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The following is an excerpt from a 10KSB SEC Filing, filed by ORAGENICS INC on 3/17/2004.
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ORAGENICS INC - 10KSB - 20040317 - PART_I

PART I

ITEM 1. DESCRIPTION OF BUSINESS.

This description contains certain forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from the results discussed in the forward-looking statements as a result of certain of the risks set forth herein and elsewhere in this Form 10-KSB. The Company assumes no obligation to update any forward-looking statements contained herein.

OVERVIEW

Oragenics, Inc. was incorporated under the laws of Florida on November 6, 1996. We commenced operations in 1999.

We, Oragenics, Inc., are a biotechnology company aimed at adding value to novel technologies and products sourced from innovative research at the University of Florida and other academic centers. Our aim is to in-license and develop products through human proof-of-concept (Phase I or II of the FDA's regulatory process discussed below) prior to partnering with major pharmaceutical, biotechnology or healthcare product firms for advanced clinical development and commercialization. We have generated no revenues from operations during the last two years. All of our revenues have been from a sponsored research agreement which has expired; none have been from sales.

We are currently developing the following products, each of which addresses potential market opportunities:

- REPLACEMENT THERAPY is a single, painless topical treatment that has the potential to offer life-long protection from most tooth decay. We expect to initiate Phase I safety studies with this product during 2004.

- MUTACIN 1140 is a novel antibiotic with activity against essentially all Gram-positive bacteria including vancomycin-resistant Staphylococcus aureus. Researchers have not succeeded to-date in demonstrating bacterial resistance to this antibiotic. We are currently in early preclinical stages of development for Mutacin 1140.

- "PROBIOTIC" TECHNOLOGY employs naturally occurring beneficial bacteria to promote oral and periodontal health. Probiotics are widely employed in Japan and Europe and acceptance in the United States is growing. Such products may be marketed as "health supplements" without the need for regulatory filings, offering the opportunity for near-term commercialization.

- "OTHER" TECHNOLOGIES include other technologies that we may develop from our research and development activities or that we may license, including our recently licensed technology called in vivo induced antigen technology that enables the simple, fast identification of novel and potentially important gene targets associated with the natural onset and progression of infections, cancers and other diseases in humans and other living organisms, including plants.

We amended our articles of incorporation on May 8, 2002, in order to change our name from Oragen, Inc. to Oragenics, Inc. and to increase our authorized capital from 100,000 shares of common stock to 100,000,000 shares of common stock and 20,000,000 shares of preferred stock. Our registered office is located at 4730 S.W. 103rd Way, Gainesville, Florida 36208, and our headquarters are located at 12085 Research Drive, Alachua, Florida 32615.

OUR BUSINESS STRATEGY

For our business to become profitable and competitive, our technologies must be approved for production and sale by the Federal Food and Drug Administration ("FDA"). Our present strategy for financing the clinical trials which will be necessary as part of the FDA approval process involves conducting

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the research and development work in respect of our technologies through Phase I clinical trials. Assuming we complete Phase I clinical trials successfully, we intend to consider the sublicense of our licensed, patented technologies to pharmaceutical companies, which would be responsible for completing Phase II and III clinical trials and for undertaking the new drug applications. We anticipate that such sublicenses would provide for payment of fees to us, a portion of which would be payable upon execution and the balance of which would be payable upon achievement of product development milestones, and for payment to us of royalties from sales. This strategy would serve to avoid the high costs of Phase II and III trials we would otherwise have to pay, and generate revenues from our technologies sooner than if we conducted those trials ourselves. There can be no assurance that we will be able to enter into such sublicenses on terms favorable to us, or at all.

If we are successful in sublicensing one or more of our technologies, we intend to seek to license promising new technologies in our fields of expertise. We hope to be able to obtain licenses of other technologies firstly from the University of Florida, with which a number of our directors and officers have a strong relationship, and secondly from other universities.

OUR TECHNOLOGIES

REPLACEMENT THERAPY

Background. Our licensed, patented replacement therapy technology is the fruit of 25 years of research by our founder and chief scientific officer, Dr. Jeffrey Hillman. In the course of his research at Forsyth Dental Center and the University of Florida, Dr. Hillman isolated a strain of a species of bacteria naturally resident on teeth with the ability to out-compete and displace other strains of that species. The strains of that species typically found on teeth produce lactic acid, which causes tooth decay. Dr. Hillman, through recombinant DNA technology, succeeded in replacing a gene in the strain of bacteria with the ability to out-compete. That gene is responsible for producing lactic acid. Dr. Hillman replaced it with a gene that causes that strain to produce other harmless, non-decay-causing substances. The University of Florida has obtained a patent in respect of that genetically altered strain, and we have obtained an exclusive license of that patent from the University of Florida. Our replacement therapy technology may prove to be a new treatment for human tooth decay.

In 2000, we entered into a sponsored research agreement with respect to our replacement therapy technology. Under that agreement, we were paid $357,787 in respect of research and development costs. The agreement allowed our sponsor the exclusive option to negotiate a sublicense of our replacement therapy technology. Our sponsor did not exercise the option, and it has expired. We have had no further discussions or negotiations with the sponsor since the agreement expired.

Market Opportunity. The dental care market in the United States is estimated to be $58 billion annually. Of this sum, a considerable portion is related to tooth decay. Since the introduction of fluoride, no significant technology has been introduced to prevent tooth decay. Our licensed, patented replacement therapy technology may prove to be the first new treatment for human tooth decay in many years.

Technical Background. Many different types of bacteria reside in everyone's mouth. Streptococcus mutans (S. mutans) is a bacteria that resides on nearly everyone's teeth. This bacteria converts sugar that we eat into lactic acid. Lactic acid erodes the tooth's enamel and causes the great majority of tooth decay. Our replacement therapy technology consists of a genetically modified strain of S. mutans that does not produce lactic acid. Our strain of S. mutans produces tiny quantities of a substance known as mutacin 1140, which allows our strain to out-compete the strain of S. mutans which is naturally resident on a person's teeth. Our strain eliminates the resident strain of S. mutans and replaces it in the mouth. It will be administered as a pharmaceutical composition by dentists during office visits. Because our strain out-competes resident strains on teeth, one treatment may last for a long time. Preliminary studies conducted by our Chief Scientific Officer, Dr. Jeffrey Hillman have shown our Replacement Therapy technology to be effective and non toxic in animals.1 We hope that further testing will confirm these results. We have not yet conducted human clinical trials.

