PRECIGEN, INC. [PGEN] Filings

10-Q 1 pgen-20240630.htm 10-Q pgen-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-36042

PRECIGEN, INC.

(Exact name of registrant as specified in its charter)

Virginia

26-0084895

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

20374 Seneca Meadows Parkway

Germantown,

Maryland

20876

(Address of principal executive offices)

(Zip Code)

(301) 556-9900

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, no par value

PGEN

Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2024, 252,763,043 shares of common stock, no par value per share, were outstanding. This number excludes 3,635,484 shares held by the registrant as treasury shares.

Table of Contents

PRECIGEN, INC.

FORM 10-Q

TABLE OF CONTENTS


Item No.		Page
PART I - FINANCIAL INFORMATION
1.	Condensed Consolidated Financial Statements (unaudited):	4
	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	4
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023	6
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2024 and 2023	7
	Condensed Consolidated Statements of Shareholders' Equity for the Three and Six Months Ended June 30, 2024 and 2023	8
	Condensed Consolidated Statements of Cash Flows for th e Six Months Ended June 30, 2024 and 2023	10
	Notes to the Condensed Consolidated Financial Statements	12
2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
3.	Quantitative and Qualitative Disclosures About Market Risk	37
4.	Controls and Procedures	38

PART II - OTHER INFORMATION
1.	Legal Proceedings	39
1A.	Risk Factors	39
2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
3.	Defaults on Senior Securities	40
4.	Mine Safety Disclosures	40
5.	Other Information	40
6.	Exhibits	40
	Signatures	41

Precigen®, AdenoVerse®, UltraCAR-T®, RheoSwitch®, UltraVector®, RTS®, UltraPorator®, ActoBiotics® and RheoSwitch Therapeutic System® are our and/or our affiliates' registered trademarks in the United States and GenVec™, ActoBio Therapeutics™, AttSite™, and Precigen Therapeutics™ are our and/or our affiliates' common law trademarks in the United States are our and/or our affiliates' common law trademarks in the United States. This Quarterly Report on Form 10-Q, or Quarterly Report, and the information incorporated herein by reference contain references to trademarks, service marks, and trade names owned by us or other companies. Solely for convenience, trademarks, service marks, and trade names referred to in this Quarterly Report and the information incorporated herein, including logos, artwork, and other visual displays, may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks, service marks, and trade names. We do not intend our use or display of other companies' trade names, service marks, or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Other trademarks, trade names, and service marks appearing in this Quarterly Report are the property of their respective owners. Unless the context requires otherwise, references in this Quarterly Report to "Precigen", "we", "us", and "our" refer to Precigen, Inc.

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Special Note Regarding Forward-Looking Statements

This Quarterly Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this Quarterly Report, including statements regarding our strategy; future events, including their outcome or timing; future operations; future financial position; future revenue; projected costs; prospects; plans; objectives of management; and expected market growth, are forward-looking statements. The words "aim", "anticipate", "assume", "believe", "continue", "could", "due", "estimate", "expect", "intend", "may", "plan", "positioned", "potential", "predict", "project", "seek", "should", "target", "will", "would", and the negatives of these terms or similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These statements may relate to, among other things: (i) the timeliness of regulatory approvals; (ii) our strategy and overall approach to our business model, our efforts to realign our business, and our ability to exercise more control and ownership over the development process and commercialization path; (iii) our ability to successfully enter new markets or develop additional product candidates, including the expected timing and results of investigational studies and preclinical and clinical trials, whether with our collaborators or independently; (iv) our ability to consistently manufacture our product candidates on a timely basis or to establish agreements with third-party manufacturers; (v) our ability to successfully enter into optimal strategic relationships with our subsidiaries and operating companies that we may form in the future; (vi) our ability to hold or generate significant operating capital, including through partnering, asset sales, and operating cost reductions; (vii) actual or anticipated variations in our operating results; (viii) actual or anticipated fluctuations in competitors' or collaborators' operating results or changes in their respective growth rates; (ix) our cash position; (x) market conditions in our industry; (xi) the volatility of our stock price; (xii) the ability, and the ability of our collaborators, to protect our intellectual property and other proprietary rights and technologies; (xiii) outcomes of pending and future litigation; (xiv) the rate and degree of market acceptance of any products developed by us, our subsidiaries, collaborations, or joint ventures, or JVs, and competition from existing technologies and products or new technologies and products that may emerge; (xv) our ability to retain and recruit key personnel; (xvi) expectations related to the use of proceeds from public offerings and other financing efforts; (xvii) estimates regarding expenses, future revenue, capital requirements, and needs for additional financing; (xviii) our substantial doubt about our ability to continue as a going concern; (xix) our timeline to commercialization of our product candidates; (xx) our strategic prioritization and streamlining of resources undertaken to extend our cash runway and focus more of our capital resources on PRGN-2012 and costs related to such prioritization and

streamlining of resources; (xxi) potential non-dilutive financings for future liquidity; and (xxii) our ability to successfully

partner or sell our paused programs and activities in a timely manner.

Forward-looking statements are based on our beliefs, assumptions, and expectations of our future performance, and may also concern our expectations relating to our subsidiaries and other affiliates. We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report.

We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions, and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report, particularly in Part II, Item 1A, "Risk Factors," that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, JVs, or investments that we may make.

You should read this Quarterly Report, the documents that we reference in this Quarterly Report, our Annual Report on Form 10-K for the year ended December 31, 2023, the other reports we have filed with the Securities and Exchange Commission, or SEC, and the documents that we have filed as exhibits to our filings with the SEC completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Precigen, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)


(Amounts in thousands, except share data)	June 30, 2024		December 31, 2023
Assets
Current assets
Cash and cash equivalents	$	9,345	$	7,578

Short-term investments	10,191		55,277

Receivables
Trade, less allowance for credit losses of $0 and $184 as of June 30, 2024 and December 31, 2023	511		902


Other	505		673

Prepaid expenses	3,163		4,325

Total current assets	23,715		68,755


Property, plant and equipment, net	13,451		7,111
Intangible assets, net	5,091		40,701
Goodwill	24,918		26,612

Right-of-use assets	5,550		7,097
Other assets	435		767
Total assets	$	73,160	$	151,043

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Precigen, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)


(Amounts in thousands, except share data)	June 30, 2024		December 31, 2023
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable	$	4,846	$	1,726
Accrued compensation and benefits	6,675		8,250
Other accrued liabilities	6,642		6,223
Settlement and indemnification accruals	3,213		5,075
Deferred revenue	378		509



Current portion of lease liabilities	1,269		1,202


Total current liabilities	23,023		22,985


Deferred revenue, net of current portion	1,818		1,818
Lease liabilities, net of current portion	5,072		5,895
Deferred tax liabilities	77		1,847

Total liabilities	29,990		32,545
Commitments and contingencies (Note 13)
Shareholders' equity
Common stock, no par value, 400,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 256,398,527 shares issued as of June 30, 2024 and December 31, 2023, 252,656,151 shares and 248,919,096 shares outstanding as of June 30, 2024 and December 31, 2023, respectively.	—		—
Additional paid-in capital	2,093,080		2,084,916
Accumulated deficit	(2,047,001)		(1,964,471)
Accumulated other comprehensive loss	(2,909)		(1,947)
Total shareholders' equity	43,170		118,498


Total liabilities and shareholders' equity	$	73,160	$	151,043

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Precigen, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)


(Amounts in thousands, except share and per share data)	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues

Product revenues	$	31	$	324	$	169	$	648
Service revenues	673		1,438		1,592		2,965
Other revenues	13		5		21		5
Total revenues	717		1,767		1,782		3,618
Operating Expenses

Cost of products and services	1,014		1,697		2,089		3,224
Research and development	15,693		11,874		29,942		24,037
Selling, general and administrative	10,306		9,316		20,457		20,954
Impairment of goodwill	1,630		—		1,630		—
Impairment of other noncurrent assets	32,915		—		32,915		—
Total operating expenses	61,558		22,887		87,033		48,215
Operating loss	(60,841)		(21,120)		(85,251)		(44,597)
Other Income (Expense), Net


Interest expense	(2)		(136)		(4)		(460)
Interest income	319		828		927		1,460
Other income, net	43		44		80		424
Total other income, net	360		736		1,003		1,424

Loss before income taxes	(60,481)		(20,384)		(84,248)		(43,173)
Income tax benefit	1,689		65		1,718		120


Net loss	$	(58,792)	$	(20,319)	$	(82,530)	$	(43,053)







Net loss per share


Net loss per share, basic and diluted	$	(0.23)	$	(0.08)	$	(0.33)	$	(0.18)
Weighted average shares outstanding, basic and diluted	252,366,533		248,003,322		250,803,790		240,307,403

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Precigen, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in thousands)	2024		2023		2024		2023
Net loss	$	(58,792)	$	(20,319)	$	(82,530)	$	(43,053)
Other comprehensive income (loss):
Unrealized gain on investments	16		228		15		491
(Loss) gain on foreign currency translation adjustments	(128)		(47)		(977)		479

Comprehensive loss	$	(58,904)	$	(20,138)	$	(83,492)	$	(42,083)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Precigen, Inc. and Subsidiaries

Condensed Consolidated Statements of Shareholders' Equity

(Unaudited)


(Amounts in thousands, except share data)	Common Stock			Treasury Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Shareholders' Equity
	Shares	Amount		Shares	Amount
Balances at March 31, 2024	250,248,808	$	—	6,149,719	$	—	$	2,088,025	$	(2,797)	$	(1,988,209)	$	97,019

Stock-based compensation expense	—	—		—	—		1,964		—		—		1,964
Shares issued upon vesting of restricted stock units and for exercises of stock options	236,458	—		(236,458)	—		52		—		—		52
Shares issued for accrued compensation	2,170,885	—		(2,170,885)	—		3,039		—		—		3,039














Net loss	—	—		—	—		—		—		(58,792)		(58,792)

Other comprehensive loss	—	—		—	—		—		(112)		—		(112)
Balances at June 30, 2024	252,656,151	$	—	3,742,376	$	—	$	2,093,080	$	(2,909)	$	(2,047,001)	$	43,170


(Amounts in thousands, except share data)	Common Stock			Treasury Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Shareholders' Equity
	Shares	Amount		Shares	Amount
Balances at March 31, 2023	255,482,753	$	—	—	$	—	$	2,078,133	$	(2,699)	$	(1,891,301)	$	184,133

Stock-based compensation expense	—	—		—	—		2,188		—		—		2,188



Shares issued in public offerings, net of issuance costs	—	—		—	—		27		—		—		27












Net loss	—	—		—	—		—		—		(20,319)		(20,319)

Other comprehensive income	—	—		—	—		—		181		—		181
Balances at June 30, 2023	255,482,753	$	—	—	$	—	$	2,080,348	$	(2,518)	$	(1,911,620)	$	166,210

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Precigen, Inc. and Subsidiaries

Condensed Consolidated Statements of Shareholders' Equity

(Unaudited)


(Amounts in thousands, except share data)	Common stock			Common Stock in treasury			Additional paid-in		Accumulated other comprehensive		Accumulated		Total Precigen shareholders’
	Shares	Amount		Shares	Amount		capital		income (loss)		deficit		equity
Balances at December 31, 2023	248,919,096	$	—	7,479,431	$	—	$	2,084,916	$	(1,947)	$	(1,964,471)	$	118,498

Stock-based compensation expense	—	—		—	—		4,545		—		—		4,545
Shares issued upon vesting of RSUs and for exercises of stock options	1,197,992	—		(1,197,992)	—		52		—		—		52
Shares issued for accrued compensation	2,170,885	—		(2,170,885)	—		3,039		—		—		3,039
Shares issued as payment for services	368,178	—		(368,178)	—		528		—		—		528













Net loss	—	—		—	—		—		—		(82,530)		(82,530)

Other comprehensive loss	—	—		—	—		—		(962)				(962)
Balances at June 30, 2024	252,656,151	—		3,742,376	$	—	$	2,093,080	$	(2,909)	$	(2,047,001)	$	43,170


(Amounts in thousands, except share data)	Common stock			Common Stock in treasury			Additional paid-in		Accumulated other comprehensive		Accumulated		Total Precigen shareholders’
	Shares	Amount		Shares	Amount		capital		income (loss)		deficit		equity
Balances at December 31, 2022	208,150,021	$	—	—	$	—	$	1,998,314	$	(3,488)	$	(1,868,567)	$	126,259

Stock-based compensation expense	—	—		—	—		5,320		—		—		5,320
Shares issued upon vesting of RSUs	697,815	—		—	—		—		—		—		—
Shares issued for accrued compensation	2,206,469	—		—	—		3,361		—		—		3,361
Shares issued as payment for services	465,808	—		—	—		545		—		—		545
Shares and warrants issued in public offerings, net of issuance costs	43,962,640	—		—	—		72,808		—		—		72,808












Net loss	—	—		—	—		—		—		(43,053)		(43,053)

Other comprehensive income	—	—		—	—		—		970		—		970
Balances at June 30, 2023	255,482,753	$	—	—	$	—	$	2,080,348	$	(2,518)	$	(1,911,620)	$	166,210

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Precigen, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Six Months Ended June 30,
(Amounts in thousands)	2024		2023
Cash flows from operating activities
Net loss	$	(82,530)	$	(43,053)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	3,191		3,404
Gain on disposals of assets, net	(3)		(40)
Impairment of goodwill	1,630		—
Impairment of other noncurrent assets	32,915		—

Gain on debt retirement	—		(60)



Amortization of discounts on investments, net	(570)		(721)

Stock-based compensation expense	4,545		5,320
Shares issued as payment for services	528		545

Accretion of debt discount and amortization of deferred financing costs	—		60
Deferred income taxes	(1,718)		(113)


Changes in operating assets and liabilities:
Receivables:
Trade	391		(376)


Other	490		(226)

Prepaid expenses	1,158		2,274
Other assets	55		83
Accounts payable	3,178		(1,536)
Accrued compensation and benefits	1,468		1,804
Other accrued liabilities	(235)		(1,740)
Deferred revenue	(131)		(10)
Lease liabilities	303		229
Settlement and indemnification accruals	(1,862)		—


Net cash used in operating activities	(37,197)		(34,156)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Precigen, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Six Months Ended June 30,
(Amounts in thousands)	2024		2023
Cash flows from investing activities
Purchases of investments	$	(51,664)	$	(128,563)
Sales and maturities of investments	97,335		101,852





Purchases of property, plant and equipment	(6,674)		(255)
Proceeds from sale of assets	3		61



Net cash provided by (used in) investing activities	39,000		(26,905)
Cash flows from financing activities
Proceeds from issuance of shares, net of issuance costs	—		72,808




Payments of long-term debt and convertible notes, including cost to retire of $120 in 2023	—		(43,219)

