Business Overview and History
Orgenesis Inc. (OTCQX:ORGS) is a global biotech company that is revolutionizing the accessibility and affordability of cell and gene therapies (CGTs) through its innovative decentralized approach. With a strong focus on unlocking the full potential of CGTs, Orgenesis is dedicated to improving healthcare outcomes by making these advanced treatments more widely available.
Orgenesis was founded in 2011 with the vision of transforming the CGT landscape. The company's journey began with a collaborative worldwide network of research institutes and hospitals engaged in the Point-of-Care (POCare) model, which paved the way for the development of its POCare Therapies pipeline.
In the early years, Orgenesis faced significant challenges in establishing its technological capabilities and building partnerships within the CGT industry. However, the company persevered and by 2018 had made substantial progress in developing its POCare network. This allowed Orgenesis to begin licensing its POCare advanced therapies to partners for clinical development and potential commercialization.
The company's focus on developing a scalable, cost-effective approach to advanced therapies has been a consistent theme throughout its evolution. Orgenesis has worked tirelessly to overcome traditional challenges facing the CGT industry, such as high costs and complex logistics, to improve access and outcomes in healthcare.
Throughout its history, Orgenesis has navigated a complex regulatory landscape while continuing to advance its POCare platform and therapeutic pipeline. Despite facing setbacks, such as the delisting of its common stock from the Nasdaq Stock Market in 2023 due to non-compliance with certain listing requirements, the company has remained committed to its mission of revolutionizing CGT accessibility.
Recent Developments and Financials
In 2024, Orgenesis made several strategic moves to strengthen its position in the CGT market. The company acquired the remaining equity interests in its subsidiary, Octomera LLC, which holds the POCare Services operations. This reconsolidation allowed Orgenesis to regain full ownership and control over its decentralized platform, a critical component of its growth strategy.
Additionally, Orgenesis entered into an asset purchase and strategic collaboration agreement with Germfree, a leading innovator in modular cleanroom infrastructure and services. This partnership is designed to advance Orgenesis' therapeutic programs and product development capabilities, further enhancing the company's ability to transform CGT production and delivery.
On January 29, 2024, Orgenesis acquired all of the preferred units of its Octomera subsidiary, reconsolidating it into the company's accounts. In February 2024, the company's Orgenesis Biotech Israel Limited (OBI) subsidiary was deconsolidated after a court appointed a trustee to run its affairs.
Business Segments
Orgenesis operates two main business segments: the Octomera segment and the Therapies segment.
The Octomera segment includes the company's Point-of-Care (POCare) Services, which are performed in decentralized hubs that provide harmonized and standardized services to customers, known as POCare Centers. These POCare Services include process development of therapies, process adaptation and optimization, incorporation of therapies compliant with Good Manufacturing Practices (GMP) in the company's proprietary Orgenesis Mobile Processing Units and Labs (OMPULs), tech transfers and training of local teams, and processing and supply of therapies and required supplies under GMP conditions within Orgenesis' POCare Network.
The Therapies segment includes the company's therapy-related activities. Orgenesis works closely with research institutes and hospitals to in-license advanced therapies that can benefit from a point-of-care approach. The goal is to quickly adapt these therapies to a point-of-care model through regional partnerships and then out-license the products for market approval in non-core geographical regions. This approach aims to lower overall development costs by minimizing pre-clinical development costs and enabling the company to receive additional funding from grants and/or payments by regional partners.
Financials
For the nine months ended September 30, 2024, Orgenesis reported revenues of $734,000, a significant increase from $365,000 in the same period the previous year, representing a growth of 101%. However, the company continued to operate at a loss, with a net loss of $28.64 million, compared to a net loss of $58.30 million in the nine months ended September 30, 2023. The company's cash position as of September 30, 2024, was $1.12 million, with a working capital deficit of $33.53 million.
The increase in revenues was primarily driven by growth in the company's cell processing development and hospital services within the Octomera segment. Meanwhile, the decrease in net loss was partly attributable to a reduction in selling, general and administrative expenses, particularly due to a decline in credit losses in the Octomera segment, offset by an increase in research and development expenses related to the company's asset purchase agreements.
In the most recent quarter, Orgenesis reported revenue of $347,000 and a net income of $9.12 million. However, due to the lack of prior quarter data, year-over-year growth cannot be determined.
Liquidity
Orgenesis faces significant liquidity challenges as evidenced by its working capital deficit. The company's ability to raise additional capital is crucial for its ongoing operations and future growth initiatives. The delisting from Nasdaq and subsequent trading on the OTCQX Best Market may impact Orgenesis' access to capital markets, potentially affecting its liquidity position in the future.
As of September 30, 2024, Orgenesis reported an accumulated deficit of $204.41 million and negative operating cash flows of $14.98 million for the nine-month period. The company will need to seek additional financing, refinance or amend the terms of existing loans, and/or postpone certain expenses in order to fund its operations until it can generate sustainable positive cash flows.
Risks and Challenges
Orgenesis faces several key risks and challenges as it navigates the highly competitive and rapidly evolving CGT landscape. The company's ability to raise additional capital is crucial, as it continues to invest in its decentralized platform and product development initiatives. The delisting of Orgenesis' shares from the Nasdaq Stock Market and the subsequent trading on the OTCQX Best Market may impact the company's access to capital markets and investor perception.
Additionally, Orgenesis must overcome regulatory hurdles, ensure the successful integration of acquired assets, and maintain its technological edge as the industry evolves. The company's reliance on partnerships and collaborations with research institutions, hospitals, and industry players also introduces inherent risks.
Outlook and Conclusion
Orgenesis' mission to redefine accessibility to cell and gene therapies through its decentralized approach is gaining traction in the industry. The company's strategic partnerships, acquisitions, and product development initiatives are positioning it as a leader in the transformation of CGT production and delivery.
Despite the company's current financial challenges, Orgenesis' focus on cost-effective and scalable solutions has the potential to unlock the full potential of CGTs and improve healthcare outcomes globally. As the company continues to execute on its strategic roadmap, investors will closely monitor Orgenesis' ability to navigate the complex regulatory landscape, secure additional funding, and translate its innovative platform into sustainable financial performance.
The company's growth in revenue, particularly in its Octomera segment, shows promise for future expansion. However, Orgenesis will need to address its ongoing losses and liquidity challenges to ensure long-term viability. The success of its POCare model and the ability to commercialize its therapies efficiently will be critical factors in determining the company's future trajectory in the competitive CGT market.