What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-05-10 compared with 2020-11-09 · 188 added, 339 removed, 213 unchanged (71% of the section changed)

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Our proprietary and complementary technology platforms provide a strong foundation to realize the core promise of precision medicine by supporting our efforts to construct powerful gene programs to drive efficacy, deliver these programs through viral, non-viral, and microbe-based approaches to drive lower costs, and control gene expression to drive safety.

Our therapeutic platforms, including UltraCAR-T, ActoBiotics, and AdenoVerse Immunotherapy, are designed to allow us to precisely control the level and physiological location of gene expression and modify biological molecules to control the function and output of living cells to treat underlying disease conditions.

Our therapeutic platforms, including UltraCAR-T, AdenoVerse immunotherapy, and ActoBiotics, are designed to allow us to precisely control the level and physiological location of gene expression and modify biological molecules to control the function and output of living cells to treat underlying disease conditions.

We are actively advancing our lead clinical programs, including:

PRGN-3005 and PRGN-3006, which are built on our UltraCAR-T platform;

PRGN-2009, which is based on our AdenoVerse Immunotherapy platform;

AG019, which is built on our ActoBiotics platform;

and INXN-4001, a non-viral triple-effector plasmid DNA, which is built on our UltraVector platform.

In addition, our UltraPorator device, intended to be a viable scale-up and commercialization solution for decentralized UltraCAR-T manufacturing, received U.S.

Food and Drug Administration, or FDA, clearance for manufacturing UltraCAR-T cells in clinical trials.

PRGN-2009 and PRGN-2012, which are based on our AdenoVerse immunotherapy platform;

and AG019, which is built on our ActoBiotics platform.

In addition, we recently completed a Phase 1 study of INXN-4001, a non-viral triple-effector plasmid DNA, which is built on our UltraVector platform.

We also have a robust pipeline of preclinical programs that we are pursuing in order to drive long-term value creation.

We have developed a proprietary electroporation device, UltraPorator, designed to further streamline and ensure the rapid and cost-effective manufacturing of UltraCAR-T therapies.

In October 2020, we announced that UltraPorator received U.S.

Food and Drug Administration, or FDA, clearance for manufacturing UltraCAR-T cells in clinical trials, and in November 2020, we announced that we have begun dosing patients with UltraCAR-T cells manufactured with UltraPorator in our PRGN-3005 and PRGN-3006 clinical trials.

We exercise discipline in our portfolio management by systematically evaluating data from our preclinical programs in order to make rapid "go" and "no go" decisions.

Through this process, we believe we can more effectively allocate resources to programs that we believe show the most promise and advance such programs to clinical trials.

Our Healthcare Subsidiaries

Our healthcare business is operated by our wholly owned subsidiaries PGEN Therapeutics, Inc., or PGEN Therapeutics, Precigen ActoBio, Inc., or ActoBio, and Exemplar Genetics LLC, doing business as Precigen Exemplar, or Exemplar, and also includes our majority ownership interest in Triple-Gene LLC, doing business as Precigen Triple-Gene, or Triple-Gene, as well as equity and royalty interests in therapeutics and therapeutic platforms from companies not controlled by us.

PGEN Therapeutics, Inc.

PGEN Therapeutics (formerly Precigen, Inc.) is a dedicated discovery and clinical stage biopharmaceutical company advancing the next generation of gene and cell therapies using precision technology to target urgent and intractable diseases in immuno-oncology, autoimmune disorders and infectious diseases.

Our Healthcare Business

Our healthcare business focuses on human therapeutics and developing research models and services for healthcare research applications.

Our Biopharmaceuticals segment is operated by our wholly owned subsidiaries PGEN Therapeutics, Inc., or PGEN Therapeutics, and Precigen ActoBio, Inc., or ActoBio, and our majority ownership interest in Triple-Gene LLC, doing business as Precigen Triple-Gene, or Triple-Gene, as well as equity and royalty interests in therapeutics and therapeutic platforms from companies not controlled by us.

Exemplar Genetics LLC, doing business as Precigen Exemplar, or Exemplar, is a wholly owned subsidiary which is focused on developing research models and services for healthcare research applications.

Biopharmaceuticals

PGEN Therapeutics

PGEN Therapeutics is a dedicated discovery and clinical stage biopharmaceutical company advancing the next generation of gene and cell therapies using precision technology to target urgent and intractable diseases in immuno-oncology, autoimmune disorders and infectious diseases.

PGEN Therapeutics operates as an innovation engine, progressing a preclinical and clinical pipeline of well-differentiated therapies toward clinical proof-of-concept and commercialization.

PGEN Therapeutics is developing therapies primarily built on our UltraCAR-T therapeutics platform and our "off-the-shelf" AdenoVerse immunotherapy platform.

Through our UltraCAR-T therapeutics platform, we are able to precision-engineer UltraCAR-T cells to produce a homogeneous cell product that simultaneously co-expresses antigen-specific chimeric antigen receptor, or CAR, kill switch, and our proprietary membrane-bound interleukin-15, or mbIL15, genes in any genetically modified UltraCAR-T cell.

Our decentralized and rapid proprietary manufacturing process allows us to manufacture these

UltraCAR-T cells overnight at a medical center's current good manufacturing practices facility and reinfuse the patient the following day after gene transfer.

Through our UltraCAR-T therapeutics platform, we are able to precision-engineer UltraCAR-T cells to produce a homogeneous cell product that simultaneously expresses antigen-specific chimeric antigen receptor, or CAR, kill switch, and our proprietary membrane-bound interleukin-15, or mbIL15, genes in any genetically modified UltraCAR-T cell.

Our decentralized and rapid proprietary manufacturing process allows us to manufacture UltraCAR-T cells overnight at a medical center's current good manufacturing practices facility and reinfuse the patient the following day after gene transfer.

This process improves upon current approaches to CAR-T manufacturing, which require extensive ex vivo expansion following viral vector transduction to achieve clinically relevant cell numbers that we believe can result in the exhaustion of CAR-T cells prior to their administration, limiting their potential for persistence in patients.

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Our AdenoVerse immunotherapy platform utilizes a library of proprietary adenovectors for the efficient gene delivery of therapeutic effectors, immunomodulators, and vaccine antigens.

We have established proprietary manufacturing cell lines and production methodologies from our AdenoVerse immunotherapy platform, which we believe are easily scalable for commercial supply.

We believe that our proprietary gorilla adenovectors, part of the AdenoVerse technology, have superior performance characteristics as compared to current competition, including standard human adenovirus serotype 5, rare human adenovirus types and other non-human primate adenovirus types.

Our most advanced programs within PGEN Therapeutics include:

(i) PRGN-3005, a first-in-class autologous CAR-T therapy that utilizes our UltraCAR-T platform to simultaneously co-express a CAR targeting the Mucin 16 antigen, mbIL15, and kill switch genes, which is in a Phase 1 clinical trial for the treatment of advanced ovarian cancer;

(ii) PRGN-3006, a first-in-class autologous CAR-T therapy that utilizes our UltraCAR-T platform to co-express a CAR to target CD33 (also known as Siglec-3), mbIL15 and a kill switch for better precision and control, which is in a Phase 1/1b clinical trial for the treatment of relapsed or refractory acute myeloid leukemia, or AML, and higher-risk myelodysplastic syndromes, or MDS;

and (iii) PRGN-2009, a first-in-class, "off-the-shelf" investigational immunotherapy utilizing the AdenoVerse platform, is designed to activate the immune system to recognize and target human papillomavirus-positive, or HPV+, solid tumors using a gorilla adenovector with a large payload capacity and the ability for repeat injections, which is in a Phase 1/2 clinical trial for patients with HPV-associated cancers in collaboration with the National Cancer Institute pursuant to a cooperative research and development arrangement.

We expect to announce initial data from the Arm A:

Intraperitoneal (IP) infusion portion of the PRGN-3005 trial in the second half of 2020.

We continue to enroll patients in the Phase 1 trial of PRGN-3006 and expect to announce initial trial data from this study in the second half of 2020.

We initiated dosing the patients in the Phase 1 trial of the study and continue to enroll patients in this dose escalation portion.

In addition to our clinical programs, PGEN Therapeutics has a robust preclinical pipeline that includes UltraCAR-T therapeutics for various cancers, "off-the-shelf" AdenoVerse immunotherapeutics for infectious diseases, an AdenoVerse cytokine therapy for solid tumors, and a multifunctional therapeutic for solid tumors.

Our most advanced programs within PGEN Therapeutics are as follows:

PRGN-3005 is a first-in-class, investigational autologous CAR-T therapy that utilizes our UltraCAR-T platform to simultaneously express a CAR targeting the unshed portion of the Mucin 16 antigen, mbIL15, and kill switch genes.

PRGN-3005 is currently being evaluated in a Phase 1/1b clinical trial for the treatment of advanced, recurrent platinum-resistant ovarian cancer, fallopian tube or primary peritoneal cancer.

A dose escalation phase of the intraperitoneal (IP) arm of the PRGN-3005 Phase 1 trial is ongoing, and an expansion phase is planned at the maximum tolerated dose, or MTD.

