What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-10 compared with 2022-11-09 · 118 added, 293 removed, 192 unchanged (68% of the section changed)

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We are actively advancing our lead clinical programs, including:

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

PRGN-3005, PRGN-3006 and PRGN-3007, which are built on our UltraCAR-T platform;

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

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UltraPorator has received U.S.

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

Food and Drug Administration, or FDA, clearance for manufacturing UltraCAR-T cells in clinical trials, and we have been dosing patients with UltraCAR-T cells manufactured with UltraPorator in our UltraCAR-T 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 Business

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

Our Biopharmaceuticals segment includes 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 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.

Our Biopharmaceuticals reportable segment is primarily comprised of the Company's legal entities of Precigen and ActoBio, as well as royalty interests in therapeutics and therapeutic platforms from companies not controlled by us.

In addition to human therapeutics, Exemplar Genetics LLC, doing business as Precigen Exemplar, or Exemplar, is our 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.

We are developing therapies 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 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, or cGMP, 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.

CAR-T cells prior to their administration, limiting their potential for persistence in patients.

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

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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.

The most advanced programs within PGEN Therapeutics are as follows:

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.

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

Enrollment in the Phase 1 portion of the clinical trial has been completed and enrollment in the Phase 2 portion of the clinical trial is ongoing.

PRGN-2012 has been granted Orphan Drug designation for treatment of RRP 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.

The most advanced programs 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 , fallopian tube, or primary peritoneal cancer.

We have completed enrollment in the Phase 1 dose escalation cohorts of the intraperitoneal (IP) and intravenous (IV) arms without lymphodepletion as well as in the lymphodepletion cohort in the IV arm and initiated Phase 1b expansion clinical trial.

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, 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.

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.

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 has been 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.

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

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.

The Phase 1b expansion cohort of the clinical trial with lymphodepletion prior to IV administration of PRGN-3005 is ongoing.

We have completed the Phase 1 dose escalation study.

Phase 1b dose expansion trial is ongoing where PRGN-3006 is being evaluated following lymphodepletion.

PRGN-3007 is a first-in-class, investigational autologous CAR-T therapy that utilizes the next generation UltraCAR-T platform to express a CAR to target ROR1, mbIL15, kill switch, and a novel mechanism for the intrinsic blockade of the programmed death 1, or PD-1, gene expression.

PRGN-3007 has received FDA clearance to initiate a Phase 1/1b clinical trial for patients with advanced receptor tyrosine kinase-like orphan receptor 1-positive, or ROR1 + , hematological (Arm 1) and solid tumors (Arm 2).

PRGN-3007 is being evaluated in a Phase 1/1b clinical trial for patients with advanced receptor tyrosine kinase-like orphan receptor 1-positive, or ROR1 + , hematological (Arm 1) and solid tumors (Arm 2).

The target patient population for Arm 1 includes relapsed or refractory CLL, relapsed or refractory MCL, relapsed or refractory B-ALL, and relapsed or refractory DLBCL.

The target patient population for Arm 2 includes locally advanced

unresectable or metastatic histologically confirmed TNBC.

The study will enroll in two parts:

The target patient population for Arm 2 includes locally advanced unresectable or metastatic histologically confirmed TNBC Arm 1 and Arm 2 will enroll in parallel.

The study is enrolling in two parts:

an initial 3+3 dose escalation in each arm followed by a dose expansion at the maximum tolerated dose.

Arm 1 and Arm 2 will enroll in parallel.

In addition to our clinical programs, PGEN Therapeutics has a robust pipeline of preclinical programs in our core therapeutic areas of immune-oncology, infectious diseases, and autoimmune disorders 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 therapeutic platforms.

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

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

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

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

We have completed the Phase 1 clinical trial.

Phase 2 clinical trial is ongoing.

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

In addition to our clinical programs, we have a robust pipeline of preclinical programs in order to drive long-term value creation.

