Oragenics Inc: Form 10-Q for the period ended Mar 31, 2025

The following information should be read in conjunction with the Consolidated Financial Statements, including the notes thereto, included elsewhere in this Form 10-Q as well as our Annual Report on Form 10-K for the year ended December 31, 2024 filed on March 14, 2025.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, including, but not limited to, statements regarding our future performance, business prospects, events and product development plans. These forward-looking statements are not historical facts, but are based on current expectations, estimates and projections about our industry, our beliefs and our assumptions. These forward-looking statements include statements about our strategies, objectives and our goals. To the extent statements in this Quarterly Report involve, without limitation, our expectations for growth, estimates of future revenue, our sources and uses of cash, our liquidity needs, our current or planned clinical trials or research and development activities, product development timelines, our future products, regulatory matters, expense, profits, cash flow balance sheet items or any other guidance on future periods, these statements are forward-looking statements.

These statements are often, but not always, made through the use of word or phrases such as “believe,” “will,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” and “would. “These forward-looking statements are not guarantees of future performance and concern matters that could subsequently differ materially from those described in the forward-looking statements. Actual events or results may differ materially from those discussed in this Quarterly Report on Form 10-Q. Except as may be required by applicable law, we undertake no obligation to update any forward-looking statements or to reflect events or circumstances arising after the date of this Report.

Important factors that could cause actual results to differ materially from those in these forward-looking statements are in the section entitled “Risk Factors” located in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, and the other risks and uncertainties described elsewhere in this report as well as other risks identified from time to time in our filings with the Securities and Exchange Commission, press releases and other communications. In addition, the statements contained throughout this Quarterly Report concerning future events or developments or our future activities, including concerning, among other matters, current or planned clinical trials, anticipated research and development activities, anticipated dates for commencement of clinical trials, anticipated completion dates of clinical trials, anticipated meetings with the FDA or other regulatory authorities concerning our product candidates, anticipated dates for submissions to obtain required regulatory marketing approvals, anticipated dates for commercial introduction of products, and other statements concerning our future operations and activities, are forward-looking statements that in each instance assume that we are able to obtain sufficient funding in the near term and thereafter to support such activities and continue our operations and planned activities in a timely manner. There can be no assurance that this will be the case. Also, such statements assume that there are no significant unexpected developments or events that delay or prevent such activities from occurring. Failure to timely obtain sufficient funding, or unexpected developments or events, could delay the occurrence of such events or prevent the events described in any such statements from occurring.

Overview

We are a development-stage company dedicated to the research and development of nasal delivery pharmaceutical medications in neurology and fighting infectious diseases. Our lead product, ONP-002, is a fully synthetic, non-naturally occurring neurosteroid, is lipophilic, and we believe can cross the blood-brain barrier with the goal of rapidly eliminating swelling, oxidative stress and inflammation while restoring proper blood flow through gene amplification.

Our ONP-002 Neurology Asset for Brain Related Illness and Injury

Our lead product and focus is on the development and commercialization of ONP-002 for the treatment of mild traumatic brain injury (“mTBI” or “Concussion”).

ONP-002, together with our other neurology assets are referred to herein as the Neurology Assets. To date, ONP-002 has been shown to be stable up to 104 degrees for 18 months. The drug candidate is manufactured into a powder and filled into a novel intranasal device. The drug is then administered through the nasal passage from the device. The novel intranasal device is lightweight and easy to use in the field.

We believe the proprietary powder formulation and intranasal administration allows for rapid and direct accessibility to the brain. The device is breath propelled and is designed to allow patients to blow into the device which closes the soft palate in the back of the nasopharynx, preventing the flow of drug to the lungs or esophagus, minimizes system exposure and side effects, and effectively crosses the blood brain barrier. This mechanism is designed to trap ONP-002 in the nasal cavity allowing for more abundant and faster drug availability in the traumatized brain.

Expected ONP-002 Product Development Timeline:

This product development plan is an estimate and is subject to change based on funding, technical risks and regulatory approvals.

Business Development Strategy

Success in the biopharmaceutical and product development industry relies on the continuous development of novel product candidates. Most product candidates do not make it past the clinical development stage, 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.

Recent Funding

Stock Sale

In February 2025, we sold 7.8 million shares pursuant to our ATM Agreement with Dawson James for net proceeds of $2.6 million. See Note 7 of Notes to Consolidated Financial Statements.