A dose escalation phase of the intravenous (IV) arm of the PRGN-3005 trial is ongoing concurrently with the IP arm.

PRGN-3006 is a first-in-class, investigational autologous CAR-T therapy that utilizes our UltraCAR-T platform to express a CAR to target CD33 (Siglec-3), mbIL15 and kill switch genes.

PRGN-3006 is currently being evaluated in an investigator-initiated Phase 1/1b clinical trial for the treatment of relapsed or refractory acute myeloid leukemia, or AML, higher-risk myelodysplastic syndromes, or MDS, and chronic myelomonocytic leukemia, or CMML.

A dose escalation phase of each of the non-lymphodepletion and the lymphodepletion arms of this Phase 1 trial is ongoing concurrently.

The dose escalation phase of each arm is planned to be followed by an expansion phase at the MTD.

PRGN-3006 was granted Orphan Drug designation for the treatment of AML by the FDA.

PRGN-2009 is a first-in-class, "off-the-shelf" investigational immunotherapy designed to activate the immune system to recognize and target human papillomavirus-positive, or HPV+, solid tumors.

PRGN-2009 leverages our UltraVector and AdenoVerse platforms to optimize HPV type 16 and HPV type 18, antigen design for delivery via a proprietary gorilla adenovector with a large genetic payload capacity and the ability for repeat administrations.

PRGN-2009 is in a Phase 1/2 clinical trial as a monotherapy or in combination with bintrafusp alfa, or M7824, an investigational bifunctional fusion protein, for patients with HPV-associated cancers in collaboration with the National Cancer Institute, or NCI, pursuant to a cooperative research and development arrangement, or CRADA.

PRGN-2012 is a first-in-class, investigational "off-the-shelf" AdenoVerse immunotherapy for the treatment of recurrent respiratory papillomatosis, or RRP.

PRGN-2012 is an innovative therapeutic vaccine with optimized antigen design that uses our gorilla adenovector technology to elicit immune responses directed against cells infected with HPV type 6 and HPV type 11.

PRGN-2012 is in a Phase 1 clinical trial for adult patients with RRP.

In March 2021, we announced that the first patient was dosed in the PRGN-2012 Phase 1 trial.

PRGN-2012 is being developed in collaboration with the Center for Cancer Research at the NCI pursuant to a CRADA.

PRGN-2012 was granted Orphan Drug designation for treatment of RRP by the FDA.

In addition to our clinical programs, PGEN Therapeutics has a robust pipeline of preclinical programs that we are pursuing in order to drive long-term value creation.

Our pipeline includes a number of product candidates, including UltraCAR-T therapeutics for various cancers, and "off-the-shelf" AdenoVerse immunotherapy for infectious disease, and a multifunctional therapeutic for solid tumors.

We expect to continue development of various preclinical programs to identify product candidates for evaluation in clinical trials.

Precigen ActoBio, Inc.

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We refer to these microbe-based biopharmaceuticals as ActoBiotics.

Our ActoBiotics platform is a unique delivery platform precisely tailored for specific disease modification via local delivery directly to the relevant tissue.

Our ActoBiotics platform is a unique delivery platform precisely tailored for specific disease modification with the potential for superior efficacy and safety.

ActoBiotics combine the advantages of highly selective protein-based therapeutic agents with local delivery by the well-characterized and food-grade bacterium Lactococcus lactis , or L.

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We believe ActoBiotics have the potential to provide superior safety and efficacy via the sustained release of appropriate quantities of select therapeutic agents as compared to injectable biologics, while reducing the side effects commonly attributed to systemic delivery and corresponding peaks in concentration.

ActoBio's most advanced internal pipeline candidate is AG019, a first-in-class disease modifying antigen-specific immunotherapy for the prevention, delay, or reversal of type 1 diabetes mellitus, or T1D.

AG019 is currently in a Phase 1b/2a clinical trial for the treatment of recent onset T1D.

ActoBio's most advanced internal pipeline candidate, AG019, is a first-in-class disease modifying antigen-specific, investigational immunotherapy for the prevention, delay, or reversal of type 1 diabetes mellitus, or T1D.

AG019 is an easy-to-take capsule formulation of ActoBiotics engineered to deliver the autoantigen human proinsulin, or PINS, and the tolerance-enhancing cytokine human interleukin-10 to the mucosal lining of gastro-intestinal tissues in patients with T1D.

AG019 is currently in a Phase 1b/2a clinical trial for the treatment of early-onset T1D.

The Phase 1b portion of the study evaluates the safety and tolerability of AG019 monotherapy administered as a single dose and repeated daily doses in adult and adolescent patients.

The Phase 2a portion of the study investigates the safety and tolerability of AG019 in combination with teplizumab (PRV-031).

The primary endpoint of assessing safety and tolerability in the Phase 1b monotherapy portion of the study was met, and preliminary results at six months after AG019 monotherapy treatment initiation demonstrated an encouraging trend in C-peptide levels, a biomarker for T1D disease progression.

Recruitment in the Phase 2a portion of the trial is ongoing.

The Phase 2a portion of the study investigates the safety and tolerability of AG019 in combination with teplizumab, or PRV-031.

Enrollment and dosing in the Phase 1b and Phase 2a portions of the study are complete.

The primary endpoint of assessing safety and tolerability in the Phase 1b monotherapy portion of the study was met, and preliminary results at six months after AG019 monotherapy treatment initiation showed an encouraging trend in C-peptide levels, a biomarker for T1D disease progression.

Data from the Phase 2a portion showed that the combination was well-tolerated and the preliminary data at six months after treatment initiation showed an encouraging trend in C-peptide levels compared to baseline levels.

No dose-related adverse events or serious adverse events were reported in either portion of this trial.

Precigen Triple-Gene

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Triple-Gene's approach is to develop a holistic treatment for heart failure through improvements in angiogenesis, calcium homeostasis-associated cellular energetics, reductions in inflammatory signals, and the activation/recruitment of stem cells to support heart remodeling.

Triple-Gene's most advanced candidate, INXN-4001, a non-viral triple-effector plasmid

based on our UltraVector platform designed for constitutive expression of human S100A1, SDF-1a, and VEGF-165 genes to address multiple pathways of heart failure, is currently in a Phase 1 clinical trial.

Six-month follow-up data from the Phase 1 study of INXN-4001 demonstrated that the study met the primary endpoints to evaluate safety and feasibility for INXN-4001.

Triple-Gene's most advanced candidate, INXN-4001, a non-viral triple-effector plasmid based on our UltraVector platform designed for constitutive expression of human S100A1, SDF-1a, and VEGF-165, is engineered to address multiple pathways of heart failure.

Utilizing a single plasmid comprising all three genes, instead of each individual gene on separately delivered plasmids, INXN-4001 can control for delivery and ensure expression of the three genes in all transfected cells.

A first-in-human, open label Phase 1 trial designed to evaluate the safety of retrograde coronary sinus infusion, or RCSI, of INXN-4001 in outpatient left ventricular assist device, or LVAD, recipients has been completed.

Six-month follow-up data demonstrated that the study met the primary endpoints to evaluate safety and feasibility for INXN-4001, and analysis of the final results is ongoing.

Partnered Program

We have partnered with Castle Creek Biosciences, Inc.

(formerly Fibrocell Science, Inc.), or Castle Creek, to advance product candidates D-Fi (debcoemagene autoficel), formerly designated FCX-007, for the treatment of recessive dystrophic epidermolysis bullosa, or RDEB, and FCX-013 for the treatment of localized scleroderma.

In October 2020, Castle Creek announced the dosing of the first patient in the ongoing Phase 3 trial of D-Fi and the dosing of the first patient in the ongoing Phase 1/2 trial of FCX-013.

The FDA has granted Orphan Drug designation to D-Fi for the treatment of Dystrophic Epidermolysis Bullosa, which includes RDEB.

In addition, D-Fi has been granted Rare Pediatric Disease designation, Fast Track designation, and Regenerative Medicine Advanced Therapy designation by the FDA for treatment of RDEB.

The FDA has granted Orphan Drug designation to FCX-013 for the treatment of localized scleroderma.

In addition, FCX-013 has been granted Rare Pediatric Disease designation and Fast Track designation for the treatment of moderate to severe localized scleroderma.

Pursuant to the collaboration, we licensed our technology platforms to Castle Creek for use in certain specified fields, and in exchange, we received and were entitled to certain access fees, milestone payments, royalties, and sublicensing fees related to the development and commercialization of product candidates.

In March 2020, we and Castle Creek terminated

the original collaboration agreement by mutual agreement, with the parties agreeing that FCX-007 and FCX-013 would be treated as "Retained Products" under the terms of the original agreement.

Castle Creek retains a license to continue to develop and commercialize the Retained Products within the field of use for so long as Castle Creek continues to pursue such development and commercialization, and we are also entitled to certain royalties with respect to the Retained Products.

We are also required to perform certain drug product manufacturing activities related to the Retained Products.

Precigen Exemplar

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Exemplar's MiniSwine models are genetically engineered to exhibit a wide variety of human disease states, which provides a more accurate platform to test the efficacy of new medications and devices.

Partnered Programs

We also are engaged in a number of collaborations, pursuant to which our platforms are being used to advance additional product candidates.