Proceeds from stock option exercises	52		—

Net cash provided by financing activities	52		29,589
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(95)		(172)
Net increase (decrease) in cash, cash equivalents, and restricted cash	1,760		(31,644)
Cash, cash equivalents, and restricted cash
Beginning of period	7,848		48,596
End of period	$	9,608	$	16,952
Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	5	$	1,156
Cash paid during the period for income taxes	4		—
Significant noncash activities


Accrued compensation paid in equity awards	$	3,039	$	3,361
Purchases of property and equipment included in accounts payable and other accrued liabilities	1,171		19

Proceeds from sale of assets included in accounts receivable	57		—

The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of June 30, 2024 and December 31, 2023 as shown above:


	June 30, 2024		December 31, 2023
Cash and cash equivalents	$	9,345	$	7,578
Restricted cash included in other receivables	263		—

Restricted cash included in other assets	—		270
Cash, cash equivalents, and restricted cash	$	9,608	$	7,848

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Precigen, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

(Amounts in thousands, except share and per share data)

1. Organization

Precigen, Inc. ("Precigen"), a Virginia corporation, is a dedicated discovery and clinical-stage biopharmaceutical company advancing the next generation of gene and cell therapies with the overall goal of improving outcomes for patients with significant unmet medical needs. Precigen is leveraging its proprietary technology platforms to develop product candidates designed to target urgent and intractable diseases in its core therapeutic areas of immuno-oncology, autoimmune disorders, and infectious diseases. Precigen’s primary operations are located in the State of Maryland.

Precigen also has two wholly owned operating subsidiaries: Precigen ActoBio, Inc. ("ActoBio"), and Exemplar Genetics, LLC, doing business as Precigen Exemplar ("Exemplar").

Precigen and its consolidated subsidiaries are hereinafter referred to as the "Company."

ActoBio utilizes a proprietary class of microbe-based biopharmaceuticals that enable expression and local delivery of disease-modifying therapeutics, with its primary operations located in Ghent, Belgium. As part of a continuing effort to strategically prioritize the application of resources to particular development efforts, during the second quarter of 2024, the Company initiated a shutdown of ActoBio's operations. 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. See Notes 6 and 7 for further discussion related to non-cash impairment charges recorded in relation to these activities. In addition to the impairment charges described in Notes 6 and 7, the Company also recorded a charge related to employee severance and termination benefits of $2,100, of which $1,700 is included in research and development expenses and $400 is included in selling, general and administrative expenses included in the accompanying condensed consolidated statement of operations for the three and six months ended June 30, 2024. No payments had been made for these employee termination benefits through June 30, 2024.

In addition to the actions taken at ActoBio noted above, in August, 2024 the Company also began undertaking a strategic prioritization of its clinical portfolio and streamlining of its resources, including a reduction of over 20% of its workforce, to focus on potential commercialization of the PRGN-2012 AdenoVerse® gene therapy for the treatment of recurrent respiratory papillomatosis (RRP). These strategic changes are designed to reduce required resources for non-priority programs and enable the Company to focus on pre-commercialization efforts on PRGN-2012, including supporting submission of a rolling biologics license application (BLA) under an accelerated approval pathway anticipated in the second half of 2024, conducting a confirmatory clinical trial, and manufacturing commercial product. Additionally, the Company will continue acceleration of commercial readiness efforts for a potential launch in 2025. These actions will result in the Company recording severance charges in the third quarter of 2024 related to the reduction in its workforce of approximately $900.

Exemplar is committed to enabling the study of life-threatening human diseases through the development of Yucatan MiniSwine preclinical research models and services. Exemplar’s primary operations are located in the State of Iowa.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Certain information and footnote disclosures normally included in the Company's annual financial statements have been condensed or omitted. These interim condensed consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for fair statement of the Company's financial position as of June 30, 2024 and results of operations and cash flows for the interim periods ended June 30, 2024 and 2023. The year-end condensed consolidated balance sheet data was derived from the Company's audited financial statements but does not include all disclosures required by U.S. GAAP. These interim financial results are not necessarily indicative of the results to be expected for the year ending December 31, 2024, or for any other future annual or interim period. The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

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The accompanying condensed consolidated financial statements reflect the operations of Precigen and its majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated.

Liquidity and Going Concern

During the six months ended June 30, 2024, the Company incurred a net loss of $82,530 and used $37,197 of cash in our operations, and as of June 30, 2024, had an accumulated deficit of $2,047,001. The Company has incurred operating losses since its inception and management expects operating losses and negative cash flows from operations to continue for the foreseeable future and, as a result, the Company will require additional capital to fund its operations and execute its business plan. As of June 30, 2024, the Company had $19,536 in cash, cash equivalents and short-term investments. As discussed in Note 10, the Company raised in August approximately $31,363 in net proceeds in a public offering of its common stock, however, had no committed source of additional funding from either debt or equity financings. The Company is currently exploring a number of potential non-dilutive financings for future liquidity. The Company's current cash and investments position, including the proceeds received from the August 2024 offering, is not sufficient to fund the Company's planned operations through one year after the date the interim financial statements are issued and accordingly, there is substantial doubt about the Company's ability to continue as a going concern. The analysis used to determine the Company's ability to continue as a going concern does not include cash sources outside of the Company's direct control that management expects to be available within the next twelve months.

The Company’s ability to fund its operations on an ongoing basis is dependent upon the successful execution of management’s plans, which include raising additional capital in the near term. This additional capital could be raised through a combination of non-dilutive financings (including debt or royalty monetization financings, collaborations, strategic alliances, monetization of non-core assets, marketing, distribution or licensing arrangements), dilutive financings (including equity and/or debt financings which may include an equity component) and, in the longer term, from revenue related to product sales, to the extent its product candidates receive marketing approval and can be commercialized. There can be no assurance that new financing or other transactions will be available to the Company on commercially acceptable terms, or at all. Also, any collaborations, strategic alliances, monetization of non-core assets or marketing, distribution or licensing arrangement may require the Company to give up some or all of its rights to a product or technology, which in some cases may be at less than the full potential value of such rights. If the Company is unable to obtain additional capital, the Company will assess its capital resources and may be required to delay, reduce the scope of, or eliminate some or all of its operations, which may include research and development and clinical trials. This may have a material adverse effect on the Company’s business, financial condition, results of operations and ability to operate as a going concern.

These interim condensed consolidated financial statements have been prepared on a going concern basis and do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary in the event the Company can no longer continue as a going concern.

Risks and Uncertainties

The Company is subject to a number of risks similar to those of other companies conducting high-risk, early-stage research and development of therapeutic product candidates. Principal among these risks are dependence on key individuals and intellectual property, competition from other products and companies, and the technical risks associated with the successful research, development, and clinical manufacturing of its and its collaborators' therapeutic product candidates.

Research and Development

The Company considers that regulatory requirements inherent in the research and development of new products preclude it from capitalizing such costs. Research and development expenses include salaries and related costs of research and development personnel, including stock-based compensation expense, costs to acquire technology rights, contract research organizations and consultants, facilities, materials and supplies associated with research and development projects as well as various laboratory studies. Costs incurred in conjunction with collaboration and licensing arrangements are included in research and development. Indirect research and development costs include depreciation, amortization, and other indirect overhead expenses.

The Company has research and development arrangements with third parties that include upfront and milestone payments. As of June 30, 2024 and December 31, 2023, the Company had research and development commitments with third parties that had not yet been incurred totaling $16,895 and $17,800, respectively. The commitments are generally cancellable by the Company by providing written notice at least sixty days before the desired termination date.