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Animal Studies. Dr. Jeffrey Hillman, our Chief Scientific Officer, and others have conducted animal studies of the effectiveness of our replacement therapy technology in rats at the Forsyth Institute, the University of Florida and our company from 1976 to 2002.2 In the most recent of these studies, our strain of S. mutans and wild-type strains of S. mutans were grown in culture in the presence of sugar. After careful analysis of the culture, it was found that the wild strain made lactic acid almost exclusively from the metabolism of sugar. It also made very small amounts of other acids and the non-acidic compounds, ethanol and acetoin. By contrast, our strain made mostly the non-acidic compounds, ethanol and acetoin, from metabolism of the sugar. Our strain produced absolutely no detectable lactic acid. We then infected 2 identical groups of conventional rats with either the wild strain or our strain. A third identical group of rats was not infected and served as a control group. After feeding the rats a diet containing sugar for 8 weeks, the teeth of the rats were carefully inspected to determine their incidence and severity of tooth decay. It was found that animals infected with our strain had no more tooth decay than did the control group animals. Both the group infected with our strain and the control group had only half the tooth decay experienced by the wild strain.

Dr. Hillman and others also conducted a 6 month toxicity study in rats. They infected a group of rats with our licensed, patented strain of S. mutans. No gross or histological side effects were found during colonization of the rats over this prolonged period.

These studies provide scientific evidence of the effectiveness of our licensed, patented strain of S. mutans in preventing tooth decay, and of its non-toxicity, in animals.

Manufacturing. The manufacturing methods for producing our strain of S. mutans to be used in our replacement therapy technology will be standard fermentation methods. These involve culturing bacteria in large vessels, and harvesting them when mature by centrifuge or filtration. The cells will then be suspended in a pharmaceutical medium appropriate for application in the human mouth. These methods are commonplace and readily available within the pharmaceutical industry. We intend to consider sublicensing our replacement therapy technology to a pharmaceutical company. If we are successful in doing so, the sublicensee company will manufacture and market our replacement therapy technology.

Method of Administration. We expect, if we are successful in obtaining the necessary regulatory approvals, that the product based on our replacement therapy technology will be a liquid rinse which will be applied to a patient's teeth by a dentist. We expect that it will be available by prescription only.

Competition. We do not know of any direct competitors with our licensed, patented replacement therapy technology. We understand that certain companies have been researching vaccines to inhibit the growth of S. mutans. However, every vaccine has drawbacks, including induced-heart-reactive antibodies in animals. Major studies would be required to establish that elimination of naturally occurring bacteria such as S. mutans from the mouth will not create serious, unintended consequences. Academic institutions, government agencies and other public and private research organizations may also conduct research, seek patent protection and establish collaborative arrangements for discovery, research and clinical development of technologies and products similar to ours. Many of our potential competitors in these areas have research and development capabilities that may allow them to develop new or improved products that may compete with products based on our technologies.

Any product based on our replacement therapy technology will compete against traditional oral care products used to combat tooth decay. These products include tooth sealants and fluoride treatments administered by dentists, and fluoride based toothpastes. Some of our competitors will include Colgate, Procter & Gamble, Unilever, GlaxoSmithKline and Dentsply. All of these companies are much larger and have far greater technical and financial resources than us. It is our intention to compete in the market for dental care products by obtaining a strategic partner with a dedicated sales force in the dental office market. There can be no assurance we will be able to obtain any such partner. If we are unable to secure such a strategic partner, we will seek to enter into a contract manufacturing arrangement with a pharmaceutical manufacturing company, and to enter into distribution agreements with dental product distributing companies. There can be no assurance we will be able to enter into any such arrangement.

1        Hillman et al, Construction and Characterization of an Effector Strain
         of Streptococcus mutans for Replacement Therapy of Dental Caries,
         Infection and Immunity (2000) Vol.68, No. 2.
2        Hillman et al, Construction and Characterization of an Effector Strain
         of Streptococcus mutans for Replacement Therapy of Dental Caries,
         Infection and Immunity (2000) Vol.68, No. 2.

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License. We hold our patented replacement therapy technology under license from the University of Florida Research Foundation, Inc. The license is dated August 4, 1998. It was amended on September 15, 2000, July 10, 2002, September 25, 2002 and March 17, 2003. It provides us with an exclusive world wide license to make, use and sell products and processes covered by Patent No. 5,607,672. This patent covers the genetically altered strain of S. mutans which does not produce lactic acid, a pharmaceutical composition for administering the genetically altered strain, and the method of preventing tooth decay by administering the strain. The University of Florida Research Foundation, Inc. has reserved for itself and the University of Florida the right to use and sell such products and services for research purposes only. Our license also provides the University of Florida Research Foundation, Inc. with a license, for research purposes only, to any improvements we make to the products and processes covered by the patent. Our license is for the period of the patent, subject to the performance of terms and conditions contained therein. The patent is dated March 4, 1997, and will expire on March 3, 2014.

Under the license, we have entered into an Equity Agreement with the University of Florida Research Foundation, Inc. under which we have issued as partial consideration for our license 599,940 shares of our common stock which is 4.5% of our total outstanding shares as of December 31, 2003. We are obligated to pay 5% of the selling price of our products to the University of Florida Research Foundation, Inc. If we sublicense the license, we are obligated to pay 20% of all amounts we receive from the sublicensee to the University of Florida Research Foundation, Inc. On December 31, 2005 and each year thereafter we are obligated to make a minimum royalty payment of $50,000. We spent at least an aggregate of $600,000 in 2003 and are obligated to spend or cause to be spent an aggregate of $1,000,000 in each calendar year following 2003 on the research, development and regulatory prosecution of our replacement therapy and mutacin 1140 technologies together, until a product which is covered wholly or partially by the claims of the patent, or is manufactured using a process which is covered wholly or partially by the claims of the patent, is sold commercially.

