What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-14 compared with 2024-08-14 · 92 added, 84 removed, 275 unchanged (39% of the section changed)

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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.

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

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

As part of this restructuring, we have paused enrollment in PRGN-3005 and PRGN-3007 UltraCAR-T clinical trials.

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.

We do not plan to enroll patients in PRGN-2009 cervical cancer trial at non-NCI clinical sites.

We have reduced our focus on preclinical programs, while continuing select projects that we believe could provide further near-term validation of our technology platforms.

We have completed the shutdown of our ActoBio subsidiary operations, including the elimination of all ActoBio personnel.

In conjunction with this shutdown, ActoBio's portfolio of intellectual property is 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 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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PRGN-2012 has received Orphan Drug Designation for the Treatment of RRP from the European Commission as well.

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

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

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

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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.

As part of the strategic prioritization of our pipeline announced in August 2024, we plan to enroll patients in the PRGN-2009 clinical trials only at NCI under a CRADA.

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 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.

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.

As part of the strategic prioritization of our pipeline announced in August 2024, we have paused enrollment in the 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.

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

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

The target patient population for Arm 2 includes locally advanced unresectable or metastatic histologically confirmed TNBC.

The study is designed to enroll in two parts:

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

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.

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

Precigen ActoBio, Inc.

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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.

T he Company also recorded a charge related to employee severance and termination benefits of $2.1 million, which were 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.

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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 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.

As of September 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 nine months ended September 30, 2024.

Financial overview

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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.

As discussed above in the Overview, 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 and six months ended June 30, 2024 and 2023.

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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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.

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

Other expense consisted primarily of interest on our Convertible Notes, which were fully retired in the second quarter of 2023, and the reclassification of cumulative foreign translation losses due to closing operations in ActoBio in the third quarter of 2024.

See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 8" and "Notes to the Condensed

Consolidated Financial Statements (Unaudited) - Note 10" appearing elsewhere in this Quarterly Report for further discussion on Convertible Notes and reclassification of cumulative foreign translation losses, respectively.

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 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.

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, (x) reclassification of cumulative translation gain (loss), and (xi) 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 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:

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

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

Three Months Ended

June 30, Dollar

September 30, Dollar

Change Percent

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Selling, general and administrative 9,836 9,196 640 7.0 %

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

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

Total operating expenses 22,215 22,316 (101) (0.5) %

Operating loss (21,262) (20,937) (325) 1.6 %

Total other income, net

Total other income (expense), net

(2,704) 1,136 (3,840) >(200)%

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(23,966) (19,801) (4,165) 21.0 %

Income tax benefit 1,689 65 1,624 >200%

Income tax benefit (expense)

(12) 6 (18) >(200)%

$ (23,978) $ (19,795) $ (4,183) 21.1 %

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.

Product and service revenues decreased $0.4 million, or 31%, compared to the three months ended September 30, 2023.

This decrease was related to reductions in product and service revenues at Exemplar.

Cost of product and services

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Research and development expenses

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.

Research and development expenses decreased by $0.2 million, or 2%, compared to the three months ended September 30, 2023.

The decrease was the result of a $2.0 million decrease in costs associated with ActoBio, including depreciation and amortization and personnel and operating costs, resulting from the shutdown of operations during the second quarter of 2024 as well as lower costs of $0.7 million incurred at contract research organizations for other programs compared to the same period in 2023.

These decreases were offset by increased costs of approximately $2.5 million including those associated with PRGN-2012 in advance of our planned BLA submission and our ongoing confirmatory trial, as well as increased personnel costs associated with severance incurred related to the Precigen workforce reduction in the third quarter of 2024.

Selling, general and administrative expenses

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.

SG&A expenses increased by $0.6 million, or 7%, compared to the three months ended September 30, 2023.

This increase was primarily due to severance costs incurred related to the Precigen workforce reduction, as well as increased costs associated with PRGN-2012 commercial readiness.

These increases were partially offset by a reduction in insurance rates and legal expenses compared to the prior year period.

Other income (expense), net

Other income (expense), net decreased by $3.8 million, or >(200)%, compared to the three months ended September 30, 2023.

This decrease was primarily due to the reclassification of cumulative translation losses of $2.9 million in the third quarter of 2024 as a result of the final closing of the ActoBio facilities, and a $0.6 million reduction in interest income.

Segment performance

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.

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

Three Months Ended

June 30, 2024 Dollar

September 30, 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 June 30, 2024 and 2023, for our one reportable segment for which revenue exists.

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

Three Months Ended

June 30, 2024 Dollar

September 30, Dollar

Change Percent

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Biopharmaceuticals

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.

Segment Adjusted EBITDA loss increased compared to the prior period.

This was primarily due to costs incurred related to the Precigen workforce reduction and the previously announced departure of one of the Company's executive officers, as well as higher fees paid to contract research organizations related to PRGN-2012 confirmatory clinical trial and professional fees incurred in advance of our anticipated BLA submission, offset by lower costs incurred at contract research organizations for other programs compared to the prior period.

