ogen research report

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Gr iffin Securities, Inc., 17 State Stree t, New York, N Y , 10004 www.GriffinSecurities.com 1Please Review Disclosures on Page 29 of this Research Report

INITIATION REPORT

Biotechnology ,QGXVWU\November 27 , 2012

KEITH A.MARKEY,PH.D.,M.B.A.212-514-7914

[email protected]

O R A G E N I C S,IN C .( O T C B B :O G E N )IN T R E X O N C O L L A B O R A T I O N A DDS SI G N I F I C A N T V A L U E

x Oragenics & Intrexon are targeting the multi-billion dollar antibiotics market. The collaboration grantsOragenics exclusive access to ,QWUH[RQVDGYDQFHGLQGXVWULDO engineering platform for lantibiotics, a family ofmore than 50 naturally occurring antibiotics.

o 7KH OHDG GUXJ FDQGLGDWH LV 2UDJHQLFVVPXWDFLQ 08 which has a broad spectrum ofactivity against such virulent bacteria as multi-drug resistant Staphylococcus aureus (MRSA),Mycobacteriumtuberculosis, and Clostridiumdifficile.

o Intrexon , the leading synthetic biology company , will contribute advanced transgene and ce llularengineering expertise to enable lantibiotic production. Success with MU1140 will position thecollaborators to produce lantibiotics as active pharmaceutical ingredients for a wide range of antibiotic drugproducts.

x Recent $13 million fi nancing brings F idelity and Randal J. Kirk as in vestors. We expect current cash to lastuntil mid-2014 supporting the Intrexon lantibiotics collaboration and growth of the oral probiotics products.

x Probiotics sales are poised for substantial growth. Oragenics has proprietary products based on beneficialbacteria that protect against tooth decay and gum disease. Two clinical trials should soon show the Evora linefavorably alters the bacterial composition of the human mouth, leading to better health, improved breath, andwhiter teeth. Meanwhile, EvoraPets should increase its penetration of the $47 billion pet market.

We are initiating coverage with a BUY recommendation and $5.00 price target.

Oragenics, Inc. (OTCBB:OGEN) is a biotechnologycompany with commercial probiotic products forhumans and pets and an R&D pipeline focused onantibiotics through a collaboration with IntrexonCorporation. The four probiotic products contain thefirst comprehensive patented probiotic technology fororal care, ProBiora3

. These products are sold under

the Evora

brand with the support of Henry Schein,Patterson Dental, and Benco Dental for the

professional dental markets and under and the privatelabels of other distributors.

The R&D pipeline consists of proven lantibiotics thatare the subject of a recently announced, exclusivechannel collaboration with Intrexon. The twocompanies are developing new therapies for themulti-billion dollar antibiotics market to address thegrowing health crisis posed by drug-resistantbacteria.

Source: BigCharts.com

Share Price (11/26/2012) $1.80

52-Week Price Low / High $0.75-$3.20

Mkt. Capitalization (issued) $49.3 million

Shares Outstanding (issued) 27.38 million

12-month Target Price $5.00

Average Daily Volume (3 mos.) 14,225

Website www.oragenics.com

(VWG(DUQVLoss)/shr ($0.40)

(VWG3 (DUQV/RVVVKU ($0.20)


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GRIFFIN SECURITIES EQUITIES RESEARCH 3

Oragenics, Inc. November 27 , 2012

INVESTMENT THESIS

Oragenics has three business initiatives based on its ground-breaking research in oral microbiology. Eachhas considerable commercial potential and near-WHUPYDOXDWLRQGULYHUVWKDWPHULWLQYHVWRUVFRQVLGHUDWLRQ

x DEVELOPMENT OF NATURAL ANTIBIOTICS ADDRESSES A HIGH-PRIORITY MEDICAL NEED. Through its work

with oral bacteria, Oragenics has gained considerable experience with compounds used by bacteriato compete for resources needed to thrive. Among them is a family of more than 50 unusual peptidescalled lantibiotics that have a broad spectrum of activity against such infectious agents asStreptococcus pneumoniae, multi-drug resistant Staphyloccocus aureus (MRSA), Mycobacteriumtuberculosis, and Clostridium difficile. 7KH&RPSDQ\VOHDGFRPSRXQGPXWDFLQ08KDVdemonstrated an ability to kill the growing number of drug-resistant bacteria that exact a toll on untoldthousands of people worldwide each year. Yet, no lantibiotic has been produced in sufficient quantityor purity to complete clinical trials and be commercialized as a medicine to date. Intrexon provides thepotential means to achieve that end in a market that is primed to accept them where significantvaluations are being realized early in the development cycle.

o THE BASIS OF A LARGE-SCALE LANTIBIOTIC PRODUCTION SYSTEM SHOULD BE COMPLETED BY NEXTSPRING. Oragenics is collaborating with Intrexon, a specialist in synthetic biology, to create an

approach for producing commercial-scale quantities of MU1140. Success in that endeavor willpave the way for commencement of clinical testing of the antibiotic. It will also establish thepotential for a pipeline of new antibiotic drug candidates derived from the Intrexon technology. Webelieve the investment community and other drug companies will quickly take note of thisimportant milestone.

o CLINICAL TRIALS OF MU1140 WILL LIKELY COMMENCE IN 2014.Preclinical work on this antibiotic willprobably be completed fairly quickly once a source is established, since Oragenics already haspromising data from studies performed on small quantities obtained from bacteria. Submission ofthe IND, followed by results from the Phase 1 trial, will be important value-driving events for thelantibiotic program.

x ORAL PROBIOTICS SALES ARE POISED TO ACCELERATE. $Q LPSRUWDQWSDUWRI WKLV \HDUVZRUNKDVEHHQconducting two small clinical trials of the bacteria used in the Evora product line to demonstrate this

combination of bacteria, dubbed ProBiora3

, offers a new approach to better health. The trials areevaluating the impact of the probiotic on pathogens associated with dental caries and periodontaldisease, as well as its effect on breath odor and tooth whiteness. While the focus is on oral health,WKH EHQHILWPD\ EHH[WUDSRODWHGWRDSHUVRQVRYHUDOO KHDOWK VLQFHWKHPRXWK LVDQHQWU\ SRLQW IRUpathogens to the body. The initial data, which is expected in early 2013, should provide marketingsupport for the two OTC products, EvoraPlus for adults and EvoraKids, as well as EvoraPro, whichis sold by GHQWLVWVRIILFHV0HDQZKLOHWKH&RPSDQ\KDVEHHQZRUNLQJWRJDLQ more distributors of itsEvora products and to expand the use of ProBiora3 via more private-label products in the $27 billionworldwide market for probiotics.

x SUPPLY CONTRACTS SHOULD EXTEND THE USE OF ORAGENICSS PROBIOTICS IN THE PET-CARE MARKET.Thekeys to expanding the use of thH&RPSDQ\VRUDO SURELRWLF WHFKQRORJ\ LQ WKH SHW-care market areadditional distribution contracts and supply agreements with pet food manufacturers. Oragenics isalready working with several distributors worldwide to promote its probiotic formulation for improving a

SHWVEUHDWKRGRUDQGWRRWKZKLWHQHVV:HEHOLHYHWKHFRQWUDFWLQJZRUNWKDWLVXQGHUZD\ZLOOSD\RIIin the months ahead, leading to greater penetration of the $47 billion pet market.

ORAGENICS HAS THE WHEREWITHAL TO SUCCEED.Besides its expertise in microbiology, its leading positionLQWKHRUDOSURELRWLFVPDUNHWDQGLWVH[FOXVLYHDFFHVVWR,QWUH[RQVFXWWLQJ -edge technology for lantibiotics,the Company has ample cash to support operations through mid-2014. By that time, we believe theprobiotics business will begin generating excess cash, which should reduce, if not eliminate, the need forexternal financing. A Phase 2 trial of MU1140, which may commence in late 2014, should be relativelyinexpensive since the antibiotic probably will be developed as a rapid-acting therapy for acute, life-threatening infections of drug-resistant bacteria. We believe the time is right for savvy investors to takepositions in Oragenics (OTCBB: OGEN) and are therefore initiating coverage of with a BUY rating.


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MANAGEMENT TEAM

John Bonfilglio, Ph.D. Chief Executive Officer, President, and Director

x Recruited to transform Oragenics business in May 2011, with more than 30 years of experiencein the pharmaceutical industry

x Held the positions of President and CEO with Transdel Pharmaceuticals, Argos Therapeutics,The Immune Response Corporation, and Peregrine Pharmaceuticals. Also served in seniormanagement positions with Cypress Biosciences, Baxter Healthcare, and Allergan

Michael Sullivan, CPA Chief Financial Officer

x -RLQHG2UDJHQLFVPDQDJHPHQWLQ)HEUXDU\ZLWKH[WHQVLYHH[SHULHQFHLQILQDQFH

x Has held senior level financial positions with public and private companies including FirstAdvantage Corporation, Utek Corporation, eANGLER, and HSN Direct International

Martin Handfield, M.S., Ph.D. Vice President of Research & Development

x Promoted to his current position in December 2011 after serving DV2UDJHQLFVV'LUHFWRURI5'

since January 2009

x Held the title of Associate Professor at the University of Florida College of Dentistry, where he co-invented IVIAT and co-founded IviGene Corporation and Epicure Corporation

BOARD OF DIRECTORS

Frederick W. Telling, Ph.D. Chairman of the Board

x Joined the Oragenics Board as a Director in June 2010 and accepted the position of Chairman inFebruary 2011

x Held senior executive positions during his 30 years with Pfizer and presently serves as a directorfor Cell Therapeutics

John Bonfilglio, Ph.D. Chief Executive Officer, President, and Director

Alan W. Dunton, MD Director

x Has served on the Oragenics board since April 2011 and is also a member of the board ofdirectors of Targacept and principal owner of the biotechnology consulting firm Danerius, LLC

x Has extensive experience in the pharmaceutical industry in various executive positions withPanacos Pharmaceuticals, Metaphore Pharmaceuticals, Emisphere Technologies, Johnson &Johnson, Syntex Corporation, CIBA-GEIGY Corporation, and Hoffmann La Roche

Robert Koski Director

x

Joined the Oragenics board in June 2009 with more than 20 years of experience as a practicingattorney

x Serves as a partner in the Koski Family Limited Partnership, which beneficially owns a significantinterest in Oragenics, and as a director for the Koski Family Foundation


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Christine Koski Director

x Has served on the board since June 2009, including holding the office of Chairperson between June 2009and February 2011

x Serves as CEO of nMetrics, a director of Sun Hydraulics and Cheltec, and managing partner of the KoskiFamily Limited Partnership, which beneficially owns a significant interest in Oragenics

Charles L. Pope, CPA Director

x Joined Oragenics board in June 2010 with more than 30 years of experience in finance and accountingfields, having held the position of chief financial officer for Aerosonic, Reptron, SRI/Surgical Express, andInnovaro

x Is a director of Inuvo, Inc. and Innovaro, Inc.