We have partnered with Castle Creek Biosciences, Inc.

In October 2020, Castle Creek announced the dosing of the first patient in the ongoing Phase 3 trial of D-Fi and the dosing of the first patient in the ongoing Phase 1/2 trial of FCX-013.

FCX-007 and FCX-013 each have been granted Orphan Drug designation, Rare Pediatric Disease designation and Fast Track designation by the FDA.

The FDA has also granted FCX-007 Regenerative Medicine Advanced Therapy designation.

Pursuant to the collaboration, we licensed our technology platforms to Castle Creek for use in certain specified fields and in exchange we received and were entitled to certain access fees, milestone payments, royalties, and sublicensing fees related to the development and commercialization of product candidates.

In March 2020, we and Castle Creek terminated the original collaboration agreement by mutual agreement, with the parties agreeing that FCX-007 and FCX-013 would be treated as "Retained Products" under the terms of the original agreement.

We are also required to perform certain drug product manufacturing activities related to the Retained Products.

Until July 2020, ActoBio was in collaboration with Oragenics, Inc., or Oragenics, for the continued development and commercialization of AG013 for use in the treatment of oral mucositis in humans through the administration of an effector via genetically modified bacteria.

In July 2020, we and Oragenics mutually agreed to terminate this collaboration, and we recognized the remaining balance of deferred revenue as collaboration and licensing revenue during the third quarter of 2020.

Following the termination of the collaboration, all rights to develop AG013 reverted to us, and we are presently considering strategic options for the program.

Our Non-Healthcare Businesses

While our primary focus is in healthcare, we also own the following non-healthcare businesses:

Trans Ova Genetics, L.C.

Trans Ova Genetics, L.C., or Trans Ova, is internationally recognized as a provider of industry-leading bovine reproductive technologies.

Our Non-Healthcare Business

At March 31, 2021, our only non-healthcare business is our established bovine genetics company, Trans Ova Genetics, L.C., or Trans Ova.

Trans Ova is internationally recognized as a provider of industry-leading bovine reproductive technologies.

Trans Ova offers bovine embryo transfer technologies, in addition to other advanced reproductive technologies, including in vitro fertilization, or IVF, sexed-semen, genetic preservation, and cloning.

Through extensive research programs and applied science, Trans Ova has developed and implemented new technologies that, we believe, have helped to move the science of bovine genetic improvement forward.

We and Trans Ova continue to evaluate the optimal means to utilize these technology assets and Trans Ova's broad customer base and deep industry knowledge to maximize the value of the business.

MBP Titan LLC

Through the first quarter of 2020, we operated MBP Titan, LLC, or MBP Titan, as our standalone subsidiary comprising our Methane Bioconversion Platform, or MBP, and our associated technologies, personnel, and facilities.

We previously announced that the market uncertainty driven by the COVID-19 pandemic and the current state of the energy sector raised significant challenges for the strategic alternatives we have been pursuing for the MBP platform in the near term.

As a result, we suspended MBP Titan's operations while preserving certain key MBP intellectual property and have terminated most of the personnel.

We are in the process of disposing of certain of MBP Titan's remaining assets and obligations.

During the nine months ended September 30, 2020, we recorded noncash impairment charges of $22.0 million related to the write-down of goodwill, property and equipment, and right-of-use assets to their net realizable values.

We continue to evaluate the optimal means to utilize these technology assets and Trans Ova's broad customer base and deep industry knowledge to maximize the value of the business.

COVID-19 Impact

COVID-19 has had and continues to have an extensive impact on the global health and economic environments.

At Precigen, the health and safety of our employees is of the utmost importance.

The health and safety of our employees is of the utmost importance.

Our essential employees are practicing appropriate safety measures, including social distancing and use of personal protective equipment.

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Commencing in the second half of March 2020, our healthcare business began to experience delays to certain of our clinical trials as a result of COVID-19.

For example, starting in March, ActoBio temporarily suspended the last cohort of the Phase 1b/2a clinical trial for AG019 as a proactive measure to protect the welfare and safety of patients, caregivers, clinical site staff, our employees, and contractors.

For example, starting in March 2020, we temporarily suspended the last cohort of the Phase 1b/2a clinical trial for AG019 as a proactive measure to protect the welfare and safety of patients, caregivers, clinical site staff, our employees, and contractors.

The temporary suspension of the AG019 trial was voluntary and was not related to any patient safety issues in the study.

The voluntary suspension of the AG019 trial was lifted in June 2020, and the study is recruiting patients again.

The voluntary suspension of the AG019 trial was lifted in June 2020, and recruitment in the study resumed.

Additionally, from April to May 2020, enrollment of new patients in our PRGN-3005 Phase 1 trial was temporarily suspended due to a mandated hold on certain early and late-stage clinical trials at the Fred Hutchinson Cancer Research Center in Seattle that was instituted in light of the COVID-19 pandemic.

The temporary suspension of the PRGN-3005 trial was not related to safety issues in the studies, and recruitment resumed in the PRGN-3005 trial in May 2020.

At this time, we do not expect that these suspensions will result in a significant overall delay.

Furthermore, uncertainty regarding the duration and severity of the ongoing pandemic may adversely impact our clinical as well as preclinical pipeline candidates in the future.

We expect to announce initial data from the Arm A:

Intraperitoneal (IP) infusion portion of the PRGN-3005 trial in the second half of 2020.

Furthermore, we continue to enroll patients in the Phase 1 trial of PRGN-3006 for patients with relapsed or refractory AML and MDS and expect to announce initial trial data from this study in the second half of 2020.

Recruitment resumed in the PRGN-3005 trial in May 2020.

Although these suspensions did not result in significant overall delay, there is uncertainty regarding the duration and severity of the ongoing pandemic, and we could experience further delays of other pandemic-related events that may adversely impact our clinical as well as preclinical pipeline candidates in the future.

Notwithstanding the foregoing, as the COVID-19 pandemic continues to evolve, we may experience additional delays to our clinical trials, including related to enrollment, site closures, reduced availability of key personnel, or our ability to receive the necessary approvals from the FDA or other regulatory agencies to advance our programs.

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While Trans Ova and Exemplar have not experienced any significant impacts as a result of COVID-19 at this time, we are unable to reliably quantify or estimate what the future impacts may be.

In addition, we have taken certain steps with respect to our operations of MBP Titan as a result of the impacts of the COVID-19 pandemic and other factors.

See "Our Non-Healthcare Businesses - MBP Titan LLC" above.

Given the dynamic nature of these circumstances, the full impact of the COVID-19 pandemic on our ongoing business, results of operations, and overall financial performance for the balance of 2020 and beyond cannot be reasonably estimated at this time.

Given the dynamic nature of these circumstances, the full impact of the COVID-19 pandemic on our ongoing business, results of operations, and overall financial performance cannot be reasonably estimated at this time.

For more information regarding the risks associated with COVID-19 and its impact on our business, see "Risk Factors" in Part II - Item 1A.

TS Biotechnology Sale

Historically, we focused on programming biological systems for application across a variety of diverse end markets, including health, food, energy, and environment, but we have also consistently evolved the way in which we apply our synthetic biology technologies and the opportunities on which we have focused.

In January 2020, we furthered our plans to enhance our focus on the healthcare industry when we sold a number of our bioengineering assets, or the TS Biotechnology Sale, to TS Biotechnology Holdings, LLC, or TS Biotechnology, a limited liability company managed by Third Security, LLC, or Third Security.

Kirk, who is the former Chief Executive Officer, or CEO, of Precigen and is currently the Executive Chairman, serves as the Senior Managing Director and CEO of Third Security and owns 100 percent of the equity interests of Third Security.

The assets divested in the TS Biotechnology Sale included our domain name dna.com and all of our equity interests in (1) Blue Marble AgBio LLC, a Delaware limited liability company, that we formed to hold our agricultural biotechnology assets, (2) ILH Holdings, Inc., a Delaware corporation, which housed our yeast fermentation technology platform for the biologic production of active pharmaceutical ingredients and other fine chemicals, (3) Intrexon Produce Holdings, Inc., a Delaware corporation, which owned Okanagan Specialty Fruits, Inc., the agricultural company developing non-browning apples without the use of any artificial additives, (4) Intrexon UK Holdings Inc., a Delaware corporation, which owned Oxitec, Ltd., the developer of an insect-based biological control system, (5) Oragenics, and (6) SH Parent, Inc., a

Delaware corporation, which held our ownership interests in Surterra Holdings, Inc., a cannabinoid-based wellness company.

In addition, in January 2020, in a separate transaction, we sold our interest in EnviroFlight, LLC to Darling Ingredients, Inc., referred to collectively with the TS Biotechnology Sale as the Transactions.

Beginning in the fourth quarter of 2019, we determined that assets, liabilities, and operations sold in the Transactions collectively met the criteria for discontinued operations.

As such, the assets, liabilities, and operations related to the Transactions are reclassified and presented as discontinued operations for all periods presented.

See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 3" appearing elsewhere in this Quarterly Report for a discussion of the Transactions and the discontinued operations.

As we continue our efforts to focus our business and generate additional capital, we may be willing to enter into transactions involving one or more of our operating segments and reporting units for which we have goodwill and intangible assets.

