Orgenesis Inc. (NASDAQ:ORGS) is a global biotech company working to unlock the potential of Cell and Gene Therapies (CGTs) in an affordable and accessible format. The company operates two main segments: POCare Services and Therapies.
Business Overview
The POCare Services segment includes the company's point-of-care (POCare) platform, which provides harmonized and standardized services to customers through decentralized hubs called POCare Centers. These services include process development, adaptation of automation and closed systems, GMP-compliant production, and technology transfers. The goal is to enable rapid capacity expansion and integration of new technologies to bring together patients, doctors, and industry partners for standardized, regulated clinical development and production of therapies.
In the Therapies segment, Orgenesis reviews many advanced therapy candidates available for in-licensing, selecting those with the highest market potential, ability to benefit from a POCare approach, and chance of clinical success. The company then quickly adapts these therapies to a POCare model through regional partnerships, aiming to out-license the products for market approval in non-core geographical regions. This approach lowers overall development costs by minimizing pre-clinical expenses and leveraging additional funding from grants and regional partners.
Financials
For the full year 2023, Orgenesis reported annual revenue of $530,000 and a net loss of $55,361,000. Operating cash flow was negative $14,837,000, and free cash flow was negative $16,933,000. These results reflect the company's continued investment in its POCare platform and pipeline development.
In the first quarter of 2024, Orgenesis generated revenue of $141,000, down slightly from $142,000 in the prior-year period. The decrease was primarily due to reduced activity in the POCare Services segment, which was partially offset by increased revenue from the Therapies segment. Gross profit for the quarter was negative $351,000, compared to negative $2,580,000 in Q1 2023, as the company saw a significant reduction in cost of revenues.
Operating expenses declined 55% year-over-year to $6,056,000 in Q1 2024, driven by lower selling, general, and administrative costs, as well as reduced credit losses. The company reported a net loss of $10,005,000 for the quarter, an improvement from the $23,377,000 net loss in the prior-year period.
Liquidity
Cash and cash equivalents stood at $80,000 as of March 31, 2024, down from $837,000 at the end of 2023. The decrease was primarily due to the company's ongoing operating cash outflows, which were $4,441,000 in Q1 2024, compared to $7,240,000 in the same period last year.
To address its liquidity challenges, Orgenesis is actively pursuing additional financing options, including equity and debt offerings. In May 2024, the company raised $154,000 through a private placement of common stock and warrants. Additionally, in April 2024, Orgenesis entered into an $8.3 million asset purchase and strategic collaboration agreement with Germfree Laboratories, which included an upfront payment of $750,000.
Despite these efforts, the company has stated that there is substantial doubt about its ability to continue as a going concern due to its current financial position and projected cash needs. Orgenesis must satisfy Nasdaq's continued listing requirements, including a minimum closing bid price of $1.00 per share for 30 consecutive business days. The company has received a delisting notice from Nasdaq and has requested a hearing to address the deficiencies and present a plan to regain compliance.
Risks and Challenges
Orgenesis operates in a highly competitive and rapidly evolving cell and gene therapy market, which presents both opportunities and risks. The company's success will depend on its ability to effectively execute its POCare strategy, secure additional financing, and navigate the regulatory landscape. Investors should closely monitor the company's progress in addressing its liquidity challenges and its efforts to develop and commercialize its pipeline of advanced therapies.
Outlook
Overall, Orgenesis is a unique player in the CGT space, leveraging its POCare platform to potentially bring these transformative therapies to patients in a more affordable and accessible manner. However, the company's near-term financial and operational challenges will require careful attention and decisive action to ensure its long-term viability.