What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-08 compared with 2022-05-09 · 142 added, 86 removed, 312 unchanged (42% of the section changed)

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In January 2022, we announced the completion of enrollment in the dose escalation phase of both IP and IV arms without lymphodepletion in the ongoing Phase 1 clinical trial.

We have received FDA clearance to incorporate lymphodepletion at Dose Level 3 of the IV arm.

We have initiated dosing at Dose Level 3 with lymphodepletion prior to IV administration of PRGN-3005.

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 a kill switch gene.

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

PRGN-3006 is currently being evaluated in a Phase 1/1b clinical trial for the treatment of relapsed or refractory, or r/r, acute myeloid leukemia, or AML, or high-risk myelodysplastic syndromes, or MDS.

In January 2022, we announced the completion of enrollment in the dose escalation phase in both the non-lymphodepletion and the lymphodepletion cohorts of this Phase 1 trial.

An expansion phase is planned at the MTD.

On April 4, 2022, we announced that PRGN-3006 was granted Fast Track designation in patients with r/r AML by the FDA.

The Phase 1b expansion arm is ongoing.

In April 2022, we announced that PRGN-3006 was granted Fast Track designation in patients with r/r AML by the FDA.

Previously PRGN-3006 was granted Orphan Drug Designation in patients with AML by the FDA.

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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, part of our proprietary AdenoVerse platform, to elicit immune responses directed against

cells infected with HPV type 6 and HPV type 11.

PRGN-2012 is in a Phase 1/2 clinical trial for adult patients with RRP.

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We have partnered with Castle Creek Biosciences, 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.

Pursuant to a previous 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.

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.

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.

Our Non-Healthcare Business

At March 31, 2022, 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 are evaluating strategic alternatives to determine 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 for our shareholders, including a potential sale of the business, the development of collaborations with third parties, and other strategic opportunities.

COVID-19 Impact

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

As disclosed in "Notes to Condensed Consolidated Financial Statements (Unaudited) - Note 1", on July 1, 2022, we entered into an agreement to sell 100% of the outstanding membership interests of Trans Ova (the "Trans Ova Sale"), our established bovine genetics company, which is expected to close in Q3 2022.

The consummation of the Trans Ova Sale is subject to customary closing conditions, including:

(i) the expiration of the waiting period applicable to the Purchase Agreement under the HSR act, as amended, (ii) the absence of any law or governmental order prohibiting the Trans Ova Sale, (iii) the absence of any material adverse effect on the business, assets, results of operation of Trans Ova and its subsidiaries since the signing of the Purchase Agreement, and (iv) the accuracy of the representations and warranties of each party (subject to materiality qualifiers) in the Purchase Agreement and the compliance by each party with its covenants in all material respects.

The consummation of the Trans Ova Sale is not subject to any financing contingency.

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, 2022, 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, 2022.

As of June 30, 2022, our reportable segments were (i) Biopharmaceuticals and (ii) Exemplar.

These identified reportable segments met the quantitative thresholds to be reported separately for the six months ended June 30, 2022.

The Company's segment presentation excludes amounts related to the operations of Trans Ova and MBP Titan which are reported as discontinued operations.

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.

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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, 2022, both of these subsidiaries generated positive Segment Adjusted EBITDA.

We continue to generate product and service revenues through our Exemplar subsidiary, and in the six months ended June 30, 2022, 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.

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We generate product and service revenues primarily through sales of products or services that are created from technologies developed or owned by us.

Our primary current revenues arise from Trans Ova and include sales of advanced reproductive technologies, including our bovine embryo transfer and IVF processes and from genetic preservation and sexed semen processes, and applications of such processes to other livestock, as well as sales of livestock and embryos produced using these processes and used in production.

Exemplar also generates product and service revenues through the development and sale of genetically engineered miniature swine models.

Exemplar generates product and service revenues through the development and sale of genetically engineered miniature swine models.

We recognize revenue when control of the promised product is transferred to the customer or when the promised service is completed.

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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.

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

As we focus on our healthcare business, we anticipate that our expenses will increase substantially if, and as, we continue to advance the preclinical and clinical development of our existing product candidates and our research programs.

