Precigen, Inc. Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2023; filed March 19, 2024. The filing is an annual report rather than a standalone fourth-quarter report. Precigen is a discovery- and clinical-stage biopharmaceutical company focused on gene and cell therapies for immuno-oncology, autoimmune disorders and infectious diseases. Reportable segments are Biopharmaceuticals and Exemplar, a genetically engineered miniature-swine research-models business.
Financial Performance and Position
| Metric | 2023 | 2022 | Change |
|---|---|---|---|
| Total revenue | $6.2 million | $26.9 million | Down 76.9% |
| Operating loss | $99.8 million | $75.7 million | Loss increased $24.0 million |
| Loss from continuing operations | $95.9 million | $79.8 million | Loss increased $16.1 million |
| Net income (loss) | $(95.9) million | $28.3 million | Prior year included $108.1 million of discontinued-operation income |
| Research and development expense | $48.6 million | $47.2 million | Up 3.1% |
| SG&A expense | $40.4 million | $48.0 million | Down 15.8% |
| Cash used in operating activities | $66.9 million | $65.0 million | Use increased $1.9 million |
| Cash, cash equivalents and short-term investments | $62.9 million | $56.0 million | Up $6.9 million |
Revenue consisted primarily of Exemplar product and service revenue of $6.15 million. Biopharmaceuticals revenue was $75,000, compared with $14.9 million in 2022, when the company recognized deferred collaboration revenue related to Intrexon Energy Partners and Intrexon Energy Partners II. Product and service revenue declined to $6.14 million from $12.0 million because of lower Exemplar services demand.
Gross margin percentages are not clearly provided in the filing. Cost of products and services was $6.1 million, compared with $6.3 million in 2022. Segment Adjusted EBITDA was a loss of $75.3 million for Biopharmaceuticals and a loss of $0.7 million for Exemplar.
At December 31, 2023, total assets were $151.0 million, shareholders’ equity was $118.5 million and accumulated deficit was $1.96 billion. The company had no outstanding convertible notes or revolving-line borrowings at year-end. The $43.2 million of remaining convertible notes were retired in 2023. Operating lease liabilities totaled $7.1 million.
Material Changes Versus 2022
- Revenue fell substantially because the nonrecurring 2022 collaboration revenue was not repeated and Exemplar experienced lower customer demand.
- Net results shifted from $28.3 million of income to a $95.9 million loss. The 2022 result benefited from the $94.7 million gain on the sale of Trans Ova, which was classified as discontinued operations.
- Research and development spending increased modestly as clinical development and employee hiring continued, while SG&A declined primarily because of lower legal and insurance costs.
- Precigen recorded a $10.4 million goodwill impairment charge for Exemplar after lowering its business projections. Goodwill declined to $26.6 million from $36.9 million.
- The company raised $72.8 million net through a January 2023 equity offering of 43.96 million shares, increasing dilution. Approximately 11.5 million shares were purchased by related parties and affiliates.
- Cash used in investing activities was $3.1 million, including $185.0 million of investment purchases and $183.4 million of investment sales and maturities. The company also spent $1.5 million on property, plant and equipment.
- A shareholder securities class action settlement was finally approved in November 2023; the related 2022 accrual and insurance receivable were eliminated in 2023. Other legal matters remain pending.
Liquidity, Going Concern and Capital Needs
Management and the auditors disclosed substantial doubt about Precigen’s ability to continue as a going concern within one year after issuance of the financial statements. The company had $62.9 million of cash, cash equivalents and short-term investments at year-end, no committed additional funding source, continuing operating losses and forecasted negative operating cash flows. Management expects to seek additional capital through equity or debt financing, collaborations, strategic alliances, asset monetizations, licensing or other transactions.