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Cash and Cash Equivalents

All highly liquid investments with an original maturity of three months or less at the date of purchase are considered to be cash equivalents. Cash balances at a limited number of banks may periodically exceed insurable amounts. The Company believes that it mitigates its risk by investing in or through major financial institutions. Recoverability of investments is dependent upon the performance of the issuer.

Short-term Investments

As of June 30, 2024 and December 31, 2023 short-term investments include United States government debt and agency securities and certificates of deposit. The Company determines the appropriate classification as short-term or long-term at the time of purchase based on original maturities and management's reasonable expectation of sales and redemption. The Company reevaluates such classification at each balance sheet date.

Fair Value of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset and liability. As a basis for considering such assumptions, the Company uses a three-tier fair value hierarchy that prioritizes the inputs used in its fair value measurements. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:


Level 1:			Quoted prices in active markets for identical assets and liabilities;

Level 2:			Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly; and

Level 3:			Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available.

Net Loss per Share

Basic net loss per share is calculated by dividing net loss attributable to common shareholders by the weighted average shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, using the treasury-stock method and the if-converted method. For purposes of the diluted net loss per share calculation, shares to be issued pursuant to stock options and restricted stock units ("RSUs") are considered to be common stock equivalents but are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive as described in the next paragraph. Therefore, basic and diluted net loss per share were the same for all periods presented. See Note 10 for further discussion of the Company's Share Lending Agreement, which was terminated on October 1, 2023.

The following potentially dilutive securities as of June 30, 2024 and 2023, have been excluded from the above computations of diluted weighted average shares outstanding for the three and six months then ended as they would have been anti-dilutive:


	June 30,
	2024	2023

Options	27,403,769	22,325,095
Restricted stock units	786,709	1,877,308

Total	28,190,478	24,202,403

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Segment Information

The Company's chief operating decision maker ("CODM") regularly reviews disaggregated financial information for various operating segments. The financial information regularly reviewed by the CODM consists of (i) Biopharmaceuticals and (ii) Exemplar, each an operating segment that was also determined to be a reportable segment. The Biopharmaceuticals reportable segment is primarily comprised of the Company's legal entities of Precigen and ActoBio. See Note 1 for a description of Precigen, ActoBio and Exemplar.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures. According to ASU 2023-07, public entities are required to disclose its significant segment expense categories and amounts for each reportable segment. A significant segment expense is an expense that is significant to the segment, regularly provided to or easily computed from information regularly provided to the chief operating decision maker and included in the reported measure of segment profit or loss. This updated standard is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024. We do not believe the adoption of ASU 2023-07 will have a material impact on our consolidated financial statements and disclosures.

There are no other new accounting standards which have not yet been adopted that are expected to have a significant impact on our financial statements and related disclosures.

3. Collaboration and Licensing Revenue

The Company's collaborations and licensing agreements may provide for multiple promises to be satisfied by the Company and typically include a license to the Company's technology platforms, participation in collaboration committees, and performance of certain research and development services. Based on the nature of the promises in the Company's collaboration and licensing agreements, the Company typically combines most of its promises into a single performance obligation because the promises are highly interrelated and not individually distinct. Options to acquire additional services are considered to determine if they constitute material rights. At contract inception, the transaction price is typically the upfront payment received and is allocated to the performance obligations. The Company has determined the transaction price should be recognized as revenue based on its measure of progress under the agreement primarily based on inputs necessary to fulfill the performance obligation.

The Company determines whether collaborations and licensing agreements are individually significant for disclosure based on a number of factors, including total revenue recorded by the Company pursuant to collaboration and licensing agreements, collaborators or licensees with equity method investments, or other qualitative factors. Collaboration and licensing revenues generated from consolidated subsidiaries are eliminated in consolidation.

There was no collaboration and licensing revenue recognized during both the three and six months ended June 30, 2024 and 2023.

Alaunos License Agreement

On April 3, 2023, the Company entered into an amended and restated exclusive license agreement (the “License Agreement”), with Alaunos Therapeutics (“Alaunos”). The License Agreement amended and replaced an Exclusive License Agreement by and between the Company and Alaunos, dated October 5, 2018.

Pursuant to the terms of the License Agreement, the Company granted Alaunos an exclusive, worldwide, royalty-free, sub-licensable license to certain patents and know-how to research, develop and commercialize T-cell receptor products, which are referred to as TCR Products, designed for neoantigens for the treatment of cancer or the treatment and prevention of human papilloma virus, or HPV, to the extent that the primary reason for such treatment or prevention is to prevent cancer, which is referred to as the HPV Field. The Company has also granted Alaunos an exclusive, worldwide, royalty-free, sub-licensable license to certain patents relating to the Sleeping Beauty technology to research, develop and commercialize TCR Products

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(other than those designed for neoantigens) for the treatment of cancer and in the HPV Field. The Company also granted Alaunos certain non-exclusive rights to certain patents and know-how to research, develop and commercialize products developed under or arising from a program of research and development focused on NK cells and gamma delta T-cells in the HPV field. Alaunos has the exclusive right to conduct in its sole discretion, and is solely responsible for all aspects of, the research, development and commercialization of the licensed products for the treatment of cancer and is not subject to a diligence obligation with respect to such efforts.

The License Agreement will terminate on a product-by-product and/or country-by-country basis upon the expiration of the last to expire patent claim for each licensed product. In addition, Alaunos may terminate the License Agreement on a country-by-country or program-by-program basis following written notice to the Company, and either party may terminate the License Agreement following notice of a material breach subject to a certain cure period.

Neither Alaunos nor the Company will have any other obligations with respect to the payment of milestones or royalties on products developed in connection with the License Agreement.

Deferred Revenue

Deferred revenue primarily consists of upfront and milestone consideration received for the Company's collaboration and licensing agreements. Revenue is recognized as services are performed. The arrangements classified as long-term are not active while the respective counterparties evaluate the status of the project and its desired future development activities since the Company cannot reasonably estimate the amount of services, if any, to be performed over the next year.

Deferred revenue consisted of the following:


	June 30, 2024		December 31, 2023
Collaboration and licensing agreements	$	1,818	$	1,818
Prepaid product and service revenues	15		15
Other	363		494
Total	$	2,196	$	2,327
Current portion of deferred revenue	$	378	$	509
Long-term portion of deferred revenue	1,818		1,818
Total	$	2,196	$	2,327

4. Short-term Investments

The Company's investments are classified as available-for-sale. The following table summarizes the amortized cost, gross unrealized gains and losses, and fair value of available-for-sale investments as of June 30, 2024:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value
U.S. government debt securities	$	8,359	$	15	$	(31)	$	8,343

Certificates of deposit	1,848		—		—		1,848

Total	$	10,207	$	15	$	(31)	$	10,191

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In addition, at June 30, 2024 and December 31, 2023, the Company held a U.S. government debt security valued at $5,864 and $1,502, respectively, which was included in cash and cash equivalents in the condensed consolidated balance sheet as this investment had an original maturity of less than three months when purchased.

The estimated fair value of available-for-sale investments was $10,191 as of June 30, 2024, and these available-for-sale investments all contractually mature within one year.

The following table summarizes the amortized cost, gross unrealized gains and losses, and fair value of available-for-sale investments as of December 31, 2023:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value
U.S. government debt securities	$	51,704	$	102	$	(135)	$	51,671
Certificates of deposit	3,361		1		(1)		3,361
Corporate bonds	245		—		—		245
Total	$	55,310	$	103	$	(136)	$	55,277

Changes in market interest rates and bond yields cause certain investments to fall below their cost basis, resulting in unrealized losses on investments. The Company does not intend to sell these investments nor is it more likely than not that the Company will be required to sell these investments, prior to maturity or recovery of amortized cost.