These efforts could result in our identifying impairment indicators or recording impairment charges in future periods.

In addition, market changes and changes in judgments, assumptions and estimates that we have made in assessing the fair value of goodwill could cause us to consider some portion or all of certain assets to become impaired.

As of September 30, 2020, our reportable segments were (i) PGEN Therapeutics, (ii) ActoBio, (iii) MBP Titan, (iv) Trans Ova, and (v) the Human Biotherapeutics division, an operating division of Precigen.

These identified reportable segments met the quantitative thresholds to be reported separately for the nine months ended September 30, 2020.

Discontinued Operations

Historically, we developed technology platforms for application across a variety of diverse end markets, including health, food, energy, and environment.

In January 2020, we announced that we were increasing our focus on our healthcare opportunities, which reflected our most advanced platforms, and in connection therewith, we divested a number of our non-healthcare assets (referred to collectively as the Transactions) and changed our name to Precigen, Inc.

In 2020, as a result of market uncertainty driven by the COVID-19 pandemic and the state of the energy sector raising significant challenges for the strategic alternatives pursued by MBP Titan, LLC, or MBP Titan, our methane bioconversion business, we suspended MBP Titan's operations, preserved certain of MBP Titan's intellectual property, terminated all of its personnel, and undertook steps to dispose of its other assets and obligations.

The wind down of MBP Titan's activities was substantially complete by December 31, 2020, with the final disposition of certain property and equipment and the facility operating lease occurring in January 2021.

This discontinuation of operations represented the continuation of a strategic shift that we commenced in early 2020 to becoming a primarily healthcare company advancing technologies and products that address complex healthcare challenges.

After the wind down of MBP Titan, certain assets and contractual obligations which were originally related to MBP Titan continue to be managed at the Precigen corporate level.

These remaining assets and contractual obligations include our equity interests in and collaboration agreements with Intrexon Energy Partners, LLC, or Intrexon Energy Partners, and Intrexon Energy Partners II, LLC, or Intrexon Energy Partners II, including the associated deferred revenue remaining under each collaboration agreement, as well as the associated intellectual property.

See also "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 3" appearing elsewhere in this Quarterly Report for additional discussion of our discontinued operations.

See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 4" appearing elsewhere in this Quarterly Report for a discussion of Intrexon Energy Partners and Intrexon Energy Partners II.

As of March 31, 2021, our reportable segments were (i) Biopharmaceuticals, (ii) Exemplar, and (iii) Trans Ova.

These identified reportable segments met the quantitative thresholds to be reported separately for the three months ended March 31, 2021.

Corporate expenses, which are not allocated to the segments and are managed at a consolidated level, include costs associated with general and administrative functions, including our finance, accounting, legal, human resources, information technology, corporate communication, and investor relations functions.

Corporate expenses exclude interest expense, depreciation and amortization, stock-based compensation expense, and equity in net loss of affiliates and, for 2019, include unrealized and realized gains and losses on our securities portfolio as well as dividend income.

Corporate expenses exclude interest expense, depreciation and amortization, gain or loss on disposals of assets, stock-based compensation expense, loss on settlement agreement, and equity in net loss of affiliates.

See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 19" appearing elsewhere in this Quarterly Report for a discussion of our reportable segments and Segment Adjusted EBITDA.

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We anticipate that we may continue to incur significant losses for the foreseeable future, and we may never achieve or maintain profitability.

Outside of collaboration and license fee payments, which vary over time, we have not generated significant revenues from our collaborations, including revenues or royalties from product sales by us or our collaborators.

We have generated sales of products and services through Trans Ova and Exemplar, two of our operating subsidiaries.

Certain of our consolidated subsidiaries require regulatory approval and/or commercial scale-up before they may commence significant product sales and operating profits.

We are closely monitoring the impacts of the COVID-19 pandemic on our business, operations, and financial results, any of which could be significantly impacted by the COVID-19 pandemic.

See "COVID-19 Impact" for additional discussion above.

Our historical collaboration and licensing revenues were generated under a business model from which we have gradually transitioned, and we do not expect to expend significant resources servicing our historical collaborations in the future.

We may enter into strategic transactions for individual platforms or programs in the future from which we may generate new collaboration and licensing revenues.

We continue to generate product and service revenues through our Trans Ova and Exemplar subsidiaries, and in the three months ended March 31, 2021, both of these subsidiaries generated positive Segment Adjusted EBITDA.

Products currently in our clinical pipeline will require regulatory approval and/or commercial scale-up before they may commence significant product sales and operating profits.

These efforts could result in us identifying impairment indicators or recording impairment charges in future periods.

In addition, market changes and changes in judgements, assumptions, and estimates that we have made in assessing the fair value of goodwill could cause us to consider some portion or all of certain assets to become impaired.

Sources of revenue

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As we continue to shift our focus on our healthcare business, we have and may continue to mutually terminate collaboration agreements or repurchase rights to the exclusive fields from collaborators, relieving us of any further performance obligations under the agreement.

Upon such circumstances or when we determine no further performance obligations are required of us under an agreement, we may recognize any remaining deferred revenue as either collaboration revenue or as a reduction of in-

process research and development expense, depending on the circumstances.

See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 5" appearing elsewhere in the Quarterly Report for a discussion of changes to our significant collaborations.

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In future periods, in connection with our focus on healthcare, our revenues will primarily depend on our ability to advance and create our own programs and the extent to which we bring products enabled by our technologies to market.

Other than for collaboration revenues recognized upon cancellation or modification of a collaboration, we expect our collaboration revenues will continue to decrease in the near term as the number of collaborations to which we are party declines and as we fulfill our obligations under any remaining exclusive channel collaborations, or ECCs.

Other than for collaboration revenues recognized upon cancellation or modification of an existing collaboration or for revenues generated pursuant to future strategic transactions for any of our existing platforms or programs, we expect our collaboration revenues will continue to decrease in the near term.

Our revenues will also depend upon our ability to maintain or improve the volume and pricing of Trans Ova's and Exemplar's current product and service offerings and to develop and scale up production of new offerings from the various technologies of our subsidiaries.

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• facility-related expenses, which include direct depreciation costs and unallocated expenses for rent and maintenance of facilities and other operating costs.

We currently have no individually significant research and development projects, and our research and development expenses primarily relate to either the costs incurred to expand or otherwise improve our technologies or the costs incurred to develop our own products and services.

The amount of our research and development expenses may be impacted by, among other things, the number and nature of our own proprietary programs, and the number and size of programs we may support on behalf of an ECC.

We expect that our research and development expenses will increase as we continue to develop our own proprietary programs, including the progression of these programs into preclinical or clinical stages.

We believe these increases will likely include increased costs related to the hiring of additional personnel in research and development functions, increased costs paid to consultants and contract research organizations, and increased costs related to laboratory supplies.

However, as expected, research and development expenses for MBP Titan have decreased and will continue to decrease as we have suspended its operations, preserved certain key intellectual property, and are in the process of disposing of certain of its remaining assets and obligations.

See "Our Non-Healthcare Businesses - MBP Titan LLC" above.

Our research and development expenses are generally incurred by our reportable segments and primarily relate to either costs incurred to expand or otherwise improve our technologies or the costs incurred to develop our own products and services.

Our Biopharmaceuticals segment is progressing preclinical and clinical programs that target urgent and intractable diseases in our core therapeutic areas of immuno-oncology, autoimmune disorders, and infectious diseases, including PRGN-3005, PRGN-3006, AG019, and INXN-4001.

Exemplar's research and development activities relate to new and improved pig research models.

Trans Ova's research and development activities support new and improved product and service offerings for its customers.

The following table summarizes our research and development expenses incurred by reportable segment and reconciles those expenses to research and development expenses on the condensed consolidated statements of operations for the three months ended March 31, 2021 and 2020.

Three Months Ended

Biopharmaceuticals

$ 10,063 $ 10,641

Exemplar 74 190

Trans Ova 385 640

Total research and development expenses from reportable segments 10,522 11,471

Other research and development expenses — (141)

Eliminations (1) (3)

Total consolidated research and development expenses $ 10,521 $ 11,327

The amount of research and development expenses may be impacted by, among other things, the number and nature of our own proprietary programs, and the number and size of programs we may support on behalf of collaboration agreements.

We expect that our research and development expenses will increase as we continue to develop our own proprietary programs, including progression of these programs into preclinical and clinical stages.

We believe these increases will likely include increased costs paid to consultants and contract research organizations and increased costs related to laboratory supplies.

Research and development expenses may also increase as a result of ongoing research and development operations that we might assume through mergers and acquisitions or in-licensing of technologies.

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Selling, general and administrative, or SG&A, expenses consist primarily of salaries and related costs, including stock-based compensation expense, for employees in executive, operational, finance, information technology, legal, and corporate communications functions.

Other significant SG&A expenses include rent and utilities, insurance, accounting, and legal services, and expenses associated with obtaining and maintaining our intellectual property.

SG&A expenses may fluctuate in the future depending on the number and nature of transactions we may undertake with certain of our operations and subsidiaries.

These fluctuations could be related to personnel, legal fees, outside consultants, and other professional services.