If we fail to make these minimum expenditures, the University of Florida Research Foundation, Inc. may terminate our license.

We must pay all patent costs and expenses incurred by the University of Florida Research Foundation, Inc. for the preparation, filing, prosecution, issuance and maintenance of the patents beyond $105,000. We have paid $100,000 to UFRF for the patent expenses already incurred.

We have agreed to indemnify and hold the University of Florida Research Foundation, Inc. harmless from any damages caused as a result of the production, manufacture, sale, use, lease, consumption or advertisement of the product. Further, we are required to maintain liability insurance coverage appropriate to the risk involved in marketing the products. We have obtained liability insurance in the amount of $1,000,000. This policy expires on June 24, 2004. There is no assurance that we can obtain continued coverage on reasonable terms.

Intellectual Property Matters. We do not hold any patents on our replacement therapy technology. Our rights to this technology flow from our license with the University of Florida Research Foundation, Inc.

We received notification from B.C. International Corporation on July 29, 2002 that a gene utilized in our licensed, patented strain of S. mutans infringes a patent which it holds under a license. Their notification did not state that they intended to pursue legal remedies. Management of our company does not believe the gene in question infringes that patent. We have sent them correspondence setting out our position. We have heard nothing further from them.

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Regulatory Status. We submitted an investigational new drug application for our replacement therapy technology in 1998. The FDA placed our application on clinical hold on December 3, 1998 pending resolution of concerns related to transmission of our genetically modified strain of S. mutans by those treated with it to others who have not been treated with it, possible reversion of our strain to an acid-producing strain, and the possibility of genetic transfer of the ability to produce mutacin 1140 from our strain to other forms of bacteria which occur naturally in human beings. The clinical hold order was issued because the FDA believed our application did not contain sufficient information to allow it to assess the risks to the subjects in our proposed human clinical studies. We may not commence Phase I human clinical studies of our replacement therapy technology until the clinical hold is lifted. We have amended our first investigational new drug application three times to respond to the FDA's concerns. We filed a new investigational new drug application in March of 2003. This investigational new drug application has also been placed on hold until we satisfy the FDA's safety concerns. As a result of the research and development work we have done to respond to the FDA's concerns, we have gained valuable knowledge about the use and administration of our replacement therapy technology.

On October 23, 2000, we met with representatives of the FDA's Center for Biological Evaluation and Research ("Center") to discuss their concerns. At that meeting, we and the Center's representatives discussed design of the preclinical experiments which the FDA would require in response to the clinical hold. In order to address the FDA's concerns, we developed a modification of our licensed, patented strain of S. mutans. The modified strain has a nutritional requirement for a substance known as D-alanine. If D-alanine is withdrawn from its diet, it will die. Conceptually, because of the nutritional requirement of our modified strain, if it is transmitted to those who have not been treated with it, it will die, unless D-alanine is administered regularly. D-alanine will be supplied to the trial subjects with mouth rinse. D-alanine is not normally found in the human diet, which is why it has been selected for our study as a potential recall mechanism. The maintenance system will be by regular mouth rinse, the amount and frequency of which will be determined in the clinical trials. In the rat animal model used, total eradication was not achieved even when D-alanine was removed from the diet. We hypothesize this occurred because the rats were able to feed our strain with D-alanine obtained through cross-feeding from bacteria in their feces, which the rats consumed. We commenced these studies in 2001. The results of the studies can be summarized as follows. The modifications to produce D-alanine dependence had no effect on the modified strain's production of lactic acid or mutacin 1140, which suggests that the modified strain compares identically to our original strain with respect to its ability to out-compete natural strains and non-production of tooth decay. No adverse side effects were observed in laboratory rats infected with the modified strain, and exposed to D-alanine in their drinking water, for five months. The potential for reversion of the modified strain to lactic acid production and for transmission of the modified strain to those not treated with it were demonstrated to be very low. Transfer of DNA from our strain to other strains was shown to be statistically extremely low because of the genetic modification made to prevent any DNA transfer.

On March 19, 2003, we submitted a new investigational new drug ("IND") application to the FDA in respect of our newly modified strain of our licensed, patented strain of S. mutans. It incorporates our previous investigational new drug application by reference. Our new investigational drug application refers to an ongoing eradication animal study and indicates that results from that study will be submitted as an amendment when it is complete. On April 18, 2003, the FDA notified us by telephone that it was placing our new investigational new drug application on clinical hold. We spoke again by telephone with the FDA on April 30, 2003. The FDA has indicated that, in order to lift the clinical hold, it wants certain of the experimental protocols for our human clinical trials described in our new investigational new drug application redesigned to include a full physical examination of subjects' spouses, and to include more extensive testing of subjects' spouses, including six months post-trial follow-up. The FDA also required additional preclinical animal toxicity studies in which our newly modified strain of S. mutans and D-alanine were ingested by rats together and separately, and studies demonstrating total eradication of our newly modified strain of S. mutans from test animals. The FDA issued a formal letter outlining its requests on May 15, 2003 and the requested studies were completed in December 2003. We filed an amendment to our IND with the results of those studies in January 2004. The FDA's primary safety concern is the theoretical risk of our strain reverting to acid production or of our strain's DNA being transferred to other naturally occurring organisms. Until the FDA is satisfied this theoretical risk is not a safety threat, the FDA will want to see total eradication of the strain from animals and from clinical subjects following the first human studies. Before allowing our clinical study to proceed, the FDA will submit our application and protocol to the FDA's Vaccines and Related Biological Product Advisory Committee and/or the National Institute of Health's Recombinant DNA Advisory Committee ("NIH RAC") for their recommendations regarding concerns of release of the bacteria into the environment. We are scheduled to appear before the NIH RAC on March 10, 2004.