5. Fair Value Measurements

The carrying amount of cash and cash equivalents, receivables, accounts payable, accrued compensation and benefits, and other accrued liabilities approximate fair value due to the short maturity of these instruments.

Assets

The following table presents the placement in the fair value hierarchy of financial assets that are measured at fair value on a recurring basis as of June 30, 2024:


	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		June 30, 2024
Assets
U.S. government debt securities	$	—	$	8,343	$	—	$	8,343

Certificates of deposit	—		1,848		—		1,848

Total	$	—	$	10,191	$	—	$	10,191

The following table presents the placement in the fair value hierarchy of financial assets that are measured at fair value on a recurring basis as of December 31, 2023:


	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		December 31, 2023
Assets
U.S. government debt securities	$	—	$	51,671	$	—	$	51,671
Certificates of deposit	—		3,361		—		3,361
Corporate bonds	—		245		—		245
Total	$	—	$	55,277	$	—	$	55,277

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The method used to estimate the fair value of the Level 2 short-term investments in the tables above is based on professional pricing sources for identical or comparable instruments, rather than direct observations of quoted prices in active markets.

6. Property, Plant and Equipment, Net

Property, plant and equipment consist of the following:


	June 30, 2024		December 31, 2023
Land and land improvements	$	164	$	164
Buildings and building improvements	2,629		2,629
Furniture and fixtures	379		530
Equipment	16,628		18,576
Leasehold improvements	4,475		4,380
Breeding stock	83		79
Computer hardware and software	3,213		3,459
Construction and other assets in progress	8,109		1,577
	35,680		31,394
Less: Accumulated depreciation and amortization	(22,229)		(24,283)
Property, plant and equipment, net	$	13,451	$	7,111

Depreciation expense was $388 and $475 for the three months ended June 30, 2024 and 2023, respectively, and $768 and $981 for the six months ended June 30, 2024 and 2023, respectively.

As discussed in Note 1, during the three and six months ended June 30, 2024, the Company suspended ActoBio's operations. As a result, the Company reviewed the related property, plant and equipment and right-of-use assets for impairment. Based on the estimated undiscounted cash flows, the Company determined that the related asset values were not fully recoverable and calculated estimated fair values using market participant assumptions. The estimated fair values were lower than the carrying values, and the Company recorded impairment losses of $110 related to property, plant, and equipment and $488 related to the right-of-use assets, which are included in impairment of other noncurrent assets in the accompanying condensed consolidated statements of operations.

7. Goodwill and Intangible Assets, Net

The changes in the carrying amount of goodwill for the six months ended June 30, 2024 were as follows:


Balance at December 31, 2023	$	26,612
Impairment	(1,630)
Foreign currency translation adjustments	(64)
Balance at June 30, 2024	$	24,918

The Company had $26,503 and $24,873 of cumulative impairment losses as of June 30, 2024 and December 31, 2023, respectively.

During the three months ended June 30, 2024, in connection with the suspension of ActoBio's operations, as discussed in Note 1, the Company determined the fair value of the ActoBio reporting unit was less than its carrying amount. As a result, the Company recorded a goodwill impairment charge of $1,630, which represented the full amount of goodwill associated with the ActoBio reporting unit.

Intangible assets consist of the following as of June 30, 2024:

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	Gross Carrying Amount		Accumulated Amortization		Net
Patents, developed technologies and know-how	$	15,912	$	(10,821)	$	5,091

Intangible assets consist of the following as of December 31, 2023:


	Gross Carrying Amount		Accumulated Amortization		Net
Patents, developed technologies and know-how	$	82,501	$	(41,800)	$	40,701

During the three months ended June 30, 2024, in connection with the suspension of ActoBio's operations, the Company determined the fair value of the certain developed technologies that the Company ceased using was less than its carrying amount. As a result, the Company recorded an impairment charge of $32,317, which is included in impairment of other noncurrent assets in the accompanying condensed consolidated statements of operations.

Amortization expenses were $1,208 and $1,218 for the three months ended June 30, 2024 and 2023, respectively, and $2,423 for the six months ended June 30, 2024 and 2023.

8. Debt

Lines of Credit

Exemplar has a $5,000 revolving line of credit with a bank that matures on November 1, 2024. As of June 30, 2024, the line of credit bore interest at a stated rate of 8.50% per annum. As of June 30, 2024 and December 31, 2023, there was no outstanding balance on the line of credit.

Convertible Notes

In July 2018, Precigen completed a registered underwritten public offering of $200,000 aggregate principal amount of Convertible Notes and issued the Convertible Notes under an indenture between Precigen and The Bank of New York Mellon Trust Company, N.A., as trustee, as supplemented by the First Supplemental Indenture.

The Convertible Notes matured on July 1, 2023, although certain notes were repurchased prior to their maturity beginning in third quarter of 2022. On June 30, 2023, the Company repurchased all remaining outstanding Convertible Notes at par plus accrued interest.

The components of interest expense in 2023 related to the Convertible Notes were $108 of cash interest expense and $26 of non-cash interest expense for the three months ended June 30, 2023, and $397 of cash interest expense and $60 of non-cash interest expense for the six months ended June 30, 2023.

9. Income Taxes

For the three and six months ended June 30, 2024 and 2023, the Company calculated its tax benefit using the estimated annual effective tax rate method. The rate is the ratio of estimated annual income tax expense related to estimated pretax loss from continuing operations, excluding significant unusual or infrequently occurring items. As a result of the pretax losses anticipated for the full year which are not benefited, this rate has been calculated and applied to the year-to-date interim period’s ordinary income or loss on a jurisdiction by jurisdiction basis to determine the income tax expense/benefit allocated to the year-to-date period. The annual effective tax rate is revised, if necessary, at the end of each interim period based on the Company’s most current best estimate. The Company recorded an income tax benefit of $1,689 and $65 for the three months ended June 30, 2024 and 2023, respectively, and $1,718 and $120 for the six months ended June 30, 2024 and 2023, respectively. The effective tax rate differs from the U.S. statutory tax rate, primarily as a result of the change in valuation allowance required. The increase in tax benefit recognized in the three and six months ended June 30, 2024 is primarily caused by the non-cash impairment of ActoBio's developed technology and goodwill, which resulted in the reduction of the associated deferred tax liability, and was recorded as a discrete item in the period.

The Company's net deferred tax assets are offset by a valuation allowance due to the Company's history of net losses combined with an inability to confirm recovery of the tax benefits of the Company's tax attributes and other net deferred tax assets. In

assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

10. Shareholders' Equity

Issuances of Precigen Common Stock

In January 2023, the Company closed a public offering of 43,962,640 shares of its common stock, resulting in net proceeds of $72,808, after deducting underwriting discounts, fees, and other offering expenses. Of the 43,962,640 shares, 11,517,712 shares were purchased by related parties and their affiliates, including the Company's Chief Executive Officer, its Chairman of the Board of Directors and his affiliates, and certain other of the Company's officers.

The Company completed the offering of shares of common stock, utilizing a number of underwriters, with J.P. Morgan Securities LLC acting as representative of the underwriters. The services provided by JP Morgan Securities LLC were in the ordinary course of their role as lead underwriter, for which they received customary fees and commissions.