Other significant SG&A expenses include rent and utilities, insurance, accounting, and legal services (including the cost of settling any claims and lawsuits), and expenses associated with obtaining and maintaining our intellectual property.

SG&A expenses may fluctuate in the future depending on the scaling of our corporate functions required to support our corporate initiatives and the outcomes of legal claims and assessments against us.

Other income (expense), net

We historically held equity securities and preferred stock of private and publicly traded companies, including investments received and/or purchased from certain collaborators.

These equity securities and preferred stock were recorded at fair value at each reporting date.

Unrealized appreciation (depreciation) resulting from fair value adjustments were reported as other income (expense) in the condensed consolidated statements of operations.

In January 2020, as part of the TS Biotechnology Sale, we sold our remaining equity securities and investment in preferred stock, and therefore, no future gains (losses) will be incurred.

Interest expense is expected to increase in future periods due to the noncash amortization of the long-term debt discount and debt issuance costs related to the 3.50% convertible senior notes due 2023 issued in July 2018.

Interest income consists of interest earned on our cash and cash equivalents and short-term investments and may fluctuate based on amounts invested and current interest rates.

Interest income consists of interest earned on our cash and cash equivalents and short-term and long-term investments and may fluctuate based on amounts invested and current interest rates.

Equity in net income (loss) of affiliates

Equity in net income or loss of affiliates is our pro-rata share of our equity method investments' operating results, adjusted for accretion of basis difference.

We account for investments in our joint ventures, or JVs, and start-up entities backed by Harvest Intrexon Enterprise Fund I, LP, or Harvest, using the equity method of accounting since we have the ability to exercise significant influence, but not control, over the operating activities of these entities.

We account for investments in our joint ventures, or JVs, using the equity method of accounting since we have the ability to exercise significant influence, but not control, over the operating activities of these entities.

We previously accounted for our investments in start-up entities backed by the Harvest Intrexon Enterprise Fund I, LP, or Harvest, using the equity method of accounting.

In December 2020, we entered into an agreement with Harvest to resolve matters related to the parties' contractual and equity relationships and our remaining equity interests in start-up entities backed by Harvest were terminated.

Segment performance

We use Segment Adjusted EBITDA as our primary measure of segment performance.

We define Segment Adjusted EBITDA as net loss before (i) interest expense, (ii) income tax expense or benefit, (iii) depreciation and amortization, (iv) stock-based compensation expense, (v) adjustments for bonuses paid in equity awards, (vi) loss on impairment of goodwill and other noncurrent assets, (vii) equity in net loss of affiliates, and (viii) recognition of previously deferred revenue associated with upfront and milestone payments as well as cash outflows from capital expenditures and investments in affiliates.

We define Segment Adjusted EBITDA as net income (loss) before (i) interest expense, (ii) income tax expense or benefit, (iii) depreciation and amortization, (iv) stock-based compensation expense, (v) loss on settlement agreements where noncash consideration is paid, (vi) adjustments for accrued bonuses paid in equity awards, (vii) gain or loss on disposals of assets, (viii) loss on impairment of goodwill and other noncurrent assets, (ix) equity in net loss of affiliates, and (x) recognition of previously deferred revenue associated with upfront and milestone payments as well as cash outflows from capital expenditures and investments in affiliates, but includes proceeds from the sale of assets in the period sold.

Corporate expenses are not allocated to the segments and are managed at a consolidated level.

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Results of operations

Comparison of the three months ended September 30, 2020 and the three months ended September 30, 2019

The following table summarizes our results of operations for the three months ended September 30, 2020 and 2019, together with the changes in those items in dollars and as a percentage:

Comparison of the three months ended March 31, 2021 and the three months ended March 31, 2020

The following table summarizes our results of operations for the three months ended March 31, 2021 and 2020, together with the changes in those items in dollars and as a percentage:

Three Months Ended

September 30, Dollar

March 31, Dollar

Change Percent

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Selling, general and administrative 18,702 21,486 (2,784) (13.0) %

Impairment of goodwill — 178 (178) (100.0) %

Impairment of other noncurrent assets 920 448 472 105.4 %

Total operating expenses 42,199 46,438 (4,239) (9.1) %

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Loss from continuing operations before income taxes (21,896) (20,806) (1,090) 5.2 %

Income tax benefit 50 3 47 >200%

Income tax benefit (expense) 52 (40) 92 >200%

Loss from continuing operations (21,844) (20,846) (998) 4.8 %

Loss from discontinued operations, net of income taxes (2) — (4,580) 4,580 (100.0) %

Net loss attributable to Precigen $ (29,508) $ (53,634) $ 24,126 (45.0) %

(1) Includes $2,823 and $1,851 from related parties for the three months ended September 30, 2020 and 2019, respectively.

(2) The results of operations in the table above include the operations related to the Transactions, which are included as loss from discontinued operations, net of income taxes.

Income (loss) from discontinued operations, net of income taxes (2) 4,526 (35,152) 39,678 112.9 %

Net loss $ (17,318) $ (55,998) $ 38,680 (69.1) %

(1) Includes $0 and $198 from related parties for the three months ended March 31, 2021 and 2020, respectively.

(2) See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 3" appearing elsewhere in this Quarterly Report.

Collaboration and licensing revenues

The following table shows the collaboration and licensing revenues recognized for the three months ended September 30, 2020 and 2019, together with the changes in those items.

Three Months Ended

September 30, Dollar

(In thousands)

ZIOPHARM Oncology, Inc.

$ — $ 431 $ (431)

Oragenics, Inc.

2,823 231 2,592

Intrexon Energy Partners, LLC — 823 (823)

Intrexon Energy Partners II, LLC — 293 (293)

Castle Creek Biosciences, Inc.

2,394 402 1,992

Harvest start-up entities (1) — 100 (100)

Other 6 16 (10)

Total $ 5,223 $ 2,296 $ 2,927

(1) For the three months ended September 30, 2019, revenues recognized from collaborations with Harvest start-up entities include:

Thrive Agrobiotics, Inc.;

Exotech Bio, Inc.;

and AD Skincare, Inc.

Collaboration and licensing revenues increased $2.9 million, or 128%, over the three months ended September 30, 2019 primarily due to accelerated recognition of previously deferred revenue upon the mutual termination of a collaboration with Oragenics in July 2020 and increased recognition of previously deferred revenue which arose from the termination and modification of a collaboration with Castle Creek in March 2020.

These increases were partially offset by a decrease in collaboration revenues related to programs that have been paused since the second half of 2019 while the other parties evaluate the status of the projects and their desired future development activities.

Collaboration and licensing revenues decreased $10.7 million, or 99%, from the three months ended March 31, 2020 primarily due to recognition of previously deferred revenue which arose from the termination of a collaboration with Castle Creek in February 2020.

Product revenues and gross margin

Product revenues increased $1.1 million, or 18%, over the three months ended September 30, 2019.

The increase in product revenue was primarily due to higher customer demand for animals.

Gross margin on products improved in the current period as a result of operational efficiencies gained through reductions in workforce and improved inventory management and a decrease in the cost of cows used in production.

Product revenues increased $1.4 million, or 29%, over the three months ended March 31, 2020.

The increase in product revenue was primarily due to higher customer demand for animals as a result of stronger beef and dairy industries in the current year.

Gross margin on products improved in the current period as a result of the increased revenues, increased focus on selling higher margin products, and operational efficiencies that have been gained through reductions in workforce and improved inventory management.

Service revenues and gross margin

Service revenues increased $1.4 million, or 14%, over the three months ended September 30, 2019.

Trans Ova's revenues and gross margins thereon improved due to an increase in services performed for new and existing customers and the expansion of its commercial dairy business.

Gross margin also increased due to a reduction in third-party royalty rate obligations for certain licensed technologies and reductions in workforce.

Additionally, Exemplar's service revenues increased in the current period due to an increase in services performed resulting from a higher demand from existing customers, which also improved gross margin on services performed.

Service revenues increased $4.0 million, or 29%, over the three months ended March 31, 2020.

Trans Ova's revenues and gross margins thereon improved primarily due to an increase in services performed as a result of higher customer demand as the beef and dairy industries have been stronger in the current year and a change in pricing structure with certain customers.

Additionally, Exemplar's service revenues increased in the current period due to an increase in services performed resulting from a higher demand from existing and new customers, which also improved gross margin on services performed.

Research and development expenses

Research and development expenses decreased $13.5 million, or 53%, from the three months ended September 30, 2019.

Salaries, benefits, and other personnel costs decreased $6.8 million and contract research organization costs and lab supplies decreased $5.1 million in 2020 as we suspended MBP Titan's operations and deprioritized certain programs at ActoBio.

Research and development expenses decreased $0.8 million, or 7%, from the three months ended March 31, 2020.

Salaries, benefits, and other personnel costs decreased $0.7 million in 2021 as we scaled down certain research and development functions in the first quarter of 2020 as a result of certain programs being previously deprioritized.

Selling, general and administrative expenses

SG&A expenses were comparable period over period due to offsetting changes.

Professional fees increased $2.1 million, primarily due to an increase in legal fees associated with litigation matters, including our settlement with the Securities and Exchange Commission, or SEC, in 2020.

