Exhibit
99.1
February
24, 2006
President’s
Letter to Shareholders
This
letter to our shareholders is intended to provide more specific information
regarding the development of our technologies and what we expect to accomplish
in 2006 and beyond. We suggest you periodically visit our website at
www.oragenics.com
and
review our press releases and SEC filings to obtain updates regarding our
progress. I also wish to thank our shareholders for their financial support
and
patience. The last several filings have been necessarily cautious, and so I
wanted to share an update of our science, and what we are doing to advance
each
product and hopefully create value for you our shareholder. This letter should
be read in conjunction with the Company’s 10-KSB for 2005.
As
previously stated to you, Oragenics was incorporated to discover and develop
life altering and innovative health solutions, and thereby create value for
our
customers and our shareholders. Our product opportunities offer unique and
proprietary approaches to health concerns with very substantial market
potential. We plan to continue to move forward with our product development
plans for our three proprietary lead technologies:
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SMaRT™
replacement therapy
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SMaRT™
Replacement Therapy
SMaRT™
replacement therapy is a unique approach to prevent tooth decay. Tooth decay
results when certain bacteria in the mouth produce acids that can dissolve
tooth
enamel. SMaRT™ replaces the disease-causing bacteria in the mouth with a
virtually identical bacteria strain that does not cause tooth decay. In 2005,
we
initiated a Phase I clinical trial to ascertain the safety of our product using
a strain of our bacteria (A2JM) that utilized an additional compound not found
in normal diets to remain active.
As
we
have previously noted, we have had slower than expected patient recruitment
due
to the strict entry criteria developed for this clinical trial. However, the
limited human testing to date is encouraging. We communicated our results,
and
recruitment problem, to the FDA in January 2006 and discussed establishing
a new
Phase 1 trial with A2JM that would allow us to enroll healthy male subjects
in
an institutionalized, 12-day study with a 2-month follow-up phase. Based on
their comments, we plan to re-submit a new protocol to the FDA and while there
can be no assurances we expect to begin this second trial in the second quarter
of 2006.
In
December 2005, we entered into a consulting agreement with Dr. Raman Bedi,
the
former Chief Dental Officer of England and a leading oral health authority.
He
immediately enlisted three global dental experts to join our international
scientific advisory board: Dr. Brian Mouatt of the United Kingdom, Dr. Ayyaz
Khan of Pakistan, and Dr. Hari Parkash of India, and has also begun identifying
strategic alliances in Asia and Middle East. These efforts by Dr. Bedi are
expected to result in a global strategy for conducting clinical trials for
SMaRT™ replacement therapy. We currently plan to initiate multi-center clinical
trials outside the United States in late 2006 or early 2007. These trials are
expected to be designed so that data collected would be shared with the
FDA.
MU
1140™ Antibiotic
Resistance
to antibiotics is of growing concern to the medical community. Our laboratory
studies have shown that MU 1140™ (mutacin 1140) is active against essentially
all Gram-positive bacteria tested, that it has a unique mode of action and
none
of the tested bacteria has been able to develop resistance to it.
By
mid-2005 we made significant breakthroughs in the cost-effective manufacture
and
purification of MU 1140™ and initiated pre-clinical studies.
During
the next two months, we plan to conduct two preclinical studies with MU 1140™,
utilizing independent testing labs, that will provide information on Tier 2
spectrum of activity against clinically important Gram-positive bacteria and
the
effectiveness in a drug resistant Staphylococcus
aureus
infected
animal model system. If these studies are successful, we expect to complete
additional animal safety trials, file an Investigational New Drug application
(“IND”) with the FDA and begin a Phase I clinical study late in the fourth
quarter of 2006. Because of the wide spread interest in new antibiotics that
are
effective against multiple drug resistant infections, continued positive results
with MU 1140™ could attract a potential licensing partner within the next 18
months to undertake the completion of clinical trials and the commercialization
of MU 1140™.
Probiora
3™
Probiora
3™ is an oral probiotic product intended to maintain periodontal and dental
health. Probiotics are live microorganisms that confer health benefits to the
host when administered in adequate amounts. For example, yogurt containing
live
Lactobacillus
cultures
is a probiotic. In Probiora 3™, our researchers identified three natural strains
of oral bacteria that provide significant protection against the causative
organisms of periodontal disease and tooth decay.
