- Business and Employment
Oragenics (OGEN) Seeks Answer to Antibiotic Resistance
Oragenics: Small Company with Big Ideas
Oragenics is a small healthcare company focused on novel antibiotics and oral health products. The company is engaged in the search for new antibiotic compounds to combat the growing problem of antibiotic resistant infections.
The need for novel antibiotics is growing as more and more bacteria become resistant to known antibiotics. Antibiotic resistance has been called one of the world's most pressing public health problems. According to the Centers for Disease Control, there are at least 2 million antibiotic-resistant infections and 23,000 people die each year as a result.
Lantibiotics are a class of antibiotics showing great promise in fighting antibiotic resistant infections. Since the first lantibiotic was discovered in 1927, more than 60 different lantibiotics have been reported. Nisin is the only lantibiotic to be used commercially so far. It has been used in food preservatives for over 40 years in more than 80 countries without widespread occurrence of bacterial resistance.
Oragenics has 6 issued and 2 pending patents relating to lantibiotics. Scientists at Oragenics discovered the lantibiotic MU1140. MU1140 is active at low concentrations against most Gram-positive bacteria against which it has been tested. Infections caused by Gram-positive bacteria are responsible for a large proportion of serious infections worldwide.
DPOLT stands for Differentially Protected Orthogonal Lantionine. In layman’s terms, DPOLT is Oragenic’s patented method of using organic chemistry to make lantibiotics. According to the company, laboratory testing of lantibiotics has been hindered by the difficulty in obtaining sufficient amounts of the molecules, or in sufficient purity. DPOLT technology represents a cost-effective method of manufacturing lantibiotics in sufficient quantities to move testing forward. In the patent application for DPOLT, the company states, “This method can provide a steady stream of novel antibiotics for, e.g., therapeutic applications.”
The Intrexon Connection
Intexon makes the list as one of the hottest IPO’s of 2013. The company was founded by billionaire Randal J. Kirk who is one of the most successful biotech company developers in the United States. Kirk believes Intrexon is blazing a new path to more efficient drug development. He told Forbes magazine in August of this year, “I’ve been a biotech investor for 27 years, and Intrexon is by far the best thing I’ve ever seen.”
Intrexon’s business model is based on entering ECC’s, or Exclusive Channel Collaboration agreements with other companies in the biotech industry. The company’s revenue comes from nine of these ECC agreements. Intrexon has an ECC agreement with Oragenics to develop and commercialize lantibiotics – notably MU1140. Intrexon is betting on Oragenics and the collaboration has met with initial success. On October 31of this year, Oragenics announced that it had successfully engineered a genetically modified host to generate analogs of MU1140. Analogs are compounds that have similar structure and similar chemical properties.
The Road Ahead
I have focused on Oragenics’ role in developing molecules in the laboratory and ultimately products for the marketplace to combat antibiotic-resistant infections. There is an urgent need for new antibiotics and Oragenics is working to fill that need. However, real revenue from lantibiotics is still years away. In the meantime, Oragenics is generating revenue from its oral health products. Probiora3 is a proprietary blend of beneficial bacteria that fights tooth decay. Oragenics is competing with the likes of 3M and Colgate-Palmolive in this arena.
Sales from the company’s oral health care products declined from $1.4 million in 2011 to $1.3 million last year. Oragenics is working hard to increase distribution of Probiora3 products, but sales revenue increases are dependent on the success of marketing efforts. These efforts include clinical trials that could allow the company to expand the claims it can make about its oral care products.
Oragenics recently completed a public stock offering of 4.4 million shares at a price of $2.50 per share. Despite this recent sale, the company has not been significantly increasing the number of shares outstanding within recent years which is a good sign. Based on latest financial disclosure Oragenics Inc has 34.9 M of shares currently outstanding. This is 86% lower than that of the Healthcare sector and 87% lower than that of the Biotechnology industry.
Insider holdings are a good indicator of the confidence of company insiders in the prospects of the company. Insiders hold some 43% of Oragenics’ shares. Current cash is expected to last until mid-2014 supporting the Intrexon lantibiotics collaboration and growth of the oral probiotics products. The collaboration with Intrexon is a sign of significant potential for Oragenics. Randal Kirk’s record in biotech investments speaks for itself. What can we realistically expect from this company? They hope to achieve the first-ever synthetic route to commercial-scale production of a lantibiotic. That is a very tall order and an exciting prospect. Clinical trials are expected to begin in 2014. The enormous potential and tremendous need for lantibiotics make Oragenics a company worth watching and a story worth following.
On January 13, 2014 Oragenics (OGEN) stock price shot up 32.4% to $4.25 per share. Oragenics was the second leading gainer on its exchange that day. This unusual increase happened on a down day for Wall Street. The company issued a press release explaining their policy of not commenting on unusual market activity. I have since found no explanation or rumor that would explain the jump that day. As of this writing (Mar. 7, 2014) the price has settled back to $3.36 per share.
This is what the company recently had to say about the prospects for commercialization of its lantibiotic MU1140:
MU1149 will likely compete directly with antibiotic drugs such as vancomycin and newer drugs, including Cubicin (daptomycin) and Zyvox (linezolid). Given the growing resistance of target pathogens to even new antibiotics, we believe that there is ample room in the marketplace for additional antibiotics. Many of our competitors are taking approaches to drug development differing from our approach, including using traditional screening of natural products;
genomics to identify new targets, and combinatorial chemistry to generate new chemical structures. Competition in the pharmaceutical industry is based on drug safety, efficacy, ease of use, patient compliance, price, marketing, and distribution. Our lantibiotic development will depend on our success in developing MU1140 and/or analogs and to the point of commercialization or partnership and in the process securing and protecting our intellectual property.