Capital expenditures were also higher in the current period due 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

Comparison of the nine months ended September 30, 2024 and the nine months ended September 30, 2023

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

Nine Months Ended

September 30, Dollar

Change Percent

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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.

Product and service revenues decreased $2.3 million, or 46%, compared to the nine months ended September 30, 2023.

This decrease was related to reductions in product and service revenues at Exemplar.

Cost of product and services

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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.

Research and development expenses increased $5.7 million, or 16%, compared to the nine months ended September 30, 2023.

The increase was primarily the result of $4.4 million of increased costs associated with PRGN-2012 in advance of our planned BLA submission, including 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.

Additionally, salaries, benefits, and other personnel costs increased by $3.0 million due to an increase in the hiring of employees related to the advancement of PRGN-2012 in the third and fourth quarters of 2023 and severance charges incurred related to the Precigen workforce reduction in the third quarter of 2024.

These increases were offset by lower costs of $1.6 million incurred at contract research organizations for other programs compared to the same period in 2023 as well as a $0.2 million reduction in total ActoBio operating expenses 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.

SG&A expenses increased by $0.1 million, or 1%, compared to the nine months ended September 30, 2023.

This increase was primarily due to higher severance costs associated with the suspension of ActoBio's operations and the streamlining of Precigen's resources, as well as increased costs related to PRGN-2012 commercial readiness.

These increases were partially offset by a decrease in stock compensation and insurance expenses in 2024 compared to the same period in 2023.

Other income (expense), net

Other income, net decreased $4.3 million, or 166%, compared to the nine months ended September 30, 2023.

This decrease was primarily due to the reclassification of cumulative translation losses of $2.9 million resulting from the final closing of the ActoBio facilities in the third quarter of 2024, as well as a reduction of $1.1 million in interest income due to lower investment balances, and $0.5 million in interest expense due to the final retirement of our Convertible Notes in the second quarter of 2023.

Impairment of Goodwill and other noncurrent assets

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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

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

Nine Months Ended

September 30, Dollar

Change Percent

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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

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

Nine Months Ended

September 30, Dollar

Change Percent

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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.

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, together with professional fees incurred in advance of 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 nine months ended September 30, 2024, versus the nine months ended September 30, 2023.

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 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.

We have incurred losses from continuing operations since our inception, and as of September 30, 2024, we had an accumulated deficit of $2.1 billion.

From our inception through September 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 September 30, 2024, we had cash and cash equivalents of $24.7 million and short-term investments of $3.9 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.

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 $30.9 million, after deducting underwriting discounts, fees, and an estimate of other offering expenses.

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

Six Months Ended

Nine Months Ended

September 30,

(In thousands)

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Effect of exchange rate changes on cash, cash equivalents, and restricted cash (25) (306)

Net decrease in cash, cash equivalents, and restricted cash $ 1,760 $ (31,644)

Net increase (decrease) in cash, cash equivalents, and restricted cash

$ 16,877 $ (38,261)

Cash flows from operating activities:

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.

During the nine months ended September 30, 2024, our net loss was $106.5 million, which includes the following significant noncash expenses and benefits totaling $46.1 million:

(i) $34.5 million of impairment losses, (ii) $6.6 million of stock-based compensation expense, (iii) $3.9 million of depreciation and amortization expense, (iv) $2.9 million due to reclassification of cumulative translation losses, and (v) $0.6 million of shares issued as payment for services, partially offset by non-cash benefits of $1.7 million due to deferred income taxes and $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.

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:

During the nine months ended September 30, 2023, our net loss was $62.8 million, which includes the following significant noncash expenses and benefits totaling $11.8 million:

(i) $7.6 million of stock-based compensation expense, (ii) $5.1 million of depreciation and amortization expense and (iii) $0.5 million of shares issued as payment for services, offset by non-cash benefits of $1.3 million due to amortization of discounts on investments.

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Cash flows from investing 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.

During the nine months ended September 30, 2024, we received $52.1 million of investments, from sales and maturities, net of purchases, and purchased $7.6 million of property, plant and equipment, primarily related to the build-out of our manufacturing facility.

During the nine months ended September 30, 2023, we purchased $16.0 million of investments, net of sales and maturities.

Cash flows from financing activities:

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).

During the nine months ended September 30, 2024, we received $31.8 million of proceeds, net of certain issuance costs, from the sale of our common stock in an underwritten public offering and $0.3 million of proceeds from stock option exercises.

During the nine months ended September 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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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 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.

Our consolidated financial statements as of September 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 $28.6 million at September 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 June 30, 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 September 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 $ 7,796 $ 1,617 $ 2,764 $ 2,538 $ 877

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.

In addition to the obligations in the table above, as of September 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 June 30, 2024, we also had research and development commitments with third parties totaling $16.9 million that had not yet been incurred.

As of September 30, 2024, we also had research and development commitments with third parties totaling $7.4 million that had not yet been incurred.

Off-balance sheet arrangements

10 unchanged sentences

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What changed 10-Q

Item 2. Management’s Discussion and Analysis