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Cost of products and services

Cost of products and services includes primarily labor and related costs, drugs and supplies used primarily in Trans Ova's embryo transfer and IVF processes, livestock and feed used in production, and facility charges, including rent and depreciation.

Fluctuations in the price of livestock and feed have not had a significant impact on our operating margins and no derivative financial instruments are used to mitigate the price risk.

Cost of products and services includes primarily labor and related costs, drugs and supplies, feed used in production, and facility charges, including rent and depreciation.

Fluctuations in the price of feed have not had a significant impact on our operating margins and no derivative financial instruments are used to mitigate the price risk.

Research and development expenses

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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, 2022 and 2021.

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Biopharmaceuticals

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Exemplar 75 63 158 137

Trans Ova 961 385

Total research and development expenses from reportable segments 11,954 13,184 23,755 23,321

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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.

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

consolidated level.

See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 18" appearing elsewhere in this Quarterly Report for further discussion of Segment Adjusted EBITDA.

Results of operations

Comparison of the three months ended March 31, 2022 and the three months ended March 31, 2021

The following table summarizes our results of operations for the three months ended March 31, 2022 and 2021, together with the changes in those items in dollars and as a percentage:

Comparison of the three months ended June 30, 2022 and the three months ended June 30, 2021

The following table summarizes our results of operations for the three months ended June 30, 2022 and 2021, together with the changes in those items in dollars and as a percentage:

Three Months Ended

March 31, Dollar

June 30, Dollar

Change Percent

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Selling, general and administrative 12,670 14,954 (2,284) (15.3) %

Impairment of other noncurrent assets 638 543 95 17.5 %

Total operating expenses 27,073 30,031 (2,958) (9.8) %

Operating loss (24,162) (26,216) 2,054 (7.8) %

Total other expense, net (1,986) (4,783) 2,797 (58.5) %

Loss from continuing operations before income taxes (26,148) (30,999) 4,851 (15.6) %

Income tax benefit 89 60 29 48.3 %

Loss from continuing operations (26,059) (30,939) 4,880 (15.8) %

Income from discontinued operations, net of income taxes (1) 8,424 10,889 (2,465) (22.6) %

Net loss $ (17,635) $ (20,050) $ 2,415 (12.0) %

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

Product revenues and gross margin

Product revenues decreased $0.1 million, or 11%, from the three months ended June 30, 2021.

The decrease in product revenues was primarily due to product mix and lower customer demand.

Gross margin on products declined in the current period as a result of the decreased revenues and an increase in salaries, benefits, and other personnel costs.

Service revenues and gross margin

Service revenues decreased $0.5 million, or 17%, from the three months ended June 30, 2021.

The decrease in service revenues was primarily resulting from a lower demand from existing customers.

Gross margin on services declined in the current period as a result of decreased revenues and an increase in salaries, benefits, other personnel costs.

Research and development expenses

Research and development expenses decreased $1.2 million, or 9%, from the three months ended June 30, 2021.

Contract research organization costs and lab supplies decreased $1.9 million due to timing differences, the completion of our 1b/2a clinical trial of AG019 in the fourth quarter of the prior year, as well as a continued prioritization of clinical product candidates with less expense incurred related to preclinical research programs for the comparable period.

This decrease was partially offset with an increase in salaries, benefits, and other personnel costs of $0.7 million primarily due to an increase in the hiring of employees to support the growth in our operations.

Selling, general and administrative expenses

SG&A expenses decreased $2.3 million, or 15%, from the three months ended June 30, 2021.

Salaries, benefits, and other personnel costs decreased $1.5 million primarily due to reduced stock compensation in 2022 and a reduction in salaries, benefits and other personnel costs due to reduced head count.

Professional fees decreased $0.4 million, primarily due to decreased legal fees associated with certain matters.

Total other expense, net

Total other expense, net, is comprised primarily of interest expense associated with our Convertible Notes issued July 2018.

The current period decrease is primarily due to the adoption of a new accounting standard effective January 1, 2022 noted above, which simplified the accounting for the Convertible Notes and reduced non-cash interest expense.