ORAGENICS KEY INVESTORS

Complementing Oragenics management team and board are investors who participated in an equityfinancing that garnered $13 million in August. Among these investors are the highly regarded Fidelitybiotechnology investment funds (1.67 million shares) DQG RQH RI WKH ZRUOGV PRVW VXFFHVVIXO

biotechnology entrepreneurs, Randal J. Kirk (5.25 million shares), who is also the Chairman of IntrexonCorporation. 10U.LUNVDFFRPSOLVKPHQWVLQFOXGHFR-founding General Injectables & Vaccines (soldto Henry Shein in 1998) and King Pharmaceuticals (acquired by Pfizer in 2010), and foundingNew River Pharmaceuticals (sold to Shire in 2007) and Third Security LLC. He also served asChairman of Scios (sold to Johnson & Johnson in 2003) and Clinical Data (sold to Forest Labsin 2011).

The monies raised in August will support the work on lantibiotic production and accelerate revenuegrowth of the probiotic products in the human and animal markets. Oragenics expects the cash on handas of September 30th (see page 26 for the balance sheet), to finance operations through mid-2014. Bythat time, we estimate that the probiotics business will begin generating excess cash and milestonesrelated to MU1140 should have already been achieved through the Intrexon collaboration.

1 Oragenics Schedule 14A filed September 17, 2012.


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RECENT MILESTONES

-DQ Oragenics enlists a distributor for its four probiotic products in Poland

-DQ Probiotic products marketer signs deal to incorporate ProBiora3 into private-label products

for Denmark and Finland

)HE Patterson Dental agrees to distribute EvoraPro, EvoraPlus, and EvoraKids to dentists in

North America

$SU U.S. Patent & Trademark Office grants the first patent on ProBiora3

2FW Frost & Sullivan honors Oragenics with its 2011 North American Product Differentiation

Award for ProBiora3

)HE Phase 1 study of LPT3-04 shows that the weight-loss product is safe and well tolerated by

overweight and mildly obese adults, and it provides early evidence of efficacy

)HE Independent trial of EvoraKids yields excellent safety profile and a significant decrease in

bacterial species associated with dental caries over a 48-week treatment period

$SU Oragenics signs a distributor for its four probiotic products in Japan

-XQ Oragenics forms exclusive channel collaboration with Intrexon Corporation to develop a

production system for lantibiotics via synthetic biology

-XQ Distribution partnership is formed for the use of ProBiora3 in private-label probiotic products

for adults and kids in Mexico

-XQ EvoraPro is launched in 90-day supply

$XJ A 3-year distribution agreement is signed with Central Business USA for the distribution of

ProBiora3 products for humans and pets in South America

$XJ Balance sheet is strengthened via $13 million equity offering and conversion of $2.5 million

of debt to equity1RY An exclusive distribution agreement is signed with Pharmacos Exakta, a subsidiary of Opco

Health, for Probiora3 in private-label pet products

NEAR-TERM MILESTONES

4 Complete a trial of ProBiora3 to provide clinical evidence that EvoraPro and EvoraPlusimprove oral bacteria, teeth whitening, and breath odor

4 Initiate 1-year clinical study of EvoraKids in 2-year old children in Scandinavia

4 Sign international distribution agreement for ProBiora3

4 Complete a production system for lantibiotics via the Intrexon collaboration

+ Present data from the ProBiora3 clinical trial at a dental meeting

4 Partner with an experienced pharmaceutical company to support large-scale productionand development of MU1140

4 Complete expansion of the bacteria for producing MU1140

+ Submit documentation supporting the use of ProBiora3 as a food additive in Europe

2014 Initiate Phase 1 clinical study of MU1140


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THE RATIONALE BEHIND THE ORAGENICSINTREXON COLLABORATION

,QWUH[RQ &RUSRUDWLRQ LV D SULYDWHO\ KHOG FRPSDQ\ HVWDEOLVKHG E\ RQH RI WKH ZRUOGV PRVW successfulinvestors in biotechnology, Randal J. Kirk, to realize the full potential of synthetic biology. The companycombines platform technologies in biology, engineering, and informatics to facilitate the rational design

and programming of DNA, proteins, and cells to rapidly produce a desired function for human, industrial,DJULFXOWXUDORUYHWHULQDU\DSSOLFDWLRQV,QWUH[RQVDUHDVRIH[SHUWLVHLQFOXGHWKHIROORZLQJ

x UltraVector

Platform that utilizes a library of modular components to customize complextransgene assemblies

x Genomic engineering that offers complete control over gene expression

x 3URWHLQHQJLQHHULQJWKDWLPSURYHVXSRQDQDWLYHSURWHLQVIXQFWLRQDOLW\

x Cell identification and selection based upon a laser-enabled analysis and processinginstrumentation

x Cell system informatics that utilizes a proprietary software and database for mapping cellularpathways to facilitate the design of new gene targets or product pathways

Given the breadth of these best-in-class capabilities, it is not surprising that Oragenics entered into acollaboration with Intrexon last June. Through this agreement, Oragenics intends to develop andcommercialize lantibiotics, a family of potent, broad-spectrum antibiotics, as active pharmaceuticalingredients (APIs) for the treatment of infectious diseases in humans and companion animals. Intrexon isresponsible for technology discovery efforts, cell-engineering development, and certain aspects of themanufacturing process. Oragenics is responsible for conducting preclinical and clinical development ofcandidate lantibiotics, as well as for other aspects of manufacturing and the commercialization of theSURGXFWV 7KH ILUVW FRPSRXQG LQ GHYHORSPHQW LV 08 8VLQJ ,QWUH[RQV ELRLQGXVWULDO SURFHVVHVOragenics expects to produce enough API to advance development of this promising lantibiotic. Figure 1provides an overview of the solution Intrexon provides Oragenics for its lantibiotic franchise.

Figure 12UDJHQLFV6ROXWLRQIRU&RPPHUFLDO-Scale Lantibiotic Production

Challenge: Natural production of lantibiotics by bacteria yields amounts insufficient for commercial use, and Oragenics has notas yet been able to produce enough of these molecules via its methods to obtain a commercially viable supply.

Solution: The production of lantibiotics through cell engineering and proprietary technologies (combining biology, engineeringand informatics) provided by Intrexon.

Source: Griffin Securities & Oragenics


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We believe successful completion of this initial bioindustrial production method will constitute an importantvaluation inflection point for Oragenics, since it would be first time a pharmaceutical-grade lantibiotic willbe produced in commercial quantities. As discussed below, MU1140 has considerable commercialpotential. Early success here will also position the Company to quickly advance additional lantibioticcandidates and develop a potentially very valuable pipeline of antimicrobial medicines.

THE PROMISE OF NATURAL ANTIBIOTICS

Drug resistant microorganisms are a major and growing health threat that has been gaining greaterattention over the past decade. A part of the problem can be traced to inappropriate use of antibiotics(e.g., excessive prescribing or incomplete dosing) that favor the selection of drug-resistant strains.Another contributor has been a lack of interest in antibiotics, partly because chronic diseases for whichthere have been few options have become treatable via the latest technologies. (See Figure 2.2,3)

The World Health Organization considers antimicrobial resistance to be one of the three greatest threatsto human health, and reports from the Infectious Diseases Society of America and European Center forDisease Prevention & Control indicate that there are too few antibiotic candidates under development totreat the infectious agents posing the greatest threat (i.e., Enterococcus faecium, Staphylococcus aureus,Klebsiella pneumonia, Acinetobacter baumannii, Pseudomonas aeruginosa, and Enterobacterspecies).

The Infectious Diseases Society of America has launched a collaboration with other healthcareorganizations to promote the development of 10 new antibiotics by 2020.

The U.S. federal government also has a large number of initiatives under way with the aim of improvingsurveillance, preventing infection, expanding our understanding of the threat through research, andfacilitating new drug development.4 The last of these goals was recently addressed in the FDA Safety andInnovation Act via a provision for the Generating Antibiotic Incentives Now (GAIN) program. As set forthby this legislation, the FDA is to give any antibiotics meeting certain criteria a six-month priority review,fast-track approval, and an additional five years of exclusivity. These measures, plus better guidance onthe drug development process, should reduce antibiotic drug development time and provide the potentialfor an extra financial reward.

Oragenics is well positioned to benefit from the growing interest in new antibiotics. It has many years ofexperience working with bacteria-derived compounds called lantibiotics. These small peptides, whichhave a broad spectrum of activity, probably evolved as bacteria competed for food and hospitableenvironments. The first lantibiotic discovered was nisin in 1927, which paved the way for the identification

2 Flamm, RK, The challenge of antimicrobial resistance in human health. Presented at the 2011 Antibiotic Use in Food AnimalsConference, October 2012.3 IDSA. Combating antimicrobial resistance: Policy recommendations to save lives. Clin Infect Dis 2011; 52 (suppl 5): S397.4A Public Health Action Plan to Combat Antimicrobial Resistance, 2011. Accessed atwww.cdc.gov/drugresistance/annualReports.html

Figure 2. Left panel: Incidence rates of MRSA bacteremia reported by U.S. medical centers to the SENTRY Program providean example of the upward trend in drug-resistant infections. Right panel: FDA approvals of antibiotics over the past threedecades declined, resulting in few new drugs available to combat bacterial infections.