Our pipeline includes product candidates based on UltraCAR-T and "off-the-shelf" AdenoVerse immunotherapy therapeutic platforms.

We expect to continue development of a number of potential product candidates in our preclinical pipeline to identify product candidates for evaluation in clinical trials.

Precigen ActoBio, Inc.

ActoBio is pioneering a proprietary class of microbe-based biopharmaceuticals that enable expression and local delivery of disease-modifying therapeutics.

We refer to these microbe-based biopharmaceuticals as ActoBiotics.

ActoBio is pioneering a proprietary class of microbe-based biopharmaceuticals, referred to as ActoBiotics, that enable expression and local delivery of disease-modifying therapeutics.

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

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A single 8-week treatment cycle of oral AG019 as a monotherapy and in combination with teplizumab showed stabilization or increase of C-peptide levels during the first 6 months post treatment initiation in recent-onset T1D.

Precigen Triple-Gene

Triple-Gene is a clinical stage gene therapy company focused on developing advanced treatments for complex cardiovascular diseases.

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

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

The Phase 1 trial met the primary endpoints to evaluate safety and feasibility for INXN-4001.

Partnered Program

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.

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.

Third Party Licenses

We previously entered into a collaboration with Castle Creek Biosciences, Inc., or Castle Creek, to advance certain product candidates.

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 certain product candidates 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.

One such Retained Product is D-Fi (debcoemagene autoficel), formerly designated FCX-007, for the treatment of recessive dystrophic epidermolysis bullosa, or RDEB.

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.

COVID-19 Impact

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

Furthermore, there is uncertainty regarding the duration and severity of the ongoing pandemic, and we could experience delays of other pandemic-related events that may adversely impact our clinical as well as preclinical pipeline candidates in the future.

We are also closely monitoring the impact of COVID-19 on all aspects of our businesses.

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.

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

We have implemented safety measures in our facilities for the well-being of our employees and visitors.

These measures have permitted us to continue to advance our programs, with the ultimate goal of benefiting patients.

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

Discontinued Operations

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 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.

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 interest in and collaboration agreements with Intrexon Energy Partners, LLC ("Intrexon Energy Partners"), and Intrexon Energy Partners II, LLC ("Intrexon Energy Partners II"), including the associated deferred revenue remaining under each collaboration agreement which was recognized as revenue in the third quarter of 2022 upon acquiring control of these entities as well as the associated intellectual property developed by MBP Titan to date.

These assets, liabilities, and related historical revenue and equity losses are included in our operating results from continuing operations in the condensed consolidated financial statements appearing in Item 1 of this form 10-Q for all periods presented as a result of our continuing involvement.

As disclosed in "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Notes 3 and 5 " appearing elsewhere in the Quarterly Report", effective as of August 18, 2022, Precigen completed the previously announced sale of 100% of the issued and outstanding membership interests of its wholly-owned subsidiary, Trans Ova.

In August 2022, Precigen completed the sale of 100% of the issued and outstanding membership interests in its wholly-owned subsidiary, Trans Ova Genetics, L.C.

(“Trans Ova”), a provider of reproductive technologies, including services and products sold to cattle breeders and other producers.

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 also "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Notes 2, 4, 5 and 16" appearing elsewhere in this Quarterly Report for a discussion of Intrexon Energy Partners and Intrexon Energy Partners II.

As of September 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 nine months ended September 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.

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

As of March 31, 2023, our reportable segments were (i) Biopharmaceuticals and (ii) Exemplar.

These identified reportable segments met the quantitative thresholds to be reported separately for the three months ended March 31, 2023.

Prior to January 1, 2023, corporate expenses, were not allocated to the segments and were managed at a consolidated level.

Corporate expenses, include costs associated with general and administrative functions, including the Company's finance, accounting, legal, human resources, information technology, corporate communication, and investor relations functions.

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 and include unrealized and realized gains and losses on the Company's securities portfolio as well as dividend income.

