Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x

☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20172020
OR
¨☐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
INTREXON CORPORATIONPRECIGEN, INC.
(Exact name of registrant as specified in its charter)
VirginiaVirginia26-0084895
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification Number)
20374 Seneca Meadows Parkway
Germantown, Maryland
20876
Germantown,Maryland20876
(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 date)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, no par valuePGENNasdaq 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  x☒    No  ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes  x☒    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☐
Large accelerated filerxAccelerated filer¨
Non-accelerated filer
¨  (Do not check if a smaller reporting company)
☐		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  x☒
As of OctoberJuly 31, 2017, 120,720,5052020, 172,311,228 shares of common stock, no par value per share, were issued and outstanding.


Table of Contents

INTREXON CORPORATIONPRECIGEN, INC.
FORM 10-Q
TABLE OF CONTENTS
 
Item No. Page
PART I - FINANCIAL INFORMATION
1.
5
Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019
5
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2020 and 2019
7
Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2020 and 2019
9
Condensed Consolidated Statements of Shareholders' and Total Equity for the Three and Six Months Ended June 30, 2020 and 2019
10
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019
12
Notes to the Condensed Consolidated Financial Statements
14
2.
43
3.
61
4.
62
PART II - OTHER INFORMATION
1.
63
1A.
63
2.
64
3.
64
4.
65
5.
65
6.
65
66
Item No. Page
PART I - FINANCIAL INFORMATION
1.
Consolidated Financial Statements (unaudited):
5
 
Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016
5
 
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016
7
 
Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2017 and 2016
8
 
Consolidated Statements of Shareholders' and Total Equity for the Nine Months Ended September 30, 2017
9
 
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016
10
 
Notes to Consolidated Financial Statements
12
2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
39
3.
Quantitative and Qualitative Disclosures About Market Risk
52
4.
Controls and Procedures
54
 
PART II - OTHER INFORMATION
1.
Legal Proceedings
55
1A.
Risk Factors
56
2.
Unregistered Sales of Equity Securities and Use of Proceeds
57
5.
Other Information
57
6.
Exhibits
59
 
Signatures
60
Intrexon®, Trans Ova Genetics®, OxitecActoBiotics®, ViaGenRheoSwitch®, BioPopUltraVector®, ActoBioticsRTS®, and AquAdvantageRheoSwitch Therapeutic System® are our and/or our affiliates' registered trademarks in the United States and AquaBounty™, EnviroFlight™, GenVec™, Okanagan Specialty Fruits™Precigen™, AdenoVerse™, ActoBio Therapeutics™, Progentus™, AttSite™, and AdenoVerse™Precigen Therapeutics™ are our and/or our affiliates' common law trademarks in the United States. This quarterly reportQuarterly 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 reportQuarterly 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 reportQuarterly 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.

2

Table of Contents


Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q 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, on Form 10-Qincluding statements regarding our strategy,strategy; future events, including their outcome or timing; future operations,operations; future financial position,position; future revenue,revenue; projected costs, prospects, plans,costs; prospects; plans; objectives of managementmanagement; and expected market growth, are forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "predict," "project,""aim", "anticipate", "assume", "believe", "continue", "could", "due", "estimate", "expect", "intend", "may", "plan", "predict", "potential", "positioned", "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 forward-looking statements include, among other things, statements about:
 
our current and future exclusive channel collaborations ("ECCs"), license agreements and other collaborations;
developments concerning our collaborators and licensees;
•our ability to successfully enter new markets or develop product candidates, including the expected timing and results of investigational studies and preclinical and clinical trials, and our research and development programs;
•the timing or likelihood of regulatory filings for any product candidates we develop and our ability to obtain and maintain regulatory approvals for such product candidates for any indication;
•our intentions and ability to successfully commercialize our product candidates;
•the rate and degree of market acceptance of any products developed by us;
•our ability to successfully execute and achieve benefits from our recent leadership transition plan and organizational restructuring;
•our efforts to hold or generate significant operating capital, including through partnering, potential asset sales of our non-healthcare assets, and operating cost reductions;
•our cash position;
•any delays or potential delays to our clinical trials as a result of the COVID-19 pandemic;
•our estimates regarding expenses, future revenue, capital requirements, and our need for additional products, whether with financing;
•our collaboratorsstrategy and overall approach to our business model, including our efforts to focus our business in the healthcare industry;
•our ability to adapt to changes in laws, regulations, and policies;
•our reliance on and the performance of third parties, including exclusive channel collaborations and joint ventures, or independently;JVs;
•competition from existing technologies and products or new technologies and products that may emerge;
actual or anticipated variations in our operating results;
actual or anticipated fluctuations in our competitors' or our collaborators' and licensees' operating results or changes in their respective growth rates;
our cash position;
market conditions in our industry;
our ability, and the ability of our collaborators and licensees, to protect our intellectual property and other proprietary rights and technologies;
our ability, and the ability of our collaborators and licensees, to adapt to changes in laws or regulations and policies;
the ability of our collaborators and licensees to secure any necessary regulatory approvals to commercialize any products developed under the ECCs, license agreements and joint ventures;
the ability of our collaborators and licensees to develop and successfully commercialize products enabled by our technologies;
the rate and degree of market acceptance of any products developed by a collaborator under an ECC or through a joint venture or license under a license agreement;
our ability to retain and recruit key personnel;
the result of litigation proceedings that we face currently or may face in the future;
•our expectations related to the use of proceeds from our public offerings and other financing efforts;
•actual or anticipated variations in our operating results;
•market conditions in our industry;
•our ability to retain, recruit, and train key personnel, or the loss of key personnel as a result of illness or otherwise;
•our estimates regarding expenses, future revenue, capital requirementsability to successfully enter into optimal strategic relationships with our subsidiaries and needs for additional financing.operating companies that we may form in the future;
•the result of litigation proceedings or investigations that we currently face or may face in the future; and
3
Table of Contents
•the effects, duration, and severity of the ongoing COVID-19 pandemic and the actions we and others have taken or may take in response.
Forward-looking statements 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 on Form 10-Q.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, on Form 10-Q, 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, joint venturesJVs, or investments that we may make.
You should read this Quarterly Report, on Form 10-Q, the documents that we reference in this Quarterly Report, on Form 10-Q, our Annual Report on Form 10-K for the year ended December 31, 20162019, 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 Securities and Exchange CommissionSEC 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.