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The D-alanine dependent strain was designed to meet the FDA's requirement for total eradication of the strain in the unlikely event that either of two adverse events is observed during clinical trials. In particular, if the strain somehow reacquired the ability to make lactic acid, this would qualify as a reason to eradicate it from the test subjects. Also, if it is observed that the strain can be transmitted from treated subjects to untreated subjects, this would also qualify as a reason to eradicate it. In several rat studies performed to test if eliminating D-alanine from the diet resulted in eradication, the strain was reduced significantly in numbers but not totally eradicated. We hypothesize that the rats continued to supply the strain with D-alanine by eating their feces. Many bacteria found in feces produce D-alanine naturally. This route of D-alanine supplementation is not a concern in human subjects. We expect that the absence of D-alanine in the human diet will enable us to achieve total eradication of the strain in human subjects by stopping the twice-daily rinses with D-alanine. The FDA has acknowledged the likelihood of our hypothesis, but would like us to devise a method that will assure eradication of the strain in animals. We conducted a study in which animals infected with the strain have been taken off their D-alanine supplementation and are also being treated twice daily by topical application of a commercially available chlorhexidine mouth rinse. The measured levels of the strain fell steadily over the course of the study to non-detectable levels. On February 5, 2004, the FDA informed the Company that our IND remained on clinical hold since the FDA still wants to see total eradication of our strain and has suggested the use of antibiotic treatments to accomplish total eradication. On February 24, 2004 we requested a face-to-face meeting with the FDA in early April 2004 to discuss and resolve their concerns and allow us to proceed with the Phase I clinical trial. If the FDA removes the clinical hold on our investigational new drug application, we will be permitted to commence human clinical trials of our licensed, patented replacement therapy technology. The cost per patient is estimated at $10,000.

Our patient estimate for each phase of the clinical trial process for the replacement therapy technology is:

Phase I Combined Phase II/III

24-30 3,000

MUTACIN 1140

Background. Our second licensed, patented technology is mutacin 1140, an antibiotic peptide which is produced by our strain of S. mutans. It was discovered by Dr. Hillman in the course of his research into our replacement therapy technology. It is a broad spectrum antibiotic which has demonstrated potency, in laboratory studies against all Gram-positive bacteria against which it has been tested.3 The testing was conducted by Dr. Jeffrey Hillman, our Chief Scientific Officer and a significant shareholder of our company, together with others at the University of Florida and at our laboratories in 1998 and 1999.

Introduction to Antibiotics. Before the development of effective modern antibiotics, serious bacterial infections were as feared as AIDS is today. Since development of antibiotics, they have been less feared. However, society may soon be faced once again with the prospect of bacterial and fungal diseases becoming major causes of death. Resistance to drugs which are effective against bacterial and fungi is increasing, and at a faster pace than development of drugs which are effective against them.

Market Opportunity. Since the initial discovery and introduction of antibiotics some 50 years ago, doctors and researchers have found that bacteria are efficient at developing or acquiring mechanisms of defense. Until recently, antibiotic resistance appeared to be a relatively minor nuisance. Drug manufacturers were confident they could modify the structure of existing drugs such as penicillins, cephalosporins and tetracyclines faster than bacteria are able to develop drug resistance. Unfortunately, this has not proved to be the case. The numbers of drug resistant bacteria are on the rise, and the development of new treatment options has not kept pace. The single greatest problem in the use of antibiotics today is resistance by the disease causing organisms they are targeted against. The Center for Disease Control estimates that bacteria resistant to known antibiotics cause 44% of hospital infections. Drug resistant bacterial infections affect approximately 9 million people annually in the United States, resulting in some 60,000 deaths. Vancomycin, introduced in 1956, today serves as the last line of defense against certain life-threatening infections. Unfortunately, certain bacteria have developed strains which resist even vancomycin. Many experts caution we may soon see the return of the pre- antibiotic era.

1        Hillman et al, Constructin and Characterization of an Effector Strain
         of Streptococcus mutans for Replacement Therapy of Dental Caries,
         Infection and Immunity (2000) Vol.68, No. 2.

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      Technical Background. Preliminary in vitro4 laboratory studies conducted

by Dr. Jeffrey Hillman have demonstrated mutacin 1140's effectiveness against all tested Gram-positive bacteria.5 Gram-positive bacteria are a class of bacteria that cause a large variety of human infections. We hope further testing will confirm these results. mutacin 1140 belongs to a small class of antibiotics called lantibiotics. Lantibiotics differ from other antibiotics because they contain an unusual amino acid. They are able to kill a wide variety of bacteria by punching holes in their cellular membranes.

Nisin is a lantibiotic that has been widely used for decades as a food preservative. We will study mutacin 1140 first for its potential application in the clinical treatment of various infectious diseases. In laboratory studies it has been effective at killing a broad spectrum of bacteria, including the streptococci that cause pharyngitis (strep throat) and pneumonia. It is also effective against Staphylococci, which cause various sorts of infection.6 At a later time, we may undertake the further study of mutacin 1140 for use as a food preservative.

Mutacin 1140 has other properties that indicate its potential usefulness and acceptance as an antibiotic. The most striking of these is the observation that these pathogenic bacteria based on testing to date seem to have great difficulty in becoming resistant to it.7 It is a small, modified peptide that is expected to be absorbed by an oral route of administration. Preliminary animal testing conducted by Dr. Hillman indicates that it does not readily provoke an immune response, indicating that it may not be very allergenic.8

Laboratory Testing. Dr. Hillman and others have conducted laboratory studies at the Forsyth Institute, the University of Florida and our company to test the efficacy of mutacin 1140 as an antibacterial agent from 1984 to the present.9 To test the ability of mutacin 1140 to kill bacteria, standard microbiological testing methods were employed. Mutacin 1140 was purified and incorporated into growth medium at different concentrations. This medium was then inoculated with the bacterium under study, and its ability to grow in the presence of mutacin 1140 was observed. The minimal inhibitory concentration (MIC), which is defined as the lowest concentration of mutacin 1140 that was observed to inhibit growth of the test bacterium, was recorded.