Beginning in the first quarter of 2023, we began allocating certain corporate expenses to one of the reporting units within the Biopharmaceuticals reportable segment.

As presented in Note 15 to the Condensed Consolidated Financial Statements (Unaudited) appearing elsewhere in this Quarterly Report, the prior year period has been reclassified to conform to the current period’s presentation.

Financial overview

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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 Exemplar subsidiary, and in the nine months ended September 30, 2022, generated positive Segment Adjusted EBITDA.

We continue to generate product and service revenues through our Exemplar subsidiary, and in the three months ended March 31, 2023, it produced 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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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.

See further discussion regarding our ability to continue as a going concern below under the Liquidity and capital resources section of Item 2.

Sources of revenue

Historically, we have derived our collaboration and licensing revenues through agreements with counterparties for the development and commercialization of products enabled by our technologies.

Generally, the terms of these collaborations provide that we receive some or all of the following:

(i) technology access fees upon signing;

(ii) reimbursements of costs incurred by us for our research and development and/or manufacturing efforts related to specific applications provided for in the collaboration;

(iii) milestone payments upon the achievement of specified development, regulatory and commercial activities;

and (iv) royalties on sales of products arising from the collaboration.

Our technology access fees and milestone payments may be in the form of cash or securities of the collaborator.

Our collaborations contain multiple arrangements, and we typically defer revenues from the technology access fees and milestone payments received and recognize such revenues in the future over the anticipated performance period.

We are also entitled to sublicensing revenues in those situations where our collaborators choose to license our technologies to other parties.

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.

Although we have generated revenue in the past from collaboration agreements, our primary current revenues arise from Exemplar, which 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 or service is transferred to the customer.

As we have shifted our focus to our healthcare business, we have and may continue to mutually terminate historical 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 operating 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.

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

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.

See "Notes to the Consolidated Financial Statements (Unaudited) - Note 4" appearing elsewhere in this Quarterly Report for a discussion of changes to our significant collaborations.

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 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 Exemplar's current product and service offerings.

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.

We expect a significant period of time could pass before commercialization of our various product candidates or before the achievement of contractual milestones and the realization of royalties on product candidates commercialized under our collaborations and revenues sufficient to achieve profitability.

Accordingly, there can be no assurance as to the timing, magnitude, and predictability of revenues to which we might be entitled.

Accordingly, there can be no assurance as to the timing, magnitude, and predictability of revenues, if any, to which we might be entitled.

Cost of products and services

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.

Cost of products and services, all which are related to our Exemplar reporting segment, 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 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.

Research and development expenses

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• costs related to laboratory supplies used in our research and development efforts and acquiring, developing, and manufacturing preclinical study and clinical trial materials;

• costs related to certain in-licensed technology rights or reacquired in-process research and development;

• costs related to certain in-licensed technology rights or in-process research and development;

• amortization of patents and related technologies acquired in mergers and acquisitions;

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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, PRGN-3007, PRGN-2009, PRGN-2012, and AG019.

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

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 and nine months ended September 30, 2022 and 2021.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Biopharmaceuticals

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Selling, general and administrative expenses

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 (including the cost of settling certain claims and lawsuits), and expenses associated with obtaining and maintaining our intellectual property.

communications functions.

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

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.

Interest expense decreased in the current period, and is expected to decrease in future periods upon the adoption of a new accounting standard effective January 1, 2022, which simplified the accounting for the Convertible Notes.

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

In September 2022, the Company retired Convertible Notes with principal of $117,560.

The net gain recorded on extinguishment of $0.9 million is included in Other income(expense), net.

Other 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.

Other expense consists primarily of interest on our Convertible Notes, which decreased in 2022 due redemption of a portion of our Convertible Notes.

See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 9" appearing elsewhere in this Quarterly Report for further discussion.

The extinguishment of these Convertible Notes will alleviate us of $3.2 million in future cash interest payments had we held the Convertible Notes until maturity.

