Precigen(US:PGEN)2025-05-14 20:23markdown PART I - FINANCIAL INFORMATION [Condensed Consolidated Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents unaudited condensed financial statements for Q1 2025 and 2024, detailing increased net loss, a shift to shareholders' deficit, and a going concern disclosure [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Precigen's balance sheet as of March 31, 2025, reflects decreased assets, increased liabilities from warrant revaluation, and a shift to a shareholders' deficit Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $6,058 | $29,517 | ($23,459) | | Short-term investments | $74,184 | $68,393 | $5,791 | | **Total Assets** | **$128,787** | **$145,266** | **($16,479)** | | Warrant liabilities | $83,018 | $50,537 | $32,481 | | **Total Liabilities** | **$113,329** | **$78,535** | **$34,794** | | **Total Shareholders' (Deficit) Equity** | **($14,060)** | **$38,513** | **($52,573)** | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2025 operations show increased revenues and narrowed operating loss, but a significant non-cash warrant liability expense resulted in a substantial net loss increase Q1 2025 vs Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $1,341 | $1,065 | | Research and development | $10,478 | $14,249 | | Selling, general and administrative | $12,359 | $10,151 | | Operating loss | ($22,596) | ($24,410) | | Change in fair value of warrant liabilities | ($32,481) | $0 | | **Net loss** | **($54,153)** | **($23,738)** | | **Net loss per share, basic and diluted** | **($0.18)** | **($0.10)** | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 cash flows indicate increased cash used in operations and a reversal in investing activities, leading to a significant overall decrease in cash and cash equivalents Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($16,325) | ($14,090) | | Net cash (used in) provided by investing activities | ($6,457) | $24,045 | | Net cash used in financing activities | ($679) | $0 | | **Net (decrease) increase in cash** | **($23,459)** | **$9,895** | [Notes to the Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, PRGN-2012's PDUFA date, substantial doubt about going concern, warrant liability re-measurement, and segment realignment - The company's lead product candidate, **PRGN-2012**, has been granted **priority review** by the FDA with a PDUFA target action date of **August 27, 2025**[35](index=35&type=chunk) - Management has concluded there is **substantial doubt about the Company's ability to continue as a going concern**, as its current cash and investments are **not sufficient to fund planned operations for one year**. This analysis excludes potential revenue from PRGN-2012, which is not yet approved[42](index=42&type=chunk)[44](index=44&type=chunk) - The company recorded a **$32.5 million expense** due to the **change in fair value of warrant liabilities**, driven by an increase in the company's stock price and other factors[80](index=80&type=chunk) - Effective Q1 2025, the company realigned its operations into a **single operating segment** to streamline operations and focus on the potential commercial launch of PRGN-2012[123](index=123&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the strategic shift to prioritize PRGN-2012, detailing Q1 2025 financial results, including R&D and SG&A changes, warrant liability impact, and reiterating the going concern issue [Overview](index=27&type=section&id=Overview) Precigen, a clinical-stage biopharmaceutical company, strategically prioritized its pipeline on PRGN-2012 for RRP, which received FDA priority review with an August 2025 PDUFA date, while pausing other clinical trials - The company has **strategically prioritized** its pipeline to focus resources on the potential commercialization of its lead program, **PRGN-2012**[133](index=133&type=chunk) - The FDA granted **priority review** to the **PRGN-2012 Biologics License Application (BLA)** for RRP, with a PDUFA target action date of **August 27, 2025**[134](index=134&type=chunk)[137](index=137&type=chunk) - As part of the restructuring, enrollment has been **paused** for the **PRGN-3005 and PRGN-3007 UltraCAR-T clinical trials** to minimize spending and focus on partnerships[132](index=132&type=chunk)[133](index=133&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20operations) Q1 2025 results show a 26% revenue increase, a 27% decrease in R&D expenses, a 22% increase in SG&A expenses, and a significant net loss increase due to a non-cash warrant liability charge Comparison of Operations for the Three Months Ended March 31 (in thousands) | Item | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $1,341 | $1,065 | $276 | 25.9% | | Research and development | $10,478 | $14,249 | ($3,771) | (26.5)% | | Selling, general and administrative | $12,359 | $10,151 | $2,208 | 