Source: Flamm, RK.2

and IDSA3
http://www.cdc.gov/drugresistance/annualReports.htmlhttp://www.cdc.gov/drugresistance/annualReports.htmlhttp://www.cdc.gov/drugresistance/annualReports.htmlhttp://www.cdc.gov/drugresistance/annualReports.html


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of more than 50 related compounds. Attempts to commercialize these natural antibiotics have beenlargely unsuccessful, with nisin being the one exception, but that is only because it is used in minutequantities as a food preservative. The single greatest challenge to developing lantibiotics for medicalpurposes has been their production they are so potent that they kill the bacteria producing them atconcentrations below the levels needed for large-scale manufacturing. Accordingly, lantibiotics remain a

potentially huge, untapped treasure trove in the field of pharmaceutics. Oragenics recent exclusivecollaboration with Intrexon was designed specifically to address this manufacturing challenge. We expectOragenics to leverage IQWUH[RQV DGYDQFHG V\QWKHWLF ELRORJ\ SODWIRUP WHFKQRORJLHV WR XQORFN WKLVenormous opportunity.

LANTIBIOTICSANEW APPROACH TO FIGHTING INFECTIONS

Lantibiotics are a group of compounds within a broader group of toxins called bacteriocins that are usedby a bacterium against other microorganisms. Lantibiotics, which number more than 50, have beencategorized into subgroups based on differences in their structures and biological activities, but onecommon feature is the unique amino acids called lanthionine (Ala-S-Ala circled in yellow in the A ring)and methyl-lanthionine (Abu-S-Ala circled in orange in the B ring). Depicted in Figure 3 are the structuresof the predominant forms of nisin and mutacin 1140 (MU1140), which was discovered by Oragenics,along ZLWK WKH WR[LQV QRYHO DPLQR DFLGV

5 The diagrams also identify the common portion of these

molecules that is used to bind a bacterial cell wall component called Lipid II.

Figure 3. Structures of MU1140 and Nisin A6

The lanthionines are not the only unusual amino acids in these molecules. Other structures includedehydrated amino acids, designated by Dha (a derivative of alanine, circled in green) and Dhb (aderivative of threonine, circled in blue). Investors need not understand these structures, but it is importantto comprehend their effect on lantibiotic commercialization. Bacteria utilize highly specific enzymes tocreate lantibiotics through post-translational modification (i.e., after the protein is assembled).

7It is

because of these unique structures that attempts to produce them through alternative means (e.g.,

synthetically and in yeast) have met with limited success.

Fortunately, lantibiotics are derived from bacterial genes which means the emerging field of geneticengineering offers a new approach to commercial production. Research has already determined that nisinexists in two forms naturally, and genetically modified variants have been created with differences in their

5 Smith, L, et al. Covalent structure of mutacin 1140 and a novel method for the rapid identification of lantibiotics. Eur J Biochem2000; 267(23): 6810.6 Smith, L and Hillman, JD. Therapeutic potential of type A(I) lantibiotics, a group of cationic peptide antibiotics. Curr Opin Microbiol2008; 11(5): 401.7 Nagao, J, et al. Lantibiotics: Insights and foresight for new paradigm. J Biosci Bioeng 2006; 102(3): 139.


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Table 1. MU1140 Minimum Inhibitory Concentrations for Various Bacteria16

Microorganism

(# of isolates tested)

MICJP/

Microorganism

(# of isolates tested)

MICJP/

Enterococcus faecalis(3) 16-32 Streptococcus agalactiae(2) 4

E. faecalisATCC 29212(1) 32 Streptococcus intermedius(1) 2Enterococcus faecium(4) 8-32 Streptococcus mitis(1) 4

Staphylococcus aureus(4) 16 Streptococcus pneumoniae(3) 1

S. aureusATCC 29213 (1) 16 S. pneumoniaeATCC 49619 (1) 4

Staphylococcus epidermidis(4) 16 Streptococcus pyogenes(2) 0.5

Staphyloccocus saprophyticus(2) 4-16 Clostridium difficile(2) 1

Oragenics has also investigated the pharmacokinetics of MU1140 and the results were used in asimulation analysis to predict the optimal method of administering the drug.17 As shown in Figure 4,plasma levels of MU1140 were measured at various times after a single, intravenous bolusadministration. The GUXJVKDOI-life was determined to be in the range of 1.5 1.7 hours.

2WKHU UHVHDUFK DVVHVVHG WKH GUXJV DELOLW\ WR NLOO Staphylococcus aureus in vivo. The results of thispharmacodynamic analysis indicated that MU1140 administration caused a rapid, significant drop inbacterial counts within 2 hours, regardless of the dose used. (Four doses were tested to achieve plasmaOHYHOVRIDQGJP/7KHKDOI-maximal concentration for this bacterium ZDVJP/Further analysis of this data and the pharmacokinetic profile found that there was a strong correlationEHWZHHQ WKH WLPH WKH GUXJV SODVPD FRQFHQWUDWLon was above the minimum inhibitory concentration(T>MIC) forS. aureusand bacterial cell counts 24 hours later. (See Figure 5.) This suggests that T>MICover a 24 hour period is a predictive index for therapeutic success.

17 Ghobrial, O, et al. Pharmacokinetic and pharmacodynamic evaluation of the lantibiotic MU1140. J Pharm Sci 2010; 99(5): 2521.

Figure 4. Pharmacokinetic profiles of MU1140 inthe plasma of rats after a single, 12.5 (circles) or25 (squares) mg/kg, IV bolus dose.

Source: Ghorbrial, O, et al.17


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The preclinical research concluded that the best route of administration of MU1140 is slow infusion, sincethat will increase the T>MIC and maximize the therapeutic effect. A slow infusion will also minimize ahypersensitivity reaction seen with the drug in the first 5 minutes after bolus dosing. (No other adverseeffects were observed.) Alternatively, pretreatment with the antihistamine diphenhydramine (20 mg/kg)can be used to block most of the symptoms associated with bolus dosing. Further experiments with

MU1140 await a method for producing the lantibiotic in quantity.

THE LARGE COMMERCIAL POTENTIAL OF LANTIBIOTICS

The growing threat posed by infectious agents gained the attention of the U.S. public at the turn of thecentury with reports of community-acquired methicillin-resistant Staphylococcus aureus (MRSA)infections by athletes and prisoners. Until then, the focus was on hospital-acquired infections. But timeshave changed and with them have come concerns over other resistant microbes around the world.Indeed, a mathematical model predicts that community-acquired MRSA will displace hospital-acquiredstrains as the predominant source of infections, given the larger reservoir of bacteria outside ofhealthcare facilities.18 This appears to be taking place already in select locations. New resistant strainsDUH OLNHO\ DV 056$ UHSUHVHQWV D FRQWLQXRXVO\ HPHUJHQW SKHQRPHQRQ GULYHQ E\ PXOWL-factorialLQWHUDFWLRQVEHWZHHQWKHFODVVLFWULDGRIKRVWSDWKRJHQDQGHQYLURQPHQW

19 There is no reason to thinkthat this statement applies solely to MRSA, however, given the presence of other drug-resistant

microorganisms, such as vancomycin-resistant Enterococcus. (Note that vancomycin is considered adrug of last resort, since it has traditionally been reserved for only the most serious infections.)

The impact of drug resistant infections can be measured in lives lost and in excess healthcare costs.Studies have found that patients with drug-resistant infections experience prolonged illnesses that resultin extended hospital stays, higher healthcare costs, and increased mortality. For instance, a meta-analysis found that patients with vancomycin-resistant enterococci infections spent 10 46 more days inthe hospital than did similar patients with no infection or with vancomycin-sensitive infections. This wasassociated with excess healthcare costs (range: $27,190 - $86,290, depending on whether the patientwas treated in the intensive care unit) and a higher average mortality rate (45.2% versus 19.0%). 20Alternative therapies for vancomycin-resistant enterococci infections are available, but they are not welltolerated, as indicated in Table 2.21 But use of inappropriate antibiotics also comes at a price that has

18'$JDWD(0&HWDO0RGHOLQJWKHLQYDVLRQRIFRPPXQLW\-acquired methicillin-resistant Staphylococcus aureusinto hospitals. ClinInfect Dis 2009; 48(3): 274.19 Mediavilla, JR, et al. Global epidemiology of community-acquired methicillin resistant Staphylococcus aureus. Curr Opin Microbiol,preprint dated October 5, 2012.20 Salgado, CD and Farr, BM. Outcomes associated with vancomycin-resistant enterococci: A meta-analysis. Infect Control HospEpidemiol 2003; 24(9): 690.21 Rivera, AM and Boucher, HW. Current concepts in antimicrobial therapy against select Gram-positive organisms: Methicillin-resistant Staphylococcus aureus, penicillin-resistant pneumonococci, and vancomycin-resistant enterococci. Mayo Clin Proc 2011;86(12): 1230.

Figure 5. The relationship between MU1140T>MIC and predicted viable S. aureuscounts,based on the pharmacokinetic and pharmaco-

dynamic data.