Equity in net income (loss) of affiliates

Equity in net 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.

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

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.

See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 15" appearing elsewhere in this Quarterly Report for further discussion of Segment Adjusted EBITDA.

Results of operations

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

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

Comparison of the three months ended March 31, 2023 and the three months ended March 31, 2022

The following table summarizes our results of operations for the three months ended March 31, 2023 and 2022, together with the changes in those items in dollars and as a percentage:

Three Months Ended

September 30, Dollar

March 31, Dollar

Change Percent

(In thousands)

Collaboration and licensing revenues (1) $ 14,561 $ 22 $ 14,539 >200%

Product revenues $ 324 492 $ (168) (34.1) %

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Operating expenses

Cost of products 463 482 (19) (3.9) %

Cost of services 1,114 970 144 14.8 %

Cost of product and services 1,527 1,694 (167) (9.9) %

Research and development 12,163 11,801 362 3.1 %

Selling, general and administrative 11,639 13,689 (2,050) (15.0) %

Impairment of other noncurrent assets — — — N/A

Impairment of goodwill — 482 (482) (100.0) %

Total operating expenses 25,329 27,666 (2,337) (8.4) %

Operating loss (23,478) (22,153) (1,325) 6.0 %

Total other expense, net (942) (4,850) 3,908 (80.6) %

Equity in net loss of affiliates 862 — 862 N/A

Total other income (expense), net 689 (1,802) 2,491 138.2 %

Equity in net loss of affiliates — (1) 1 (100.0) %

Loss from continuing operations before income taxes (22,789) (23,956) 1,167 (4.9) %

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

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

Collaboration and licensing revenues

Collaboration and licensing revenues increased $14.5 million or greater than 200%, from the three months ended September 30, 2021 due to the fact we obtained control of Intrexon Energy Partners and Intrexon Energy Partners II in the third quarter of 2022 and therefore we recognized the remaining balance of deferred revenue associated with Intrexon Energy Partners and Intrexon Energy Partners II, less the amounts paid to acquire the membership interests of the investors.

See "Notes to the Condensed Financial Statements (Unaudited) – Notes 2, 4, 5 and 16” appearing elsewhere in this Quarterly Report for further discussion of Intrexon Energy Partners and Intrexon Energy Partners II.

Product revenues and gross margin

Product revenues decreased $0.2 million, or 38%, from the three months ended September 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 $0.9 million, or 34%, from the three months ended September 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.

Revenues and gross margin

Revenues decreased $3.7 million, or 66%, from the three months ended March 31, 2022.

This decrease related to the recognition of revenue in the first quarter of 2022 related to agreements for which revenue was previously deferred that did not occur in the first quarter of 2023 of $1.0 million, as well as declines in services performed resulting from a lower demand from existing customers at Exemplar.

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

Research and development expenses

Research and development expenses increased $0.2 million, or 2%, from the three months ended September 30, 2021.

This increase was driven by an increase in salaries, benefits, and other personnel costs of $1.0 million primarily due to an

increase in the hiring of employees to support the growth in our operations and offset by $0.8 decrease in contract research organization costs and lab supplies 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.

Research and development expenses increased $0.4 million, or 3%, compared to the three months ended March 31, 2022.

This increase was primarily driven by a continued prioritization of clinical product candidates.

Selling, general and administrative expenses

SG&A expenses decreased $0.8 million, or 8%, from the three months ended September 30, 2021.

Salaries, benefits, and other personnel costs decreased $0.1 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 $0.6 million, primarily due to decreased legal and consulting fees associated with certain matters.

Total other expense, net

Total other expense, net, is primarily related to our Convertible Notes issued July 2018.

The decrease was also a result of the gain recorded on the early retirement of a portion of our Convertible Notes of $0.9 million.

The extinguishment of these Convertible Notes will alleviate us of $3.2 million in future cash interest payments had we held the Convertible Notes until maturity.

