OGEN: COVID-19 Vaccine Candidate Exhibits Protective Immunity in Mice…

By David Bautz, PhD

NYSE:OGEN

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Business Update

CoV-2 S-2P Demonstrates Protective Immunity in Mice

In February 2021, Oragenics, Inc. OGEN announced data from the National Institutes of Health (NIH) that demonstrated the stabilized prefusion spike protein CoV-2 S-2P (which is being developed as the COVID-19 vaccine Terra CoV-2) induced protective immunity in mice challenged with mouse-adapted SARS-CoV-2 virus (Dinnon 3rd et al., 2020).

The following graphic shows that mice immunized with either 0.1 or 1 g of CoV-2 S-2P and combined with the TLR-4 agonist Sigma Adjuvant System (SAS) completed inhibited virus growth in the nasal cavities and lungs of mice following infection four weeks after their second immunization compared to control mice immunized with placebo (PBS).

The company had previously disclosed results from a preclinical study examining the immune response to various doses of CoV-2 S-2P in different strains of mice (Corbett et al., 2020). The following figure shows that immunization with S-2P along with SAS elicits antibody titers that are similar to those incited by mRNA-1273, an approved SARS-CoV-2 vaccine developed by Moderna Inc. (MRNA). In addition, the similar levels of both IgG1 and IgG2a/c antibodies is indicative of a balanced Th1/Th2 response.

Oragenics also previously disclosed that immunization with S-2P elicits robust neutralizing antibody (Nab) titers in BALB/c mice. The following table shows the levels of Nab from three separate serum pools following immunization with S-2P and SAS. These values were similar to the Nab levels induced by mRNA-1273.

Adjuvant Agreement

In January 2021, Oragenics announced a material transfer agreement with Adjuvance Technologies Inc. for the use of the adjuvant TQL1055 in Terra CoV-2. A vaccine adjuvant is utilized to increase the immunogenicity of the vaccine antigen. TQL1055 is a semi-synthetic analogue of the saponin adjuvant QS-21 that has improved characteristics including stability and manufacturing efficiency. The initial agreement calls for TQL1055 to be used in preclinical animal testing to support the company's IND application, with an option to enter into a license agreement for clinical trials.

Intranasal Adjuvant Agreement

In March 2021, Oragenics announced a material transfer agreement with Biodextris Inc. for the use of three intranasal mucosal adjuvants in Terra CoV-2. BDX100, BDX300, and BDX301 are proteasome-based adjuvants that are composed of lipopolysaccharide (LPS) from Shigella flexneri non-covalently associated with major outer proteins from Neisseria meningitidis (Hu et al., 2007). As the following figure shows, immunization with SARS-CoV1 spike (S) protein and the intranasal adjuvant Protollin (of which the BDX adjuvants are derived) results in an antigen-specific serum IgG and lung IgA response. The development of mucosal IgA may help to create sterilizing immunity and reduce the spread of SARS-CoV-2.

Background on Terra CoV-2

The spike (S) protein is found on all coronaviruses and is used for receptor recognition and entry into target cells (Li, 2016). The S protein is produced as a single amino acid chain before being cleaved into two non-covalently bound subunits, S1 and S2. These subunits then trimerize to form a large prefusion spike protein. The complex undergoes a conformational change in order to bind to cell surface receptors that allows for cell entry (Wrapp et al., 2020).

Generating antibodies directed against the spike protein is a preferred strategy for vaccine development, however generating a recombinant spike protein that retains the prefusion conformation is difficult, as the complex can spontaneously change to the membrane fusion form. This is important because antibodies directed against the prefusion complex can bind the S protein as it exists on the surface of the virus, while antibodies directed against the membrane fusion form are not effective at neutralizing the virus. Multiple studies in this field have advanced our knowledge on producing stable, prefusion spike proteins, as shown by research into vaccines against HIV (Sanders et al., 2002) and MERS (Pallesen et al., 2017). Terra CoV-2 utilizes a prefusion form of the S protein of SARS-CoV-2 for vaccination. In addition, it is produced in a mammalian expression system (Chinese Hamster Ovary [CHO] cells), which allows for the proper glycosylation pattern, another important aspect to ensuring an immunogenic antigen. The following figure gives an example of antigenic sites on the RSV F protein, and how some of those antigenic sites on the prefusion form of the molecule are not present on the postfusion form, thus exemplifying why producing a stable, prefusion form of the S protein is critical for vaccine development (Flynn et al., 2016).

Financial Update

On March 3, 2021, Oragenics filed form 10-K with financial results for the year ending December 31, 2020. As expected, the company did not report any revenue during 2020. Net loss for 2020 was $26.4 million, or $0.47 per share, compared to $15.6 million, or $0.37 per share, in 2019. R&D expenses in 2020 were $22.1 million compared to $12.1 million in 2019. The increase was primarily due to the acquisition of Noachis Terra, Inc. and increases in stock-based compensation and salaries partially offset by decreases in clinical costs associated with the clinical trial work for AG013. G&A expenses in 2020 were $4.5 million compared to $3.8 million in 2019. The increase was primarily due to increased non-employee stock-based compensation, employee stock-based compensation, insurance, and legal costs.

Oragenics exited 2020 with approximately $17.6 million in cash and cash equivalents. In February 2020, the company announced it had raised approximately $20 million from sales through its ATM facility along with approximately $1.9 million from the exercise of stock warrants. We estimate that the company has sufficient capital to fund operations through the second quarter of 2022. In addition, the company redeemed the Series C Preferred Stock on March 15, 2021 that will include accrued and unpaid dividends.

As of February 25, 2021, Oragenics had approximately 109.6 million shares outstanding and, when factoring in stock options and warrants, a fully diluted share count of approximately 135.8 million shares.

Valuation

We value Oragenics based on TerraCov2, OG716, the cash on hand, and potential cash from warrant exercises. For modeling purposes, we anticipate the Phase 1 trial of Terra CoV-2 initiating in early 2022 with approval in 2024. Pfizer, Moderna, Johnson and Johnson, AstraZeneca have all reported a high degree of efficacy for their COVID-19 vaccine candidates, however we never envisioned Terra CoV-2 competing with the first round of COVID vaccines. Rather, we envision Terra CoV-2 being utilized in a "post-pandemic" environment in which its potential characteristics (single dose, pre-filled syringes, storage at 4ºC) could prove advantageous over other vaccine candidates. We have adjusted our model based on the money raised through the ATM, warrant exercises, and the redemption of the Series C Preferred Stock, and our valuation currently stands at $2.00.

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