Source: Ghobrial, O, et al.17


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been measured as a significant increase in mortality.22 Overall, antibiotic-resistant infections result in 8million excess hospital days and $21 billion to $34 billion in additional healthcare costs in the UnitedStates annually.3

Table 2. Drugs for Infections Caused by Gram-Positive Bacteria20

In 2009, sales of antibiotics amounted to approximately $42 billion, which represented 5% of thepharmaceutical market.23 Sales trends in other sectors have been either declining or growing much moreslowly over the past few years, and these trends are not expected to change much during this decadepartly because 152 drugs will lose patent protection between 2012 and 2020. 24 This should not be an

issue in the antibiotics sector, though, since the rising prevalence of multi-drug resistant bacteria areUHQGHULQJPDQ\RIWRGD\VPHGLFLQHVLQHIIHFWLYH

New antibiotics should enter a market that is primed to accept them. We believe this is an important factorEHKLQGWKHVXFFHVVRI&XELVWVGDSWRP\FLQZKLFKZDVODXQFKHGLQDQGLVH[SHFWHGWRDFKLHYHVDOHVapproaching $850 million in the United States this year, despite the toxicities listed in Table 2 and apremium price to vancomycin (average wholesale price: $2,800 versus $1,500) 25. Furthermore, Rib-X andSanofi signed a research collaboration agreement potentially worth more than $772 million (more than$186 million per drug candidate) on July 6, 2011 for Rib-;V5;-04 program, which consists of a class ofantibiotics in preclinical development that target the bacterial protein synthetic machinery. This isimportant because the market is so in need of new antibiotics that sizeable valuations are being procuredearly in the development cycle. Based on this kind of valuation metric, MU1140 could have a totalvaluation of more than $186 million by 2014 (the estimated time required for Intrexon to set up thebioindustrial process and for preclinical research to be completed). Additionally, each subsequent

lantibiotic candidate (more than 50 are known) could also be valued more than $186 million per candidatefollowing manufacturing validation (3 to 6 months) and preclinical testing (12 24 months). This bodeswell for early partnering opportunities and sizable deal valuation metrics.

22 Tabah, A, et al. Characteristics and determinants of outcome of hospital-acquired bloodstream infections in intensive care units:the EUROBACT International Cohort Study. Intensive Care Med, preprint September 26, 2012.23 Hamad, B. The antibiotics market. Nat Rev Drug Discov 2010; 9(9): 675.24 Long, D. The US pharmaceutical market: Trends, issues, & outlook. Presented at the National Conference of PharmaceuticalOrganizations annual meeting, January 7, 2011.25 McCallister, E. Antibiotics economics. BioCentury on BioBusiness, published August 1, 2011.


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PROBIOTICS FOR ORAL HEALTH

The pioneering work of Dr. Jeffery Hillman, a founder of Oragenics, laid the foundation for probiotics inoral health over a period spanning more than three decades. (Dr. Hillman retired from his position asChief Scientific Officer with Oragenics in late 2011 and passed the baton to one of his protgs, Dr.

Martin Handfield.)

THE CHALLENGE POSED BY ORAL PATHOGENS

The human mouth is the home to a vast diversity of bacteria (as many as 25,000 phylotypes), althoughthe average adult person harbors about 265 different species.26,27,28 This population of microbes differsbetween individuals and changes over time in a single individual. Such factors as D SHUVRQVgeneticmake-up, age, oral health, general health status, diet, and smoking status contribute to the diversity. 29,30,31Even within a single mouth, there are marked differences in local populations.32 That is attributable to thedistinctions between the environments provided by the soft cheek tissue, hard enamel surface of a tooth,and anaerobic conditions at the juncture of the tooth and gum.

While there is considerable variation between oral bacteria populations, there is also a group of about 11genera that are common in adults; these are Streptococcus, Neisseria, Corynebacterium, Rothia,

Actinomyces, Haemophilus, Prevotella, Fusobacterium, Granulicatella, Capnocytophaga, andVeillonella.26,28 Among these bacteria are some that are harmful, notably S. mutans, which is the principal

pathogen causing dental caries, and others that are beneficial, including S.gordonii. The most prevalentgenus is Streptococcus, which accounts for about 20% of the oral bacteria. These microbes do not existas individuals, and often form a biofilm that is resistant to antimicrobial agents and to invasion by otherbacteria. In the competition for a hospitable environment, bacteria release a variety of chemicals to gainan advantage, including hydrogen peroxide, acids, and small peptides with antibiotic properties.

Despite the competition, biofilm formation reflects a series of cooperative events.33 For instance, dentalplaque is formed via interactions that lead to a three-dimensional structure with distinctmicroenvironments for various bacteria. Briefly, an important early event in plaque formation is theadhesion of bacterial enzymes to the tooth surface, along with various saliva-derived proteins that mayserve as binding sites for some microorganisms.34 That is followed by the creation of an insoluble, glucanmatrix (sugar-derived polymer) on the surface of the tooth, in part by enzymes secreted by S. mutans.That matrix lays down a three-dimensional structure, which permits acidic micro-environments favoringbacterial adherence and growth.35 These acidic microenvironments also lead to dental caries viademineralization of the tooth enamel and dentin. A variety of adhesion molecules on the surfaces ofbacteria enable them to bind to the tooth and the extracellular matrix.36 Adhesins and extracellular matrixalso play a role in more advanced stages of plaque formation by enabling inter-bacterial binding. It is thisprocess, dubbed positive cooperativity, that figures importantly in the multi-layered structure of a dentalplaque, shown in Figure 6.

26 Keijser, BJF, et al. Pyrosequencing analysis of the oral microflora of healthy adults. J Dent Res 2008; 87(11): 1016.27=DXUD(HWDO'HILQLQJWKHKHDOWK\FRUHPLFURELRPHRIRUDOPLFURELDOFRPPXQLWLHV%0&0LFURELRl 2009; 9: 259.28 Bik, EM, et al. Bacterial diversity in the oral cavity of ten healthy individuals. ISME J 2010; 4(8): 962.29 Crielaard,W, et al. Exploring the oral microbiota of children at various developmental stages of their dentition in the relation to their

oral health. BMC Med Genomics 2011; 4: 22.30 Hsiao, WW, et al. Microbial transformation from normal oral microbiota to acute endodontic infections. BMC Genomics 2012; 13:345.31 Dang, AT, et al. Evidence of an increased pathogenic footprint in the lingual microbiome of untreated HIV infected patients. BMCMicrobiol 2012; 12: 153.32 Aas, JA, et al. Defining the normal bacterial flora of the oral cavity. J Clin Microbiol 2005; 43(11): 5721.33 Rosan, B and Lamont, RJ. Dental plaque formation. Microb Infect 2000; 2: 1599.34 Bowen, WH and Koo, H. Biology of Streptococcus mutans-derived glucosyltransferases: Role in extracellular matrix formation ofcariogenic biofilms. Caries Res 2011; 45; 69.35 Xiao, J, et al. The exopolysaccharide matrix modulates the interaction between 3D architecture and virulence of a mixed-speciesoral biofilm. PLoS Pathog 2012; 8(4): e1002623.36 Nobbs, AH, et al. Stick to your gums: Mechanisms of oral microbial adherence. J Dent Res 2011; 90(11): 1271.


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Based upon the structure of dental plaque and the steps involved in its formation, there are severalpossible approaches to interceding to improve oral health, including dietary changes that reduce sugar(especially sucrose) consumption, mouthwashes with antimicrobial properties, and clinical intervention.An alternative type of intervention is available through probiotics. These non-pathogenic, livingmicroorganisms confer a health benefit and prevent or improve some diseases when administered inadequate amounts. There are a variety of means by which probiotics may affect oral health at the toothsurface and at the tooth-gum interface.

37These are summarized in Figure 7.

Figure 7. Possible Mechanisms of Probiotic Action for Oral Health37

THE PROBIOTICS MARKET AND THE NEW REGULATORY ENVIRONMENT

Probiotics are defined as non-pathogenic microorganisms, mostly of human origin, that confer a healthbenefit and prevent or improve some diseases when administered in adequate amounts.38 These live

37 Haukioja, A. Probiotics and oral health. Eur J Dent 2010; 4: 348.38 FAO-WHO, 2001. Health and nutritional properties of probiotics in food including powder milk with live lactic acid bacteria. Foodand Agriculture Organization of the United Nations and World Health Organization, Cordoba, Argentina.

A

Figure 6. Panel A shows diagrammatically how the interaction between bacteria results in the multiplelayers of dental plaque. Early colonizers (green spheres), including S. mutans, bind to a tooth and expressadhesion sites to which another bacterium, such as Fusobacterium nucleatum(orange ellipse) binds. Thatmicrobe then serves as a substrate to which late colonizers, such as Aggregatibacteractinomycetemcomitans[purple] orTropenema denticola [blue], bind. Panel B is a picture of subgingivalbiofilms created with a fluorescent in situ hybridization (FISH) probe for F. nucleatum (orange) betweenearly- and late-colonizers (green).

Source: Nobbs, AH, et al.36


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organisms may be regulated as either a cosmetic, dietary supplement or drug, based on the nature of theclaims made, the intended use, and the country where they are distributed. A probiotic is regulated as adrug if it is intended for the GLDJQRVLVFXUHPLWLJDWLRQWUHDWPHQWRUSUHYHQWLRQRIGLVHDVHLQPDQor ifthe probiotic is administered via any route other than orally.39 The most common uses of probiotics are asdietary supplements to aid in gastrointestinal performance of patients cancer or an inflammatory bowel

disease.

40,41,42

The most common probiotics are lactobacilli and bifidobacteria that are included in variousbrands of yogurt and other fermented milk products. This market is huge, accounting for an estimated $27billion in sales this year and growing at a compound annual growth rate of 6.4% through 2015, one of thefastest expanding food segments.43 But then, general interest in probiotics has also been rising quicklyover the past decade, as evidenced by the upturn in scientific publications on the field (see Figure 8).

Figure 8. Scientific publications on probiotics by year44

The success of probiotics to date has spawned unsubstantiated claims in some cases, and that haselicited the customary response from major regulatory agencies the FDA and its European counterparthave begun to impose more exacting requirements on probiotics. Moreover, the U.S. Federal TradeCommission has leant its support in demanding that some of the industry VODUJHVWSDUWLFLSDQWVLQFOXGLQJDannon and Nestle, remove certain claims from their product labels.45,46 Companies are now required toprovide evidence that functional foods are safe and scientifically address the health issue(s) advertised.