This increase was partially offset by a decrease in salaries, benefits, and other personnel costs of $1.2 million primarily due to a reduced headcount as we scaled down our corporate functions to support our

more streamlined organization.

Other corporate expenses, such as travel, marketing, and supplies, decreased $0.5 million due to the scaling back of our corporate functions and the impact of the COVID-19 pandemic on travel.

SG&A expenses decreased $2.8 million, or 13%, from the three months ended March 31, 2020.

Salaries, benefits, and other personnel costs decreased $1.0 million in 2021 primarily due to a reduced headcount as we scaled down our corporate functions to support our more streamlined organization and reduced stock compensation costs for previously granted awards that became fully vested in early 2021.

Professional fees decreased $1.0 million primarily due to a decrease in legal fees associated with certain litigation matters that were settled in the second half of 2020.

Segment performance

The following table summarizes Segment Adjusted EBITDA, which is our primary measure of segment performance, for the three months ended September 30, 2020 and 2019, for each of our reportable segments and for All Other segments combined, as well as unallocated corporate costs.

The following table summarizes Segment Adjusted EBITDA, which is our primary measure of segment performance, for the three months ended March 31, 2021 and 2020, for each of our reportable segments as well as unallocated corporate costs.

Three Months Ended

September 30, Dollar

March 31, Dollar

Change Percent

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Segment Adjusted EBITDA:

PGEN Therapeutics $ (6,739) $ (5,953) $ (786) (13.2) %

ActoBio (1,602) (4,634) 3,032 65.4 %

MBP Titan (1,765) (9,024) 7,259 80.4 %

Biopharmaceuticals

$ (8,854) $ (10,022) $ 1,168 11.7 %

Exemplar 1,806 250 1,556 >200%

Trans Ova 6,421 (457) 6,878 >200%

Human Biotherapeutics (420) (142) (278) (195.8) %

All Other 1,654 (1,345) 2,999 >200%

Unallocated corporate costs (8,194) (10,838) 2,644 (24.4) %

For a reconciliation of Segment Adjusted EBITDA to net loss before income taxes, see "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 19" appearing elsewhere in this Quarterly Report.

The following table summarizes revenues from external customers for the three months ended September 30, 2020 and 2019, for each of our reportable segments and for All Other segments combined.

For a reconciliation of Segment Adjusted EBITDA to net loss from continuing operations before income taxes, see "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 19" appearing elsewhere in this Quarterly Report.

The following table summarizes revenues from external customers for the three months ended March 31, 2021 and 2020, for each of our reportable segments.

Three Months Ended

September 30, Dollar

Change Percent

(In thousands)

PGEN Therapeutics $ 164 $ 444 $ (280) (63.1) %

ActoBio 2,823 231 2,592 >200%

MBP Titan — 1,117 (1,117) (100.0) %

Trans Ova 15,228 13,981 1,247 8.9 %

Human Biotherapeutics 2,394 402 1,992 >200%

All Other 2,974 2,124 850 40.0 %

PGEN Therapeutics

Segment Adjusted EBITDA declined due to higher clinical trial costs as certain programs entered clinical trials in late 2019.

Costs related to PGEN Therapeutics' clinical trials are expected to increase in the fourth quarter of 2020 and beyond as the clinical trials progress and as we commence new clinical trials for programs either in the preclinical phase or where we receive approval of an Investigational New Drug, or IND.

Revenues for ActoBio increased primarily due to accelerated recognition of previously deferred revenue upon the mutual termination of a collaboration with Oragenics in July 2020.

Segment Adjusted EBITDA improved as ActoBio incurred fewer costs with contract research organizations due to deprioritizing certain programs in late 2019 and fewer AG019 trial costs in the current period due to delayed costs resulting from the temporary suspension of the last cohort of the Phase 1b/2a clinical trial.

Costs related to ActoBio's clinical trial are expected to increase in the fourth quarter of 2020 and beyond as the trial progresses.

Revenues for MBP Titan have decreased as our partnered programs have been paused since the fourth quarter of 2019.

Segment Adjusted EBITDA improved in 2020 as we suspended MBP Titan's operations in the second quarter of 2020 and are in the process of disposing of certain of its remaining assets and obligations.

Revenues for Trans Ova increased primarily due to higher customer demand for pregnant cows and more procedures performed for new and existing customers and the expansion of its commercial dairy business.

The improvement in Segment Adjusted EBITDA was primarily due to reduced costs as a result of operational efficiencies gained through reductions in workforce and improved inventory management and a reduction in third-party royalty rate obligations for certain licensed technologies.

Human Biotherapeutics

The increase in Human Biotherapeutics' revenues was due to an increase in the recognition of previously deferred revenue in the current period, which arose from the termination and modification of a collaboration with Castle Creek in the first quarter of 2020.

Revenues in All Other increased in 2020 due to higher demand at Exemplar for services performed.

Segment Adjusted EBITDA improved period over period as a result of the closure of two reporting units in 2019 as well as Exemplar's increased revenues and reduced costs related to a reduction in headcount and improved inventory management.

Unallocated Corporate Costs

Unallocated corporate costs decreased primarily due to a reduction of corporate employees as we scaled down our corporate functions to support our more streamlined organization, as well as a decrease in certain professional fees as we eliminated third-party vendors that were not critical to our most valuable enterprises.

This decrease was partially offset by an increase in legal fees associated with litigation matters, including our settlement with the SEC.

Comparison of the nine months ended September 30, 2020 and the nine months ended September 30, 2019

The following table summarizes our results of operations for the nine months ended September 30, 2020 and 2019, together with the changes in those items in dollars and as a percentage:

Nine Months Ended

September 30, Dollar

March 31, Dollar

Change Percent

(In thousands)

Collaboration and licensing revenues (1) $ 20,259 $ 14,717 $ 5,542 37.7 %

Product revenues 20,397 18,483 1,914 10.4 %

Service revenues 42,615 39,707 2,908 7.3 %

Other revenues 574 813 (239) (29.4) %

Total revenues 83,845 73,720 10,125 13.7 %

Operating expenses

Cost of products 21,526 24,130 (2,604) (10.8) %

Cost of services 20,197 21,860 (1,663) (7.6) %

Research and development 45,253 80,844 (35,591) (44.0) %

Selling, general and administrative 64,057 72,486 (8,429) (11.6) %

Impairment of goodwill 9,635 178 9,457 >200%

Impairment of other noncurrent assets 13,326 448 12,878 >200%

Total operating expenses 173,994 199,946 (25,952) (13.0) %

Operating loss (90,149) (126,226) 36,077 (28.6) %

Total other expense, net (11,660) (6,115) (5,545) 90.7 %

Equity in loss of affiliates (1,125) (1,943) 818 (42.1) %

Loss from continuing operations before income taxes (102,934) (134,284) 31,350 (23.3) %

Income tax benefit 130 25 105 >200%

Loss from continuing operations (102,804) (134,259) 31,455 (23.4) %

Loss from discontinued operations, net of income taxes (2) (26,056) (20,442) (5,614) 27.5 %

Net loss (128,860) (154,701) 25,841 (16.7) %

Net loss attributable to noncontrolling interests — 1,592 (1,592) (100.0) %

Net loss attributable to Precigen $ (128,860) $ (153,109) $ 24,249 (15.8) %

(1) Includes $3,053 and $12,543 from related parties for the nine months ended September 30, 2020 and 2019, respectively.

(2) The results of operations in the table above include the operations related to the Transactions, as well as adjustments to those businesses as a result of the Transactions, all of which are included as loss from discontinued operations, net of income taxes.

See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 3" appearing elsewhere in this Quarterly Report.

Collaboration and licensing revenues

The following table shows the collaboration and licensing revenues recognized for the nine months ended September 30, 2020 and 2019, together with the changes in those items.

Nine Months Ended

September 30, Dollar

(In thousands)

ZIOPHARM Oncology, Inc.

$ 100 $ 2,130 $ (2,030)

Oragenics, Inc.

3,053 613 2,440

Intrexon Energy Partners, LLC — 2,596 (2,596)

Intrexon Energy Partners II, LLC — 1,217 (1,217)

Castle Creek Biosciences, Inc.

Biopharmaceuticals

$ 178 $ 10,862 $ (10,684) (98.4) %

Harvest start-up entities (1) — 4,862 (4,862)

Other 139 52 87

Total $ 20,259 $ 14,717 $ 5,542

(1) For the nine months ended September 30, 2019, revenues recognized from collaborations with Harvest start-up entities include:

Thrive Agrobiotics, Inc.;

Exotech Bio, Inc.;

and AD Skincare, Inc.

Collaboration and licensing revenues increased $5.5 million, or 38%, over the nine months ended September 30, 2019 primarily due to the accelerated recognition of previously deferred revenue upon the mutual terminations of collaborations with Castle Creek and Oragenics in 2020.

This increase was partially offset by a decrease in collaboration revenues related to programs that have been paused since the second half of 2019 while the other parties evaluate the status of the projects and their desired future development activities.

Product revenues and gross margin

Product revenues increased $1.9 million, or 10%, over the nine months ended September 30, 2019.

The increase in product revenue was primarily due to higher customer demand for cow products.