In August 2024, the Company closed a public offering of 39,878,939 shares of its common stock, resulting in net proceeds to the Company of approximately $31,363, after deducting underwriting discounts, fees, and an estimate of other offering expenses. This included the sale of 4,584,821 shares of the Company’s common stock pursuant to the underwriter’s exercise of

its option to purchase an additional 5,294,117 shares until September 6, 2024. Of the 39,878,939 shares, 23,588,234 shares were purchased by related parties and their affiliates, including the Company's Chairman of the Board of Directors and his affiliates, and one of the Company's executive officers.

Share Lending Agreement

Concurrently with the offering of the Convertible Notes, Precigen entered into a share lending agreement (the "Share Lending Agreement") with J.P. Morgan Securities LLC (the "Share Borrower") pursuant to which Precigen loaned and delivered 7,479,431 shares of its common stock (the "Borrowed Shares") to the Share Borrower. The Share Lending Agreement terminated on October 1, 2023, and the Borrowed Shares were returned to Precigen on October 5, 2023.

The Share Lending Agreement was entered into at fair value and met the requirements for equity classification. Therefore, the value is netted against the issuance of the Borrowed Shares in additional paid-in capital. Additionally, the Borrowed Shares are not included in the denominator for loss per share attributable to Precigen shareholders.

Components of Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are as follows:


	June 30, 2024		December 31, 2023
Unrealized loss on investments	$	(16)	$	(33)
Loss on foreign currency translation adjustments	(2,893)		(1,914)
Total accumulated other comprehensive loss	$	(2,909)	$	(1,947)

11. Share-Based Payments

The Company measures the fair value of stock options and RSUs issued to employees and nonemployees as of the grant date for recognition of stock-based compensation expense. Stock-based compensation expense for employees and nonemployees is recognized over the requisite service period, which is typically the vesting period. Stock-based compensation costs included in the condensed consolidated statements of operations are presented below:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cost of products and services	$	(5)	$	17	$	12	$	35

Research and development	920		582		1,454		1,087
Selling, general and administrative	1,049		1,589		3,079		4,198

Total	$	1,964	$	2,188	$	4,545	$	5,320

Precigen Equity Incentive Plans

In August 2013, Precigen adopted the 2013 Omnibus Incentive Plan ("the 2013 Plan"), for employees and nonemployees which provided for grants of share-based awards, including stock options, RSUs, shares of common stock and other awards, to employees, officers, consultants, advisors, and nonemployee directors. Upon the effectiveness of the 2023 Omnibus Incentive Plan in June 2023, as discussed in the next paragraph, (the "2023 Plan"), no new awards may be granted under the 2013 Plan and any awards granted under the 2013 Plan prior to the effectiveness of the 2023 Plan will remain outstanding under such plan and will continue to vest and/or become exercisable in accordance with their original terms and conditions. As of June 30, 2024, there were 17,633,646 stock options and no RSUs outstanding under the 2013 Plan.

In April 2023, Precigen adopted the 2023 Plan, which became effective upon shareholder approval in June 2023. The 2023 Plan permits the grant of share-based awards, including stock options, restricted stock awards, and RSUs and other awards, to officers, employees and nonemployees. The 2023 Plan authorizes for issuance pursuant to awards under the 2023 Plan an aggregate of 16,418,137 shares, which included shares remaining available for issuance under the 2013 Plan as of the adoption of the 2023 Plan. As of June 30, 2024, there were 6,004,500 stock options and no RSUs outstanding under the 2023 Plan and 8,042,752 shares were available for future grants. On May 28, 2024, Precigen's board of directors approved an increase of 2,000,000 shares of common stock to be reserved for issuance under the 2023 Plan, which was subsequently approved by its shareholders at Precigen's annual meeting on July 5, 2024.

In April 2019, Precigen adopted the 2019 Incentive Plan for Non-Employee Service Providers (the "2019 Plan"), which became effective upon shareholder approval in June 2019. The 2019 Plan permits the grant of share-based awards, including stock options, restricted stock awards, and RSUs, to nonemployee service providers, including board members. As of June 30, 2024, there were 12,000,000 shares authorized for issuance under the 2019 Plan, of which 3,765,623 stock options and 786,709 RSUs were outstanding and 2,739,963 shares were available for future grants.

Stock option activity was as follows:


	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
Balances at December 31, 2023	22,057,340	$	6.90	7.47
Granted	6,852,634	1.41

Exercised	(36,458)	1.42
Forfeited	(611,750)	1.51
Expired	(857,997)	16.23
Balances at June 30, 2024	27,403,769	5.36		7.47
Exercisable at June 30, 2024	15,595,522	8.17		6.20

RSU activity was as follows:


	Number of Restricted Stock Units	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (Years)
Balances at December 31, 2023	961,534	$	1.17	0.19
Granted	4,464,724	1.42
Vested	(4,639,549)	1.37
Forfeited	—	—
Balances at June 30, 2024	786,709	1.43		0.62

Precigen currently uses treasury shares and authorized and unissued shares to satisfy share award exercises.

12. Operating Leases

The Company leases certain facilities and equipment under operating leases. Leases with a lease term of twelve months or less are considered short-term leases and are not recorded on the balance sheet, and expense for these leases is recognized over the term of the lease. All other leases have remaining terms of one to six years, some of which may include options to extend the lease and some of which may include options to terminate the lease within one year. The Company uses judgment to determine whether it is reasonably possible to extend the lease beyond the initial term or terminate before the initial term ends and the length of the possible extension or early termination. The leases are renewable at the option of the Company and do not contain residual value guarantees, covenants, or other restrictions.

The components of lease costs were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating lease costs	$	609	$	617	$	1,218	$	1,232
Short-term lease costs	22		10		35		30
Variable lease costs	92		86		184		206
Lease costs	$	723	$	713	$	1,437	$	1,468

As of June 30, 2024, maturities of lease liabilities, excluding short-term and variable leases, for continuing operations were as follows:


2024	$	1,090
2025	1,611
2026	1,473
2027	1,303
2028	1,260
2029	1,295
Thereafter	552
Total	$	8,584
Present value adjustment	(2,243)
Total	$	6,341
Current portion of operating lease liabilities	$	1,269
Long-term portion of operating lease liabilities	5,072
Total	$	6,341

Other information related to operating leases in continuing operations was as follows:


	June 30, 2024		December 31, 2023
Weighted average remaining lease term (years)	4.85		5.39
Weighted average discount rate	11.4	%	11.2	%


	Six Months Ended June 30,
	2024		2023
Supplemental disclosure of cash flow information
Cash paid for operating lease liabilities	$	1,144	$	1,022
Operating lease right-of-use assets obtained in exchange for new lease liabilities (includes new leases or modifications of existing leases)	572		373

13. Commitments and Contingencies

Contingencies

In October 2020, several shareholder class action lawsuits were filed in the United States District Court for the Northern District of California on behalf of certain purchasers of the Company's common stock. The complaints name as defendants the Company and certain of its current and former officers. The plaintiffs' claims challenged disclosures about the MBP program from May 10, 2017 to March 1, 2019. In March 2021, the Court granted an order consolidating the claims and, in April 2021, appointed a lead plaintiff and lead counsel in the case, captioned In re Precigen Securities Litigation, Case No. 5:20-cv-06936-BLF (N.D. Cal.). On May 18, 2021, the lead plaintiff filed an Amended Class Action Complaint. On August 2, 2021, the defendants moved to dismiss the Amended Class Action Complaint. On September 27, 2021, the lead plaintiff filed a Second Amended Class Action Complaint in lieu of a response to the defendants’ motion to dismiss. On November 3, 2021, the defendants moved to dismiss the Second Amended Class Action Complaint and on May 31, 2022, the Court granted the defendants’ motion to dismiss the Second Amended Class Action Complaint with leave to amend. On August 1, 2022, the lead plaintiff filed a Third Amended Class Action Complaint.