4

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Intrexon CorporationPrecigen, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands, except share data)September 30,
2017		 December 31,
2016		(Amounts in thousands, except share data)June 30,
2020		December 31,
2019
Assets   Assets
Current assets   Current assets
Cash and cash equivalents$64,216
 $62,607
Cash and cash equivalents$46,713  $65,793  
Restricted cash6,987
 6,987
Short-term investments44,502
 174,602
Short-term investments86,292  9,260  
Receivables   Receivables
Trade, net18,134
 21,637
Related parties17,866
 16,793
Notes, net—
 1,500
Trade, less allowance for credit losses of $5,690 and $5,201 as of June 30, 2020 and December 31, 2019, respectivelyTrade, less allowance for credit losses of $5,690 and $5,201 as of June 30, 2020 and December 31, 2019, respectively23,337  20,650  
Related parties, less allowance for credit losses of $2,312 as of June 30, 2020 and December 31, 2019Related parties, less allowance for credit losses of $2,312 as of June 30, 2020 and December 31, 2019294  600  
Other2,253
 2,555
Other364  4,978  
Inventory17,730
 21,139
Inventory12,729  16,097  
Prepaid expenses and other8,052
 7,361
Prepaid expenses and other3,266  6,444  
Current assets held for saleCurrent assets held for sale—  110,821  
Total current assets179,740
 315,181
Total current assets172,995  234,643  
Long-term investments—
 5,993
Equity securities26,642
 23,522
Investments in preferred stock148,499
 129,545
Property, plant and equipment, net102,876
 64,672
Property, plant and equipment, net46,956  60,969  
Intangible assets, net240,897
 225,615
Intangible assets, net64,759  68,346  
Goodwill166,821
 157,175
Goodwill54,122  63,754  
Investments in affiliates22,942
 23,655
Investments in affiliates859  1,461  
Right-of-use assetsRight-of-use assets20,683  25,228  
Other assets9,844
 3,710
Other assets1,341  1,362  
Total assets$898,261
 $949,068
Total assets$361,715  $455,763  
The accompanying notes are an integral part of these condensed consolidated financial statements.

5
Table of Contents
Intrexon CorporationPrecigen, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands, except share data)September 30,
2017		 December 31,
2016
Liabilities and Total Equity   
Current liabilities   
Accounts payable$7,852
 $8,478
Accrued compensation and benefits11,206
 6,540
Other accrued liabilities18,960
 15,776
Deferred revenue48,289
 53,364
Lines of credit234
 820
Current portion of long term debt439
 386
Deferred consideration—
 8,801
Related party payables816
 440
Total current liabilities87,796
 94,605
Long term debt, net of current portion7,673
 7,562
Deferred revenue, net of current portion227,998
 256,778
Deferred tax liabilities, net15,868
 17,007
Other long term liabilities5,747
 3,868
Total liabilities345,082
 379,820
Commitments and contingencies (Note 16)
 
Total equity   
Common stock, no par value, 200,000,000 shares authorized as of September 30, 2017 and December 31, 2016; 120,624,346 and 118,688,770 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively—
 —
Additional paid-in capital1,370,917
 1,325,780
Accumulated deficit(820,554) (729,341)
Accumulated other comprehensive loss(16,750) (36,202)
Total Intrexon shareholders' equity533,613
 560,237
Noncontrolling interests19,566
 9,011
Total equity553,179
 569,248
Total liabilities and total equity$898,261
 $949,068
(Amounts in thousands, except share data)June 30,
2020		December 31,
2019
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable$3,650  $5,917  
Accrued compensation and benefits7,719  14,091  
Other accrued liabilities9,342  12,049  
Deferred revenue, including $0 and $877 from related parties as of June 30, 2020 and December 31, 2019, respectively6,592  5,697  
Lines of credit—  1,922  
Current portion of long-term debt, including $31,680 and $31,211 to related parties as of June 30, 2020 and December 31, 2019, respectively32,108  31,670  
Current portion of lease liabilities4,514  4,182  
Related party payables175  51  
Current liabilities held for sale—  47,333  
Total current liabilities64,100  122,912  
Long-term debt, net of current portion, including $25,000 to related parties as of June 30, 2020 and December 31, 2019191,205  186,321  
Deferred revenue, net of current portion, including $31,020 and $30,182 from related parties as of June 30, 2020 and December 31, 2019, respectively32,858  48,136  
Lease liabilities, net of current portion21,212  23,849  
Deferred tax liabilities2,698  2,834  
Other long-term liabilities100  —  
Total liabilities312,173  384,052  
Commitments and contingencies (Note 16)
Shareholders' equity
Common stock, 0 par value, 400,000,000 shares authorized as of June 30, 2020 and December 31, 2019; 172,285,932 shares and 163,274,880 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively—  —  
Additional paid-in capital1,802,413  1,752,048  
Accumulated deficit(1,752,221) (1,652,869) 
Accumulated other comprehensive loss(650) (27,468) 
Total shareholders' equity49,542  71,711  
Total liabilities and shareholders' equity$361,715  $455,763  
The accompanying notes are an integral part of these condensed consolidated financial statements.