Service revenues and gross margin

Service revenues increased $2.9 million, or 7%, over the nine months ended September 30, 2019.

Trans Ova's service revenues and gross margins thereon increased due to an increase in services performed for new and existing customers and the expansion of its commercial dairy business.

Gross margin also increased due to a reduction in third-party royalty rate obligations for certain licensed technologies and reductions in workforce.

Additionally, Exemplar's service revenues increased in the current period due to an increase in services performed resulting from higher demand from existing customers, which also improved gross margin on services performed.

Research and development expenses

Research and development expenses decreased $35.6 million, or 44%, from the nine months ended September 30, 2019.

Salaries, benefits, and other personnel costs decreased $13.7 million and contract research organization costs and lab supplies decreased $17.9 million in 2020 as we suspended MBP Titan's operations and deprioritized certain programs at ActoBio.

The decrease in salaries, benefits, and other personnel costs is partially offset by $1.8 million of one-time severance costs incurred related primarily to MBP Titan employees.

Selling, general and administrative expenses

SG&A expenses decreased $8.4 million, or 12%, from the nine months ended September 30, 2019, including a decrease in professional fees payable to certain third-party vendors and reduced salaries, benefits and other personnel costs due to reduced corporate headcount as we scaled down our corporate functions to support a more streamlined organization.

Other corporate expenses decreased $1.9 million as part of the streamlined organization and the impact of the COVID-19 pandemic on travel.

These decreases were partially offset by increased share-based compensation expense attributable to equity grants made in the first quarter of 2020, one-time severance costs for terminated employees, and increased legal fees associated with litigation matters, including our settlement with the SEC.

Impairment of goodwill and other noncurrent assets

Impairment of goodwill and other noncurrent assets increased $22.3 million over the nine months ended September 30, 2019 primarily due to recording $22.0 million of goodwill and other noncurrent asset impairment charges in connection with the suspension of MBP Titan's operations in 2020.

Total other expense, net

Total other expense, net, increased $5.5 million, or 91%, over the nine months ended September 30, 2019.

In 2019, our equity securities and investments in preferred stock, which were fully liquidated by early 2020, had unrealized appreciation of $3.1 million.

Additionally, interest income earned on our short-term investments decreased in 2020 due to lower interest rates.

Segment performance

The following table summarizes Segment Adjusted EBITDA, which is our primary measure of segment performance, for the nine months ended September 30, 2020 and 2019, for each of our reportable segments and for All Other segments combined, as well as unallocated corporate costs.

Nine Months Ended

September 30, Dollar

Change Percent

(In thousands)

Segment Adjusted EBITDA:

PGEN Therapeutics $ (19,356) $ (20,789) $ 1,433 6.9 %

ActoBio (4,727) (11,196) 6,469 57.8 %

MBP Titan (15,728) (26,238) 10,510 40.1 %

Trans Ova 3,723 (2,854) 6,577 >200%

Human Biotherapeutics (2,253) (719) (1,534) <(200)%

All Other 2,783 (5,062) 7,845 155.0 %

Unallocated corporate costs 27,938 42,476 (14,538) (34.2) %

The following table summarizes revenues from external customers for the nine months ended September 30, 2020 and 2019, for each of our reportable segments and for All Other segments combined.

Nine Months Ended

September 30, Dollar

Change Percent

(In thousands)

PGEN Therapeutics $ 542 $ 2,174 $ (1,632) (75.1) %

ActoBio 3,053 813 2,240 >200%

MBP Titan — 3,813 (3,813) (100.0) %

Exemplar 3,257 2,151 1,106 51.4 %

Trans Ova 21,076 16,785 4,291 25.6 %

Human Biotherapeutics 16,967 3,247 13,720 >200%

All Other 7,371 10,219 (2,848) (27.9) %

PGEN Therapeutics

Revenues for PGEN Therapeutics declined from 2019 to 2020 because we had no significant collaborations requiring services in 2020.

Segment Adjusted EBITDA improved due to higher costs for contract research organizations incurred in 2019 for preclinical activities on certain programs prior to moving to clinical trials and the manufacturing of clinical trial materials in advance of initiation of the trials.

Additionally, fewer costs related to the PRGN-3005 Phase 1 trials were incurred in the second quarter of 2020 as enrollment of new patients in this trial was temporarily suspended due to a mandated hold on certain early and late-stage clinical trials at the Fred Hutchinson Cancer Research Center in Seattle that was instituted in light of the COVID-19 pandemic.

Costs related to PGEN Therapeutics' clinical trials are expected to increase in the fourth quarter of 2020 and beyond as the trials progress.

Finally, capital expenditures decreased in the current period as PGEN Therapeutics completed an expansion of its lab facilities in 2019.

Revenues for ActoBio increased primarily due to accelerated recognition of previously deferred revenue upon the mutual termination of a collaboration with Oragenics in July 2020.

Segment Adjusted EBITDA has improved as ActoBio incurred fewer costs with contract research organizations due to deprioritizing certain programs in late 2019 and fewer AG019 trial costs in the second quarter of 2020 due to the temporary suspension of the last cohort of the Phase 1b/2a clinical trial.

Revenues for MBP Titan have decreased as our partnered programs have been paused since the fourth quarter of 2019.

Segment Adjusted EBITDA improved in 2020 as we suspended MBP Titan's operations in the second quarter of 2020 and are in the process of disposing of certain of its remaining assets and obligations.

Revenues for Trans Ova increased primarily as a result of more procedures performed for new and existing customers and the expansion of its commercial dairy business.

The improvement in Segment Adjusted EBITDA was primarily due to operational efficiencies gained through reductions in workforce and improved inventory management, a decrease in the cost of cows used in production, and a reduction in third-party royalty rate obligations for certain licensed technologies.

Human Biotherapeutics

The increase in Human Biotherapeutics' revenues was due to the accelerated recognition of previously deferred revenue upon the mutual termination of a collaboration with Castle Creek in 2020.

Segment Adjusted EBITDA declined due to one-time severance costs associated with workforce reductions in the first quarter of 2020 and increased costs for contract research organizations related to our INXN-4001 program.

Revenues in All Other decreased in 2020 as our partnered programs with Harvest start-up entities have been paused since the third quarter of 2019.

These decreases were partially offset by an increase in Exemplar's revenues as a result of higher demand

from its existing customers.

Segment Adjusted EBITDA improved period over period as a result of improved Segment Adjusted EBITDA at Exemplar due to its higher revenues and reduced costs, as well as the closure of two reporting units in 2019.

Biopharmaceuticals

The decrease in Biopharmaceuticals revenue was due to the accelerated recognition of previously deferred revenue upon the mutual termination of a collaboration with Castle Creek in February 2020.

Segment Adjusted EBITDA improved as we deprioritized certain programs and scaled down certain research and development functions in the first quarter of 2020 but were partially offset by increases in costs associated with our clinical and preclinical programs.

Revenues for Exemplar increased due to an increase in services performed resulting from a higher demand from existing and new customers.

The improvement in Segment Adjusted EBITDA was primarily due to the increased revenues and reduced costs as a result of operational efficiencies gained through reductions in workforce and improved inventory management.

Revenues for Trans Ova increased primarily due to higher customer demand for pregnant cows and more procedures performed as a result of stronger beef and dairy industries in the current year.

Revenues also increased due to a change in the pricing structure with certain customers.

The improvement in Segment Adjusted EBITDA was primarily due to the increased revenues, as well as reduced costs as a result of operational efficiencies gained through reductions in workforce and improved inventory management.

Unallocated Corporate Costs

Unallocated corporate costs decreased primarily due to a reduction of corporate employees as well as a decrease in certain professional fees as we scaled down our corporate functions to support our more streamlined organization.

These decreases were partially offset by an increase in legal fees associated with litigation matters, including our settlement with the SEC.

Unallocated corporate costs decreased primarily due to a reduction of corporate employees as we scaled down our corporate functions to support our more streamlined organization, as well as a decrease in certain professional fees associated with certain litigation matters that were settled in the second half of 2020.

Liquidity and capital resources

Sources of liquidity

We have incurred losses from operations since our inception, and as of September 30, 2020, we had an accumulated deficit of $1.8 billion.

From our inception through September 30, 2020, we have funded our operations principally with proceeds received from private and public equity and debt offerings, cash received from our collaborators, and through product and service sales made directly to customers.

As of September 30, 2020, we had cash and cash equivalents of $27.7 million and short-term investments of $85.4 million.

We have incurred losses from operations since our inception, and as of March 31, 2021, we had an accumulated deficit of $1.8 billion.

From our inception through March 31, 2021, we have funded our operations principally with proceeds received from private and public equity and debt offerings, cash received from our collaborators, and through product and service sales made directly to customers.

As of March 31, 2021, we had cash and cash equivalents of $27.4 million and short-term and long-term investments of $181.9 million.

Cash in excess of immediate requirements is typically invested primarily in money market funds and U.S.

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We currently generate cash receipts primarily from sales of products and services and from strategic transactions.

As of September 30, 2020, Trans Ova was in compliance with the debt covenants associated with its line of credit as discussed in "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 11" appearing elsewhere in this Quarterly Report.