SG&A expenses decreased $2.1 million, or 15%, compared to the three months ended March 31, 2022.

This decrease was primarily driven by a reduction in professional fees of $2.0 million, due to decreased legal fees associated with certain litigation matters.

Total other income (expense), net

Total other income, net, increased $2.5 million compared to the three months ended March 31, 2022.

This is primarily due to reduced interest expense associated with our Convertible Notes issued July 2018 as they have been mostly retired, and increased interest income due to higher interest rates on our investments.

Segment performance

The following table summarizes Segment Adjusted EBITDA, which is our primary measure of segment performance, for the three months ended September 30, 2022 and 2021, for each of our reportable segments 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, 2023 and 2022, 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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Exemplar 121 3,558 (3,437) (96.6) %

Unallocated corporate costs (5,744) (7,166) 1,422 (19.8) %

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 15" appearing elsewhere in this Quarterly Report.

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

The following table summarizes revenues from external customers for the three months ended March 31, 2023 and 2022, for each of our reportable segments.

Three Months Ended

September 30, Dollar

March 31, Dollar

Change Percent

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Biopharmaceuticals

Biopharmaceuticals collaboration and licensing revenues increased due to the fact we obtained control of Intrexon Energy Partners and Intrexon Energy Partners II and therefore we recognized the remaining balance of deferred revenue associated with Intrexon Energy Partners and Intrexon Energy Partners II in the third quarter of 2022 less the amounts paid to acquire the membership interests of the investors.

Segment Adjusted EBITDA decreased as we had increased 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 nine months ended September 30, 2022 and the nine months ended September 30, 2021

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

Nine Months Ended

September 30, Dollar

Change Percent

(In thousands)

Collaboration and licensing revenues (1) $ 14,561 $ 389 $ 14,172 >200%

Product revenues 1,455 1,860 (405) (21.8) %

Service revenues 8,896 7,935 961 12.1 %

Other revenues 234 399 (165) (41.4) %

Total revenues 25,146 10,583 14,563 137.6 %

Operating expenses

Cost of products 1,585 1,306 279 21.4 %

Cost of services 3,497 2,858 639 22.4 %

Research and development 36,377 35,755 622 1.7 %

Selling, general and administrative 36,496 40,197 (3,701) (9.2) %

Impairment of goodwill 482 — 482 N/A

Impairment of other noncurrent assets 638 543 95 17.5 %

Total operating expenses 79,075 80,659 (1,584) (2.0) %

Operating loss (53,929) (70,076) 16,147 (23.0) %

Total other expense, net (4,730) (14,203) 9,473 (66.7) %

Equity in net loss of affiliates 861 (3) 864 >200%

Loss from continuing operations before income taxes (57,798) (84,282) 26,484 (31.4) %

Income tax benefit 197 173 24 13.9 %

Loss from continuing operations (57,601) (84,109) 26,508 (31.5) %

Income from discontinued operations, net of income taxes (2) 108,094 16,977 91,117 >200%

Net loss $ 50,493 $ (67,132) $ 117,625 175.2 %

(1) See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 5 " appearing elsewhere in this Quarterly Report.

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

Collaboration and licensing revenues

Collaboration and licensing revenues increased $14.2 million or greater than 200%, from the nine months ended September 30, 2021 due to the fact we obtained control of Intrexon Energy Partners and Intrexon Energy Partners II in the third quarter of 2022 and therefore we recognized the remaining balance of deferred revenue associated with the Intrexon Energy Partners and Intrexon Energy Partners II, less the amounts paid to acquire the membership interests of the investors.

Product revenues and gross margin

Product revenues decreased $0.4 million, or 22%, from the nine months ended September 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 $1.0 million, or 12%, over the nine months ended September 30, 2021.

The increase in service revenues was primarily due to higher demand from existing and new customers in the early part of 2022 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 $0.6 million, or 2%, over the nine months ended September 30, 2021.