On August 2, 2022, the Court granted the parties' request to conduct a private mediation session to explore potential resolution of the action. On November 17, 2022, at the conclusion of the mediation session, the parties executed a memorandum of understanding that agreed in principle to resolve the claims asserted in the securities class action. The settlement provides for a payment to the plaintiff class of $13,000. As a result, the shareholder class action lawsuit was resolved. On November 6, 2023, the Court granted final approval of the settlement, dismissed the litigation with prejudice, and entered final judgment. As a

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result, the Company had no amounts recorded in settlement and indemnification accruals or an insurance receivable asset on the consolidated balance sheet as of June 30, 2024 and December 31, 2023, respectively.

In December 2020, a derivative shareholder action, captioned Edward D. Wright, derivatively on behalf of Precigen, Inc. F/K/A Intrexon Corp. v. Alvarez et al, was filed in the Circuit Court for Fairfax County in Virginia on behalf of Precigen, Inc. asserting similar claims under state law against Precigen's current directors and certain officers. The plaintiff seeks damages, forfeiture of benefits received by defendants, and an award of reasonable attorneys' fees and costs. The case was stayed by an order entered on June 14, 2021. On September 24, 2021, an individual shareholder filed a lawsuit in the Circuit Court for Henrico County styled Kent v. Precigen, Inc., Case CL21-6349. The Kent action demands inspection of certain books and records of the Company pursuant to Virginia statutory and common law. On April 1, 2022, the Court denied the demurrer and referred the matter to a hearing on the merits. The Company intends to defend the lawsuits vigorously; however, there can be no assurances regarding the ultimate outcome of these lawsuits.

In the course of its business, the Company is involved in litigation or legal matters, including governmental investigations. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. The Company accrues liabilities for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. As of June 30, 2024, the Company does not believe that any such matters, individually or in the aggregate, will have a material adverse effect on the Company's business, financial condition, results of operations, or cash flows.

Trans Ova

As part of the Company's strategic shift to becoming a healthcare company, in August 2022, the Company completed the sale of 100% of the issued and outstanding membership interests in its wholly-owned subsidiary, Trans Ova, to Spring Bidco LLC (the “Buyer”), a Delaware limited liability company for $170,000 and up to $10,000 in cash earn-out payments contingent upon the performance of Trans Ova in each of 2022 and 2023, consisting of $5,000 for each year (the “Transaction”). In February 2023, the Buyer notified the Company that Trans Ova did not meet the financial measures required in 2022 in order to require the first $5,000 earn-out payment. In April 2024, the Buyer notified the Company that Trans Ova did not meet the financial measures required in 2023 in order to require the second $5,000 earn-out payment. The Company has disputed certain items reflected in the 2023 financial measures presented by the Buyer in the aforementioned notification.

In connection with the Transaction, the Company is required to indemnify the Buyer for certain expenses incurred post close (related to covenants and certain additional specified liabilities including certain patent infringement lawsuits), if incurred, in amounts not to exceed $5,750. Such indemnification was recorded as a reduction of the gain on divestiture in the third quarter of 2023. As of June 30, 2024 and December 31, 2023, $3,213 and $5,750 were included in settlement and indemnification accruals on the condensed consolidated balance sheets, respectively, related to this indemnification liability. During the three months ended June 30, 2024, the Company paid an indemnification claim of $1,862 for expenses incurred by the buyer for the period from July 2023 to December 2023. In addition, during the three months ended September 30, 2023, the Company paid $675 for indemnification claims against this liability for the period from the date of sale to June 2023.

14. Segments

The Company's CODM assesses the operating performance of and allocates resources for several operating segments using Segment Adjusted EBITDA. Management believes this financial metric is a key indicator of operating results since it excludes noncash revenues and expenses that are not reflective of the underlying business performance of an individual enterprise. The Company defines 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. Segment Adjusted EBITDA excludes the gain or loss on disposals of assets and include proceeds from the sale of assets in the period sold.

Because the Company uses Segment Adjusted EBITDA as its primary measure of segment performance, it has included this measure in its discussion of segment operating results. The Company has also disclosed revenues from external customers and intersegment revenues for each reportable segment. The CODM does not use total assets by segment to evaluate segment performance or allocate resources, and accordingly, these amounts are not required to be disclosed.

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For the three and six months ended June 30, 2024, the Company's 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. See Note 1 for a description of Biopharmaceuticals and Exemplar.

Segment Adjusted EBITDA by reportable segment was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Biopharmaceuticals	$	(27,574)	$	(17,254)	$	(51,394)	$	(38,597)
Exemplar	(483)		(83)		(683)		38

Segment Adjusted EBITDA for reportable segments	$	(28,057)	$	(17,337)	$	(52,077)	$	(38,559)

The table below reconciles Segment Adjusted EBITDA for reportable segments to consolidated net loss before income taxes:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Segment Adjusted EBITDA for reportable segments	$	(28,057)	$	(17,337)	$	(52,077)	$	(38,559)

Remove cash paid for capital expenditures, net of proceeds from sale of assets	2,326		101		6,674		255
Interest Income	319		828		927		1,461

Other expenses:
Interest expense	(2)		(136)		(4)		(460)
Depreciation and amortization	(1,596)		(1,693)		(3,191)		(3,404)
Gain on disposals of assets	—		40		3		40
Impairment losses	(34,545)		—		(34,545)		—

Stock-based compensation expense	(1,964)		(2,188)		(4,545)		(5,320)
Adjustment related to accrued bonuses paid in equity awards	3,039		—		3,039		3,360


Shares issue for payment of services	—		—		(528)		(545)
Other	(1)		1		(1)		(1)


Consolidated loss before income taxes	$	(60,481)	$	(20,384)	$	(84,248)	$	(43,173)

Revenues from external customers in the Exemplar segment consisted of $717 and $1,767 for the three months ended June 30, 2024 and 2023, respectively, and $1,782 and $3,618 for the six months ended June 30, 2024 and 2023, respectively.

Total segment revenues from reportable segments equal total consolidated revenues on the condensed consolidated statements of operations.

For the three months ended June 30, 2024 and 2023, 74.8% and 73.3%, respectively, of total consolidated revenue was attributable to four customers in 2024 and four customer in 2023 in the Exemplar segment. For the six months ended June 30, 2024 and 2023 65.5% and 78.0%, respectively, of total consolidated revenue was attributed to four customers in 2024 and four in 2023, in the Exemplar segment.

As of June 30, 2024 and December 31, 2023, the Company had $0 and $1,958, respectively, of long-lived assets in foreign countries. There were no revenues derived in foreign countries for any periods presented.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report on Form 10-Q, or Quarterly Report, and our Annual Report on Form 10-K for the year ended December 31, 2023, or Annual Report.

The following discussion contains forward-looking statements that reflect our plans, estimates, expectations, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements and you are cautioned not to place undue reliance on forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report, particularly in "Special Note Regarding Forward-Looking Statements" and "Risk Factors." The forward-looking statements included in this Quarterly Report are made only as of the date hereof.

Overview

We are a dedicated discovery and clinical-stage biopharmaceutical company advancing the next generation of gene and cell therapies with the overall goal of improving outcomes for patients with significant unmet medical needs. 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 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 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.