Promissory Note

In March 2025, we issued a $3.0 million promissory note at a 17% original issue discount. After expenses, we received net proceeds of $2.2 million. See Note 5 of Notes to Consolidated Financial Statements.

Going Concern

See Note 1 of Notes to Consolidated Financial Statements.

Significant Accounting Policies and Use of Estimates

During the three months ended March 31, 2025, there were no significant changes to our significant accounting policies and estimates as described in Note 2. Significant Accounting Policies included in Part II, Item 8. of our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on March 14, 2025.

Future Capital Requirements

Our capital requirements for 2025 will depend on numerous factors, including the success of our commercialization efforts and of our research and development, the resources we devote to develop and support our technologies and our success in pursuing strategic licensing and funded product development relationships with external partners.

Subject to our ability to raise additional capital including through possible joint ventures and/or partnerships, we expect to incur substantial expenditures to further commercialize or develop our Neurology Assets, including continued increases in costs related to research, nonclinical testing and clinical trials, as well as costs associated with our capital raising efforts and being a public company.

Our plans include seeking both equity and debt financing, alliances or other partnership agreements with entities interested in our technologies, or other business transactions that would generate sufficient resources to ensure continuation of our operations and research and development programs.

Our available cash and cash equivalents of $3.4 million at March 31, 2025 provide us with limited liquidity. We believe our existing cash and cash equivalents will allow us to fund our operating plan through the third quarter of 2025. Required additional capital may not be available on reasonable terms, if at all. If we were unable to obtain additional financing, we may be required to reduce the scope of, delay or eliminate some or all of our planned clinical testing, research and development and commercialization activities, which would harm our business.

The sale of additional equity or debt securities may result in dilution to our shareholders. If we raise additional funds through the issuance of debt securities or preferred stock, these securities could have rights senior to those of our common stock and could contain covenants that would restrict our operations.

Because of the numerous risks and uncertainties associated with research, development, and commercialization of our product candidates, we are unable to estimate the exact amounts of our working capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:

• conducting Phase II clinical trials for our ONP-002 product candidate, filing an IND with the FDA and, if approved, engaging in Phase III clinical trials;
• identifying and securing clinical sites for the conduct of human trials for our product candidates;
• the number and characteristics of the product candidates we pursue;
• the scope, progress, results, and costs of researching and developing our product candidates, and conducting nonclinical and clinical trials including the research and development expenditures we expect to make in connection with agreements with third parties we put in place to advance our research and development efforts;
• the timing of, and the costs involved in, obtaining regulatory approvals for our product candidates;
• our ability to maintain current research and development licensing agreements and to establish new strategic partnerships, licensing or other arrangements and the financial terms of such agreements;
• our ability to achieve our milestones under our ECC agreement and licensing arrangements and the payment obligations we may have;
• the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs and the outcome of such litigation; and
• the timing, receipt and amount of sales of, or royalties on, our products and future products, if any.

We have based our estimates on assumptions that may prove to be wrong. We may need to obtain additional funds sooner or in greater amounts than we currently anticipate.

New Accounting Pronouncements

See Note 2 of Notes to Consolidated Financial Statements.

Business Segments

We operate in one reportable segment, which includes all activities related to advancing the development of our concussion drug, ONP-002. The determination of a single reportable segment is consistent with the consolidated financial information regularly provided to our chief operating decision maker (CODM). Our CODM is presently our Chief Financial Officer and Interim Chief Executive Officer, who reviews and evaluates consolidated net loss for purposes of assessing performance, making operating decisions, allocating resources and planning and forecasting for future periods. The measure of segment assets is reported on the balance sheet as total assets. During the three-month periods ended March 31, 2025 and 2024 there was no segment revenue.

Results of Operations

We do not currently sell or market any products and we did not have any revenue in the three-month periods ended March 31, 2025 or 2024.

Research and Development

Research and development consist of expenses incurred in connection with the discovery and development of our product candidates and are divided into clinical research and nonclinical research and development activities.

Clinical research activities consist of clinical trials, manufacturing services and regulatory activities, all of which are largely provided by third parties.

Nonclinical research and development activities consist of our own research activities, research activities provided by third parties, our own nonclinical studies, nonclinical studies provided by third parties and the acquisition of in process research and development.

The decrease in research and development in the three months ended March 31, 2025 compared to the same period of 2024 was due to decreased expense related to our research and development for ONP-002 during the comparable periods.