Salaries, benefits, and other personnel costs increased $2.2 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 $1.6 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 decreased $3.7 million, or 9%, from the nine months ended September 30, 2021.

Salaries, benefits, and other personnel costs decreased $3.6 million primarily due to $2.6 million reduced stock compensation in 2022 and reduced head count.

Total other expense, net

Total other expense, net, is primarily related to 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, reduced non-cash interest expense and as well as a $0.9 million gain in connection with the early retirement of a portion of our Convertible Notes.

The extinguishment of these Convertible Notes will alleviate us of $3.2 million in future cash interest payments had we held the Convertible Notes until maturity.

Segment performance

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

Nine Months Ended

September 30, Dollar

Change Percent

(In thousands)

Segment Adjusted EBITDA:

Biopharmaceuticals

$ (35,286) $ (34,055) $ (1,231) (3.6) %

Exemplar 4,699 5,312 (613) (11.5) %

Unallocated corporate costs (24,718) (24,835) 117 (0.5) %

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

Nine Months Ended

September 30, Dollar

Change Percent

(In thousands)

Biopharmaceuticals

$ 14,778 $ 723 $ 14,055 >200%

Exemplar 10,368 9,860 508 5.2 %

Biopharmaceuticals

Biopharmaceuticals collaboration and licensing revenues increased due to the fact we obtained control of Intrexon Energy Partners and Intrexon Energy Partners II in the third quarter of 2022 and therefore we recognized the remaining balance of deferred revenue associated with Intrexon Energy Partners and Intrexon Energy Partners II, less the amounts paid to acquire the membership interests of the investors.

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 in the first half of 2022.

Unallocated Corporate Costs

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

The decline in Segment Adjusted EBITDA was primarily due to the decreased revenues.

Liquidity and capital resources

Sources of liquidity

We have historically financed our operations primarily through public offerings and private placements of our capital stock, and up front and milestone consideration received under our collaboration and licensing agreements.

In addition, cash flows from our Exemplar segment and businesses previously sold (including proceeds from those sales) have provided sources of funds to finance our operations.

As of September 30, 2022, we had $71,327 in cash, cash equivalents, and short-term investments.

At-the-Market Sales Agreement

As disclosed in "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 13" appearing elsewhere in this Quarterly Report, on August 9, 2022, we entered into a Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co.

Pursuant to which we may issue and sell from time to time shares of Company’s common stock of up to $100,000.

The Company has no obligation to sell any of the Shares under the Sales Agreement, and may at any time suspend or terminate the offering of its common stock pursuant to the Sales Agreement upon notice and subject to other conditions.

The Company intends to use the proceeds of the offering, when and if utilized, to fund the development of clinical and preclinical product candidates and for working capital and other general corporate purposes.

Going Concern

During the nine months ended September 30, 2022, we incurred a loss from continuing operations of $57,601 and used $49,649 of cash in our operations, and as of September 30, 2022, had an accumulated deficit of $1,846,391.

We have also incurred operating losses since our inception and management expects operating losses and negative cash flows from operations to continue for the foreseeable future and, as a result, we will require additional capital to fund our operations and execute our business plan.

In addition, as of September 30, 2022, we had $153,770 in cash, cash equivalents, short-term investments, and restricted cash, and had no committed source of additional funding from either debt or equity financings, although we may, at our discretion, sell equity securities under the terms of the at-the-market sales agreement, subject to certain conditions and limitations.

See “Notes to the Condensed Consolidated Financial Statements (Unaudited) – Note 13” appearing elsewhere in this Quarterly Report for further discussion of our at-the-market sales agreement.

Given our current cash position and forecasted negative cash flows from operating activities for the foreseeable future, as well as convertible notes of $82,440 that are due on July 1, 2023, management believes that these matters raise substantial doubt about the Company’s ability to continue as a going concern.