Segment performance

The following table summarizes Segment Adjusted EBITDA, which is our primary measure of segment performance, for the three months ended June 30, 2022 and 2021, for each of our reportable segments as well as unallocated corporate costs.

Three Months Ended

June 30, Dollar

Change Percent

(In thousands)

Segment Adjusted EBITDA:

Biopharmaceuticals

$ (11,249) $ (12,540) $ 1,291 10.3 %

Exemplar 795 1,889 (1,094) (57.9) %

Unallocated corporate costs (8,914) (10,052) 1,138 (11.3) %

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 18" appearing elsewhere in this Quarterly Report.

The following table summarizes revenues from external customers for the three months ended June 30, 2022 and 2021, for each of our reportable segments.

Three Months Ended

June 30, Dollar

Change Percent

(In thousands)

Biopharmaceuticals

$ 70 $ 416 $ (346) (83.2) %

Exemplar 2,841 3,399 (558) (16.4) %

Biopharmaceuticals

Segment Adjusted EBITDA improved as we had decreased costs associated with the advancement of our clinical and preclinical programs.

Revenues for Exemplar decreased due to a decrease in services performed resulting from a lower demand from existing customers.

The decline in Segment Adjusted EBITDA was primarily due to the decreased revenues and increased personnel costs.

Unallocated Corporate Costs

Unallocated corporate costs decreased primarily due to decreased professional fees including legal fees associated with certain matters and reduced head count.

Comparison of the six months ended June 30, 2022 and the six months ended June 30, 2021

The following table summarizes our results of operations for the six months ended June 30, 2022 and 2021, together with the changes in those items in dollars and as a percentage:

Six Months Ended

June 30, Dollar

Change Percent

(In thousands)

Collaboration and licensing revenues $ — $ 367 $ (367) (100.0) %

Product revenues 1,113 1,306 (193) (14.8) %

Service revenues 7,146 5,303 1,843 34.8 %

Other revenues 165 274 (109) (39.8) %

Total revenues 8,424 7,250 1,174 16.2 %

Operating expenses

Cost of products 1,122 824 298 36.2 %

Cost of services 2,383 1,888 495 26.2 %

Research and development 23,755 23,321 434 1.9 %

Selling, general and administrative 26,359 29,220 (2,861) (9.8) %

Impairment of goodwill 482 — 482 N/A

Impairment of other noncurrent assets 638 543 95 17.5 %

Total operating expenses 54,739 55,796 (1,057) (1.9) %

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Product revenues and gross margin

Product revenues increased $2.3 million, or 37%, over the three months ended March 31, 2021.

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 and increased focus on selling higher margin products.

Product revenues decreased $0.2 million, or 15%, from the six months ended June 30, 2021.

The decrease in product revenues was primarily due to product mix and lower customer demand.

Gross margin on products declined in the current period as a result of the decreased revenues and an increase in salaries, benefits, and other personnel costs.

Service revenues and gross margin

Service revenues increased $5.3 million, or 29%, over the three months ended March 31, 2021.

Trans Ova's revenues 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 improved in the current period due to an increase in services performed resulting from a higher demand from existing and new customers as well as a combination of price increases and a change in the pricing structure with certain customers.

Service revenues increased $1.8 million, or 35%, over the six months ended June 30, 2021.

The increase in service revenues was primarily due to higher demand from existing and new customers as well as a combination of price increases and a change in the pricing structure with certain customers.

Gross margin on services remained comparable to the prior year as increased revenues were offset by increased costs for supplies, drugs, and personnel costs.

Research and development expenses

Research and development expenses increased $2.2 million, or 21%, over the three months ended March 31, 2021.

Contract research organization costs and lab supplies increased $1.6 million with the advancement of our clinical and preclinical programs.

Research and development expenses increased $0.4 million, or 2%, over the six months ended June 30, 2021.

Salaries, benefits, and other personnel costs increased $1.2 million due to an increase in the hiring of employees to support the growth in the Company's development activities.

This increase was partially offset with a decrease of contract research organization costs and lab supplies of $0.9 million, primarily due to timing differences, the completion of our 1b/2a clinical trial of AG019 in the fourth quarter of the prior year, and as well as a continued prioritization of clinical product candidates with less expense incurred related preclinical research programs for the comparable period.