Purified mutacin 1140 was found to have a very broad spectrum of activity. It was found to kill all Gram-positive bacteria tested at concentrations comparable to many therapeutically effective antibiotics. The bacteria found to be sensitive included those responsible for human infections such as streptococcal pharyngitis ("strep throat"), the predominant type of human pneumonia, and bacterial endocarditis.

1        Hillman et al, Constructin and Characterization of an Effector Strain
         of Streptococcus mutans for Replacement Therapy of Dental Caries,
         Infection and Immunity (2000) Vol.68, No. 2.
2        Studies carried out in isolation from a living organism.
3        Wojciehowski, Byers and Hillman, Regulation of Expression of the
         Structural Gene for Mutacin 1140 and Characterization of its
         Antibacterial Properties (2002), submitted for publication.
4        Wojciehowski, Byers and Hillman, Regulation of Expression of the
         Structural Gene for Mutacin 1140 and Characterization of its
         Antibacterial Properties (2002), submitted for publication.
5        Wojciehowski, Byers and Hillman, Regulation of Expression of the
         Structural Gene for Mutacin 1140 and Characterization of its
         Antibacterial Properties (2002), submitted for publication and Hillman
         et al, Isolation of a Streptococcus mutans Strain Producing a Novel
         Bacterium, Infection and Immunity (1984) Vol. 44, No. 1, pp. 141-144.
6        Wojciehowski, Byers and Hillman, Regulation of Expression of the
         Structural Gene for Mutacin 1140 and Characterization of its
         Antibacterial Properties (2002), submitted for publication and Hillman
         el al, Isolation of a Streptococcus mutans Strain Producing a Novel
         Bacterium, Infection and Immunity (1984) Vol. 44, No. 1, pp. 141-144.
7        Wojciehowski, Byers and Hillman, Regulation of Expression of the
         Structural Gene for Mutacin 1140 and Characterization of its
         Antibacterial Properties (2002), submitted for publication and Hillman
         el al, Isolation of a Streptococcus mutans Strain Producing a Novel
         Bacterium, Infection and Immunity (1984) Vol. 44, No. 1, pp. 141-144.

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          A particularly interesting feature of mutacin 1140 is that none of the

sensitive species of bacteria tested were able to acquire genetically stable resistance to purified mutacin 1140. Acquired resistance to antimicrobial agents by strains of bacteria which cause illness in humans has become a major problem in the recent past.

Manufacturing. We have not yet identified the production method for mutacin 1140.

Method of Administration. We expect that, if we are successful in identifying a production method for mutacin 1140 and obtaining the necessary regulatory approvals, any products based on our mutacin 1140 technology will be antibiotic drugs, available only by prescription. We do not yet know the method by which products based on mutacin 1140 will be administered to patients. They may be administered orally, topically or by injection.

Competition. We believe that the current direct competitors with our mutacin 1140 technology are antibiotic drugs such as vancomycin and others. There are strains of bacteria which have developed resistance even to vancomycin. We believe that there is ample room in the marketplace for new antibiotic drugs.

We are aware of a mutacin peptide similar to mutacin 1140 patented by the University of Laval. Successful development of that technology would constitute major competition for mutacin 1140.

Many potential competitors of ours are taking approaches quite different from ours to the development of antibiotic drugs. These include traditional natural products screening, genomics to identify new antibiotic targets and combinatorial chemistry to generate new chemical structures. Competition in the pharmaceutical industry is based on drug safety, efficacy, ease of use, patient compliance, price, marketing and distribution. The commercial success of our mutacin 1140 technology will depend on our ability and the ability of our sublicensees to compete effectively in all these areas. There can be no assurance our competitors will not succeed in developing products which are more effective than mutacin 1140, or which would render mutacin 1140 obsolete and non competitive.

If we are able to find a suitable method for producing mutacin 1140 and to obtain the necessary regulatory approvals, any products based on our mutacin 1140 technology will compete against a large number of prescription antibiotics currently on the market, and against new antibiotic products which will enter the market over the next several years. Producers of antibiotic products include many large, international pharmaceutical companies, all of which have much greater financial and technical resources than us. It is our intention to compete in the market for antibiotic products by obtaining a strategic partner with an established sales force calling on doctors and hospitals. There can be no assurance we will be able to obtain any such partner. If we are not, we will be obliged to develop our own channels of distribution for products based on mutacin 1140. There can be no assurance we will be able to do so.

License. We hold our patented mutacin 1140 technology under license from the University of Florida Research Foundation, Inc. dated June 22, 2000. It was amended on September 15, 2000, July 10, 2002, September 25, 2002 and March 17, 2003. It provides us with an exclusive world wide license to make, use and sell products and processes covered by patents no. 5,932,469 and 6,391,285. These patents together cover mutacin 1140, a pharmaceutical preparation containing mutacin 1140, and the method of controlling growth of bacteria by use of mutacin 1140. Our license is for a period of the patent, subject to the performance of terms and conditions contained therein. The University of Florida Research Foundation, Inc. has reserved for itself and the University of Florida the right to use and sell such products and services for research purposes only. Our license also provides the University of Florida Research Foundation, Inc. with a license, for research purposes only, to any improvements we make to the products and processes covered by the patent. Patent No. 5,932,469 is dated August 3, 1999 and expires August 2, 2016, and Patent No. 6,391,285 is dated May 21, 2002 and expires May 20, 2019. Under the terms of the license, we are obligated to pay 5% of the selling price of our products to the University of Florida Research Foundation, Inc. If we sublicense the license, we are obligated to pay 20% of the amounts we receive from the sublicensee to the University of Florida Research Foundation, Inc. In calendar year 2005 and each year thereafter we are obligated to make a minimum royalty payment of $50,000. We spent at least an aggregate of $600,000 in 2003 and are obligated to spend or cause to be spent an aggregate of $1,000,000 in each calendar year following 2003 on the research, development and regulatory prosecution of our replacement therapy and mutacin 1140 technologies together, until a product which is covered wholly or partially by the claims of the patent, or is manufactured using a process which is covered wholly or partially by the claims of the patent, is sold commercially.

