigen that will govern activities related to the Lantibiotics
Program in the areas of project establishment, chemistry, manufacturing and controls matters, clinical and regulatory matters,
commercialization efforts and intellectual property matters. The Joint Steering Committee establishes projects for the Lantibiotics
Program and establishes the priorities, as well as approved the budgets for projects. In November of 2017 in connection with our
Series B Preferred Financing, we amended the Lantibiotic ECC to revise the payments, we are obligated to make to our Collaboration
Partner as described below.
The
Lantibiotic ECC grants us an exclusive worldwide license to use patents and other intellectual property of Precigen in connection
with the research, development, use, importing, exporting, manufacture, sale, and offer for sale of drug products involving the
direct administration to humans or companion animals of a lantibiotic for the prevention or treatment of infectious disease (“Oragenics
Products”). Such license is exclusive with respect to any clinical development, selling, offering for sale or other commercialization
of Oragenics Products, and otherwise is non-exclusive. Subject to limited exceptions, we may not sublicense the rights described
without Precigen’s written consent.
Under
the Lantibiotic ECC, and subject to certain exceptions, we are responsible for, among other things, funding the further anticipated
development of lantibiotics toward the goal of commercialization, conducting nonclinical and clinical development of candidate
lantibiotics, as well as for other aspects of manufacturing and the commercialization of the product(s). Among other things, our
Collaboration Partner is responsible for technology discovery efforts, cell-engineering development, certain aspects of the manufacturing
process, and costs of filing, prosecution and maintenance of our Collaboration Partner’s patents. Under the Lantibiotic
ECC our Collaboration Partner has the option to perform any manufacturing activities in connection with the Lantibiotic Program
that relate to the use of our Collaboration Partner material, the manufacture of bulk drug products, the manufacturing of bulk
quantities, other components of Oragenics Products, or any earlier steps in the manufacturing process for Oragenics Products.
To the extent our Collaboration Partner so elects, a separate manufacturing and supply agreement may be entered into between our
Collaboration Partner and the Company.
Pursuant
to the terms of the Lantibiotic ECC, as amended, we are obligated to pay our Collaboration Partner on a quarterly basis 10% of
net sales derived in that quarter from the sale of products developed from the Lantibiotic ECC, calculated on an Oragenics Product-by-Oragenics
Product basis and we will pay our Collaboration Partner on a quarterly basis 25% of revenue obtained in that quarter from a sublicensor
in the event of a sublicensing arrangement.
We
have agreed to indemnify and hold our Collaboration Partner -harmless from any damages caused as a result of (i) our negligence
or willful misconduct, (ii) the use, handling, storage, or transport of our Collaboration Partner Materials (as defined in the
Lantibiotic ECC), (iii) our breach of a material representation, warranty or covenant in the Lantibiotic ECC, or (iv) the design,
development, manufacture, regulatory approval, handling, storage, transport, distribution, sale or other disposition of any Oragenics
Product.
Our
Collaboration Partner may terminate the Lantibiotic ECC if we fail to use diligent efforts to develop and commercialize Oragenics
Products or if we elect not to pursue the development of a Lantibiotics Program identified by our Collaboration Partner that is
a “Superior Therapy” as defined in the Lantibiotic ECC. We may voluntarily terminate the Lantibiotic ECC at any time
upon 90 days written notice to our Collaboration Partner.
Upon
termination of the Lantibiotic ECC, we may continue to develop and commercialize any Oragenics Product that has been, at the time
of termination:
(i) commercialized by us;
(ii) approved by regulatory authorities;
Our
obligation to pay 10% of net sales, 25% of sublicensing revenue and the milestone payments described below with respect to these
“retained” products as well as to use diligent efforts to develop and commercialize these “retained” Oragenics
Products will survive termination of the Lantibiotic ECC.
In
addition, in partial consideration for each party’s execution and delivery of the Lantibiotic ECC, we entered into a Stock
Issuance Agreement with our Collaboration Partner. Pursuant to the Stock Issuance Agreement, we issued to our Collaboration Partner
439,243 shares of our common stock as an initial technology access fee, in consideration for the execution and delivery of the
Lantibiotic ECC and granted our Collaboration Partner certain equity participation rights and registration rights.
The
registration rights granted to our Collaboration Partner in the Stock Issuance Agreement by us consisted of “piggyback registration”
rights which permit our Collaboration Partner to participate in any firm commitment underwritten offering of securities by us,
subject to underwriter cutbacks and lockups. In addition, we are precluded from granting registration rights in connection with
a private placement unless (i) all shares held by our Collaboration Partner are, at the time of such private placement, included
on a registration statement, or (ii) we agree, in connection with such private placement, to grant our Collaboration Partner the
right to include on the registration statement a number of our Collaboration Partner’s Company shares equal to one half
of the number of shares to be registered on behalf of the other holders or prospective holders.
Pursuant
to the Lantibiotic ECC our Collaboration Partner is also entitled, at its election, to participate in future securities
offerings by us that constitute “qualified financings” and purchase securities equal to 30% of the number of shares
of common stock or other securities sold in such offering (exclusive of our Collaboration Partner’s purchase). For this