Selling, general and administrative expenses

SG&A expenses increased $0.9 million, or 5%, over the three months ended March 31, 2021.

Professional fees increased $1.6 million, primarily due to increased legal fees associated with certain litigation matters.

This increase was partially offset with a decrease in salaries, benefits, and other personnel costs of $1.3 million primarily due to reduced stock compensation in 2022 and reduced head count.

SG&A expenses decreased $2.9 million, or 10%, from the six months ended June 30, 2021.

Salaries, benefits, and other personnel costs decreased $3.5 million primarily due to reduced stock compensation in 2022 and reduced head count.

This decrease was partially offset with an increase in legal and professional fees of $1.1 million, primarily due to increased consulting fees and legal fees associated with certain matters.

Total other expense, net

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Segment performance

The following table summarizes Segment Adjusted EBITDA, which is our primary measure of segment performance, for the three months ended March 31, 2022 and 2021, for each of our reportable segments as well as unallocated corporate costs.

Three Months Ended

March 31, Dollar

The following table summarizes Segment Adjusted EBITDA, which is our primary measure of segment performance, for the six months ended June 30, 2022 and 2021, for each of our reportable segments as well as unallocated corporate costs.

Six Months Ended

June 30, Dollar

Change Percent

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Exemplar 4,353 3,695 658 17.8 %

Trans Ova 5,397 6,421 (1,024) (15.9) %

Unallocated corporate costs (18,974) (18,246) (728) 4.0 %

The following table summarizes revenues from external customers for the three months ended March 31, 2022 and 2021, for each of our reportable segments.

Three Months Ended

March 31, Dollar

The following table summarizes revenues from external customers for the six months ended June 30, 2022 and 2021, for each of our reportable segments.

Six Months Ended

June 30, Dollar

Change Percent

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Exemplar 8,270 6,656 1,614 24.2 %

Trans Ova 26,508 21,076 5,432 25.8 %

Biopharmaceuticals

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The improvement in Segment Adjusted EBITDA was primarily due to the increased revenues.

Revenues for Trans Ova increased primarily due to (i) higher customer demand for pregnant cows, (ii) more procedures performed as a result of stronger beef and dairy industries in the current year, and (iii) a change in the pricing structure with certain customers.

Segment Adjusted EBITDA declined due to (i) increased costs for supplies and drugs, (ii) increased costs for certain legal matters, and (iii) increased salaries, benefits, and other personnel costs.

Unallocated Corporate Costs

Unallocated corporate costs increased primarily due to increased professional fees including legal fees associated with certain litigation matters.

Unallocated corporate costs increased primarily due to increased professional fees including legal fees associated with certain matters.

Liquidity and capital resources

Sources of liquidity

We have incurred losses from operations since our inception, and as of March 31, 2022, we had an accumulated deficit of $1.9 billion.

From our inception through March 31, 2022, 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, 2022, we had cash and cash equivalents of $40.3 million and short-term and long-term investments of $101.7 million.

We have incurred losses from operations since our inception, and as of June 30, 2022, we had an accumulated deficit of $1.9 billion.

From our inception through June 30, 2022, 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 June 30, 2022, we had cash and cash equivalents of $49.5 million and short-term and long-term investments of $83.3 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.

Trans Ova is subject to certain restrictive covenants under its line of credit, which matured on April 1, 2022, which is discussed in "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 11" appearing elsewhere in this Quarterly Report.

As of March 31, 2022, Trans Ova was in compliance with these debt covenants.

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

Three Months Ended

Six Months Ended

(In thousands)

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Effect of exchange rate changes on cash, cash equivalents, and restricted cash (471) 184

Net decrease in cash, cash equivalents, and restricted cash $ (2,608) $ (24,457)

Net increase (decrease) in cash, cash equivalents, and restricted cash $ 6,558 $ (15,395)

Cash flows from operating activities:

During the three months ended March 31, 2022, our net loss was $19.3 million, which includes the following significant noncash expenses totaling $7.5 million from continuing operations:

(i) $3.6 million of stock-based compensation expense, (ii) $3.3 million of depreciation and amortization expense, and (iii) $0.6 million of shares issued as payment for services.