6
Intrexon Corporation
Table of Contents
Precigen, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)

(Amounts in thousands, except share and per share data)Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,		(Amounts in thousands, except share and per share data)Three Months Ended 
 June 30,		Six Months Ended 
 June 30,
2017 2016 2017 20162020201920202019
Revenues       Revenues
Collaboration and licensing revenues, including $24,492 and $26,688 from related parties during the three months ended September 30, 2017 and 2016, respectively, and $77,937 and $70,299 during the nine months ended September 30, 2017 and 2016, respectively$28,155
 $30,590
 $89,384
 $82,144
Collaboration and licensing revenues, including $32 and $5,902 from related parties during the three months ended June 30, 2020 and 2019, respectively, and $230 and $10,692 during the six months ended June 30, 2020 and 2019, respectivelyCollaboration and licensing revenues, including $32 and $5,902 from related parties during the three months ended June 30, 2020 and 2019, respectively, and $230 and $10,692 during the six months ended June 30, 2020 and 2019, respectively$4,315  $6,450  $15,036  $12,421  
Product revenues7,670
 9,260
 25,780
 28,699
Product revenues8,540  7,800  13,501  12,637  
Service revenues9,975
 8,706
 37,890
 33,298
Service revenues17,381  18,400  31,327  29,783  
Other revenues216
 429
 899
 783
Other revenues188  186  398  580  
Total revenues46,016
 48,985
 153,953
 144,924
Total revenues30,424  32,836  60,262  55,421  
Operating Expenses       Operating Expenses
Cost of products8,001
 9,156
 25,625
 29,471
Cost of products8,141  8,502  14,230  16,224  
Cost of services7,013
 5,803
 21,805
 17,807
Cost of services6,770  8,218  14,306  15,310  
Research and development36,472
 29,035
 104,663
 83,266
Research and development14,208  28,239  33,099  55,177  
Selling, general and administrative39,277
 33,812
 113,258
 106,956
Selling, general and administrative18,739  19,250  41,757  50,299  
Impairment of goodwillImpairment of goodwill9,635  —  9,635  —  
Impairment of assetsImpairment of assets12,406  —  12,406  —  
Total operating expenses90,763
 77,806
 265,351
 237,500
Total operating expenses69,899  64,209  125,433  137,010  
Operating loss(44,747) (28,821) (111,398) (92,576)Operating loss(39,475) (31,373) (65,171) (81,589) 
Other Income (Expense), Net       
Unrealized and realized appreciation (depreciation) in fair value of equity securities and preferred stock2,175
 412
 9,240
 (45,388)
Other Expense, NetOther Expense, Net
Unrealized and realized appreciation in fair value of equity securities and preferred stock, netUnrealized and realized appreciation in fair value of equity securities and preferred stock, net—  5,760  —  6,209  
Interest expense(138) (227) (498) (759)Interest expense(4,592) (4,353) (9,184) (8,658) 
Interest and dividend income5,070
 4,494
 14,437
 5,817
Interest and dividend income773  1,024  1,446  2,385  
Other income (expense), net(1,021) (32) 4,453
 1,205
Other income (expense), net71  (2,656) 135  (2,110) 
Total other income (expense), net6,086
 4,647
 27,632
 (39,125)
Total other expense, netTotal other expense, net(3,748) (225) (7,603) (2,174) 
Equity in net loss of affiliates(2,993) (6,255) (11,273) (16,951)Equity in net loss of affiliates(251) (716) (602) (1,464) 
Loss before income taxes(41,654) (30,429) (95,039) (148,652)
Loss from continuing operations before income taxesLoss from continuing operations before income taxes(43,474) (32,314) (73,376) (85,227) 
Income tax benefit818
 418
 2,164
 3,290
Income tax benefit120  9  80  22  
Loss from continuing operationsLoss from continuing operations(43,354) (32,305) (73,296) (85,205) 
Loss from discontinued operations, net of income taxesLoss from discontinued operations, net of income taxes—  (6,626) (26,056) (15,862) 
Net loss$(40,836) $(30,011) $(92,875) $(145,362)Net loss$(43,354) $(38,931) $(99,352) $(101,067) 
Net loss attributable to the noncontrolling interests1,147
 1,029
 3,123
 2,887
Net loss attributable to the noncontrolling interests—  165  —  1,592  
Net loss attributable to Intrexon$(39,689) $(28,982) $(89,752) $(142,475)
Net loss attributable to Intrexon per share, basic and diluted$(0.33) $(0.24) $(0.75) $(1.21)
Weighted average shares outstanding, basic and diluted120,518,885
 118,346,782
 119,741,291
 117,785,160
Net loss attributable to PrecigenNet loss attributable to Precigen$(43,354) $(38,766) $(99,352) $(99,475) 
The accompanying notes are an integral part of these condensed consolidated financial statements.



7
Table of Contents
Intrexon CorporationPrecigen, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive LossOperations
(Unaudited)

 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
(Amounts in thousands)2017 2016 2017 2016
Net loss$(40,836) $(30,011) $(92,875) $(145,362)
Other comprehensive income (loss):       
Unrealized gain (loss) on investments79
 (151) 74
 588
Gain (loss) on foreign currency translation adjustments7,410
 (3,495) 19,405
 (13,167)
Comprehensive loss(33,347) (33,657) (73,396) (157,941)
Comprehensive loss attributable to the noncontrolling interests1,129
 1,024
 3,096
 2,916
Comprehensive loss attributable to Intrexon$(32,218) $(32,633) $(70,300) $(155,025)
(Amounts in thousands, except share and per share data)Three Months Ended 
 June 30,		Six Months Ended 
 June 30,
2020201920202019
Amounts Attributable to Precigen
Net loss from continuing operations attributable to Precigen$(43,354) $(32,140) $(73,296) $(83,613) 
Net loss from discontinued operations attributable to Precigen—  (6,626) (26,056) (15,862) 
Net loss attributable to Precigen$(43,354) $(38,766) $(99,352) $(99,475) 
Net Loss per Share
Net loss from continuing operations attributable to Precigen per share, basic and diluted$(0.26) $(0.21) $(0.45) $(0.55) 
Net loss from discontinued operations attributable to Precigen per share, basic and diluted—  (0.04) (0.16) (0.10) 
Net loss attributable to Precigen per share, basic and diluted$(0.26) $(0.25) $(0.61) $(0.65) 
Weighted average shares outstanding, basic and diluted164,065,087  153,749,929  162,201,915  153,351,208  
The accompanying notes are an integral part of these condensed consolidated financial statements.

8

Table of Contents
Intrexon CorporationPrecigen, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited)
 Three Months Ended 
 June 30,		Six Months Ended 
 June 30,
(Amounts in thousands)2020201920202019
Net loss$(43,354) $(38,931) $(99,352) $(101,067) 
Other comprehensive income (loss):
Unrealized gain (loss) on investments(300) 59  272  106  
Gain (loss) on foreign currency translation adjustments1,004  26  (411) 311  
Release of cumulative foreign currency translation adjustments to loss from discontinued operations—  —  26,957  —  
Comprehensive loss(42,650) (38,846) (72,534) (100,650) 
Comprehensive loss attributable to the noncontrolling interests—  199  —  1,581  
Comprehensive loss attributable to Precigen$(42,650) $(38,647) $(72,534) $(99,069) 
The accompanying notes are an integral part of these condensed consolidated financial statements.
9
Table of Contents
Precigen, Inc. and Subsidiaries
Condensed Consolidated Statements of Shareholders' and Total Equity
(Unaudited)
 
(Amounts in thousands, except share data)Common StockAdditional
Paid-in
Capital		Accumulated
Other
Comprehensive
Loss		Accumulated
Deficit		Total
Shareholders'
Equity
SharesAmount
Balances at March 31, 2020170,656,834  $—  $1,797,450  $(1,354) $(1,708,867) $87,229  
Stock-based compensation expense—  —  4,897  —  —  4,897  
Shares issued upon vesting of restricted stock units and for exercises of stock options171,682  —  66  —  —  66  
Shares issued for accrued compensation1,457,416  —  —  —  —  —  
Net loss—  —  —  —  (43,354) (43,354) 
Other comprehensive income—  —  —  704  —  704  
Balances at June 30, 2020172,285,932  $—  $1,802,413  $(650) $(1,752,221) $49,542  
(Amounts in thousands, except share data)Common Stock 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive
Loss
 
Accumulated
Deficit
 
Total
Intrexon
Shareholders'
Equity
 
Noncontrolling
Interests
 
Total
Equity
Shares Amount      
Balances at December 31, 2016118,688,770
 $—
 $1,325,780
 $(36,202) $(729,341) $560,237
 $9,011
 $569,248
Cumulative effect of adoption of ASU 2016-09—
 —
 1,461
 —
 (1,461) —
 —
 —
Stock-based compensation expense—
 —
 31,914
 —
 —
 31,914
 35
 31,949
Exercises of stock options109,971
 —
 839
 —
 —
 839
 28
 867
Shares issued as payment for services439,200
 —
 8,440
 —
 —
 8,440
 —
 8,440
Shares and warrants issued in acquisition684,240
 —
 16,997
 —
 —
 16,997
 —
 16,997
Shares issued to acquire noncontrolling interests221,743
 —
 5,082
 —
 —
 5,082
 (5,995) (913)
Shares issued as payment of deferred consideration480,422
 —
 —
 —
 —
 —
 —
 —
Adjustments for noncontrolling interests—
 —
 2,789
 —
 —
 2,789
 (2,802) (13)
Noncash dividend—
 —
 (22,385) —
 —
 (22,385) 22,385
 —
Net loss—
 —
 —
 —
 (89,752) (89,752) (3,123) (92,875)
Other comprehensive income—
 —
 —
 19,452
 —
 19,452
 27
 19,479
Balances at September 30, 2017120,624,346
 $—
 $1,370,917
 $(16,750) $(820,554) $533,613
 $19,566
 $553,179
(Amounts in thousands, except share data)Common StockAdditional
Paid-in
Capital		Accumulated
Other
Comprehensive
Loss		Accumulated
Deficit		Total
Precigen
Shareholders'
Equity		Noncontrolling
Interests		Total
Equity
SharesAmount
Balances at March 31, 2019160,615,416  $—  $1,732,608  $(28,325) $(1,391,254) $313,029  $21,794  $334,823  
Stock-based compensation expense—  —  56  —  —  56  5  61  
Shares issued upon vesting of restricted stock units and for exercises of stock options and warrants345,378  —  —  —  —  —  —  —  
Shares issued as payment for services956,630  —  4,857  —  —  4,857  —  4,857  
Adjustments for noncontrolling interests—  —  (72) —  —  (72) 72  —  
Deconsolidation of subsidiary—  —  —  —  —  —  (21,672) (21,672) 
Net loss—  —  —  —  (38,766) (38,766) (165) (38,931) 
Other comprehensive income (loss)—  —  —  119  —  119  (34) 85  
Balances at June 30, 2019161,917,424  $—  $1,737,449  $(28,206) $(1,430,020) $279,223  $—  $279,223  
The accompanying notes are an integral part of these condensed consolidated financial statementsstatements.

10
Table of Contents

Intrexon CorporationPrecigen, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash FlowsShareholders' and Total Equity
(Unaudited)
(Amounts in thousands, except share data)Common StockAdditional
Paid-in
Capital		Accumulated
Other
Comprehensive
Loss		Accumulated
Deficit		Total
Shareholders'
Equity
SharesAmount
Balances at December 31, 2019163,274,880  $—  $1,752,048  $(27,468) $(1,652,869) $71,711  
Stock-based compensation expense—  —  9,269  —  —  9,269  
Shares issued upon vesting of restricted stock units and for exercises of stock options840,468  —  66  —  —  66  
Shares issued for accrued compensation1,805,405  —  5,100  —  —  5,100  
Shares issued as payment for services392,483  —  930  —  —  930  
Shares issued in private placement5,972,696  —  35,000  —  —  35,000  
Net loss—  —  —  —  (99,352) (99,352) 
Release of cumulative translation adjustments to loss from discontinued operations—  —  —  26,957  —  26,957  
Other comprehensive loss—  —  —  (139) —  (139) 
Balances at June 30, 2020172,285,932  $—  $1,802,413  $(650) $(1,752,221) $49,542  
 Nine Months Ended 
 September 30,
(Amounts in thousands)2017 2016
Cash flows from operating activities   
Net loss$(92,875) $(145,362)
Adjustments to reconcile net loss to net cash used in operating activities:   
Depreciation and amortization22,881
 17,657
Loss on disposal of property, plant and equipment1,311
 297
Unrealized and realized (appreciation) depreciation on equity securities and preferred stock(9,240) 45,388
Noncash dividend income(12,303) (3,676)
Amortization of premiums on investments411
 862
Equity in net loss of affiliates11,273
 16,951
Stock-based compensation expense31,949
 30,631
Shares issued as payment for services8,440
 8,284
Provision for bad debts1,093
 1,609
Deferred income taxes(2,294) (2,967)
Other noncash items(1,848) 1,259
Changes in operating assets and liabilities:   
Restricted cash—
 (6,987)
Receivables:   
Trade2,491
 2,118
Related parties(1,073) 7,438
Notes—
 (42)
Other537
 381
Inventory3,418
 4,683
Prepaid expenses and other(516) (985)
Other assets(1,036) 2,134
Accounts payable(3,756) 2,901
Accrued compensation and benefits3,291
 (8,001)
Other accrued liabilities1,554
 7,771
Deferred revenue(35,281) (14,099)
Deferred consideration(313) (630)
Related party payables356
 479
Other long term liabilities1,271
 126
Net cash used in operating activities(70,259) (31,780)
(Amounts in thousands, except share data)Common StockAdditional
Paid-in
Capital		Accumulated
Other
Comprehensive
Loss		Accumulated
Deficit		Total
Precigen
Shareholders'
Equity		Noncontrolling
Interests		Total
Equity
SharesAmount
Balances at December 31, 2018160,020,466  $—  $1,722,012  $(28,612) $(1,330,545) $362,855  $15,867  $378,722  
Stock-based compensation expense—  —  9,046  —  —  9,046  69  9,115  
Shares issued upon vesting of restricted stock units and for exercises of stock options and warrants632,015  —  57  —  —  57  250  307  
Shares issued for accrued compensation150,908  —  1,102  —  —  1,102  —  1,102  
Shares issued as payment for services1,114,035  —  5,688  —  —  5,688  —  5,688  
Shares and warrants issued in public offerings, net of issuance costs—  —  —  —  —  —  6,611  6,611  
Adjustments for noncontrolling interests—  —  (456) —  —  (456) 456  —  
Deconsolidation of subsidiary—  —  —  —  —  —  (21,672) (21,672) 
Net loss—  —  —  —  (99,475) (99,475) (1,592) (101,067) 
Other comprehensive income—  —  —  406  —  406  11  417  
Balances at June 30, 2019161,917,424  $—  $1,737,449  $(28,206) $(1,430,020) $279,223  $—  $279,223  
The accompanying notes are an integral part of these condensed consolidated financial statements.

11
Intrexon Corporation
Table of Contents
Precigen, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)

 Nine Months Ended 
 September 30,
(Amounts in thousands)2017 2016
Cash flows from investing activities   
Purchases of investments—
 (75,246)
Maturities of investments136,300
 71,987
Purchases of equity securities, preferred stock and warrants(1,161) (2,308)
Proceeds from sales of equity securities235
 —
Cash acquired in a business combination2,054
 —
Investments in affiliates(10,639) (9,415)
Cash paid in asset acquisition(14,219) (7,244)
Purchases of property, plant and equipment(32,675) (20,197)
Proceeds from sale of property, plant and equipment1,423
 243
Issuance of note receivable(2,400) (2,964)
Proceeds from repayment of note receivable1,500
 —
Net cash provided by (used in) investing activities80,418
 (45,144)
Cash flows from financing activities   
Acquisitions of noncontrolling interests(913) —
Advances from lines of credit4,563
 2,308
Repayments of advances from lines of credit(5,149) (2,320)
Proceeds from long term debt285
 547
Payments of long term debt(385) (848)
Payments of deferred consideration for acquisitions(8,678) (6,705)
Proceeds from stock option exercises867
 18,180
Payment of stock issuance costs(10) —
Net cash provided by (used in) financing activities(9,420) 11,162
Effect of exchange rate changes on cash and cash equivalents870
 (313)
Net increase (decrease) in cash and cash equivalents1,609
 (66,075)
Cash and cash equivalents   
Beginning of period62,607
 135,782
End of period$64,216
 $69,707
Supplemental disclosure of cash flow information   
Cash paid during the period for interest$534
 $875
Cash paid during the period for income taxes497
 —
Significant noncash financing and investing activities   
Stock received as consideration for collaboration agreements$—
 $18,766
Preferred stock received as consideration for collaboration amendments—
 120,000
Stock and warrants issued in business combinations16,997
 —
Stock issued to acquire noncontrolling interest5,082
 —
Stock issued in asset acquisition—
 4,401
Contingent consideration assumed in asset acquisition—
 3,660
Noncash dividend to shareholders22,385
 —
Purchases of equipment included in accounts payable and other accrued liabilities2,137
 926
 Six Months Ended 
 June 30,
(Amounts in thousands)20202019
Cash flows from operating activities
Net loss$(99,352) $(101,067) 
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization9,593  12,690  
Loss on disposals of assets, net991  1,286  
Impairment of goodwill9,635  —  
Impairment of assets12,406  —  
Gain on sale of discontinued operations(672) —  
Loss on release of cumulative foreign currency translation adjustments to loss from discontinued operations26,957  —  
Unrealized and realized (appreciation) depreciation on equity securities and preferred stock, net
106  (5,702) 
Amortization of discounts on investments, net(500) (693) 
Equity in net loss of affiliates640  3,387  
Stock-based compensation expense9,269  9,115  
Shares issued as payment for services930  5,688  
Provision for credit losses679  344  
Accretion of debt discount and amortization of deferred financing costs5,101  4,532  
Deferred income taxes(136) (981) 
Other noncash items(112) 3,141  
Changes in operating assets and liabilities:
Receivables:
Trade(3,679) (3,743) 
Related parties(17) (3,317) 
Other1,725  296  
Inventory3,125  3,096  
Prepaid expenses and other3,261  45  
Other assets3  (1,202) 
Accounts payable(1,955) (3,686) 
Accrued compensation and benefits(1,440) (347) 
Other accrued liabilities(3,034) (7,855) 
Deferred revenue(15,007) 8,890  
Lease liabilities(188) (36) 
Related party payables123  67  
Other long-term liabilities—  (585) 
Net cash used in operating activities(41,548) (76,637) 
The accompanying notes are an integral part of these condensed consolidated financial statements.

12
Table of Contents
Intrexon CorporationPrecigen, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)

 Six Months Ended 
 June 30,
(Amounts in thousands)20202019
Cash flows from investing activities
Purchases of investments$(133,260) $(37,163) 
Sales and maturities of investments57,000  90,000  
Proceeds from sales of equity securities—  589  
Investments in affiliates—  (2,370) 
Decrease in cash from deconsolidation of subsidiary—  (7,244) 
Purchases of property, plant and equipment(5,034) (25,423) 
Proceeds from sale of assets1,526  176  
Proceeds from sale of discontinued operations, net of cash sold64,240  —  
Proceeds from repayment of notes receivable2,942  —  
Net cash provided by (used in) investing activities(12,586) 18,565  
Cash flows from financing activities
Proceeds from issuance of shares in a private placement35,000  —  
Proceeds from issuance of shares and warrants in public offering, net of issuance costs—  6,611  
Advances from lines of credit10,005  3,250  
Repayments of advances from lines of credit(11,927) (3,329) 
Proceeds from long-term debt, net of issuance costs—  376  
Payments of long-term debt(253) (321) 
Proceeds from stock option and warrant exercises66  307  
Net cash provided by financing activities32,891  6,894  
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(59) (418) 
Net decrease in cash, cash equivalents, and restricted cash(21,302) (51,596) 
Cash, cash equivalents, and restricted cash
Beginning of period68,434  110,182  
End of period$47,132  $58,586  
Supplemental disclosure of cash flow information
Cash paid during the period for interest$3,612  $3,637  
Cash paid during the period for income taxes40  40  
Significant noncash activities
Accrued compensation paid in equity awards$5,100  $1,102  
Purchases of property and equipment included in accounts payable and other accrued liabilities259  1,010  
The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of June 30, 2020 and December 31, 2019 as shown above:
June 30,
2020		December 31,
2019
Cash and cash equivalents$46,713  $65,793  
Cash and cash equivalents included in current assets held for sale—  2,223  
Restricted cash included in other assets419  418  
Cash, cash equivalents, and restricted cash$47,132  $68,434  
The accompanying notes are an integral part of these condensed consolidated financial statements.
13
Table of Contents
Precigen, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
(Amounts in thousands, except share and per share data)
1. Organization
Intrexon CorporationPrecigen, Inc. ("Intrexon"Precigen"), a Virginia corporation, forms collaborationsis a synthetic biology company with an increasing focus on its discovery and clinical stage activities to create biologically based productsadvance the next generation of gene and processescellular therapies to target the most urgent and intractable challenges in immuno-oncology, autoimmune disorders, and infectious diseases.
PGEN Therapeutics, Inc. ("PGEN Therapeutics") is a dedicated discovery and clinical stage biopharmaceutical company advancing the next generation of gene and cellular therapies using synthetic biology. Intrexon'sprecision technology to target urgent and intractable diseases in immuno-oncology, autoimmune disorders, and infectious diseases. PGEN Therapeutics is a wholly owned subsidiary of Precigen with primary domestic operations are in California, Florida, Maryland,Maryland.
Precigen ActoBio, Inc. ("ActoBio") is pioneering a proprietary class of microbe-based biopharmaceuticals that enable expression and Virginia,local delivery of disease-modifying therapeutics and is a wholly owned subsidiary of Precigen with primary operations in Belgium.
Exemplar Genetics, LLC, doing business as Precigen Exemplar, ("Exemplar") is committed to enabling the study of life-threatening human diseases through the development of MiniSwine Yucatan miniature pig research models and services, as well as enabling the production of cells and organs in its genetically engineered swine for regenerative medicine applications and is a wholly owned subsidiary of Precigen with primary international operations are in Belgium and Hungary. There have been no commercialized products derived from Intrexon's collaborations to date.Iowa.
Trans Ova Genetics, L.C. ("Trans Ova"), a providerand Progentus, L.C. ("Progentus"), providers of bovine reproductive technologies, including services and other genetic processesproducts sold to cattle breeders and other producers, is a wholly owned subsidiary of Intrexon with primary operations in Iowa, Maryland, Missouri, Oklahoma, and Texas.
Oxitec Limited ("Oxitec"), a pioneering company in biological insect control solutions, is a wholly owned subsidiary of Intrexon with primary operations in England and Brazil.
Intrexon Produce Holdings, Inc. ("IPHI") is a wholly owned subsidiary of Intrexon. Okanagan Specialty Fruits, Inc. ("Okanagan"), a company which developed and received regulatory approval for the world's first non-browning apple without the use of any flavor-altering chemical or antioxidant additives, is a wholly owned subsidiary of IPHI with primary operations in Canada. Fruit Orchard Holdings, Inc. ("FOHI") is a wholly owned subsidiary of IPHI with primary operations in Washington.
ViaGen, L.C. ("ViaGen"), a provider of genetic preservation and cloning technologies, and Exemplar Genetics, LLC ("Exemplar"), a provider of genetically engineered swine for medical and genetic research, are wholly owned subsidiaries with primary operations in California, Iowa, Maryland, Missouri, New York, Oklahoma, Texas, and Iowa, respectively.Washington.
In March 2017, Intrexon acquired the remaining 49%Effective October 1, 2019, Precigen transferred substantially all of the equity of Biological & Popular Culture, Inc. ("BioPop"), a California company developing artwork, children's toys and novelty goods that are derived from living organisms or enabled by synthetic biology for $900 in cash and 221,743 shares of Intrexon common stock valued at $5,082. Upon closing this transaction, BioPop becameits proprietary methane bioconversion platform assets to a wholly owned subsidiary, MBP Titan LLC ("MBP Titan"). MBP Titan's proprietary technology is designed to convert natural gas into more valuable and usable energy and chemical products through novel, highly engineered bacteria that utilize specific energy feedstocks. During the second quarter of Intrexon.2020, the Company suspended MBP Titan's operations and focused on the preservation of MBP Titan's intellectual property. The Company is assessing potential next steps related to this intellectual property and MBP Titan's other long-lived assets. See Notes 2, 9, and 10 for further discussion, including discussion related to impairment charges recorded related to MBP Titan. Prior to October 1, 2019, the operation transferred to MBP Titan was an operating division within Precigen.
As of September 30, 2017, Intrexon owned approximately 58% ofThrough April 8, 2019, Precigen consolidated AquaBounty Technologies, Inc. ("AquaBounty"), a company focused on improving productivity in commercial aquaculture. In January 2017,aquaculture and whose common stock is listed on the Nasdaq Stock Market. On April 9, 2019, AquaBounty completed an underwritten public offering that resulted in conjunctionPrecigen no longer having the contractual right to control AquaBounty's board of directors, and accordingly, Precigen deconsolidated AquaBounty resulting in a loss on deconsolidation of $2,648, which is included in other expense, net, on the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2019. After deconsolidating the entity in April 2019, Precigen held its AquaBounty equity securities, which it accounted for using the fair value option, until October 2019 when the independent members of the Company's board of directors, with the listing byrecommendation of the audit committee and an independent special committee of the Board, unanimously approved the sale of the Company's common shares held in AquaBounty to an affiliate of their common stock onThird Security, LLC ("Third Security"), a related party.
On January 31, 2020, Precigen completed the NASDAQ Stock Market, Intrexon purchased $25,000sale of additional AquaBounty common stockthe majority of its bioengineering assets and subsequently distributed sharesoperations to an affiliate of AquaBounty common stockThird Security, which are presented as a dividend to Intrexon shareholders.discontinued operations for all periods presented. See Note 14Notes 3 and 13 for additionalfurther discussion.
Intrexon CorporationPrecigen and its consolidated subsidiaries are hereinafter referred to as the "Company."
14
Table of Contents
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying interim 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 SeptemberJune 30, 20172020 and results of operations and cash flows for the interim periods ended SeptemberJune 30, 20172020 and 2016.2019. 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, 2017,2020, 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, 2016.

2019.
The accompanying condensed consolidated financial statements reflect the operations of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated.
InvestmentsLiquidity
Management believes that existing liquid assets as of June 30, 2020 will allow the Company to continue its operations for at least a year from the issuance date of these condensed consolidated financial statements. These condensed consolidated financial statements are presented in Preferred StockUnited States dollars and are prepared under U.S. GAAP. The Company is subject to a number of risks similar to those of other companies conducting high-risk, early-stage research and development of 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' product candidates. Additionally, the accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. During the six months ended June 30, 2020, the Company incurred a net loss of $99,352 and, as of June 30, 2020, had an accumulated deficit of $1,752,221. Management expects operating losses and negative cash flows 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. In the absence of a significant source of recurring revenue, the Company's long-term success is dependent upon its ability to continue to raise additional capital in order to fund ongoing research and development, reduce uses of cash for operating and investing activities for non-healthcare businesses, obtain regulatory approval of its products, successfully commercialize its products, generate revenue, meet its obligations and, ultimately, attain profitable operations.
Risks and Uncertainties
COVID-19 has had and continues to have an extensive impact on the global health and economic environments.
Commencing in the second half of March, the Company's healthcare business began to experience delays to certain of its clinical trials as a result of COVID-19. For example, starting in March, ActoBio temporarily suspended the Phase 1b/2a cohort for AG019 as a proactive measure to protect the welfare and safety of patients, caregivers, clinical site staff, its employees, and contractors. The temporary suspension of the AG019 trial was voluntary and was not related to any patient safety issues in the study. The voluntary suspension of the AG019 trial was lifted in June 2020, and the study is recruiting patients again. Additionally, from April to May 2020, enrollment of new patients in the Company's PRGN-3005 Phase 1 trial was temporarily suspended due to a mandated hold on certain early and late-stage clinical trials at the Fred Hutchinson Cancer Research Center in Seattle instituted in light of the COVID-19 pandemic. The temporary suspension of the PRGN-3005 trial was not related to safety issues in the studies, and in May 2020, recruitment resumed in the PRGN-3005 trial.
During the second quarter of 2020, as a result of market uncertainty driven by the COVID-19 pandemic and the current state of the energy sector, the Company suspended MBP Titan's operations.
The Company holds preferred stock in certainis closely monitoring the impact of COVID-19 on these and other aspects of its collaborators which may be converted to common stock as described in Note 7. The Company electedbusiness, including Trans Ova and Exemplar. Given the fair value option to account for its investments in preferred stock wherebydynamic nature of these circumstances, the value of preferred stock is adjusted to fair value as of each reporting date and unrealized gains and losses are reported in the consolidated statement of operations. These investments are subject to fluctuation in the future due to, among other things, the likelihood and timing of conversionfull impact of the preferred stock into common stock,COVID-19 pandemic on the volatilityCompany's ongoing business, results of each collaborator's common stock,operations, and changes in general economicoverall financial performance for the balance of 2020 and beyond cannot be reasonably estimated at this time, and it could have a material adverse effect on the Company's results of operations, cash flows, and financial conditionsposition, including resulting impairments to goodwill, long-lived assets, and additional credit losses.
15
Table of the collaborators. The investments are classified as noncurrent in the consolidated balance sheet since the Company does not intend to sell the investments nor expect them to be converted into shares of common stock within one year.Contents
Until such time as the Company converts the preferred stock into common stock, the Company is entitled to monthly dividends and records dividend income as described in Note 7.
Equity Method Investments
The Company accounts for its investments in each of its joint ventures ("JVs") and for its investments in start-up entities backed by the Harvest Intrexon Enterprise Fund I, LP ("Harvest"), aall of which are related party, (Note 17)parties, using the equity method of accounting based upon relative ownership interest. The Company's investments in these entities are included in investments in affiliates in the accompanying condensed consolidated balance sheets.
The Company accounts for its investment in Oragenics, Inc. ("Oragenics"), one of its collaborators, using the fair value option. The fair value See additional discussion related to certain of the Company's investmentJVs in Oragenics was $5,634 and $7,244 as of September 30, 2017 and December 31, 2016, respectively, and is included as equity securities in the accompanying consolidated balance sheets. The Company's ownership of Oragenics was 29.4% and 29.5% as of September 30, 2017 and December 31, 2016, respectively. Unrealized appreciation (depreciation) in the fair value of these securities was $827 and $(455) for the three months ended September 30, 2017 and 2016, respectively, and was $(1,610) and $(11,597) for the nine months ended September 30, 2017 and 2016, respectively. See Note 19 for additional discussion regarding Oragenics.
Summarized financial data as of September 30, 2017 and December 31, 2016 and for the three and nine months ended September 30, 2017 and 2016, for the Company's equity method investments are shown in the following tables.
 September 30,
2017		 December 31,
2016
Current assets$68,021
 $77,761
Non-current assets12,856
 11,040
Total assets80,877
 88,801
Current liabilities9,032
 11,588
Non-current liabilities2,400
 —
Total liabilities11,432
 11,588
Net assets$69,445
 $77,213

 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
Revenues$58
 $65
 $175
 $394
Operating expenses9,693
 18,363
 33,128
 50,406
Operating loss(9,635) (18,298) (32,953) (50,012)
Other(145) 75
 37
 1,502
Net loss$(9,780) $(18,223) $(32,916) $(48,510)

4.
Variable Interest Entities
As of SeptemberJune 30, 20172020 and December 31, 2016,2019, the Company determined that certain of its collaborators and joint venturesJVs, as well as Harvest, were variable interest entities ("VIE" or "VIEs"VIEs"). The Company was not the primary beneficiary for these entities since it did not have the power to direct the activities that most significantly impact the economic performance of the VIEs. The Company's aggregate investment balances of these VIEs as of SeptemberJune 30, 20172020 and December 31, 20162019 were $187,555$859 and $159,115,$1,461, respectively, which represents the Company's maximum risk of loss related to the identified VIEs. See Note 4 for discussion of the Company's future funding commitments for the significant JVs.
Self-insurance ReservesAccounts Receivable
Effective January 1, 2017,2020, the Company commenced a self-insurance programapplies Financial Accounting Standards Board ("FASB") Accounting Standard Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). This ASU replaces the incurred loss impairment model with an expected credit loss impairment model for a significant portionfinancial instruments, including trade receivables. The amendment requires entities to consider forward-looking information to estimate expected credit losses, resulting in earlier recognition of its employee health benefit programs. losses for receivables that are current or not yet due, which were not considered under the previous accounting guidance.

The Company maintains stop-loss coverage with third party insurersis exposed to limit its individual claimscredit losses primarily through sales of products and total exposure under those programs.services by Trans Ova in the normal course of business. The Company estimates its accrued liabilityCompany's expected loss allowance methodology for the ultimate costs to close known claims, including claims incurred but not yet reported to the Company, asaccounts receivable is developed using historical collection experience, current and future economic and market conditions, and a review of the balance sheet date.current status of customers' accounts receivables. The Company's recorded estimated liability for self-insurancemonitoring activities include timely account reconciliation, routine follow-up on past due accounts, and consideration of customers' financial condition, as well as macroeconomic conditions. Past due status is determined based upon contractual terms. Balances are written off at the point when collection attempts have been exhausted.

