What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-14 compared with 2023-11-09 · 81 added, 192 removed, 206 unchanged (57% of the section changed)

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We are leveraging our proprietary technology platforms to develop product candidates designed to target urgent and intractable diseases in our core therapeutic areas of immuno-oncology, autoimmune disorders, and infectious diseases.

We have developed an extensive pipeline of therapies across multiple indications within these core focus areas.

We have developed an extensive pipeline of therapies across multiple indications.

We believe that our array of technology platforms uniquely positions us among other biotechnology companies to advance precision medicine.

Precision medicine is the practice of therapeutic product development that takes into account specific genetic variations within populations impacted by a disease to design targeted therapies to improve outcomes for a disease or patient population.

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

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

We are advancing our lead clinical programs, including:

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

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

We are actively advancing our lead clinical programs, including:

PRGN-3005, 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.

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

In addition, we have completed a Phase 1b/2a study of AG019, which is built on our ActoBiotics platform.

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

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

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

UltraPorator has received U.S.

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 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.

Our Biopharmaceuticals reportable segment is primarily comprised of the Company's legal entities of Precigen and ActoBio.

Our Exemplar reportable segment is comprised of Exemplar Genetics LLC, doing business as Precigen Exemplar, or Exemplar, our wholly owned subsidiary focused on developing research models and services for healthcare research applications.

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

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

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

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.

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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UltraPorator is intended to be a viable scale-up and commercialization solution for decentralized UltraCAR-T manufacturing.

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

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

Our most advanced programs 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.

This clinical trial is being conducted in collaboration with the Center for Cancer Research at the NCI pursuant to a CRADA.

We have completed the Phase 1 clinical trial.

The Phase 2 clinical trial is ongoing.

We recently announced that the FDA has agreed that the ongoing Phase 1/2 study of PRGN-2012 will serve as pivotal study for the purpose of filing an accelerated approval request for licensure.

PRGN-2012 has been granted Breakthrough Therapy Designation for the treatment of RRP by the FDA.

Previously, PRGN-2012 was granted Orphan Drug designation by the FDA.

We have completed the Phase 1 portion of the clinical trial.

The Phase 2 portion of the clinical trial is ongoing.

We have announced that the FDA has agreed that the ongoing Phase 1/2 clinical trial of PRGN-2012 will serve as pivotal for the purpose of filing an accelerated approval request for licensure.

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

PRGN-2012 has received Orphan Drug Designation for the Treatment of RRP from the European Commission as well.

PRGN-2012 Phase 2 pivotal trial data are anticipated in the second quarter of 2024.

We plan to submit a BLA under an accelerated approval pathway in the second half of 2024.

We are preparing for commercial readiness for a potential launch, if approved, of PRGN-2012 in 2025.

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.

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We have completed a Phase 1 clinical trial of PRGN-2009 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.

A Phase 2 clinical trial of PRGN-2009 in newly diagnosed oropharyngeal squamous cell carcinoma patients is ongoing in collaboration with the NCI pursuant to a CRADA.

In addition, we have received FDA clearance of an IND to initiate a Phase 2 clinical trial of PRGN-2009 in combination with pembrolizumab to treat patients with recurrent or metastatic cervical cancer.

A Phase 2 clinical trial of PRGN-2009 in combination with pembrolizumab in newly diagnosed oropharyngeal squamous cell carcinoma patients is ongoing in collaboration with the NCI pursuant to a CRADA.

In addition, Phase 2 clinical trial of PRGN-2009 in combination with pembrolizumab to treat patients with recurrent or metastatic cervical cancer is ongoing.

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.

The Phase 1b dose expansion trial is ongoing.

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.

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We have completed the Phase 1 dose escalation trial.

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

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.

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

The Phase 1b dose expansion trial is ongoing.

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

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

The Phase 1 dose escalation trial is ongoing.

The Phase 1 dose escalation portion of the Phase 1/1b study is ongoing.

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.

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.

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ActoBiotics can be delivered orally in a capsule, through an oral rinse, or in a topical solution.

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

ActoBiotics work via genetically modified bacteria which deliver proteins and peptides at mucosal sites, rather than the insertion of one or more genes into a human cell by means of a virus or other delivery mechanism.

By foregoing this insertion, ActoBiotics enable "gene therapy" without the need for cell transformation.

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

AG019, is a first-in-class disease modifying antigen-specific, investigational immunotherapy for the prevention, delay, or reversal of type 1 diabetes mellitus, or T1D.

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

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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.

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;

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.

Discontinued Operations

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.

As of September 30, 2023, 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, 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 income or 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.

As of March 31, 2024, 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, 2024.

Financial overview

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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 future capital requirements section on Item 2.

Sources of revenue

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.

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.

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

Other than for collaboration revenues recognized upon cancellation or modification of 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, although if any new collaboration agreements or strategic transactions are entered

into, revenue could be positively impacted.

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 Exemplar.

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Our Exemplar segment'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, 2023 and 2022.

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Biopharmaceuticals

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

We expect that our research and development expenses will increase as we continue to develop our own proprietary programs, including

progression of these programs into preclinical and clinical stages.

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

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

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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.

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 (including commercialization), 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 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.

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

Other income (expense), net

Other income consists of gain on convertible debt retirement and 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 2023 due to retirements of our Convertible Notes.

Other income consists of gain on convertible debt retirement (for 2023) and 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 consisted primarily of interest on our Convertible Notes, which decreased in 2023 due to the retirement of our Convertible Notes.

See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 8" appearing elsewhere in this Quarterly Report for further discussion.

Equity in net income or loss of affiliates

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

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

Segment performance

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 income (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.

We define Segment Adjusted EBITDA as net income (loss) before (i) interest expense and interest income, (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 income (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.

See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 14" appearing elsewhere in this Quarterly Report for further discussion of Segment Adjusted EBITDA.

Results of operations

Comparison of the three months ended September 30, 2023 and the three months ended September 30, 2022

The following table summarizes our results of operations for the three months ended September 30, 2023 and 2022, together with the changes in those items in dollars and as a percentage:

Comparison of the three months ended March 31, 2024 and the three months ended March 31, 2023

The following table summarizes our results of operations for the three months ended March 31, 2024 and 2023, 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 $ — $ 14,561 $ (14,561) (100.0) %

Product revenues 138 324 (186) (57.4) %

Service revenues 919 1,527 (608) (39.8) %

Other revenues 1 69 (68) (98.6) %

Other revenues 8 — 8 N/A

Total revenues 1,065 1,851 (786) (42.5) %

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Selling, general and administrative 10,151 11,639 (1,488) (12.8) %

Impairment of other noncurrent assets — — — N/A

Total operating expenses 25,475 25,329 146 0.6 %

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Total other income (expense), net

Equity in net income (loss) of affiliates

643 689 (46) (6.7) %

Loss from continuing operations before income taxes (19,801) (7,694) (12,107) 157.4 %

Loss before income taxes

(23,767) (22,789) (978) 4.3 %

Income tax benefit 29 55 (26) (47.3) %

Loss from continuing operations (19,795) (7,644) (12,151) 159.0 %

Income from discontinued operations, net of income taxes (1) — 95,023 (95,023) (100.0) %

Net income (loss)

$ (23,738) $ (22,734) $ (1,004) 4.4 %

(1) 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 decreased $14.6 million, or 100.0%, from the three months ended September 30, 2022 due to the fact we obtained control of Intrexon Energy Partners and Intrexon Energy Partners II in the third quarter of 2022.

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

Product and service revenues and gross margin

Product and service revenues decreased $0.7 million, or 34%, compared to the three months ended September 30, 2022.

Product and service revenues decreased $0.8 million, or 43%, compared to the three months ended March 31, 2023.

This decrease is related to reductions in services performed at Exemplar.

Gross margin on product and services declined in the current period primarily as a result of the decreased revenues, with a smaller impact due to increases in salaries, benefits, and other personnel costs at Exemplar.

Gross margin on product and services declined in the current period primarily as a result of the decreased revenues at Exemplar.

Research and development expenses

Research and development expenses decreased $1.0 million, or 8%, compared to the three months ended September 30, 2022.

This decrease was primarily due to continued reprioritization of clinical product candidates.

Research and development expenses increased $2.1 million, or 17%, compared to the three months ended March 31, 2023.

Salaries, benefits, and other personnel costs increased $1.5 million due to an increase in the hiring of employees throughout 2023 to support the growth in the Company's clinical development activities as well as increased fees paid to consultants and contract research organizations during the period compared to the prior year period.

Selling, general and administrative expenses

SG&A expenses decreased $0.9 million, or 9%, compared to the three months ended September 30, 2022.

This decrease was primarily driven by a reduction in professional fees of $0.6 million, due to decreased legal fees associated with certain litigation matters, and $0.3 million in decreased insurance related expenses.

Total other income (expense), net

Total other income, net, increased $2.1 million compared to the three months ended September 30, 2022.

This is primarily due to $2.0 million in reduced interest expense associated with the Convertible Notes as they were fully retired in the second quarter of 2023, and $0.8 million increased interest income due to higher interest rates on investments.

This increase was offset by a $0.9 million gain recorded on the early retirement of a portion of our Convertible Notes in the third quarter of 2022 that did not occur in the third quarter of 2023.

SG&A expenses decreased $1.5 million, or 13%, compared to the three months ended March 31, 2023.

This decrease was primarily driven by a reduction in stock compensation and insurance expenses in 2024 versus the same period in 2023.

Segment performance

The following table summarizes Segment Adjusted EBITDA, which is our primary measure of segment performance, for the three months ended September 30, 2023 and 2022, for each of our reportable segments.

The following table summarizes Segment Adjusted EBITDA, which is our primary measure of segment performance, for the three months ended March 31, 2024 and 2023, for each of our reportable segments.

Three Months Ended

September 30, Dollar

March 31, Dollar

Change Percent

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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 14" appearing elsewhere in this Quarterly Report.

The following table summarizes revenues from external customers for the three months ended September 30, 2023 and 2022, for each of our reportable segments.

The following table summarizes revenues from external customers for the three months ended March 31, 2024 and 2023, for each of our reportable segments.

Three Months Ended

September 30, Dollar

Change Percent

(In thousands)

Biopharmaceuticals

$ — $ 14,624 $ (14,624) (100.0) %

Exemplar 1,379 2,098 (719) (34.3) %

Biopharmaceuticals

Segment Adjusted EBITDA increased primarily due to our reduction in Selling, general and administrative expenses and Research and Development expenses within the reportable segment.

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.

Comparison of the nine months ended September 30, 2023 and the nine months ended September 30, 2022

The following table summarizes our results of operations for the nine months ended September 30, 2023 and 2022, 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 $ — $ 14,561 $ (14,561) (100.0) %

Product revenues 730 1,455 (725) (49.8) %

Service revenues 4,261 8,896 (4,635) (52.1) %

Other revenues 6 234 (228) (97.4) %

Total revenues 4,997 25,146 (20,149) (80.1) %

Operating expenses

Cost of product and services 4,761 5,082 (321) (6.3) %

Research and development 35,620 36,377 (757) (2.1) %

Selling, general and administrative 30,150 36,496 (6,346) (17.4) %

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

Impairment of other noncurrent assets — 638 (638) (100.0) %

Total operating expenses 70,531 79,075 (8,544) (10.8) %

Operating loss (65,534) (53,929) (11,605) 21.5 %

Total other income (expense), net 2,560 (4,730) 7,290 154.1 %

Equity in net income (loss) of affiliates

— 861 (861) (100.0) %

Loss from continuing operations before income taxes (62,974) (57,798) (5,176) 9.0 %

Income tax benefit 126 197 (71) (36.0) %

Loss from continuing operations (62,848) (57,601) (5,247) 9.1 %

Income from discontinued operations, net of income taxes (1) — 108,094 (108,094) (100.0) %

Net (loss) income

$ (62,848) $ 50,493 $ (113,341) <(200)%

(1) 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 decreased $14.6 million, or 100.0%, from the nine months ended September 30, 2022, due to the fact we obtained control of Intrexon Energy Partners and Intrexon Energy Partners II in the third quarter of 2022.

Product and services revenues and gross margin

Product and services revenues decreased $5.4 million, or 52%, from the nine months ended September 30, 2022.

This decrease primarily related to reductions in services performed at Exemplar as well as the recognition of revenue in the first quarter of 2022 related to agreements for which revenue was previously deferred that did not occur in 2023 of $1.0 million at Exemplar.

Gross margin on product and service declined in the current period primarily as a result of the decreased revenues, with a smaller impact due to increases in salaries, benefits, and other personnel costs at Exemplar.

Research and development expenses

Research and development expenses decreased $0.8 million, or 2.1%, compared to the nine months ended September 30, 2022.

This decrease was primarily due to continued reprioritization of clinical product candidates.

Selling, general and administrative expenses

SG&A expenses decreased $6.3 million, or 17.4%, compared to the nine months ended September 30, 2022.

This decrease was primarily driven by a reduction in professional fees of $4.8 million, due to decreased legal fees associated with certain litigation matters, as well as a $1.2 million reduction in salaries, benefits, and other personnel costs due to reduced head count, and $0.3 million in decreased insurance related expenses.

Total other income (expense), net

Total other income, net, increased $7.3 million compared to the nine months ended September 30, 2022.

This is primarily due to $5.7 million in reduced interest expense associated with the Convertible Notes as they were retired in the second quarter of 2023, and $2.1 million in increased interest income due to higher interest rates on the Company's investments.

This increase was offset by a $0.8 million reduction in the gain recorded on the early retirement of a portion of our Convertible Notes in 2023 compared to 2022.

Segment performance

The following table summarizes Segment Adjusted EBITDA, which is our primary measure of segment performance, for the nine months ended September 30, 2023 and 2022.

Nine Months Ended

September 30, Dollar

Change Percent

(In thousands)

Segment Adjusted EBITDA:

Biopharmaceuticals

$ (56,345) $ (58,956) $ 2,611 4.4 %

Exemplar (426) 4,699 (5,125) (109.1) %

The following table summarizes revenues from external customers for the nine months ended September 30, 2023 and 2022, for each of our reportable segments.

Nine Months Ended

September 30, Dollar

March 31, Dollar

Change Percent

(In thousands)

Biopharmaceuticals

$ — $ 14,778 $ (14,778) (100.0) %

Exemplar 1,065 1,851 (786) (42.5) %

Biopharmaceuticals

Segment Adjusted EBITDA increased primarily as a result of a reduction of Selling, general and administrative expenses partially offset by a higher adjustment related to bonuses settled in equity awards in 2023 and other segment EBITDA adjustments.

Segment Adjusted EBITDA loss increased primarily due to our increase in Research and Development expenses within the reportable segment.

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

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Sources of liquidity

We have incurred losses from operations since our inception, and as of September 30, 2023, we had an accumulated deficit of $1.9 billion.

From our inception through September 30, 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 September 30, 2023, we had cash and cash equivalents of $10.1 million and short-term and long-term investments of $69.0 million.

We have incurred losses from operations since our inception, and as of March 31, 2024, we had an accumulated deficit of $2.0 billion.

From our inception through March 31, 2024, 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, 2024, we had cash and cash equivalents of $17.5 million and short-term investments of $27.3 million.

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

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

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

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Cash flows from operating activities:

During the nine months ended September 30, 2023, our net loss was $62.8 million, which includes the following significant noncash expenses totaling $13.2 million:

During the three months ended March 31, 2024, our net loss was $23.7 million, which includes the following significant noncash expenses totaling $4.3 million:

(i) $2.6 million of stock-based compensation expense, (ii) $1.6 million of depreciation and amortization expense, (iii) $0.5 million of shares issued as payment for services, and (iv) $0.4 million due to amortization of discounts on investments.

During the three months ended March 31, 2023, our net loss was $22.7 million, which includes the following significant noncash expenses totaling $5.1 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 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 $19.6 million from both continuing and discontinued operations:

(i) $8.0 million of stock-based compensation expense, (ii) $9.0 million of depreciation and amortization expense, (iii) $0.9 million accretion of debt discount and amortization of deferred financing costs, (iv) $0.6 million of shares issued as payment for services, and (vi) $1.1 million of asset impairments.

Our cash outflows from operations during the nine months ended September 30, 2023 were $1.5 million lower than the nine months ended September 30, 2022 primarily due to decreased cash inflows provided by Trans Ova and Exemplar.

Cash flows from investing activities:

During the nine months ended September 30, 2023, we purchased $16.0 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 nine months ended September 30, 2022, we received $162.3 million of proceeds from the sale of discontinued operations and $57.0 million related to the sale and maturity of investments, partially offset by $4.9 million of purchases of property plant and equipment primarily in Trans Ova.

During the three months ended March 31, 2024, we received $28.4 million of investments, from sales and maturities, net of purchases, and purchased $4.4 million of property, plant and equipment.

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.

Cash flows from financing activities:

During the nine months ended September 30, 2023, we received $72.8 million of proceeds from the sale of our common stock in an underwritten public offering and retired $43.2 million of our Convertible Notes using restricted cash.

During the nine months ended September 30, 2022, we repurchased $115.7 million of our Convertible Notes using restricted cash.

During the three months ended March 31, 2024, we did not have any cash provided or used in financing activities.

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.

Future capital requirements

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:

• progress in our research and development programs, as well as the magnitude of these programs;

• progress in our research and development programs, as well as the magnitude and speed of development of these programs;

• capital expenditures to building out our manufacturing capabilities and preparing for commercial readiness;

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

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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 consolidated financial statements as of March 31, 2024 have been prepared on the basis that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

Based on our balance of cash, cash equivalents and short-term investments of $44.8 million at March 31, 2024 and forecasted negative cash flows from operating activities for the foreseeable future, there is substantial doubt about our ability to continue as a going concern within one year after the date that these financial statements are issued.

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, 2023 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, 2024 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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Operating leases $ 9,133 $ 2,017 $ 3,076 $ 2,509 $ 1,532

Operating leases not yet commenced

$ 706 176 471 59 —

Total $ 9,133 $ 2,017 $ 3,076 $ 2,509 $ 1,532

(1) See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Notes 8" 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, 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.

In addition to the obligations in the table above, as of March 31, 2024, 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 September 30, 2023, we also had research and development commitments with third parties totaling $16.8 million that had not yet been incurred.

As of March 31, 2024, we also had research and development commitments with third parties totaling $19.2 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