As of March 31, 2021, Trans Ova was in compliance with the debt covenants associated with its line of credit as discussed in "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 11" appearing elsewhere in this Quarterly Report.

The following table sets forth the significant sources and uses of cash for the periods set forth below:

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

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Cash flows from operating activities:

During the nine months ended September 30, 2020, our net loss was $128.9 million, which includes the following significant noncash expenses totaling $85.4 million from both continuing and discontinued operations:

(i) $27.0 million of accumulated foreign currency translation losses that were realized upon the closing of the Transactions, (ii) $23.0 million of impairment losses related to goodwill and other noncurrent assets, (iii) $13.9 million of stock-based compensation expense, (iv) $13.7 million of depreciation and amortization expense, and (v) $7.8 million accretion of debt discount and amortization of deferred financing costs.

These expenses were partially offset by the recognition of $12.8 million of previously deferred revenue upon the mutual terminations of collaboration agreements with Castle Creek and Oragenics in 2020.

During the nine months ended September 30, 2019, our net loss was $154.7 million, which includes the following significant noncash expenses totaling $53.2 million from both continuing and discontinued operations:

(i) $18.7 million of depreciation and amortization expense, (ii) $14.5 million of stock-based compensation expense, (iii) $8.0 million of shares issued as payment for services, (iv) $7.0 million accretion of debt discount and amortization of deferred financing costs, and (v) $5.0 million of equity in net loss of affiliates.

Additionally, we had an $3.8 million net increase in our operating assets and liabilities,

including the receipt of $10.0 million cash payment from Surterra Holdings, Inc., as upfront consideration for a collaboration agreement in the second quarter of 2019 and a $3.8 million sublicensing fee from Castle Creek.

Our cash outflows from operations during the nine months ended September 30, 2020 decreased $43.2 million from the nine months ended September 30, 2019 primarily due to (i) the reduction in cash required to fund the businesses sold in the TS Biotechnology Sale, (ii) the reduction in cash requirements for MBP Titan as we suspended those operations in the second quarter of 2020, and (iii) reductions in operating expenses for our ActoBio and corporate operations as we streamlined both in order to further prioritize the use of our capital.

During the three months ended March 31, 2021, our net loss was $17.3 million, which includes the following significant noncash expenses totaling $12.3 million from both continuing and discontinued operations:

(i) $5.4 million of stock-based compensation expense, (ii) $3.5 million of depreciation and amortization expense, (iii) $2.8 million accretion of debt discount and amortization of deferred financing costs, and (iv) $0.6 million of shares issued as payment for services.

These expenses

were partially offset by a $4.6 million noncash gain recognized upon the termination of our MBP Titan facility lease in January 2021.

During the three months ended March 31, 2020, our net loss was $56.0 million, which includes the following significant noncash expenses totaling $40.0 million from both continuing and discontinued operations:

(i) $27.0 million of accumulated foreign currency translation losses that were realized upon the closing of the Transactions, (ii) $4.8 million of depreciation and amortization expense, (iii) $4.4 million of stock-based compensation expense, (iv) $2.5 million accretion of debt discount and amortization of deferred financing costs, (v) $0.9 million of shares issued as payment for services, and (vi) $0.4 million of equity in net loss of affiliates.

These expenses were partially offset by the recognition of $10.0 million of previously deferred revenue upon the mutual termination of a collaboration with Castle Creek in February 2020.

Our cash outflows from operations during the three months ended March 31, 2021 decreased $11.4 million from the three months ended March 31, 2020 primarily due to (i) increased cash flows provided by Trans Ova and Exemplar due to increased revenues and gross margins thereon, (ii) the reduction in cash requirements for MBP Titan as we suspended those operations in the second quarter of 2020, and (iii) reductions in operating expenses for our ActoBio and corporate operations as we streamlined both in order to further prioritize the use of our capital.

Cash flows from investing activities:

During the nine months ended September 30, 2020, we purchased $75.4 million of investments, net of maturities, primarily using the $64.2 million of proceeds received from the Transactions, net of cash sold, and the private placement to TS Biotechnology discussed below.

During the nine months ended September 30, 2019, we received net proceeds of $75.4 million from the maturities and sales of investments, and we used $33.2 million for purchases of property, plant and equipment.

Additionally, our cash balance decreased $7.2 million as a result of the deconsolidation of AquaBounty Technologies, Inc, or AquaBounty.

During the three months ended March 31, 2021, we purchased $133.7 million of investments, net of maturities and sales, primarily using the proceeds received from the underwritten public offering discussed below.

During the three months ended March 31, 2020, we purchased $101.3 million of investments, net of maturities, primarily using the $64.2 million of proceeds received from the Transactions, net of cash sold, and the private placement discussed below.

Cash flows from financing activities:

During the nine months ended September 30, 2020, we received $35.0 million proceeds from the sale of our common stock in a private placement to TS Biotechnology.

During the nine months ended September 30, 2019, we received $6.6 million in net proceeds from an underwritten public offering completed by AquaBounty in March 2019.

During the three months ended March 31, 2021, we received $121.0 million net proceeds from the sale of our common stock in an underwritten public offering.

During the three months ended March 31, 2020, we received $35.0 million proceeds from the sale of our common stock in a private placement to TS Biotechnology Holdings, LLC.

Future capital requirements

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Our ability to achieve what is necessary for our success may be negatively impacted by the uncertainty caused by the COVID-19 pandemic.

See the section entitled "Risk Factors" in our Annual Report for additional risks associated with our substantial capital requirements.

Contractual obligations and commitments

The following table summarizes our significant contractual obligations and commitments as of September 30, 2020 and the effects such obligations are expected to have on our liquidity and cash flows in future periods:

The following table summarizes our significant contractual obligations and commitments from continuing operations as of March 31, 2021 and the effects such obligations are expected to have on our liquidity and cash flows in future periods:

Total Less Than 1 Year 1 - 3 Years 3 - 5 Years More Than 5 Years

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Total $ 232,922 $ 10,878 $ 216,273 $ 3,458 $ 2,313

(1) See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Notes 11 and 20" appearing elsewhere in this Quarterly Report for further discussion of these instruments.

In addition to the obligations in the table above, as of September 30, 2020 we also have the following significant contractual obligations described below.

(1) See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Notes 11" appearing elsewhere in this Quarterly Report for further discussion of our convertible debt.

In addition to the obligations in the table above, as of March 31, 2021 we also have the following significant contractual obligations described below.

In conjunction with the formation of our JVs, we committed to making future capital contributions subject to certain conditions and limitations.

As of September 30, 2020, our remaining capital contribution commitments to our JVs were $14.2 million.

As of March 31, 2021, our remaining capital contribution commitments to our JVs were $14.2 million.

These future capital contributions are not included in the table above due to the uncertainty of the timing and amounts of such contributions.

We are party to in-licensed research and development agreements with various academic and commercial institutions where we could be required to make future payments for annual maintenance fees as well as for milestones and royalties we might receive upon commercial sales of products that incorporate their technologies.

These agreements are generally subject to termination by

us and therefore no amounts are included in the tables above.

As of September 30, 2020, we also had research and development commitments with third parties totaling $12.4 million that had not yet been incurred.

These agreements are generally subject to termination by us and therefore no amounts are included in the tables above.

As of March 31, 2021, we also had research and development commitments with third parties totaling $15.2 million that had not yet been incurred.

Net operating losses

As of September 30, 2020, we had net operating loss carryforwards of approximately $702.7 million for U.S.

As of March 31, 2021, we had net operating loss carryforwards of approximately $796.6 million for U.S.

federal income tax purposes available to offset future taxable income, including $543.9 million generated after 2017, U.S.

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federal and state research and development tax credits of approximately $10.3 million, prior to consideration of annual limitations that may be imposed under Section 382 of the Internal Revenue Code of 1986, as amended, or Section 382.

Net operating loss carryforwards generated prior to 2018 begin to expire in 2022, and capital loss carryforwards will begin to expire if unutilized in 2024.

Net operating loss carryforwards generated prior to 2018 begin to expire in 2022, and capital loss carryforwards will expire if unutilized beginning in 2024.

Our foreign subsidiaries included in continuing operations have foreign loss carryforwards of approximately $78.1 million, most of which do not expire.

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As a result of our past issuances of stock, as well as due to prior mergers and acquisitions, certain of our net operating losses have been subject to limitations pursuant to Section 382.

As of September 30, 2020, Precigen has utilized all net operating losses subject to Section 382 limitations, other than those losses inherited via acquisitions.

As of September 30, 2020, approximately $42.1 million of domestic net operating losses were inherited via acquisitions and are limited based on the value of the target at the time of the transaction.

As of March 31, 2021, Precigen has utilized all net operating losses subject to Section 382 limitations, other than those losses inherited via acquisitions.

As of March 31, 2021, approximately $42.1 million of domestic net operating losses were inherited via acquisitions and are limited based on the value of the target at the time of the transaction.

Future changes in stock ownership may also trigger an ownership change and, consequently, a Section 382 limitation.

Off-balance sheet arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements as defined under SEC rules.

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements as defined under Securities and Exchange Commission, or SEC, rules.

Critical accounting policies and estimates

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis