What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-14 compared with 2024-05-14 · 167 added, 95 removed, 192 unchanged (58% 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.

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

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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;

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.

Our clinical pipeline includes PRGN-2012 and PRGN-2009, which are based on our AdenoVerse immunotherapy platform;

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

We have completed enrollment in the Phase 1b clinical trial of PRGN-3006.

In addition, we have completed a Phase 1b/2a study of AG019, which is built on our ActoBiotics platform, which we have begun to wind-down as discussed below under our Biopharmaceuticals segment (Precigen ActoBio, Inc.).

In August 2024, we announced strategic prioritization of our pipeline to focus on development of our lead program, PRGN-2012.

As part of this restructuring, we plan to pause PRGN-3005 and PRGN-3007 UltraCAR-T clinical trials.

We plan to minimize UltraCAR-T spend and focus on strategic partnerships to further advance UltraCAR-T programs.

In addition, we plan to continue PRGN-2009 Phase 2 clinical trials under a cooperative research and development agreement ("CRADA") with the National Cancer Institute ("NCI") in recurrent/metastatic cervical cancer and in newly diagnosed HPV-associated oropharyngeal cancer.

We plan to pause enrollment in PRGN-2009 cervical cancer trial at non-NCI clinical sites.

We also plan to pause all preclinical programs.

We have initiated shutdown of our ActoBio subsidiary operations, including planned elimination of all ActoBio personnel.

In conjunction with this shutdown, ActoBio's portfolio of intellectual property will be made available for prospective transactions.

These strategic changes will enable us to focus on pre-commercialization efforts on PRGN-2012, including supporting submission of a rolling BLA under an accelerated approval pathway, conducting the confirmatory clinical trial, and manufacturing of commercial product.

Additionally, we will continue acceleration of commercial readiness efforts for a potential launch.

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 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.

Food and Drug Administration, or FDA, clearance for manufacturing UltraCAR-T cells in clinical trials, and we have dosed patients manufactured UltraCAR-T cells using UltraPorator in our clinical trials.

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

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Biopharmaceuticals

We are developing therapies built on our UltraCAR-T therapeutics platform and our "off-the-shelf" AdenoVerse immunotherapy platform.

We are developing therapies built on our "off-the-shelf" AdenoVerse immunotherapy platform and our UltraCAR-T therapeutics platform.

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

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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.

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.

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

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 HPV6 and HPV11.

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

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.

We have completed the primary endpoint evaluation of the Phase 1/2 clinical trial.

PRGN-2012 Phase 1/2 pivotal trial data were presented at the 2024 American Society of Clinical Oncology (ASCO) Annual Meeting in June 2024.

We have announced that the FDA has agreed that the 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.

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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.

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

As part of the strategic prioritization of our pipeline announced in August 2024, we plan to pause enrollment in PRGN-2009 cervical cancer clinical trial at non-NCI clinical sites.

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, and high-risk myelodysplastic syndromes, or MDS.

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

PRGN-3006 has been granted Fast Track designation in patients with r/r AML by the FDA.

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We have completed the Phase 1 dose escalation trial.

The Phase 1b dose expansion trial is ongoing.

We have completed enrollment of the Phase 1b trial for PRGN-3006 in AML and are planning for an end of Phase 1b meeting with the FDA.

PRGN-3005 is in a Phase 1/1b clinical trial for the treatment of advanced, recurrent platinum-resistant ovarian, fallopian tube,

or primary peritoneal cancer.

As part of the strategic prioritization of our pipeline announced in August 2024, we will pause enrollment in the ongoing Phase 1b clinical trial of PRGN-3005.

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.

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).

PRGN-3007 is 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.

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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 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.

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.

As part of the strategic prioritization of our pipeline announced in August 2024, we will pause enrollment in the ongoing Phase 1 clinical trial of PRGN-3007.

Precigen ActoBio, Inc.

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

ActoBio utilizes 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.

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

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

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.

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.

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

We have completed a Phase 1b/2a clinical trial of AG019 for the treatment of early-onset T1D.

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

The primary endpoint of assessing safety and tolerability in both the Phase 1b AG019 monotherapy and the Phase 2a AG019 combination therapy has been met.

AG019 was well-tolerated when administered to adults and adolescents either as monotherapy or in combination with teplizumab.

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.

The primary endpoint of assessing safety and tolerability in both the Phase 1b AG019 monotherapy and the Phase 2a AG019 combination therapy were met.

Into the second quarter of 2024, we operated ActoBio as a standalone subsidiary comprising our ActoBio reporting unit, which included our associated technologies, personnel, and facilities.

We previously announced our continued effort to strategically prioritize our application of resources to particular development efforts.

During the second quarter of 2024, we suspended ActoBio's operations and began the process to wind down ActoBio's activities.

This included the commencement of terminating leases and employees, and the disposition of certain of its assets and obligations with a focus on the preservation of ActoBio's intellectual property, which will be made available for prospective transactions.

We recorded non-cash impairment charges of $34.5 million during the second quarter of 2024 related to the write-down of goodwill, property and equipment, and right-of-use assets to their net realizable values.

In addition, we recorded a tax benefit of $1.7 million related to these impairment charges.

T he Company also recorded a charge related to employee severance and termination benefits of $2.1 million, which we believe will be paid in the third quarter of 2024.

We continue to assess potential next steps with respect to the future of the ActoBio programs and intellectual property.

See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 1, 6 and 7" appearing elsewhere in the Quarterly Report for further discussion, including discussion related to impairment and employee severance and termination charges of ActoBio.

Precigen Exemplar

Exemplar is committed to enabling the study of life-threatening human diseases through the development of Yucatan MiniSwine miniature preclinical research models and services, as well as enabling the production of cells and organs in its genetically engineered MiniSwine for regenerative medicine applications.

Exemplar is committed to enabling the study of life-threatening human diseases through the development of Yucatan MiniSwine miniature preclinical research models and services.

Historically, researchers have lacked animal models that faithfully represent human diseases.

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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.

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.

As of June 30, 2024, our reportable segments were (i) Biopharmaceuticals and (ii) Exemplar.

These identified reportable segments met the quantitative thresholds to be reported separately for the six months ended June 30, 2024.

Financial overview

We have incurred significant losses since our inception.

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

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

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

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Our research and development expenses consist primarily of:

• salaries and benefits, including stock-based compensation expense, for personnel in research and development functions;

• salaries and benefits, including stock-based compensation expense and severance benefits, for personnel in research and development functions;

• fees paid to consultants and contract research organizations who perform research on our behalf and under our direction;

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

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

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

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, and PRGN-2012 and AG019.

Prior to August 2024, our Biopharmaceuticals segment was progressing preclinical and clinical programs that targeted 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, AG019 and PRGN-2012.

As discussed above in the Overview – Biopharmaceuticals reporting segment (Precigen), in August 2024, we announced a strategic prioritization of our clinical portfolio and streamlining of resources, to focus on potential commercialization of the PRGN-2012 AdenoVerse ® gene therapy for the treatment of RRP.

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 months ended March 31, 2024 and 2023.

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Biopharmaceuticals

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Total consolidated research and development expenses $ 15,693 $ 11,874 $ 29,942 $ 24,037

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

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

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

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

In addition to the strategic prioritization, 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.

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 (including commercialization), 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 and severance benefits, 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, the build-up of our commercialization efforts 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 strategic prioritization, 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 (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 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, which 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.

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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 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 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:

Comparison of the three months ended June 30, 2024 and the three months ended June 30, 2023

The following table summarizes our results of operations for the three months ended June 30, 2024 and 2023, together with the changes in those items in dollars and as a percentage:

Three Months Ended

March 31, Dollar

June 30, Dollar

Change Percent

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Service revenues 673 1,438 (765) (53.2) %

Other revenues 8 — 8 N/A

Other revenues 13 5 8 160.0 %

Total revenues 717 1,767 (1,050) (59.4) %

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Selling, general and administrative 10,306 9,316 990 10.6 %

Impairment of goodwill 1,630 — 1,630 N/A

Impairment of other noncurrent assets 32,915 — 32,915 N/A

Total operating expenses 61,558 22,887 38,671 169.0 %

Operating loss (60,841) (21,120) (39,721) 188.1 %

Total other income (expense), net

Total other income, net

360 736 (376) (51.1) %

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$ (58,792) $ (20,319) $ (38,473) 189.3 %

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

Product and service revenues and gross margin

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 at Exemplar.

Product and service revenues

Product and service revenues decreased $1.1 million, or 60%, compared to the three months ended June 30, 2023.

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

Cost of product and services

Cost of product and services decreased primarily as a result of decreased revenues at Exemplar.

Research and development expenses

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.

Research and development expenses increased $3.8 million, or 32%, compared to the three months ended June 30, 2023.

Salaries, benefits, and other personnel costs increased $2.1 million primarily due to severance charges related to the shutdown of the ActoBio subsidiary.

Additionally, fees paid to contract research organizations related to the start of the PRGN-2012 confirmatory clinical trial and close out of the PRGN-2012 pivotal clinical trial activities and professional fees incurred related to our manufacturing facility readiness for anticipated BLA submission increased $1.5 million compared to the prior year period.

Selling, general and administrative expenses

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.

SG&A expenses increased by $1.0 million, or 11%, compared to the three months ended June 30, 2023.

This increase was primarily driven by severance costs incurred related to the suspension of ActoBio operations of $0.4 million, increased costs associated with PRGN-2012 commercial readiness as well as increased professional fees incurred related to general corporate matters compared to the prior year period.

Impairment of Goodwill and other noncurrent assets

In conjunction with the suspension of ActoBio’s operations, we recorded $34.5 million of impairment charges related to goodwill and long-lived assets in the second quarter of 2024.

Segment performance

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.

The following table summarizes Segment Adjusted EBITDA, which is our primary measure of segment performance, for the three months ended June 30, 2024 and 2023, for each of our reportable segments.

Three Months Ended

March 31, Dollar

June 30, 2024 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 March 31, 2024 and 2023, for each of our reportable segments.

The following table summarizes revenues from external customers for the three months ended June 30, 2024 and 2023, for our one reportable segment for which revenue exists.

Three Months Ended

March 31, Dollar

June 30, 2024 Dollar

Change Percent

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Biopharmaceuticals

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

Segment Adjusted EBITDA loss increased primarily due to costs incurred related to the suspension of ActoBio operations in the second quarter of 2024 as well as higher fees paid to contract research organizations related to the start of the PRGN-2012 confirmatory clinical trial, close out of the PRGN-2012 pivotal clinical trial activities and non-capitalizable professional fees related to the build-out of our manufacturing facility compared to the prior period.

Additionally, capital expenditures were higher in the current period related to the build-out of our manufacturing facility for PRGN-2012.

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 six months ended June 30, 2024 and the six months ended June 30, 2023

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023, together with the changes in those items in dollars and as a percentage:

Six Months Ended

June 30, Dollar

Change Percent

(In thousands)

Product revenues $ 169 $ 648 $ (479) (73.9) %

Service revenues 1592 2,965 (1,373) (46.3) %

Other revenues 21 5 16 >200%

Total revenues 1,782 3,618 (1,836) (50.7) %

Operating expenses

Cost of product and services 2,089 3,224 (1,135) (35.2) %

Research and development 29,942 24,037 5,905 24.6 %

Selling, general and administrative 20,457 20,954 (497) (2.4) %

Impairment of goodwill 1,630 — 1,630 N/A

Impairment of other noncurrent assets 32,915 — 32,915 N/A

Total operating expenses 87,033 48,215 38,818 80.5 %

Operating loss (85,251) (44,597) (40,654) 91.2 %

Total other income (expense), net

1,003 1,424 (421) (29.6) %

Loss before income taxes

(84,248) (43,173) (41,075) 95.1 %

Income tax benefit 1,718 120 1,598 >200%

$ (82,530) $ (43,053) $ (39,477) 91.7 %

Product and service revenues

Product and service revenues decreased $1.9 million, or 51%, compared to the six months ended June 30, 2023.

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

Cost of product and services

Cost of product and service decreased primarily as a result of decreased revenues at Exemplar and cost reduction initiatives implemented at Exemplar.

Research and development expenses

Research and development expenses increased $5.9 million, or 25%, compared to the six months ended June 30, 2023.

Salaries, benefits, and other personnel costs increased by $3.3 million primarily due to severance charges incurred related to shutdown of the ActoBio subsidiary and an increase in the hiring of employees related to the advancement of PRGN-2012 in 2023 at Precigen.

These increases were offset by lower costs incurred at contract research organizations for other programs compared to the same period in 2023.

Selling, general and administrative expenses

SG&A expenses decreased by $0.5 million, or 2%, compared to the six months ended June 30, 2023.

This decrease was primarily due to lower stock compensation and insurance expenses in 2024 compared to the same period in 2023.

These decreases were offset by severance costs incurred in the second quarter of 2024 related to the suspension of ActoBio's operations that did not occur in the prior year period, and increased costs related to PRGN-2012 commercial readiness compared to the prior year period.

Impairment of Goodwill and other noncurrent assets

In conjunction with the suspension of ActoBio’s operations, we recorded $34.5 million of impairment charges related to goodwill and long-lived assets in the second quarter of 2024.

Segment performance

The following table summarizes Segment Adjusted EBITDA, which is our primary measure of segment performance, for the six months ended June 30, 2024 and 2023, for each of our reportable segments.

Six Months Ended June 30, 2024 Dollar

Change Percent

(In thousands)

Segment Adjusted EBITDA:

Biopharmaceuticals

$ (51,394) $ (38,597) $ (12,797) (33.2) %

Exemplar (683) 38 (721) N/A

The following table summarizes revenues from external customers for the six months ended June 30, 2024 and 2023, for our one reportable segment for which revenue exists.

Six Months Ended June 30, 2024 Dollar

Change Percent

(In thousands)

Exemplar $ 1,782 $ 3,618 $ (1,836) (50.7) %

Biopharmaceuticals

Segment Adjusted EBITDA loss increased primarily due to higher fees paid to contract research organizations related to the start of the PRGN-2012 confirmatory clinical trial and close out of the PRGN-2012 pivotal clinical trial activities and professional fees incurred related to the build-out of our manufacturing facility and cost associated with readiness for our anticipated BLA submission, offset by lower costs incurred at contract research organizations for other programs compared to the prior period.

Additionally, capital expenditures were higher related to the build-out of our manufacturing facility for PRGN-2012 in the six months ended June 30, 2024, versus the six months ended June 30, 2023.

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, offset by cost reduction initiatives implemented at Exemplar.

Liquidity and capital resources

Sources of liquidity

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.

We have incurred losses from continuing operations since our inception, and as of June 30, 2024, we had an accumulated deficit of $2.0 billion.

From our inception through June 30, 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 June 30, 2024, we had cash and cash equivalents of $9.3 million and short-term investments of $10.2 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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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 offering expenses.

Additionally, in August 2024, we closed a public offering of 39,878,939 shares of our common stock, resulting in net proceeds to us of approximately $31.4 million, after deducting underwriting discounts, fees, and an estimate of other offering expenses.

This included the sale of 4,584,821 shares of our common stock pursuant to the underwriter’s exercise of its option to

purchase an additional 5,294,117 shares until September 6, 2024.

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

Three Months Ended

Six Months Ended

(In thousands)

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Cash flows from operating activities:

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 six months ended June 30, 2024, our net loss was $82.5 million, which includes the following significant noncash expenses and benefits totaling $40.4 million:

(i) $34.5 million of impairment losses, (ii) $4.5 million of stock-based compensation expense, (iii) $3.2 million of depreciation and amortization expense, and (iv) $0.5 million of shares issued as payment for services, offset by non-cash benefits of $1.7 million due to deferred income taxes and $0.6 million due to amortization of discounts on investments.

In addition, changes in operating assets and liabilities provided $4.8 million of cash for operating activities.

During the six months ended June 30, 2023, our net loss was $43.1 million, which includes the following significant noncash expenses and benefits totaling $8.5 million:

(i) $5.3 million of stock-based compensation expense, (ii) $3.4 million of depreciation and amortization expense and (iii) $0.5 million of shares issued as payment for services, offset by non-cash benefits of $0.7 million due to amortization of discounts on investments.

In addition, changes in operating assets and liabilities provided $0.5 million of cash for operating activities.

Cash flows from investing activities:

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.

During the six months ended June 30, 2024, we received $45.7 million of investments, from sales and maturities, net of purchases, and purchased $6.7 million of property, plant and equipment, primarily related to the build-out of our manufacturing facility.

During the six months ended June 30, 2023, we purchased $26.7 million of investments, net of sales and maturities.

Cash flows from financing activities:

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.

During the six months ended June 30, 2024, we received $0.1 million of proceeds from stock option exercises.

During the six months ended June 30, 2023, we received $72.8 million proceeds from the sale of our common stock in an underwritten public offering and retired $43.2 million of our Convertible Notes (including cost to retire).

Future capital requirements

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• the costs associated with legal activities, including litigation, arising in the course of our business activities and our ability to prevail in any such legal disputes.

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.

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 or royalty monetization financings, government, or other third-party funding, strategic alliances, sales of assets, and licensing arrangements.

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 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.

Our consolidated financial statements as of June 30, 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 investments of $19.5 million at June 30, 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 March 31, 2024 and the effects such obligations are expected to have on our liquidity and cash flows in future periods:

The following table summarizes our significant contractual obligations and commitments from continuing operations as of June 30, 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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Total $ 8,584 $ 1,941 $ 2,916 $ 2,526 $ 1,201

(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 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.

In addition to the obligations in the table above, as of June 30, 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 March 31, 2024, we also had research and development commitments with third parties totaling $19.2 million that had not yet been incurred.

As of June 30, 2024, we also had research and development commitments with third parties totaling $16.9 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