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If we fail to make these minimum expenditures, the University of Florida Research Foundation, Inc. may terminate our license.

We have agreed to indemnify and hold the University of Florida Research Foundation, Inc. harmless from any damages caused as a result of the production, manufacture, sale, use, lease, consumption or advertisement of the product. Further, we are required to maintain liability insurance coverage appropriate to the risk involved in marketing the products. We have obtained liability insurance in the amount of $1,000,000. This policy expires on June 24, 2004.

Intellectual Property Matters. We do not hold any patents on our mutacin 1140 technology. Our rights to this technology flow from our license with the University of Florida Research Foundation, Inc.

We are aware that the University of Laval has obtained a patent in respect of a mutacin antibiotic similar to mutacin 1140. It is our view that this patent and our licensed patent do not infringe on each other. The University of Florida Research Foundation, Inc. obtained its patent in respect of mutacin 1140 before the University of Laval obtained its patent. Nevertheless, it is possible our licensed patent may infringe on the University of Laval's patent. If so, we may have to incur substantial costs related to sublicensing the University of Laval's patent, or if we are unable to negotiate a sublicense, we may be exposed to litigation from the University of Laval.

Regulatory Status. We have not yet submitted an investigational new drug application to the FDA for our mutacin 1140 technology, because we have not yet found a method to produce it in quantities necessary to undertake such studies. We have hired two senior scientists dedicated to creating a satisfactory production method. We hope to complete development of such a method within 6 to 9 months.

Our patient estimate for each phase of the clinical trial process for our mutacin 1140 technology is:

PHASE I PHASE II/III

24-30 500 - 1,000

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PROBIOTIC TECHNOLOGY

Background. Probiotics employ naturally occurring bacteria to confer a health benefit when administered in adequate amounts. Probiotics are widely accepted in Japan and Europe and acceptance in the United States is growing. The uses of yogurt containing live Lactobacillus cultures to improve digestion, immune system support or vaginal and urinary tract health are examples of common probiotic applications. Dr. Hillman has capitalized on his extensive research to create a probiotic product that is intended to maintain dental and periodontal health.

Market Opportunity. Probiotics have been targeted at improving the digestive system for many years, and they have broad acceptance in Japan and Europe. The world market has been estimated at greater than $3 billion in annual sales. If successfully developed, our probiotic treatment will be one of the first probiotic products marketed for the maintenance of oral health.

Technical Background. We have identified three natural strains of bacteria that can be employed as a probiotic product. Our laboratory and animal studies have demonstrated the ability of these organisms to maintain a healthy oral environment by creating a healthful balance of total bacteria, including a reduction in the numbers of bacteria that are the causative agents of periodontal disease and tooth decay.

Laboratory Testing. Research by Dr. Hillman and others has shown that certain types of natural bacteria normally present in dental plaque can prevent the growth of bacteria that are widely believed to be responsible for periodontal (gum) disease. The beneficial bacteria are called Streptococcus oralis and Streptococcus uberis. These bacteria have been shown to inhibit the growth of disease-causing bacteria both in the laboratory and in animal models of infection.1,2 Analysis of data from a number of laboratories indicated that the presence of S. oralis and S. uberis provided a good indication of the health of the gums.3 When these bacteria are absent from sites in the gums, the sites are much more prone to disease. In order to maintain a healthy balance of bacteria in the gums, Oragenics will provide a probiotic product that contains a mixture of S. oralis and S. uberis.

Most human tooth decay has been shown to be caused by Streptococcus mutans, which lives on nearly everyone's tooth surfaces and converts sugar in their diet to lactic acid. The lactic acid erodes the mineral in enamel and dentine, weakening the tooth and ultimately resulting in decay. Research by Dr. Hillman has led to the discovery of a particular strain of Streptococcus rattus that is naturally deficient in its ability to produce lactic acid. Therefore, this strain of S. rattus was shown to be unable to cause tooth decay.4 Because S. rattus is very closely related to S. mutans, we believe that daily treatment with this beneficial strain could significantly reduce the numbers of tooth decay-causing S. mutans by competing for nutrients and attachment sites on the tooth surface. This belief has been tested in laboratory animals and was confirmed. Therefore, the Oragenics probiotic will contain a mixture of three natural bacteria that includes lactic acid-deficient S. rattus strain for the maintenance of dental health, in addition to the S. oralis and S. uberis strains for the maintenance of periodontal health.

Oragenics is currently performing acute and 3 month chronic toxicity testing in laboratory rats. Further work will involve studies to determine an appropriate and stable delivery system, and to determine the optimum dosage levels in human clinical trials.

1        Socransky et al., Associations Between Microbial Species in Subgingival
         Plaque Samples. Oral Microbiology and Immunology (1987) Vol.3:1-7.
2        Hillman et al., Interaction Between Wild-type, Mutant and Revertant
         Forms of the Bacterium Streptococcus sanguis and the Bacterium
         Actinobacillus actinomycetemcomitans In Vitro and in the Gnotobiotic
         Rat. Archives of Oral Biology (1988) Vol.33:395-401.
3        Socransky et al., Associations Between Microbial Species in Subgingival
         Plaque Samples. Oral Microbiology and Immunology (1987) Vol.3:1-7.
4        Johnson et al., Cariogenic Potential In Vitro in Man and In Vivo in the
         Rat of Lactate Dehydrogenase Mutants of Streptococcus mutans. Archives
         of Oral Biology Vol.25:707-713.

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            Manufacturing. The manufacturing methods for producing our probiotic

strains will be standard fermentation methods. These involve culturing bacteria in large vessels and harvesting them when mature by centrifuge or filtration. These methods are commonplace and readily available within the pharmaceutical industry.

Method of Administration. We expect that the product will be self-administered by consumers as a mouth rinse.

Competition. Many companies sell probiotics that are principally designed for digestive health, vaginal health and immune system support. Our product will not compete directly with these companies. Recently researchers at the University of Hiroshima have published studies that indicate the Lactobacillus reuteri aids in the prevention of tooth decay. Lactobacillus reuteri is widely used as a probiotic for other indications and may be used in the future for dental health. We are not aware of any product on the market today that is targeted to maintain periodontal health.