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 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. 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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Biopharmaceuticals

Precigen

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. 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.

Through our UltraCAR-T therapeutics platform, we are able to precision-engineer UltraCAR-T cells to produce a homogeneous cell product that simultaneously expresses antigen-specific chimeric antigen receptor, or CAR, kill switch, and our proprietary membrane-bound interleukin-15, or mbIL15, genes in any genetically modified UltraCAR-T cell. Our decentralized and rapid proprietary manufacturing process allows us to manufacture UltraCAR-T cells overnight at a medical center's current good manufacturing practices facility, or cGMP, and reinfuse the patient the following day after gene transfer. This process improves upon current approaches to CAR-T manufacturing, which require extensive ex vivo expansion following viral vector transduction to achieve clinically relevant cell numbers that we believe can result in the exhaustion of CAR-T cells prior to their administration, limiting their potential for persistence in patients. We have developed a proprietary electroporation device, UltraPorator, designed to further streamline and ensure the rapid and cost-effective manufacturing of UltraCAR-T therapies. The UltraPorator system includes proprietary hardware and software solutions and potentially represents major advancements over current electroporation devices by significantly reducing the processing time and contamination risk. UltraPorator is intended to be a viable scale-up and commercialization solution for decentralized UltraCAR-T manufacturing.

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. 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. 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. PRGN-2009 leverages our UltraVector and AdenoVerse platforms to optimize HPV type 16 and HPV type 18, antigen designed for delivery via a proprietary gorilla adenovector with a large genetic payload capacity and the ability for repeat administrations. 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 combination with pembrolizumab in newly diagnosed oropharyngeal squamous cell carcinoma patients is ongoing in collaboration with the NCI pursuant to a CRADA. 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 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. Previously PRGN-3006 was granted Orphan Drug Designation in patients with AML by the FDA. We have completed the Phase 1 dose escalation trial. 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 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 in a Phase 1/1b clinical trial for the treatment of advanced, recurrent platinum-resistant ovarian, fallopian tube,

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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. 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 in a Phase 1/1b clinical trial for patients with advanced receptor tyrosine kinase-like orphan receptor 1-positive, or ROR1+, hematological (Arm 1) and solid tumors (Arm 2). The target patient population for Arm 1 includes relapsed or refractory CLL, relapsed or refractory MCL, relapsed or refractory B-ALL, and relapsed or refractory DLBCL. The target patient population for Arm 2 includes locally advanced unresectable or metastatic histologically confirmed TNBC Arm 1 and Arm 2 will enroll in parallel. 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.

Precigen ActoBio, Inc.

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.

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. The Phase 1b portion of the study evaluated the safety and tolerability of AG019 monotherapy administered both as a single dose and as repeated daily doses in adult and adolescent patients. 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 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. The 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. Historically, researchers have lacked animal models that faithfully represent human diseases. As a result, a sizeable barrier has blocked progress in the discovery of human disease mechanisms; novel diagnostics, procedures, devices, prevention strategies and therapeutics; as well as the ability to predict in humans the efficacy of next-generation procedures, devices, and therapeutics. 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.

Segments

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.

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Financial overview

We have incurred significant losses since our inception. 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. We may enter into strategic transactions for individual platforms or programs in the future from which we may generate new collaboration and licensing revenues. We continue to generate product and service revenues through our Exemplar subsidiary. Products currently in our clinical pipeline will require regulatory approval and/or commercial scale-up before they may commence significant product sales and operating profits.

As we continue our efforts to focus our business and generate additional capital, we may be willing to enter into transactions involving one or more of our operating segments and reporting units for which we have goodwill and intangible assets. These efforts could result in us identifying impairment indicators or recording impairment charges in future periods. 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

Our primary current revenues arise from Exemplar, which generates product and service revenues through the development and sale of genetically engineered miniature swine models. We recognize revenue when control of the promised product or service is transferred to the customer.

As we have shifted our focus to our healthcare business, we have and may continue to mutually terminate historical collaboration agreements or repurchase rights to the exclusive fields from collaborators, relieving us of any further performance obligations under the agreement. Upon such circumstances or when we determine no further performance obligations are required of us under an agreement, we may recognize any remaining deferred revenue as either collaboration revenue or as a reduction of operating expense, depending on the circumstances. See "Notes to the Consolidated Financial Statements (Unaudited) - Note 3" appearing elsewhere in this Quarterly Report for a discussion of changes to our significant collaborations.

In future periods, in connection with our focus on healthcare, our revenues will primarily depend on our ability to advance and create our own programs and the extent to which we bring products enabled by our technologies to market. Other than for collaboration revenues recognized upon cancellation or modification of an existing collaboration or for revenues generated pursuant to future strategic transactions for any of our existing platforms or programs, we expect our collaboration revenues will continue to decrease in the near term, 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. As we focus on our healthcare business, we anticipate that our expenses will increase substantially if, and as, we continue to advance the preclinical and clinical development of our existing product candidates and our research programs. We expect a significant period of time could pass before commercialization of our various product candidates or before the achievement of contractual milestones and the realization of royalties on product candidates commercialized under our collaborations. Accordingly, there can be no assurance as to the timing, magnitude, and predictability of revenues, if any, to which we might be entitled.

Cost of products and services

Cost of products and services, all which are related to our Exemplar reporting segment, includes primarily labor and related costs, drugs and supplies, feed used in production, and facility charges, including rent and depreciation. Fluctuations in the price of livestock and feed have not had a significant impact on our operating margins and no derivative financial instruments are used to mitigate the price risk.

Research and development expenses

We recognize research and development expenses as they are incurred. Our research and development expenses consist primarily of:

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

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

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

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

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

•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. 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 and six months ended June 30, 2024 and 2023.


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Biopharmaceuticals	$	15,667	$	11,797	$	29,893	$	23,894
Exemplar	26		77		49		143




Total consolidated research and development expenses	$	15,693 </

PRECIGEN, INC. [PGEN] Filings
10-Q	[2024-08-14]
10-Q	[2024-05-14]
10-K	[2024-03-19]
10-Q	[2023-11-09]
10-Q	[2023-08-09]
10-Q	[2023-05-10]
10-K	[2023-03-06]
10-Q	[2022-11-09]
10-Q	[2022-08-08]
10-Q	[2022-05-09]
10-K	[2022-03-01]
10-Q	[2021-11-08]
10-Q	[2021-08-09]
10-Q	[2021-05-10]
10-K	[2021-03-01]
10-Q	[2020-11-09]
10-Q	[2020-08-10]
10-Q	[2020-05-11]
10-K	[2020-03-02]
10-Q	[2019-11-12]
10-Q	[2019-08-09]
10-Q	[2019-05-09]
10-K	[2019-03-01]
10-Q	[2018-11-08]
10-Q	[2018-08-13]
10-Q	[2018-05-10]
10-K	[2018-03-01]
10-Q	[2017-11-09]
10-Q	[2017-08-09]
10-Q	[2017-05-10]
10-K	[2017-03-01]
10-Q	[2016-11-09]
10-Q	[2016-08-09]
10-Q	[2016-05-10]
10-K	[2016-02-29]
10-Q	[2015-11-09]
10-Q	[2015-08-10]
10-Q	[2015-05-11]
10-K	[2015-03-02]
10-Q	[2014-11-13]
10-Q	[2014-08-14]
10-Q	[2014-05-09]
10-K	[2014-03-31]
10-Q	[2013-11-07]
10-Q	[2013-09-20]
S-1	[2013-07-09]