21.8% | | Operating loss | ($22,596) | ($24,410) | $1,814 | (7.4)% | | Net loss | ($54,153) | ($23,738) | ($30,415) | 128.1% | - R&D expenses **decreased by $3.8 million**, mainly due to the **closure of ActoBio operations** and **reduced headcount** following the 2024 strategic prioritization[161](index=161&type=chunk) - SG&A expenses **increased by $2.2 million**, primarily driven by costs for **PRGN-2012 commercial readiness**[162](index=162&type=chunk) - The **significant increase in net loss** was primarily caused by a **non-cash charge of $32.5 million** for the **change in fair value of warrant liabilities**, influenced by an increase in the company's stock price[163](index=163&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20capital%20resources) As of March 31, 2025, the company had $81.0 million in cash and investments, but despite recent capital raises, management concluded existing funds are insufficient for one year, raising substantial doubt about its going concern ability - As of March 31, 2025, the company had **$6.1 million** in cash and cash equivalents and **$74.9 million** in investments[164](index=164&type=chunk) - Recent financing includes a public offering in August 2024 (net proceeds **$30.9M**) and a private placement of preferred stock and warrants in December 2024 (net proceeds **~$78.5M**)[165](index=165&type=chunk)[166](index=166&type=chunk) - Management states that current cash projections, excluding potential but uncertain revenue from PRGN-2012, are **not sufficient to fund operations for at least one year**, which raises **substantial doubt about the company's ability to continue as a going concern**[176](index=176&type=chunk) - Future capital needs will be financed through a combination of **equity/debt offerings, strategic alliances, and potential product revenue**. The ability to continue as a going concern depends on **successfully commercializing PRGN-2012 or raising additional capital**[173](index=173&type=chunk)[177](index=177&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk on its $81.0 million in cash and investments, with management believing a 100 basis point rate increase would not materially affect fair value - The company's market risk is primarily related to **interest rate fluctuations** on its **$81.0 million** of cash, cash equivalents, and investments[186](index=186&type=chunk) - Management believes a hypothetical **100 basis point change** in interest rates would **not have a material effect** on the fair value of its financial instruments[186](index=186&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) As of March 31, 2025, the CEO and CFO concluded that disclosure controls and procedures are effective, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2025[187](index=187&type=chunk) - **No material changes** to the company's internal control over financial reporting occurred during the first quarter of 2025[188](index=188&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal matters, including a derivative shareholder action, but does not anticipate a material adverse effect, with a $3.2 million indemnification accrual remaining - The company is involved in a **derivative shareholder action** (Wright v. Alvarez et al.) and a **shareholder lawsuit** demanding inspection of books and records (Kent v. Precigen, Inc.), both related to historical disclosures[119](index=119&type=chunk) - As of March 31, 2025, an **indemnification accrual of $3.213 million** remains related to the sale of Trans Ova[121](index=121&type=chunk) - Management does **not currently believe** that ongoing legal matters will have a **material adverse effect** on the company's financial condition or operations[191](index=191&type=chunk) [Risk Factors](index=37&type=page&id=Item%201A.%20Risk%20Factors) No material updates or changes to the company's risk factors have occurred since the filing of its Annual Report on Form 10-K for the year ended December 31, 2024 - **No material updates or changes** to the company's risk factors have occurred since the filing of the Annual Report for the year ended December 31, 2024[193](index=193&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) None - **None**[195](index=195&type=chunk) [Defaults on Senior Securities](index=37&type=section&id=Item%203.%20Defaults%20on%20Senior%20Securities) None - **None**[196](index=196&type=chunk) [Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - **Not applicable**[197](index=197&type=chunk) [Other Information](index=37&type=section&id=Item%205.%20Other%20Information) None - **None**[198](index=198&type=chunk) [Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications required by the Sarbanes-Oxley Act and the Interactive Data File (XBRL) - Exhibits include **CEO and CFO certifications** pursuant to **Sarbanes-Oxley Act Sections 302 and 906**[199](index=199&type=chunk)