General and Administrative

General and administrative expense consists principally of salaries and related costs for personnel in executive, finance, business development, marketing, information technology, legal and human resources functions, facility costs not otherwise included in Research and development expenses, patent filing fees and professional fees for legal, consulting, auditing, and tax services.

We anticipate that our general and administrative expenses will increase for the following reasons:

• to support our research and development activities, which, subject to available capital, we expect to expand as we continue the development of our product candidates, with a focus on ONP-002;
• the efforts we undertake from time to time to raise additional capital; and
• the increased payroll, stock-based compensation, expanded infrastructure and consulting, legal, accounting and investor relations costs associated with being a public company.

The decrease in general and administrative expense was due to the following:

The increase in legal and professional fees of $65,588 is the result of a $143,735 decrease in accounting expense, $77,260 in legal expense and $147,640 in consulting expenses offset by an increase in patent related expense in the amount of $434,222 as compared to the three months ending March 31, 2024. Salaries and benefits decreased due to lower headcount in the three months ending March 31, 2025 compared to the first quarter ending March 31, 2024. Investor relations expense was increased by $126,677 due to expenses related to our annual shareholder meeting in the three months ending March 31, 2025 as compared to the same period in 2024.

Other Income (Expense)

Other income (expense) includes local business taxes, interest income, interest expense and realized gains and losses related to foreign currency exchange rates with our vendors. Interest income consists of interest earned on our cash and cash equivalents. The primary objective of our investment policy is capital preservation. Interest expense consists primarily of interest and costs associated with our short-term note payable.

The increase in interest expense of $192,042 for the three months ending March 31, 2025, relates to the amortization of the debt discount and closing costs incurred for the $3 million debt financing entered into in March 2025.

Liquidity and Capital Resources

See Recent Funding above for a discussion of our recent financings.

Since our inception, we have funded our operations primarily through the sale of equity securities in public and private offerings, debt financing and exercises of stock-based securities. As of March 31, 2025, we had an accumulated deficit of $219 million and we have yet to achieve profitability. We incurred net losses of $2.2 million for the three months ended March 31, 2025 and $10.5 million for the year ended December 31, 2024. We expect to incur significant and increasing operating losses for the foreseeable future as we seek to advance our Neurology Assets through nonclinical testing and clinical trials to ultimately obtain regulatory approval and eventual commercialization.

The following table sets forth our primary sources and uses of cash:

Operating Activities

Cash used in operating activities in both periods resulted from our net loss adjusted for non-cash expenses and changes in operating assets and liabilities.

Significant items affecting net cash used in operating activities in the three months ended March 31, 2025 included a non-cash charge of $0.2 million of amortization of debt discount and closing costs, a $0.1 million increase in Prepaid expense and other current assets and a $0.2 million decrease in Accounts payable and accrued expenses.

Significant items affecting net cash used in operating activities in the three months ended March 31 2024 included a non-cash charge of $0.1 million for stock-based compensation, a $0.1 million decrease in Prepaid expenses and other current assets and a $0.7 million increase in Accounts payable and accrued expenses.

Financing Activities

Significant financing activities in the three months ended March 31, 2025 included $2.6 million net proceeds from the issuance of common stock, and $2.2 million in borrowings on short-term notes payable, offset by $0.2 million used for payments on our short-term note payable.

Significant financing activities in the three months ended March 31, 2024 included $1.8 million net proceeds from the issuance of common stock, partially offset by $0.2 million used for payments on our short-term note payable.

Short-Term Notes Payable

Our Short-term notes payable consisted of the following:

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Inflation

Inflation affects the cost of raw materials, goods, and services that we use. Fluctuations in energy costs and commodity prices can affect the cost of raw materials and components. Except with respect to payroll-related costs and costs arising from, or related to, government-imposed regulations, we do not believe that inflation has had a material impact on our results of operations for the periods presented.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements.

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2025. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Based on the evaluation of our disclosure controls and procedures as of March 31, 2025, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.

The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

There have been no material changes during the three-month period ended March 31, 2025 to the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2024. If any of the identified risks occur, our business, financial condition and results of operations could suffer. The trading price of our common stock could decline and you may lose all or part of your investment in our common stock. The risks and uncertainties described in our Annual Report on Form 10-K for the year ended December 31, 2024 are not the only ones we face. Additional risks that we currently do not know about or that we currently believe to be immaterial may also impair our business operations.