Intellectual Property Matters. We filed a patent application for this technology in August of 2003. The Company owns the patent rights to this technology.

Regulatory Status. Probiotic products that claim to confer a health benefit are generally able to enter the market without the need for extensive regulatory filings and testing. This avenue is available for products that do not make any claim that they treat, prevent or cure a disease, which are considered to be drug claims. We intend to market our probiotic product without any drug claims.

OTHER LICENSED TECHNOLOGY

In March 2004, we licensed from IviGene Corporation applications of a novel technology that enables the simple, fast identification of novel and potentially important gene targets associated with the natural onset and progression of cancers and other diseases in humans and other living organisms, including plants. This licensed technology will offer us the potential to generate and develop a number of product candidates for future out-licensing to corporate partners, particularly in the area of cancer.

This technology platform was developed by our founder, chairman and chief scientific officer, Jeffrey D. Hillman, and University of Florida scientists. It is called in vivo induced antigen technology (IVIAT). IVIAT can quickly and easily identify in vivo induced genes in human infections without the use of animal models, facilitating the discovery of new targets for the development of vaccines, antimicrobials and diagnostics. Dr. Hillman and his collaborators have further developed methods based on this approach to create Change Mediated Antigen Technology (CMAT). CMAT can be used to identify gene targets associated with the onset and progression of cancerous processes and autoimmune diseases. It can also be used to identify novel genes in plant diseases, including genes expressed by the pathogen when it causes the disease and genes expressed by the plant in response to the disease.

Our license provides us with exclusive worldwide rights to this broad platform technology in the areas of cancer and tuberculosis, as well as agricultural and other non-human uses. In return, we will pay royalties on revenues we are able to generate from any products developed using the technology, including royalties on sublicense fees, milestone payments and future product sales. To support the research for this technology, we have received a $100,000 Phase I SBIR Grant from the National Institute of Allergy and Infections Diseases (NIAID) of the National Institutes of Health (NIH). This grant will support initial research to help us identify genes of Mycobacterium tuberculosis that are specifically induced during human infections with that pathogen.

Directors and officers of Oragenics have a significant ownership interest in IviGene Corporation. Under the terms of our license with IviGene we are not obligated to make any payments to IviGene until we have achieved certain milestone or royalty payments.

This licensed technology is in its early stages and will require further development which will require additional capital.

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FEDERAL FOOD AND DRUG ADMINISTRATION (FDA) REGULATION

The FDA and comparable regulatory agencies in state and local jurisdictions and in foreign countries impose substantial requirements upon the clinical development, manufacture and marketing of drugs. These agencies and other federal, state and local entities regulate research and development activities and the testing, manufacture, quality control, safety, effectiveness, labeling, storage, record-keeping, approval, advertising and protection of most products we may develop.

GENERAL

The steps required before a new drug may be produced and marketed in the United States are:

1. Preclinical laboratory and animal tests

2. Investigational new drug application

3. Clinical trials (Phases I, II and III)

4. New drug application (review and approval)

5. Post-marketing surveys

The testing and approval procedures require substantial time, effort and financial resources and we cannot assure you that any approval will be timely granted, or at all.

PRECLINICAL TRIALS AND INVESTIGATIONAL NEW DRUG APPLICATION

Preclinical tests are conducted in the laboratory, and usually involve animals. They are done to evaluate the safety and efficacy of the potential product. The results of the preclinical tests are submitted as part of the investigational new drug application and are fully reviewed by the FDA prior to granting the applicant permission to commence clinical trials in humans. Submission of an investigational new drug application may not result in FDA approval to commence clinical trials.

CLINICAL TRIALS

Clinical trials are conducted in three phases, normally involving progressively larger numbers of patients.

PHASE I

Phase I clinical trials consist of administering the drug and testing for safety and tolerated dosages as well as preliminary evidence of efficacy in humans. They are concerned primarily with learning more about the safety of the drug, though they may also provide some information about effectiveness. Phase I testing is normally performed on healthy volunteers. The test subjects are paid to submit to a variety of tests to learn what happens to a drug in the human body; how it is absorbed, metabolized and excreted, what effect it has on various organs and tissues; and what side effects occur as the dosages are increased. The principal objective is to determine the drug's toxicity.

PHASE II

Assuming the results of Phase I testing present no toxicity or unacceptable safety problems, Phase II trials may begin. In many cases Phase II trials may commence before all the Phase I trials are completely evaluated if the disease is life threatening and preliminary toxicity data in Phase I shows no toxic side effects. In life threatening disease, Phase I and Phase II trials are sometimes combined to show initial toxicity and efficacy in a shorter period of time. Phase II trials involve a study to evaluate the effectiveness of the drug for a particular indication and to determine optimal dosages and dose interval and to identify possible adverse side effects and risks in a larger patient group. The primary objective of this stage of clinical testing is to show whether the drug is effective in treating the disease or condition for which it is intended. Phase II studies may take several months or longer and involve a few hundred patients in randomized controlled trials that also attempt to disclose short-term side effects and risks in people whose health is impaired. A number of patients with the disease or illness will receive the treatment while a control group will receive a placebo. At the conclusion of Phase II trials, we and the FDA will have a clear understanding of the short-term safety and effectiveness of our technologies and their optimal dosage levels.

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PHASE III

Phase III clinical trials will generally begin after the results of Phase II are evaluated. If a product is found to be effective in Phase II, it is then evaluated in Phase III clinical trials. The objective of Phase III is to develop information that will allow the drug to be marketed and used safely. Phase III trials consist of expanded multi-location testing for efficacy and safety to evaluate the overall benefit or risk index of the investigational drug in relation to the disease treated. Phase III trials will involve thousands of people with the objective of expanding on the clinical evidence.

Some objectives of Phase III trials are to discover optimum dose rates and schedules, less common or even rare side effects, adverse reactions, and to generate information that will be incorporated into the drug's professional labeling and the FDA-approved guidelines to physicians and others about how to properly use the drug.