To meet these edicts, a company must identify the food and the specific probiotic(s), since each bacterialstrain is considered unique. More important, the proposed health relationship must be assessed throughrelevant studies, including a human intervention study and preclinical tests that provide an insight into theSURELRWLFVPHFKDQLVPRIDFWLRQ

39 FAO-WHO, 2002. Guidelines for the evaluation of probiotics in food. Food and Agriculture Organization of the United Nations andWorld Health Organization, London Ontario, Canada.40 Wada, M, et al. Effects of the enteral administration ofBifidobacterium breveon patients undergoing chemotherapy for pediatric

malignancies. Support Care Cancer 2010; 18(6): 751.41 Prisciandaro, LD, et al. Evidence supporting the use of probiotics for the prevention and treatment of chemotherapy-inducedintestinal mucositis. Crit Rev Food Sci Nutr 2011; 51(3): 239.42 Bassaganya-Riera, J, et al. Probiotic bacteria produce conjugated linoleic acid locally in the gut that targets macrophage PPAR to suppress colitis. PLoS ONE 2012; 7(2): e31238.43 Steele, P. Consumer insights from the industry perspective. Presented at the Institute of Medicine Food Forum Workshop,February 22-23, 2012.44 AHRQ Publication No. 11-E0007, April 2007.45 FTC press release: Dannon Agrees to drop exaggerated health claims for Activia Yogurt and DanActive Dairy Drink, December15, 2010.46 FTC press release: Nestle subsidiary to settle FTC false advertising charges; will drop deceptive health claims for Boost KidEssentials, July 14, 2010.


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PROBIORA3APROPRIETARY COMBINATION OF PROBIOTICS

Pioneering work by Dr. Jeffrey Hillman and Oragenics led to the development of the first probiotic fordental caries and periodontal disease. Three non-infective bacteria were chosen for this purpose,specifically proprietary strains ofStreptococcus rattus, S. uberis, and S. oralis.

x A spontaneous mutant of Streptococcus rattus was isolated from a human subject andinvestigated for its ability to produce lactic acid, which is the active agent used by S. mutansto erode enamel in the tooth. The mutant strain, called JH145, was found to lack theenzyme lactate dehydrogenase (LDH) because of a point mutation and premature stop codonin the LDH gene and, hence, it produces less than 3% as much lactic acid as the normal wild-type strain.47 Accordingly, JH145 lacked the ability to produce dental caries in vitro and invivo, even though it adhered to teeth as well as the normal strain and S. mutans.

48 The LDHdeficient bacteria still competed effectively against S. mutans when administered as aprobiotic in a preclinical study. (See Figure 9.)

Based on the mechanisms of intervention shown in Figure 7, JH145 interferes at two stepsagainst S. mutans, at the point of adhesion to the tooth and by competing for nutrients.

x Oragenics evaluated other strains of bacteria to protect against periodontal disease. These

bacteria are also within the genus Streptococcus. The strains isolated by the Company are S.uberisKJ2 and S. oralis(previously known as S. sanguinistype II) KJ3. Both are foundin abundance in healthy periodontal sites, but rarely in diseased sites.49 This findingsuggested that the strains may inhibit the growth of periodontal pathogens. Indeed, KJ2 andKJ3 produce hydrogen peroxide, a reactive oxygen species that inhibits the bacteriumAggregatibacter actinomycetemcomitans, an important participant in the etiology ofaggressive periodontitis.50 Local production of hydrogen peroxide by these bacteria probablycomplements the release of the chemical by human oral tissue. 51 Indeed, successfultreatment of active periodontal lesions is correlated with recolonization of the site with S.oralis.

52Turning back to Figure 7, we see that KJ2 and KJ3 may act at all three primary levels

in combating periodontal disease, by competing for suitable microenvironments, competingIRUQXWULHQWVDQGFRPSOHPHQWLQJWKHKXPDQERG\VGHIHQVLYHPHDVXUHV

47 Hillman, JD, et al. A spontaneous lactate dehydrogenase deficient mutant ofStreptococcus rattus for use as a probiotic in theprevention of dental caries. J Appl Microbiol 2009; 107(5): 1551.48 Johnson, CP, et al. Cariogenic potential in vitroin man and in vivoin the rate of lactate dehydrogenase mutants ofStreptococcusmutans. Arch Oral Biol 1980; 25(11-12): 707.49 Hillman, JD and Socransky, SS. Bacterial interference in the oral ecology of Actinobacillus actinomycetemcomitans and itsrelationship to human periodontosis. Arch Oral Biol 1982; 27(1): 75.50 Hillman, JD and Shivers, M. Interaction between wild-type, mutant and revertant forms of the bacterium Streptococcus sanguinisand the bacterium Actinobacillus actinomycetemcomitansin vitro and in the gnotobiotic rat. Arch Oral Biol 1988; 33(6): 395.51 Zhu, L and Kreth, J. The role of hydrogen peroxide in environmental adaptation of oral microbial communities. Oxid Med CellLongev 2012; Article #717843.52 Haffajee, AD, et al. Clinical, microbiological and immunological features associated with the treatment of active periodontosislesions. J Clin Periodontol 1984; 11(9): 600.

Figure 9. Effect of oral dosing with JH145 on theproportions of the S. mutansstrain NG8 in plaque/saliva samples at different times after initiation ofprobiotic treatment. NG8 bacteria were given to

rats at a daily dose of 109

colony-forming units orcfu for three days and then allowed four weeks toestablish stable colonies. Weekly assessmentsfound that JH145 therapy (109 cfu per day for fivedays per week) significantly lowered the numbersof NG8 bacteria as a proportion of total bacteriapresent within 6-8 weeks and maintained thatrelative proportion for 26 weeks.

Source: Hillman, JD et al.47


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7KH&RPSDQ\VProBiora3 is the active ingredient in its four products sold under the Evora brand name,as well as probiotics commercialized under private labels by licensees. Formulations vary according totheir application.

EVORA PRODUCTSWELL POSITIONED IN THE MARKET

Oragenics sells its probiotics under the Evora label, as shown below:

The differences between these products are related to the numbers of bacteria. For instance, EvoraPro,ZKLFKLVVROGGLUHFWO\WKURXJKGHQWLVWVRIILFHV, has >125 million cfu of Probiora3 per tablet, while the tworetail products, the adult-strength probiotic EvoraPlus and EvoraKids, contain >100 cfu of ProBiora3 pertablet. These products are available through such online retailers as CVS Pharmacy, Amazon,

Walgreens, Target, DrugStore.com, ProbioticSmart.com, ForeverActive.com, Swanson Health Products,and ProHealth. They are also sold through international distributors: Australian PharmaceuticalsIndustries (Australia, New Zealand), Benelux Cosmetics (Belgium, Netherlands, Luxembourg), andVetcom (Korea). Competition currently comes from two sources, New Zealand-based Dr. Harold KatzLLC sells a probiotic formulation under its TheraBreath label and BioGaia, which is based in Sweden,has two versions of an oral health probiotic on the market, GUM ProDentis Daily Balance Lozengesand GUM Periobalance chewing gum. One or both products are sold in North America, parts of Europe,and Japan along with health-related offerings that do not include probiotics.

(YRUD3HWV LV DOVR VROG DV 7HGG\V 3ULGH Oral Care through retail distribution channels, including

Amazon. Its nearest competitor is SCD Probiotics Breath Spray, which is aGPLQLVWHUHGLQWRWKHDQLPDOVmouth directly or sprayed onto food. SCD, which is based in the United States, has a broad range ofproducts largely for the farming community. Other companies sell products that address companion

DQLPDOVEUHDWKEXWWKHVHdo not appear to contain probiotics.

Oragenics EvoraPlus and EvoraPet are compared to probiotic products from the aforementionedcompanies in Table 3. EvoraPlus was selected for this purpose since the competitors do not offerYHUVLRQVVSHFLILFDOO\ IRU WKHSURIHVVLRQDORU FKLOGUHQVPDUNHWV In addition, the comparisons have beenmade between products of a similar formulation; that is, lozenges were chosen over alternative products,notably chewing gum, for this purpose.

Adults - Consumer

Whitens without causing tooth

or gum sensitivity

Freshens breath

Supports gum and tooth

health

Adults - Professional

Exclusively sold to dentalprofessionals

Supercharged version of

EvoraPlus higher dosage

Whitens without causing tooth or

gum sensitivity

Freshens breath

Supports gum and tooth health

Pets

Freshens breath, cleans and

whitens teeth

Tasteless, odorless powder

Children

Natural Wild Very Cherry Berryflavor that kids love

Supports gum and tooth health

Freshens breath, cleans and

whitens teeth


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Table 3. Comparison of Probiotics for Oral Care

** Probiotics shown for the SCD Probiotics Breath Spray are approximations based on the two primary types ofbacteria and \HDVWLQWKHFRPSDQ\VOLYHVWRFNSURGXFWV Prices are for a monthly supply and were obtainedfromwww.drugstore.comfor human products and from Amazon for the pet products.

As shown in the table, the four companies use different beneficial microbes in their products. We believeeach of the comparators has drawbacks. For instance, S. salivarius K12 and M18 in the TheraBreathprobiotics produce natural antibiotics, but no scientific data has been published on the oral benefit(s) ofthe combination.53,54 Alone, the K12 strain has failed to significantly alter the oral microbiota. 55 This maybe because this bacterium seeks its natural habitat, the pharynx, and is short-lived in the mouth. 56 TheM18 strain grows primarily on the tongue, rather than on dental plaque or in the subgingival space, whichraises concerns over its ability to aid oral hygiene.57 Nonetheless, this is the most expensive oralprobiotic, at $21.99 for a 7-day course that is expected to be repeated once per month. (It should be

noted that the retail product provides 10%-15% of the M18 dosage used to demonstrate clinical efficacyin the initial patent, and users have to rinse with chlorhexidine, an antibacterial agent that lowers the totalbacterial load, prior to initiation of probiotic intervention.)

The microbe L. reuterithat isincorporated in Bio*DLDVtwo probiotic products has been reported to havea favorable effect on oral health.58 However, it is a normal inhabitant of the gastrointestinal flora, andrecent clinical studies by independent labs found less than VDWLVIDFWRU\UHVXOWV%LR*DLDV bacteria had noeffect on S. mutans regrowth in chlorhexidine-treated mouths, had no clinical benefit over an 8-weekperiod despite reducing subgingival bacteria, and was quickly eliminated from the human mouth afteradministration.59,60,61 The monthly price for this product is listed at $19.99 based on the recommendeddaily dose of one lozenge per day.