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.

During the six months ended June 30, 2022, our net loss was $36.9 million, which includes the following significant noncash expenses totaling $12.4 million from continuing operations:

(i) $6.5 million of depreciation and amortization expense and (ii) $5.9 million of stock-based compensation expense.

During the six months ended June 30, 2021, our net loss was $37.4 million, which includes the following significant noncash expenses totaling $21.6 million from both continuing and discontinued operations:

(i) $9.0 million of stock-based compensation expense, (ii) $7.0 million of depreciation and amortization expense, and (iii) $5.6 million accretion of debt discount and amortization of deferred financing costs.

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.

Our cash outflows from operations during the three months ended March 31, 2022 increased $2.4 million from the three months ended March 31, 2021 primarily due to increased costs associated with the advancement of our clinical and preclinical programs.

Our cash outflows from operations during the six months ended June 30, 2022 increased $1.7 million from the six months ended June 30, 2021 primarily due to decreased cash inflows provided by Trans Ova and Exemplar.

Cash flows from investing activities:

During the three months ended March 31, 2022, we received $18.0 million of proceeds from maturities of investments.

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

During the six months ended June 30, 2022, we received $36.0 million of proceeds from maturities of investments.

During the six months ended June 30, 2021, we purchased $116.2 million of investments, net of maturities, primarily using the proceeds received from the underwritten public offering discussed below.

Cash flows from financing activities:

During the three months ended March 31, 2022, we made payments of long-term debt of $0.2 million.

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

During the six months ended June 30, 2022, we made payments of long-term debt of $0.2 million.

During the six months ended June 30, 2021, we received $121.0 million proceeds from the sale of our common stock in an underwritten public offering.

Future capital requirements

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• the timing of regulatory approval of our product candidates and those of our collaborations;

• the timing, receipt, and amount of any payments received in connection with strategic transactions;

• the timing, receipt, and amount of any payments received in connection with strategic transactions, including the sale of Trans Ova;

• the timing, receipt, and amount of upfront, milestone, and other payments, if any, from present and future collaborators, if any;

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We may not be able to raise sufficient additional funds on terms that are favorable to us, if at all.

To the extent that we raise additional capital through the sale of equity or convertible debt securities,

the ownership interests of our common shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common shareholders.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our common shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common shareholders.

Our current stock price may make it more difficult to pursue equity financings and lead to substantial dilution if the price of our common stock does not increase.

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Contractual obligations and commitments

The following table summarizes our significant contractual obligations and commitments from continuing operations as of March 31, 2022 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 June 30, 2022 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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Cash interest payable on convertible debt 10,500 7,000 3,500 — —

Long-term debt, excluding convertible debt 3,105 355 752 814 1,184

Total $ 223,674 $ 8,977 $ 207,657 $ 3,317 $ 3,723

(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, 2022 we also have the following significant contractual obligations described below.

In addition to the obligations in the table above, as of June 30, 2022 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 March 31, 2022, our remaining capital contribution commitments to our JVs were $14.2 million.

As of June 30, 2022, 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.

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

As of March 31, 2022, we also had research and development commitments with third parties totaling $22.7 million that had not yet been incurred.

As of June 30, 2022, we also had research and development commitments with third parties totaling $19.5 million that had not yet been incurred.

Net operating losses

As of March 31, 2022, we had net operating loss carryforwards of approximately $861.0 million for U.S.

As of June 30, 2022, we had net operating loss carryforwards of approximately $862.0 million for U.S.

federal income tax purposes available to offset future taxable income, including $610.0 million generated after 2017, U.S.

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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 March 31, 2022, Precigen has utilized all net operating losses subject to Section 382 limitations, other than those losses inherited via acquisitions.

As of March 31, 2022, approximately $42.1 million of available 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 June 30, 2022, Precigen has utilized all net operating losses subject to Section 382 limitations, other than those losses inherited via acquisitions.

As of June 30, 2022, approximately $41.4 million of available 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.

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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