PHARMACEUTICAL DEVELOPMENT

The method of formulation and manufacture may affect the efficacy and safety of a drug. Therefore, information on manufacturing methods and standards and the stability of the drug substance and dosage form must be presented to the FDA and other regulatory authorities. This is to ensure that a product that may eventually be sold to the public has the same composition as that determined to be effective and safe in the clinical studies. Production methods and quality control procedures must be in place to ensure a relatively pure compound, essentially free of contamination and uniform with respect to all quality aspects.

NEW DRUG APPLICATION

The fourth step that is necessary prior to marketing a new drug is the new drug application submission and approval. In this step, all the information generated by the preclinical and human clinical trials, as well as manufacturing information for the drug, will be submitted to the FDA and, if successful, the drug will be approved for marketing.

POST MARKETING SURVEYS

The final step is the random surveillance or surveys of patients being treated with the drug to determine its long-term effects. This has no effect on the marketing of the drug unless highly toxic conditions are found.

The required testing, data collection, analysis and compilation of an investigational new drug application and a new drug application are labor intensive and costly and may take a great deal of time. Tests may have to be redone or new tests performed in order to comply with FDA requirements. Therefore, we cannot estimate with any certainty the length or the costs of the approval process. We can offer no assurance that we will ever receive FDA approval of products derived from our licensed, patented technologies.

OUR REGULATORY CONSULTANTS

We have engaged Health Decisions to provide us with consulting services relating to our regulatory affairs, and strategic and scientific advice related to our projects, under an agreement dated October 24, 2003. We have agreed to pay Health Decisions fees ranging from $550 to $2,200 per day. We will also pay Health Decisions out-of-pocket and other expenses incurred as a result of performing their services. Either party may terminate the agreement without cause at any time.

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Marketing. We presently intend to seek to sublicense our replacement therapy and mutacin 1140 technologies to pharmaceutical companies for manufacturing and marketing. Assuming the new drug applications are successful, the sublicensees would be responsible for marketing products derived from our licensed, patented technologies. We intend to select sublicensees on the basis of their experience and financial success. We can offer you no assurances that we will obtain FDA approval for our technologies or that we will be successful in entering into sublicenses with established multinational companies.

COMPETITION

Industry. The pharmaceutical and biotechnology industries are characterized by intense competition, rapid product development and technological change. Competition is intense among manufacturers of dental therapeutics and prescription pharmaceuticals. Most of our potential competitors are large, well established pharmaceutical, chemical or healthcare companies with considerably greater financial, marketing, sales and technological resources than are available to us. Academic institutions, government agencies and other public and private research organizations may also conduct research, seek patent protection and establish collaborative arrangements for discovery, research and clinical development of technologies and products similar to ours. Many of our potential competitors have research and development capabilities that may allow them to develop new or improved products that may compete with products based on our technologies. Products developed from our technologies could be rendered obsolete or made uneconomical by the development of new products to treat the conditions to be treated by products developed from our technologies, technological advances affecting the cost of production, or marketing or pricing actions by our potential competitors. This could materially affect our business, financial condition and results of operations. We cannot assure you that we will be able to compete successfully.

Personnel. Competition among biotechnology and biopharmaceutical companies for qualified employees is intense, and there can be no assurance we will be able to attract and retain qualified individuals. If we fail to do so, this would have a material, adverse effect on the results of our operations and the performance of your investment.

We do not maintain any life insurance on the lives of any of our officers and directors. We are highly dependent on the services of our directors and officers, particularly on those of Jeffrey Hillman and Mento Soponis. If one or all of our officers or directors die or otherwise become incapacitated, our operations could be interrupted or terminated.

RESEARCH AND DEVELOPMENT COSTS

In our last two fiscal years, we have spent $1,239,362 on research and development of our technologies.

COSTS OF ENFORCING OUR LICENSES

We have licenses to sell products made using the replacement therapy and mutacin 1140 technologies. The licenses were granted to us by the University of Florida Research Foundation, Inc., which owns the patents to our technologies. There is no assurance, however, that third parties will not infringe on our licenses or their patents. In order to protect our license rights and their patents, we or the University of Florida Research Foundation, Inc. may have to file lawsuits and obtain injunctions. If we do that, we will have to spend large sums of money for attorney fees in order to obtain the injunctions. Even if we do obtain the injunctions, there is no assurance that those infringing on our licenses or the University of Florida Research Foundation's patents will comply with the injunctions. Further, we may not have adequate funds available to prosecute actions to protect or to defend the licenses and patents, in which case those infringing on the licenses and patents could continue to do so in the future.

OUR EMPLOYEES

We are an early-stage biotechnology research and development company and currently have eleven full time employees other than our three officers and directors.

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AVAILABLE INFORMATION

Our website is www.oragenics.com. On our website we make available at no cost our annual reports on Form 10-KSB, quarterly reports on Form 10-QSB, current reports on Form 8-K and amendments to those reports filed or furnished as soon as reasonably practicable after we electronically file such material with, or furnish them to, the United States Securities and Exchange Commission ("SEC").

ITEM 2. DESCRIPTION OF PROPERTY.

Our administrative office and laboratory facilities are located at 12085 Research Drive, Alachua, Florida 32615. This is also our mailing address. Our telephone number is (386) 418-4018. We lease this property from the University of Florida Research Foundation, Inc. pursuant to an operating lease from March 15, 2003 to March 14, 2004 that was amended on January 26, 2004 allowing us to continue occupancy on a month-to-month basis. The annual rental is $43,352.

In January 2004, we entered into an agreement with a real estate developer to have a facility built that we will lease from the developer. The agreement requires us to pay a deposit of $6,400 and provides for monthly lease payments of $6,400, exclusive of utilities, insurance and real estate taxes. We also anticipate paying approximately $250,000 for equipment to outfit the facility. We anticipate moving to the new facility in July 2004 or shortly thereafter.

ITEM 3. LEGAL PROCEEDINGS.

As of the date hereof, we are not a party to any material legal proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None during the fourth quarter of the fiscal year covered by this report.

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BROKERAGE PARTNERS