53 Hyink, O, et al. Salifvaricin A2 and the novel lantibiotic salivaricin B are encoded at adjacent loci on a 190-kilobase transmissible

megaplasmid in the oral probiotic strain Streptococcus salivariusK12. Appl Environ Microbiol 2007; 73(4): 1107.54Heng, NCK, et al. Genome sequence of the bacteriocin-producing oral probiotic Streptococcus salivarius strain M18 2011;193(22): 6402.55 Burton, JP, et al. Safety assessment of the oral cavity probiotic Streptococcus salivariusK12. Appl Environ Microbiol 2006; 72(4):3050.56 Horz, HP, et al. Distribution and persistence of probiotic Streptococcus salivariusK12 in the human oral cavity as determined byreal-time quantitative polymerase chain reaction. Oral Microbiol Immunol, 22(2), 126 (2007)57 European patent # EP 1 483 366 B1.58 Hasslof, P, et al. Growth inhibition of oral mutans streptococci and candida by commercial probiotic lactobacilli an in vitrostudy.BMC Oral Health 2010; 10: 18.59 Keller, MK, et al. Probiotic supplements (Lactobacillus reuteri DSM 17938 and ATCC PTA 5289) do not affect regrowth of mutansstreptococci after full-mouth disinfection with chlorhexidine: a randomized controlled multicenter trial. Caries Res 2012; 46(2): 140.

Company Product Probiotic ** Price Claims

Complete oral care

Supports gum & tooth health

Freshens breath

Whitens teeth

Promotes healthy teeth & gums

Reduces plaque

Fights bad breath

Freshens breath

Cleans & whitens teeth

Use as needed to control bad breath

Oragenics EvoraPets & Teddy's Pride ProBiora3 $8.44

Bifidobacterium **

Lactobacillus

Saccharomyces

cerevisiae

SCD Probiotics Breath

SpraySCD

$19.99

Lactobacillus reuteri

DSM 17938 & ATCC

PTA5289

GUM PerioBalance Daily

Dental Probiotic LozengeBioGaia

$9.95 for 7.2 oz.

(180 sprays)

Helps body protect against: cavities, bad

breath, plaque, sensitive teeth, biofilm,

gum problems, tooth stains, sore throat,

earaches

TheraBreath Multi-

Symptom ProbioticsDr. Harold Katz LLC

$21.99 for a 7-

day therapy

Oragenics

Streptococcus

salivarius K12 & M18

EvoraPlus Probiora3 $14.95
http://www.drugstore.com/http://www.drugstore.com/http://www.drugstore.com/http://www.drugstore.com/


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We also note that 6&'VSURGXFWIRUFRPSDQLRQDQLPDOV oral health is derived from probiotics used forthe gastrointestinal health of livestock and that the spray includes numerous herbal extracts that shouldimprove bad breath, even without the probiotic components. This product is slightly more expensive thanEvoraPet.

Overall, we believe Oragenics products are positioned well based upon the characteristics of the probioticingredients in ProBiora3 and their prices versus those of the competition.

NEW CLINICAL DATA TO SPUR DEMAND FOR EVORA PRODUCTS

Oragenics is in the midst of completing two small clinical trials to provide additional evidence of thebenefits of ProBiora3. The trials, which are expected to yield data in 2013, are testing the effect of a 12-week course of once-daily mints (akin to EvoraPro or EvoraPlus) on the number of bacteria associatedwith tooth decay and gum disease in young adults. The primary objective is to determine, on a per patientbasis, if a 12 week course of ProBiora3-containing mints from Oragenics, can significantly decrease thelevels ofS. mutanswhen compared to their baseline values. The secondary objectives are to determine if12 week usage of a ProBiora3 product by the targeted subject population can: (i) significantly decreasethe levels periodontal pathogens when compared to their baseline values, (ii) significantly decrease thelevels S. mutansand periodontal pathogens in the treatment group when compared to the control group

at Week 12, and (iii) significantly change breath odor and teeth whiteness. To accomplish this, PCRanalyses are being conducted to quantify the presence of S. mutans in saliva along with seven otherperiodontal pathogens (i.e., Porphyromonas gingivalis, Tannerella forsythia, Aggregatibacteractinomycetemcomitans, Prevotella intermedia, Campylobacter rectus, Fusobacterium nucleatum, andEikenella corrodens). Secondary endpoints are breath odor and teeth whiteness. These measurementsare being made objectively with a halimeter and VITA Toothguide 3D-Master, respectively.

The results should provide ample support for new regulatory submissions and for marketing support. Webelieve they will also be used to secure more distributors for the Evora product line and contracts withmanufacturers of probiotic foods and pet-care products based on ProBiora3. But because the timing andterms of such licensing agreements are uncertain, we have restricted our financial model to Oragenicsexisting business agreements.

60 Iniesta, M, et al. Probiotic effects of orally administered Lactobacillus reuteri-containing tablets on the subgingival and salivarymicrobiota in patients with gingivitis. A randomized clinical trial. J Clin Periodontol 2012; 39(8): 736.61 Snel, J, et al. Competitive selection of lactic acid bacteria that persist in the human oral cavity. Appl Environ Microbiol 2011;77(23): 8445.


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SMARTTECHNOLOGY

Oragenics has extended its work in the field of probiotics to combine the attributes of a beneficialbacterium with the power of a lantibiotic. The goal is to use a non-cariogenic strain of bacteria as areplacement therapy for bacteria that normally cause dental decay. The Company has crafted a strain of

Streptococcus mutans that lacks lactate dehydrogenase, which generates lactic acid, the primary causeof tooth decay. The strain also has another favorable attribute it releases the lantibiotic MU1140 tofacilitate and maintain its colonization of human mouth.

Preclinical research has suggested that the strain can be used for the purpose it was created, as areplacement therapy.62 The strain colonized the mouths of rats and was eliminated when the microbialload was reduced with chlorhexidine treatment. This research provided the safety data needed toundertake a clinical trial of the strain.

Oragenics initiated a Phase 1 clinical study of a D-alanine dependent version of the bacteria in 2011 withan expected enrollment of ten healthy male subjects. (This dependence was specifically selected for usein the clinical trial to provide a simple, yet effective means of eliminating the bacteria.) The trial involves atwo-week institutionalized period of therapy followed immediately by a four-week follow-up period in whichthe subjects and their partners are monitored. D-alanine is provided in a daily mouthwash to sustain the

bacteria. Six months after the treatment has ended, the subjects will have a final evaluation. The trial isongoing.

Favorable results (e.g., safety for the subjects and lack of transmission to the partner) should support thenext step, which will likely involve a safety trial of the unattenuated strain, designated as BCS3-L1. Thisstepwise assessment of the bacteria is necessary, as Oragenics is breaking new regulatory ground in itsdevelopment of its replacement therapy. Given uncertainties related to the regulatory path, we have notincluded this technology in our financial analysis.

ANATURAL APPROACH TO WEIGHT LOSS

During Oragenics research with its SMaRT Technology, the Company discovered that administration of acompound (referred to as LPT3-04), caused animals to lose weight. As shown in Figure 10, abdominal fatcould be eliminated in a dose-dependent manner by LPT3-04.63

The Company has investigated this phenomenon further in a proof-of-concept clinical trial and found thata diet high in LPT3-04 reduced the weight of the human subjects. Efforts are now ongoing to outlicensethis product to a pharmaceutical company for further development and marketing. Since the timing of thisagreement is unknown, we have not included the weight-loss product in our financial analysis.

62 Hillman, JD, et al. Modification of an effector strain for replacement therapy of dental caries to enable clinical safety trials. J ApplMicrobiol 2007; 102(5): 1209.63 Hillman, JD, et al. Methods of treating lipomas and liposarcomas. US Patent Appl # US2012/0122984 A1.

Figure 10. Effect of LPT3-04 diets on abdominalfat in female rats. Groups of three rats eachwere placed on diets supplemented with variousamounts of the compound (0% 20%) for 30days and then euthanized so that theirabdominal fat could be weighed.

Source: Hillman, JD, et al.63

Control 15%10% 20%5%


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INVESTMENT CONSIDERATIONS

For a complete description of risks and uncertainties related to Oragenics EXVLQHVVVHHWKH5LVN)DFWRUVVHFWLRQLQ2UDJHQLFVV SEC filings, which can be accessed directly from the SEC Edgarfilings at www.sec.gov. Potential risks include:

x Stock risk and market risk: Trading ofWKH&RPSDQ\VFRPPRQVWRFN varies widely on a daily basis.There can be no assurance that an active and liquid trading market will be sustained, which couldOLPLWRQHVDELOLW\WREX\RUVHOOWKH&RPSDQ\VFRPPRQVWRFNDWDGHVLUHGSULFH,QYHVWRUVVKRXOGDOVRconsider technical risks common to many small-cap or micro-cap stock investments, such as float,risk of dilution, dependence upon key personnel, and the strength of competitors that may be largerand better capitalized.

x Competitive risk: The oral health and antibiotics markets are highly competitive, based on individualproduct characteristics, pricing, and marketing support. Other companies are actively engaged in thedevelopment/commercialization of products to directly or indirectly address the uses being pursuedby Oragenics. These companies may have substantially greater research and developmentcapabilities, as well as significantly greater marketing, financial, and human resources thanOragenics.

x Products still in development phases: Incorporation of ProBiora3 into new products will depend tosome extent on licensing and/or supply agreements that have yet to be signed, and the lantibiotictherapy is still at a preclinical stage. Such products may appear to be promising, but may not reachcommercialization for various reasons, including failure to achieve regulatory approvals, safetyconcerns, and/or the inability to be manufactured at a reasonable cost. And even if the products arecommercialized, there can be no assurance that they will be accepted, which may prevent theCompany from becoming profitable.

x Dependence on third parties: Oragenics relies on a contract manufacturer for the supply ofProBiora3 and on distributors for the sales of ProBiora3 products. In addition, the Company isdependent on the expertise of Intrexon for the development of a method for producing MU1140. If anyof these collaborations should end, the CompaQ\VEXVLQHVVSURVSHFWVPD\be materially adverselyaffected.

x Funding requirements: It is difficult to predict 2UDJHQLFVV future capital requirements. TheCompany may need additional financing to continue to fund operations and expand its business.There is no guarantee that it can secure the desired future capital or, if sufficient capital is secured,that current shareholders will not suffer significant dilution.