See “Notes to the Condensed Consolidated Financial Statements (Unaudited) – Note 11” appearing elsewhere in this Quarterly Report for further discussion of our convertible debt agreement.

Our ability to fund operations on an ongoing basis is dependent upon the successful execution of management’s plans, which include raising additional capital in the near term.

This additional capital could be raised through a combination of non-dilutive financings (including collaborations, strategic alliances, monetization of non-core assets, marketing, distribution or licensing arrangements), dilutive financings (including equity and/or debt financings) and, in the longer term, from revenue related to product sales, to the extent its product candidates receive marketing approval and can be commercialized.

There can be no assurance that new financings or other transactions will be available to us on commercially acceptable terms, or at all.

Also, any collaborations, strategic alliances, monetization of non-core assets or marketing, distribution or licensing arrangement may require us to give up some or all of our rights to a product or technology, which in some cases may be at less than the full potential value of such rights.

If we are unable to obtain additional capital, we will assess our capital resources and we may be required to delay, reduce the scope of, or eliminate some or all of our operations, which may include research and development and clinical trials.

This may have a material adverse effect on our business, financial condition, results of operations and our ability to operate as a going concern.

We currently generate cash receipts primarily from sales of products and services at our Exemplar segment and from strategic transactions.

We have incurred losses from operations since our inception, and as of March 31, 2023, we had an accumulated deficit of $1.9 billion.

From our inception through March 31, 2023, 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, 2023, we had cash and cash equivalents of $9.7 million and short-term and long-term investments of $101.8 million.

We also had restricted cash of $13.8 million at March 31, 2023.

This cash is restricted for the permitted purposes related to our Convertible Notes, including the resolution of such notes.

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

government debt securities in order to maintain liquidity and preserve capital.

In January 2023, we closed a public offering of 43,962,640 shares of our common stock, resulting in net proceeds to us of $72.8 million, after deducting underwriting discounts, fees, and other underwriting expenses.

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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Effect of exchange rate changes on cash, cash equivalents, and restricted cash (28) (230)

Net increase (decrease) in cash, cash equivalents, and restricted cash $ 48,533 $ (10,090)

Net decrease in cash, cash equivalents, and restricted cash $ (24,650) $ (2,608)

Cash flows from operating activities:

During the nine months ended September 30, 2022, our net income was $50.5 million, which includes the gain on sale of discontinued operations of $94.7 million which is presented as an adjustment to net income to net cash used in operating activities as the cash flows from the sale is presented within cash flows from investing activities;

additional significant noncash expenses totaling $17.0 million from continuing operations which also adjusted net income to net cash from operating activities included:

(i) $9.0 million of depreciation and amortization expense and (ii) $8.0 million of stock-based compensation expense

During the nine months ended September 30, 2021, our net loss was $67.1 million, which includes the following significant noncash expenses totaling $30.5 million from both continuing and discontinued operations:

(i) $11.5 million of stock-based compensation expense, (ii) $10.4 million of depreciation and amortization expense, and (iii) $8.6 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 nine months ended September 30, 2022 increased $8.5 million from the nine months ended September 30, 2021 primarily due to decreased cash inflows provided by Trans Ova (which was sold in August 2022) and Exemplar.

During the three months ended March 31, 2023, our net loss was $22.7 million, which includes the following significant noncash expenses totaling $5.3 million:

(i) $3.1 million of stock-based compensation expense, (ii) $1.7 million of depreciation and amortization expense, and (iii) $0.5 million of shares issued as payment for services.

During the three months ended March 31, 2022, our net loss was $19.3 million, which includes the following significant noncash expenses totaling $8.3 million from both continuing and discontinued operations:

(i) $3.6 million of stock-based compensation expense, (ii) $3.3 million of depreciation and amortization expense, (iii) $0.3 million accretion of debt discount and amortization of deferred financing costs, (iv) $0.6 million of shares issued as payment for services, and (vi) $0.5 million of goodwill impairment.