Failure to obtain financing could require Precigen to delay, reduce or eliminate research, development, clinical-trial or commercialization activities. Future equity or equity-linked financing could materially dilute existing shareholders; debt financing could impose restrictive covenants. Contractual obligations included $10.4 million of operating-lease commitments and $17.8 million of unincurred third-party research and development commitments as of December 31, 2023.
Pipeline, Outlook and Management Commentary
- PRGN-2012: Phase 2 enrollment and dosing were completed with 23 patients. Phase 2 data were anticipated in the second quarter of 2024. The FDA confirmed that the ongoing Phase 1/2 study may serve as pivotal for an accelerated-approval BLA pathway, subject to the stated endpoint and immunological surrogate. Precigen planned to submit a BLA in the second half of 2024 and prepare for a potential 2025 launch, if approved. PRGN-2012 has FDA Breakthrough Therapy and Orphan Drug designations and received EU Orphan Drug designation.
- PRGN-2009: Phase 2 monotherapy enrollment was completed with 20 evaluable patients; combination studies with pembrolizumab were ongoing or enrolling for HPV-associated cancers.
- PRGN-3005: Phase 1 dose escalation was completed in 27 patients. The Phase 1b expansion proceeded at a lymphodepletion dose, with a limited number of new sites planned to control costs.
- PRGN-3006: Phase 1 was completed in 26 patients and a Phase 1b expansion following lymphodepletion was initiated at Moffitt and Mayo Clinic sites. The candidate has FDA Orphan Drug and Fast Track designations for AML.
- PRGN-3007: FDA clearance was received and dosing began in a Phase 1/1b trial for ROR1-positive hematologic and solid tumors.
- AG019: Precigen completed its Phase 1b/2a study in early-onset type 1 diabetes; the filing states that primary safety and tolerability endpoints were met.
Precigen expects research and development expenditures to increase as programs advance. No quantified revenue, earnings or cash-flow guidance was provided. Commercialization remains dependent on clinical results, regulatory approval, manufacturing readiness, market acceptance, reimbursement and additional financing.
Principal Risks and Unusual Items
- Substantial doubt regarding going-concern status and dependence on near-term financing.
- Clinical-stage product candidates may fail to demonstrate safety or efficacy, experience enrollment or manufacturing delays, or require additional studies.
- Gene and cell therapies involve complex manufacturing, potential immune reactions, cytokine release syndrome, neurotoxicity and long-term safety monitoring.
- Precigen has never commercialized a product, has no active sales force and may need to build commercial capabilities or rely on partners.
- Competition is substantial, including from larger biotechnology and pharmaceutical companies with greater financial and technical resources.
- Coverage and reimbursement for any approved therapy are uncertain, particularly for high-cost physician-administered treatments.
- Intellectual-property rights may be challenged, expire, be infringed or require additional licenses.
- Exemplar revenue is concentrated: 74.6% of 2023 Exemplar revenue was attributable to four customers.
- Randal J. Kirk and affiliated shareholders controlled approximately 39% of the common stock as of February 15, 2024, creating significant shareholder concentration.
- The filing identifies ongoing derivative and books-and-records shareholder litigation, although management does not believe current matters will materially affect the company’s financial condition.
Investor Verification Checklist
- Verify the company’s near-term financing plan, expected cash runway and any subsequent equity, debt, partnership or asset-sale transactions.
- Track PRGN-2012 Phase 2 results, FDA interactions, BLA submission timing and the requirements for the planned confirmatory study.
- Assess whether clinical results for PRGN-2009, PRGN-3005, PRGN-3006 and PRGN-3007 support advancement and justify continued spending.
- Review the impact of the January 2023 equity offering, outstanding options and RSUs on future dilution.
- Monitor Exemplar customer concentration, demand trends and potential additional goodwill or long-lived-asset impairments.
- Reconcile cash, investments, restricted cash and debt balances in subsequent filings, particularly after the disclosed convertible-note retirement.
- Review pending litigation, indemnification obligations, intellectual-property disputes and any changes to the company’s going-concern disclosure.