x Regulatory risk: There is no guarantee that the CompanyV SURGXFWV under development will beapproved by the Food and Drug Administration (FDA) or international regulatory bodies for marketingin the U.S. or abroad. In addition, regulations pertaining to probiotics and drug development mayXQGHUJRIXUWKHUFKDQJHVZKLFKPD\DIIHFWWKH&RPSDQ\V ability to gain regulatory approvals and/orlabeling that supports its marketing strategies.

x Patent risk: The field of pharmaceuticals and probiotics are very competitive, and althoughOragenics has received and/or filed for numerous patents to secure its right to commercialize itsWHFKQRORJ\WKHVHSDWHQWVPD\QRWSURWHFWWKH&RPSDQ\VULJKWVDGHTXDWHO\LQWKHPDUNHWSODFH

x Business concentration risk: Because of its distribution and licensing agreements, Oragenics isdependent upon independent agents for sales of its Evora products and private-label products thatincorporate ProBiora3. The loss of important customers might have a significant effect on the&RPSDQ\VILQDQFLDOSHUIRUPDQFH


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FINANCIAL FORECASTS &VALUATION

Our financial projections reflecW WKH WKUHH DVSHFWV RI 2UDJHQLFVV EXVLQHVV WKH RUDO FDUH OLQHV LHEvoraPro, EvoraPlus and EvoraKids), the pet care EvoraPets product, and MU1140. The estimates arelimited to the period of 2012 through 2014, since it is during this time frame that significant changes are

OLNHO\WRRFFXULQWKH&RPSDQ\VEXVLQHVVQRWDEO\GHYHORSPHQWRIDSURGXFWLRQPHWKRGIRU08WKDWmay be applied to other lantibiotics, a licensing deal for MU1140, and consummation of additionaldistribution agreements for the probiotics lines. However, wHKDYHQRWLQFOXGHGLQRXUDQDO\VLVWKHZLOGFDUGVLQ WKH&RPSDQ\V5'SLSHOLQHZKLFKDUH WKHZHLJKW-loss compound LPT3-04 and the SMaRTReplacement Therapy. Even though these products have considerable commercial potential, they are notincluded because of uncertainty over the timing of their development.

REVENUE ESTIMATES

The following assumptions form the basis of our revenue projections:

Evora products for human oral health

x 2012 revenue from these products is expected to exceed $1 million.

x 2013 and subsequent years benefit from clinical data demonstrating the effectiveness of theSURELRWLF WUHDWPHQW IRUGHQWDO XVH DQG H[SDQGHGPDUNHWLQJVXSSRUW YLD WKH&RPSDQ\V GLUHFWsales force, additional distribution agreements, and regulatory approval in more countries.

x The aforementioned developments support average annual revenue growth of approximately50% through 2018.

ProBiora3 for pets

x 2012 revenue from EvoraPet approximates $200,000.

x Subsequent years benefit from support of more distributors in the United States and abroad thatresults in average annual revenue growth of 45%-50% through 2018.

MU1140

x The collaboration between Oragenics and Intrexon develops a method for producing lantibioticsin the spring of 2013.

x An IND is filed in 2014 and a Phase 1 clinical trial is completed that year.

x Oragenics follows the path laid by Rib-X in outlicensing MU1140 to a multinationalpharmaceutical company in 2014 in exchange for an upfront fee of $8 million and milestones of$5 million and $20 million upon completion of the clinical development program and submissionof the NDA, respectively, plus a royalty of 10% of sales. We have further assumed that themilestones are each recognized over a period of 5 years. Note that the Company will share 20%of revenues from this partnering agreement with the University of Florida Research Foundation inaccordance with a licensing contract for MU1140 patents.

x MU1140 is launched in 2018 in more developed countries as defined by the United Nations with

marketing support of Oragenics in the United States and the multinational drug companyelsewhere.

These assumptions lead to the following revenue projections:

2012 2013 2014

Oral Care 1,150$ 3,485$ 5,499$

Pet Care 250 515 1,003

MU1140 - - 1,600

Total 1,400$ 4,000$ 8,102$


24/30



ANNUAL InCOME STATEMENTS# (FISCAL YEAR ENDS DECEMBER 31ST)

# All figures are in thousands, except for per share data. Estimates are in italics.

Assumptions:

x The gross profit margin rises at a moderate pace from 55% in 2012 on higher prices on probioticproducts and a 2014 milestone payment (amortized over five years) related to the lantibioticdevelopment program.

x R&D expenses approach $2 million this year and rise gradually through in 2017. In the near term,Oragenics will pay Intrexon to develop the MU1140 production system. In 2013 and 2014, R&D costswill include preclinical testing and a fairly short Phase 1 clinical trial of the lantibiotic for combating anacute, life-threatening infection7KHUHDIWHUZHYHDVVXPHGWKDWPRVWRIWKHFOLQLFDOGHYHORSPHQWRI08LVSDLGE\2UDJHQLFVVPDUNHWLQJSDUWQHU.

x SG&A costs approximate $5.2 million this year and $5.1 million in 2013, with marketing expensesaccounting for a sizable proportion. Subsequently, SG&A costs rise gradually to support the EvoraSURGXFWOLQHDQGSUHSDUHIRU08VFRPPHUFLDOGHEXW .

x We have made no estimates for non-operating items.

x Investors should note that Oragenics should be able to minimize its cash payments for any taxliabilities incurred with net operating loss carryforwards of $36.5 million and tax credits of $551,000 asof December 31, 2011.

x We use average basic shares outstanding to calculate per-share losses and fully diluted shares inyears in which operations are profitable. The number of shares outstanding in 2012 increased as aresult of recent equity financings and should rise subsequently as warrants and stock options areexercised.

2011 2012 2013 2014

Total Revenues 1,444$ 1,400$ 4,000$ 8,102$

Cost of products sold 714 675 2,030 3,216

Gross Profit 730$ 725$ 1,970$ 4,886$

Operating expenses

R&D expense 2,449$ 1,950$ 2,425$ 3,000$

SG&A 5,628 5,250 5,100 5,100

Total operating costs 8,077 7,200 7,525 8,100

Operating profit/(loss) (7,347)$ (6,475)$ (5,555)$ (3,214)$

Interest income - 10 - -

Interest expense (332) (654) - -

Other - (9) - -

Pretax profit/(loss) (7,679)$ (7,128)$ (5,555)$ (3,214)$

Income taxes - - - -

Net profit/(loss) (7,679)$ (7,128)$ (5,555)$ (3,214)$

Earnings (loss) per share (1.34)$ (0.40)$ (0.20)$ (0.11)$

Shares outstanding 5,717 17,756 27,550 29,000


25/30



QUARTERLY INCOME STATEMENTS

QUARTERLYINCOM

ESTATEMENTS

FiscalyearendsDece

mber31st.

Allfiguresareinthousands,exceptforper-sharedata.

Estimatesare

resentedinitalics

inthebluesection.

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

TotalRev

enues

350

$

347

$

350

$

397

$

380

$

256

$

264

$

500

$

600

$

750

$

1,2

50

$

1,4

00

$

Cost

ofproductssold

95

329

134

156

198

112

164

201

300

380

625

725

Gross

Profit

255

$

18

$

216

$

241

$

182

$

144

$

100

$

299

$

300

$

370

$

625

$

675

$

Ope

ratingexpenses

R&D

expense

413

$

631

$

563

$

842

$

353

$

379

$

600

$

618

$

625

$

600

$

600

$

600

$

SG&

A

1,357

1,691

1,364

1,216

1,308

835

1,597

1,5

10

1,5

00

1,1

00

1,3

00

1,2

00

Tota

loperatingcosts

1,770

2,322

1,927

2,058

1,661

1,214

2,197

2,1

28

2,1

25

1,7

00

1,9

00

1,8

00

Operatingprofit/(loss)

(1,515)

$

(2,304)

$

(1,711)

$

(1,817)

$

(1,479)

$

(1,070)

$

(2,097)

$

(1,8

29)

$

(1,8

25)

$

(1,3

30)

$

(1,2

75)

$

(1,1

25)

$

Interestincome

-

-

-

-

-

1

5

4

-

-

-

-

Interestexpense

(44)

(68)

(97)

(123)

(138)

(60)

(456)

-

-

-

-

-

Other

-

(1)

1

-

-

(1)

(8)

-

-

-

-

-

Pretaxprofit/(loss)

(1,559)

$

(2,373)

$

(1,807)

$

(1,940)

$

(1,617)

$

(1,130)

$

(2,556)

$

(1,8

25)

$

(1,8

25)

$

(1,3

30)

$

(1,2

75)

$

(1,1

25)

$

Inco

metaxes

-

-

-

-

-

-

-

-

-

-

-

Netprofit/(loss)

(1,559)

$

(2,373)

$

(1,807)

$

(1,940)

$

(1,617)

$

(1,130)

$

(2,556)

$

(1,8

25)

$

(1,8

25)

$

(1,3

30)

$

(1,2

75)

$

(1,1

25)

$

Earnings/(loss)per

share

(0.28)

$

(0.42)

$

(0.32)

$

(0.33)

$

(0.25)

$

(0.08)

$

(0.11)

$

(0.

07)

$

(0.0

7)

$

(0.0

5)

$

(0.0

5)

$

(0.0

4)

$

Sharesoutsta

nding

5,668

5,683

5,683

5,834

6,449

13,382

23,793

27,4

00

27400

27500

27500

27800

2011

2012

2013


26/30



BALANCE SHEET# (FISCAL YEAR ENDS DECEMBER 31ST)

# All data are in thousands.

ASSETS 9/30/2012 12/31/2011

Current Assets

Cash & equivalents 11,903$ 436$

Accounts Receivable 72 93

Inventory 280 476

Other 236 113

Total Current Assets 12,491$ 1,118$

Property & equipment 93$ 149$

Total Assets 12,584$ 1,267$

LIABILITIES

Current Liabilities

Accounts payable 1,399$ 1,740$

Debt due 88 53

Deferred revenue 266 153

Note payable to shareholder - 7,500

Total Current Liabilities 1,753$ 9,446$

Shareholders Equity

Common Stock, par value 27$ 6$

Additional Paid-In Capital 62,901 32,811

Accumulated Deficit (52,097) (40,996)

Treasury Stock

Total Shareholders Equity 10,831$ (8,179)$

Total liabilities & equity 12,584$ 1,267$


27/30



VALUATION ANALYSIS

Our valuation analysis was conducted by treating the probiotics business and the lantibiotic projectseparately and then combining the results to arrive at a value for the Company at three time points.