Our cash outflows from operations during the three months ended March 31, 2023 were $0.4 million lower than the three months ended March 31, 2022 primarily due the settlement in 2023 of previously accrued short-term incentive bonuses in stock awards whereas the majority of our 2021 short-term incentive bonuses were paid in cash in the first quarter of 2022.

Cash flows from investing activities:

During the nine months ended September 30, 2022, we received $162.3 million of proceeds from the sale of discontinued operations and $57.0 million of proceeds from maturities of investments.

During the nine months ended September 30, 2021, we purchased $92.2 million of investments, net of maturities, primarily using the proceeds received from the underwritten public offering discussed below.

During the three months ended March 31, 2023, we purchased $50.3 million of investments, net of sales and maturities, primarily using the proceeds received from the underwritten public offering discussed below under cash flows from financing activities.

During the three months ended March 31, 2022, we received proceeds of $18.0 million related to the sale and maturity of investments.

Cash flows from financing activities:

During the nine months ended September 30, 2022, we repurchased Convertible Notes for $115.7 million.

Additionally, in October 2022, we made additional repurchases of Convertible Notes of $26.4 million.

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

During the three months ended March 31, 2023, we received $73.5 million proceeds from the sale of our common stock in an underwritten public offering and retired $29.3 million of our Convertible Notes using restricted cash.

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

Future capital requirements

As discussed in the liquidity and capital resource section above in Item 2, we believe our existing liquid assets will not be sufficient to enable us to continue as a going concern for the next twelve months without additional capital in the near term.

We believe our existing liquid assets will enable us to fund our operating expenses and capital requirements for at least the next 12 months.

Our future capital requirements will depend on many factors, including:

2 unchanged sentences

• 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 upfront, milestone, and other payments, if any, from present and future collaborators, if any;

7 unchanged sentences

Until such time, if ever, as we can regularly generate positive operating cash flows, we plan to finance our cash needs through a combination of equity offerings, debt financings, government, or other third-party funding, strategic alliances, sales of assets, and licensing arrangements.

As the COVID-19 pandemic continues to negatively impact the economy, our future access to capital on favorable terms may be materially impacted.

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

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Our success is dependent upon our ability to continue to raise additional capital in order to fund ongoing research and development, adequately satisfy or renegotiate long-term debt obligations, obtain regulatory approval of our products, successfully commercialize our products, generate revenue, meet our obligations, and, ultimately, attain profitable operations.

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 from continuing operations as of September 30, 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 March 31, 2023 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

5 unchanged sentences

(1) See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Notes 9" appearing elsewhere in this Quarterly Report for further discussion of our convertible debt.

In addition to the obligations in the table above, as of September 30, 2022 we also have the following significant contractual obligations described below.

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, 2022, we also had research and development commitments with third parties totaling $21.8 million that had not yet been incurred.

Net operating losses

As of September 30, 2022, we had net operating loss carryforwards of approximately $818.0 million for U.S.

federal income tax purposes available to offset future taxable income, including $603.0 million generated after 2017, U.S.

capital loss carryforwards of $212.5 million, and U.S.

federal and state research and development tax credits of approximately $11.7 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 have begun 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 $64.2 million, most of which do not expire.

Excluding certain deferred tax liabilities totaling $2.1 million, our remaining net deferred tax assets, which primarily relate to these loss carryforwards, are offset by a valuation allowance due to our history of net losses.

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

As of September 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.

In addition to the obligations in the table above, as of March 31, 2023, we are party to license agreements with various third parties that contain future milestones and royalty payment obligations related to development milestones and/or commercial sales of products that incorporate or use their technologies.

Because these agreements are generally subject to termination by us or are dependent on certain condition precedents within our control, no amounts are included in the tables above.

As of March 31, 2023, we also had research and development commitments with third parties totaling $18.2 million that had not yet been incurred.

Off-balance sheet arrangements

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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