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COVID-19 Vaccine Development Continues
Oragenics, Inc. (NYSE:OGEN) is developing TerraCoV2, a vaccine candidate against SARS-CoV-2 (the virus that causes COVID-19) that is licensed from the National Institute of Allergy and Infectious Diseases (NIAID). The vaccine candidate is targeted against the prefusion spike (S) protein found on the surface of SARS-CoV-2 (more details below). Since acquiring the rights to the vaccine candidate earlier in 2020, Oragenics has completed the creation of the antigen producing CHO cell line, with purification methods currently under development. In addition, we anticipate the company announcing a deal for an adjuvant to be used with the vaccine in the first quarter of 2021. We also anticipate the completion of various preclinical studies during the first quarter of 2021 that will include mouse immunogenicity studies and hamster challenge studies. Currently, we estimate that the company will file an IND for TerraCoV2 by the end of the second quarter of 2021, with a Phase 1 clinical trial initiating in the third quarter of 2021. The Phase 1 trial will likely take 8-10 weeks to perform and will examine a number of dosing parameters for the vaccine, including the potential for a single dose, which is in contrast to the two doses necessary for the leading vaccine candidates. A successful Phase 1 trial could potentially lead to a Phase 2/3 trial initiating by the end of 2021.
Background on TerraCoV2
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). The vaccine acquired by Oragenics utilizes a prefusion form of the S protein for 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).
Robust Antibody Response to SARS-CoV-2 S-2P
A preclinical study examined the immune response to various doses of the stabilized prefusion spike protein (SARS-CoV-2 S-2P) in different strains of mice (1) (Corbett et al., 2020). The following figure shows that immunization with S-2P elicits antibody titers that are similar to those incited by mRNA-1273, the lead SARS-CoV-2 vaccine candidate being developed by Moderna Inc. (MRNA). S-2P was immunized with Sigma Adjuvant System (SAS) as an adjuvant, which is an oil-in-water emulsion that is an alternative to Freund’s adjuvant. In addition, the similar levels of both IgG1 and IgG2a/c antibodies is indicative of a balanced Th1/Th2 response.
Immunization with S-2P also 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.
On November 10, 2020, Oragenics filed form 10-Q with financial results for the third quarter of 2020. As expected, the company did not report any revenues during the third quarter of 2020. R&D expenses were $3.5 million for the third quarter of 2020, compared to $3.1 million for the third quarter of 2019. The increase was primarily due to an increase in costs associated with the development of TerraCoV2. G&A expenses for the third quarter of 2020 were $1.0 million, compared to $0.9 million for the third quarter of 2019. The increase was primarily due to increased filing fees and registration costs, travel and entertainment costs, consulting fees, and stock-based compensation.
Oragenics exited the third quarter of 2020 with approximately $10.0 million in cash and cash equivalents. Subsequent to the end of the quarter, the company generated gross proceeds of $5.25 million from a public offering of 14.2 million shares at a price of $0.37 per share. We estimate that the company currently has approximately 75.2 million shares outstanding and, when factoring in stock options and warrants, a fully diluted share count of approximately 103.8 million.
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 TerraCoV2 initiating in mid-2021 with approval in 2023. Pfizer, Moderna, and AstraZeneca have all reported a high degree of efficacy for their COVID-19 vaccine candidates, however we never envisioned TerraCoV2 competing with the first round of COVID vaccines. Rather, we envision TerraCoV2 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. With no changes to our model, our valuation remains at $3.00.
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1. Kizzmekia Corbett, et al., “SARS-CoV-2 mRNA Vaccine Development Enabled by Prototype Pathogen Preparedness,” bioRxiv June 2020[doi: https://doi.org/10.1101/2020.06.11.145920]