Probiotics Contribution: We based our assessment of Oragenics probiotics business on a comparative

analysis that considered the valuations of other companies in this industry segment and their sales, asshown in Table 4. Specifically, we calculated the market capitalization-to-sales (sales achieved in the last12 months) ratio for each company to obtain an average ratio. We then applied that ratio, 3.19, to oursales estimates for Oragenics for 2012, 2013, and 2014 to arrive at the probiotics contribution to the&RPSDQ\VWRWDOYDOXDWLRQDWWKRVHWLPHSRLQWV

Table 4. Comparator Analysis of Oragenics Business Units64

This approach had the following limitations: All of the companies, except BioGaia, sell probiotics affectinggastrointestinal performance, rather than improving oral health, and that segment of the market is alreadyfairly mature. Accordingly, the valuations ascribed to those corporations are probably lower than whatmight be expected for an emerging market. Also, a portion of the sales of these companies come fromproducts that are not probiotics. The related impact on the market cap-to-sales ratio is not readilyapparent. Finally, the stocks of these companies are listed on foreign exchanges, where valuations maynot transfer equally to U.S.-listed equities, such as Oragenics shares.

Lantibiotics Contribution: Oragenics has notable valuation inflection points on the horizon. We believethe single most important event will be success in developing a production system for MU1140. That

would not only move the drug into the lead as the most advanced lantibiotic in development, but it wouldalso position the Company with its collaborator Intrexon to serve as the supplier of these novelcompounds to the industry. (Note that more than 50 lantibiotics have been identified, but they constituteonly a portion of the bacteriocin group of known, natural antibiotics.) The magnitude of the added valuewill ultimately depend on the timing and terms of licensing agreements. However, a deal completed lastyear between another antibiotic company, Rib-X, and Sanofi provides a reasonable basis for an estimate.Their agreement gave Sanofi rights to up to four compounds in exchange for milestones of $744 million,or $186 million apiece. At the time, the most advanced drug was still at a preclinical stage ofdevelopment.

7RSURSHUO\DGGUHVVWKHODQWLELRWLFSURMHFWVSRWHQWLDOFRQWULEXWLRQWR2UDJHQLFVVYDOXDWion, we assumedthat MU1140 would complete preclinical development in 2014 and would therefore be at approximatelythe same stage of development as Rib-;VDQWLELRWLFs with a value of $186 million apiece. We discountedthat value back one year at a rate of 30%, thus valuing the antibiotic at $143 million in 2013. We believe

WKDWGLVFRXQWUDWHLVDSSURSULDWHRQFHSURGXFWLRQRI08LVHVWDEOLVKHGJLYHQWKHFRPSRXQGVNQRZQproperties. The result of that analysis, $143 million, is the contribution we estimate MU1140 should makeWR2UDJHQLFV PDUNHW FDS LQ 7R DVVHVV LWV FRQWULEXWLRQ WR WKH &RPSDQ\V FXUUHQW YDOXDWLRQZHdiscounted the $143 million back one additional year at a discount rate of 45% and arrived at $99 million.The much higher discount rate between 2013 and 2012 is considered appropriate because we believecreating the production system for lantibiotics is the major hurdle toward commercialization of MU1140and entering into licensing agreements with the industry.

64 Prices and sales were obtained from CapitalIQ on November 26, 2012.

AB-Biotics SA CATS: ABB 2.73

BioGaia AB OM: BIOG B 4.52

Biosearch SA CATS: BIO 1.35

Probi AB OM: PROB 4.17Average Probiotics Sales Multiplier: 3.19

Company MC/LTM RevenueExchange &

Ticker


28/30



Figure 11. Estimated Market Capitalization of Oragenics

7RGD\V Market Capitalization: We believe that Oragenics current market capitalization does notadequately reflect the value of its probiotics business and the potential of its lantibiotic program. Asshown in Figure 11, our analysis values the Company at $103 million, or $3.36 per share, based on thenumber of fully diluted shares outstanding. This is 86% above its current share price of $1.80 per share.

Of the calculated valuation, 96% is contributed by MU1140 and 4% from the probiotics business, partlyEHFDXVHPXFKRIWKLV\HDUVHIIRUWVKDYHEHHQGHGLFDWHGWRSUHSDULQJIRUDQH[SDQVLRQRISURELRWLFVVDOHVthrough R&D and partnering work, rather than promotion of the Evora product line.

12-Month Price Target: Our valuation analysis yields a market capitalization of $156 million, or $5.09 perfully diluted share outstanding. The probiotics business is estimated to contribute $13 million to thecorporate value, while MU1140 contributes $143 million. Based on this analysis, we have set our 12-month price target at $5.00.

0.0

50.0

100.0

150.0

200.0

250.0

2012 2013 2014

MarketCapitalizaton,$

million


29/30



DISCLOSURES

ANALYST(s) CERTIFICATION: The analyst(s) responsible for covering the securities in this report certifythat the views expressed in this research report accurately reflect their personal views about Oragenics,Inc. WKH&RPSDQ\DQGLWVVHFXULWLHV7KHDQDO\VWVUHVSRQVLEOHIRUFRYHULQJWKHVHFXULWLHVLQWKLVUHSRUW

certify that no part of their compensation was, is, or will be directly or indirectly related to the specificrecommendation or view contained in this research report.

MEANINGS OF RATINGS: Our rating system is based upon 12 to 36 month price targets. BUY describesstocks that we expect to appreciate by more than 20%. HOLD/NEUTRAL describes stocks that weexpect to change plus or minus 20%. SELL describes stocks that we expect to decline by more than20%. SC describes stocks that Griffin Securities has Suspended Coverage of this Company and pricetarget, if any, for this stock, because it does not currently have a sufficient basis for determining a ratingor target and/or Griffin Securities is redirecting its research resources. The previous investment rating andprice target, if any, are no longer in effect for this stock and should not be relied upon. NR describesstocks that are Not Rated, indicating that Griffin Securities does not cover or rate this Company.

DISTRIBUTION OF RATINGS: Currently Griffin Securities has assigned BUY ratings on 88% ofcompanies it covers, HOLD/NEUTRAL ratings on 12%, and SELL ratings on 0%. Griffin Securities hasprovided investment banking services for 10% of companies in which it has had BUY ratings in the past12 months and 0% for companies in which it has had HOLD/NEUTRAL, NR, or no coverage in the past12 months or has suspended coverage (SC) in the past 12 months.

COMPENSATION OR SECURITIES OWNERSHIP: The analyst(s) responsible for covering the securitiesin this report receive compensation based upon, among other factors, the overall profitability of GriffinSecurities, including profits derived from investment banking revenue. The analyst(s) that prepared theresearch report did not receive any compensation from the Company or any other companies mentionedin this report in connection with the preparation of this report. The analyst responsible for covering thesecurities in this report currently does not own common stock in the Company, but in the future may fromtime to time engage in transactions with respect to the Company or other companies mentioned in thereport. Griffin Securities from time to time in the future may request expenses to be paid for copying,printing, mailing and distribution of the report by the Company and other companies mentioned in thisreport. Griffin Securities has received compensation from the Company in the past 12 months for

investment banking services. Griffin Securities expects to receive, or intends to seek, compensation forinvestment banking and non-investment banking services from the Company in the next three months.

FORWARD-LOOKING STATEMENTS: This Report contains forward-looking statements, which involverisks and uncertainties. Actual results may differ significantly from such forward-looking statements.)DFWRUVWKDWPLJKWFDXVHVXFKDGLIIHUHQFHLQFOXGHEXWDUHQRWOLPLWHGWRWKRVHGLVFXVVHGLQWKH5LVNFDFWRUV VHFWLRQ LQ WKH 6(& ILOLQJV DYDLODEOH LQ HOHFWURQLF IRUPDW WKURXJK 6(& (GJDU ILOLQJV DWwww.SEC.gov on the Internet.

OTHER COMPANIES MENTIONED IN THIS REPORT:

Henry Schein, Inc. (NasdaqGS: HSIC)

Patterson Companies, Inc. (NasdaqGS: PDCO)


30/30


PRICE CHART 2 Year

Source: BigCharts.com

11/27/2012 Initiating Coverage: share price, $1.80; rating, BUY; 12-month price target, $5.00.

GENERAL:*ULIILQ6HFXULWLHV,QF*ULIILQ6HFXULWLHVDFINRA (formerly known as the NASD) memberfirm with its principal office in New York, New York, USA is an investment banking firm providing

corporate finance, merger and acquisitions, brokerage, and investment opportunities for institutional,corporate, and private clients. The analyst(s) are employed by Griffin Securities. Our researchprofessionals provide important input into our investment banking and other business selectionprocesses. Our salespeople, traders, and other professionals may provide oral or written marketcommentary or trading strategies to our clients that reflect opinions that are contrary to the opinionsexpressed herein, and our proprietary trading and investing businesses may make investment decisionsthat are inconsistent with the recommendations expressed herein.

Griffin Securities may from time to time perform corporate finance or other services for some companiesdescribed herein and may occasionally possess material, nonpublic information regarding suchcompanies. This information is not used in preparation of the opinions and estimates herein. While theinformation contained in this report and the opinions contained herein are based on sources believed tobe reliable, Griffin Securities has not independently verified the facts, assumptions and estimates

contained in this report. Accordingly, no representation or warranty, express or implied, is made as to,and no reliance should be placed on, the fairness, accuracy, completeness or correctness of theinformation and opinions contained in this report.

The information contained herein is not a complete analysis of every material fact in respect to anycomp

ogen research report

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