European
and Asian companies have signaled their intent to establish a licensing
agreement with us, while another potential partner is completing a laboratory
evaluation of the product before moving forward with possible licensing
discussions. We expect to initiate a human trial within the next two months
to
support product claims for Probiora 3™. While there can be no assurances,
this study should be completed by early in the third quarter of 2006. If
successfully developed and commercialized, we believe Probiora 3™ will be the
first proven probiotic to be marketed for the maintenance of oral
health.
General
Corporate and Financial News
In
July
2005, I took over as President and CEO of Oragenics when Chuck Soponis retired.
In December 2005, Chuck also resigned from our Board of Directors and was
replaced by George Hawes, a seasoned businessman. As CEO, I implemented a cost
restructuring plan that significantly reduced our expenditures. While painful,
this restructuring reduced our normal monthly burn by approximately 50% to
$175,000. We believe that we have now achieved that delicate balance which
all
biotechnology companies seek of advancing lead programs fast enough to meet
milestones without an unreasonably high operating budget.
In
December 2005 we completed a financing round that raised $1.175 million. That
investment has been followed by another round of equity financing in February
2006 which upon closing raises an additional $600,000, of which more than half
the amount raised was provided by four of our directors. These investments
have
signaled an increasing level of confidence by the investment community and
have
allowed us to maintain operations and advance the development of our
technologies. These financings also provide warrants that entitle the investor
to purchase stock at $0.60 per share. Based on stock trading prices, these
warrants are callable by us and, if fully exercised, would provide an additional
$2.66 million to Oragenics. Nevertheless, management will continue to seek
additional funding opportunities for the second half of 2006, to sustain our
development plans as well as the projected costs of clinical trials for our
three lead technologies.
In
other
initiatives, I granted a phone interview to Wall Street Transcript on January
19th,
which
will be published at the end of February in a special biotech issue. Both Dr.
Hillman and I were interviewed for an article about Oragenics to appear in
the
AUTM in March. This is a magazine for university technology managers and
business executives who manage intellectual property. Dr. Hillman gave a video
interview on January 23rd
to an
independent production company from Orlando that produces health spots that
are
distributed to several hundred local TV stations for airing during news hours.
Lastly, and perhaps most significantly, we have retained J.M. Dutton (at
www.jmdutton.com) to produce investment research on the company for the
institutional investor and the public. We expect their first research report
on
the Company to be completed by April 30th.
The
Company expects to participate in Dutton’s Health Care Conference held in San
Francisco at the end of May. It is anticipated that the audience will be
comprised of a strong group of biotech investors.
We
believe 2005 has been a turn-around year for Oragenics, as we completed a
strategic restructuring plan and refocused our efforts on product development
and regulatory approval. I would like to thank our staff and our management
team
for their loyalty and resolve to achieve our goals. Today, there is tremendous
enthusiasm and optimism at Oragenics because of the potential of the products
we
are developing and their increasing stage of maturity. Again, I want to thank
you for your interest in Oragenics and if you have further questions, please
call me at 386-418-4018 x222 or Paul Hassie at 386-418-4018 x232.
Sincerely,
Robert
T.
Zahradnik
President
& Chief Executive Officer
Safe
Harbor Statement: Under the Private Securities Litigation Reform Act of 1995:
This release includes forward-looking statements that reflect Oragenics' current
views with respect to future events and financial performance. These
forward-looking statements are based on management's beliefs and assumptions
and
information currently available. The words "believe," "expect," "anticipate,"
"intend," "estimate," "project" and similar expressions that do not relate
solely to historical matters identify forward-looking statements. Investors
should be cautious in relying on forward-looking statements because they are
subject to a variety of risks, uncertainties, and other factors that could
cause
actual results to differ materially from those expressed in any such
forward-looking statements. These factors include, but are not limited to those
set forth in our most recently filed annual report on Form 10-KSB and quarterly
report on Form 10-QSB, and other factors detailed from time to time in filings
with the Securities and Exchange Commission. We expressly disclaim any
responsibility to update forward-looking statements.