Estimates are used to determine the loss allowance, which is based on the insurance company's incurred loss estimatesassessment of anticipated payment and management's judgment, including assumptionsother historical, current, and factors related to the frequency and severity of claims and the Company's claims development history.future information that is reasonably available.
The assessment of self-insurance reserves is a highly subjective process that requires judgments about future events. Self-insurance reserves are reviewed at least quarterly to determinefollowing table shows the adequacy ofactivity in the accruals and related financial statement disclosure. The ultimate settlement of self-insurance reserves may differ significantly from amountsallowance for credit losses for the Company has accrued in its consolidated financial statements.six months ended June 30, 2020:
Balance at December 31, 2019$7,513 
Charged to operating expenses679 
Write offs of accounts receivable, net of recoveries(190)
Balance at June 30, 2020$8,002 
Segment Information
WhileThe Company realigned its business in April 2019, and as a result, its chief operating decision maker ("CODM") now regularly reviews disaggregated financial information for various operating segments. As of June 30, 2020, the Company generates revenues from multiple sources, including collaboration agreements, licensing,Company's reportable segments were (i) PGEN Therapeutics, (ii) ActoBio, (iii) MBP Titan, (iv) Trans Ova, and products(v) the Human Biotherapeutics division, which is an operating division of Precigen. All of Precigen's consolidated subsidiaries and servicesoperating divisions that did not meet the quantitative thresholds to report separately are combined and reported in a single category, All Other. See Note 1 for a description of PGEN Therapeutics, ActoBio, MBP Titan, and Trans Ova. See Note 19 for a description of the Human Biotherapeutics division. Corporate expenses, which are not allocated to the segments and are managed at a consolidated level, include costs associated with bovine reproduction, management is organized around a singular researchgeneral and development focus toadministrative functions, including the Company's finance, accounting, legal, human resources, information technology, corporate communication, and investor relations functions. Corporate expenses exclude interest expense, depreciation and amortization, stock-based compensation expense, and equity in net loss of affiliates and, for 2019, include unrealized and realized gains and losses on the Company's securities portfolio as well as dividend income. See Note 19 for further the developmentdiscussion of the Company's underlying synthetic biology technologies. Accordingly, the Company has determined that it operates in one segment. Assegments.
16
Table of September 30, 2017 and December 31, 2016, the Company had $19,335 and $13,265, respectively, of long-lived assets in foreign countries. The Company recognized revenues derived in foreign countries totaling $4,448 and $3,502 for the three months ended September 30, 2017 and 2016, respectively, and $11,773 and $8,678 for the nine months ended September 30, 2017 and 2016, respectively.Contents
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 Adopted Accounting Pronouncements
In January 2017,October 2018, the Financial Accounting Standards Board ("FASB")FASB issued Accounting Standards Update ("ASU") 2017-01, Business CombinationsASU 2018-18, Collaborative Arrangements (Topic 805) -808): Clarifying the Definition of a Business ("Interaction between Topic 808 and Topic 606 ("ASU 2017-01"2018-18"). The provisions of ASU 2017-012018-18 clarify the definition of a business to assist entities with evaluating whetherwhen certain transactions between collaborative arrangement participants should be accounted for as acquisitions (or disposals) of assets or businesses.under Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("ASC 606"), and incorporates unit-of-account guidance consistent with ASC 606 to aid in this determination. The Company adopted this standard ineffective January 1, 2020, and there was no impact to the second quarter of 2017, and the implementation of this standard did not have a material impact on the Company'saccompanying consolidated financial statements.
In October 2016,2018, the FASB issued ASU 2016-17, 2018-17, Consolidation (Topic(Topic 810) - Interests Held through: Targeted Improvements to Related Parties That Are under Common Control ("Party Guidance for Variable Interest Entities ("ASU 2016-17"2018-17"). The provisions of ASU 2016-17 amend2018-17 modify the consolidation guidance on how a reporting entity that isunder ASC Topic 810 related to the single decision makerevaluation of a VIE should treat indirect interests in the entityheld through related parties under common control when determining whether fees paid to decision makers and service providers are variable interests. Indirect interests held through related parties that are under common control are no longer considered to be the equivalent of direct interests in their entirety and instead should be considered on a proportional basis. This guidance more closely aligns with theaccounting of how indirect interests held through related parties under common control are considered for determining whether a reporting entity when determining whether it is the primary beneficiary of thatmust consolidate a VIE. The Company adopted this standard effective January 1, 2017,2020, and there was no impact to the implementation of this standard did not have a material impact on the Company'saccompanying consolidated financial statements.
In March 2016,August 2018, the FASB issued ASU 2016-09, Stock Compensation (Topic 718)2018-15, Intangibles - Improvements to Employee Share-Based PaymentGoodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2016-09"2018-15"). The provisions of ASU 2016-09 simplify various aspects of2018-15 clarify the accounting for employee share-based payment transactions, includingimplementation costs of a hosting arrangement that is a service contract. The new standard requires an entity (customer) in a hosting arrangement that is a service contract to follow existing internal-use software guidance to determine which implementation costs to capitalize as an asset related to the income tax consequences, classificationservice contract and which costs to expense. Capitalized implementation costs of awards as either equitya hosting arrangement that is a service contract should be amortized over the term of the hosting arrangement, which might extend beyond the noncancelable period if there are options to extend or liabilities,terminate. ASU 2018-15 also specifies the financial statement presentation of capitalized implementation costs and classification on the statement of cash flows.related amortization, in addition to required disclosures for material capitalized implementation costs related to hosting arrangements that are service contracts. The Company adopted this standard effective January 1, 2017. Upon adoption in the first quarter of 2017, the Company elected to recognize forfeitures as they occur2020, on a prospective basis, and recorded an opening

adjustment to additional paid-in capital and accumulated deficit for previously unrecognized stock-based compensation costs due to estimating forfeitures on unvested shares totaling $1,461. The Company also recognized deferred tax assets of approximately $17,900 relatedthere was no material impact to the excess tax benefits that previously arose directly from tax deductions related to equity compensation greater than stock-based compensation costs recognized in theaccompanying consolidated financial statements and the cumulative adjustment for forfeitures. These deferred tax assets were fully offset by a valuation allowance (Note 13). The adoption was on a modified retrospective basis and had no impact on prior periods.statements.
In March 2016,August 2018, the FASB issued ASU 2016-07, Investments-Equity Method and Joint Ventures2018-13, Fair Value Measurements (Topic 323) - Simplifying the Transition820): Disclosure Framework-Changes to the Equity Method of Accounting ("Disclosure Requirements for Fair Value Measurements ("ASU 2016-07"2018-13"). The provisions of ASU 2016-07 eliminate2018-13 modify the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an adjustment must be madedisclosures related to recurring and nonrecurring fair value measurements. Disclosures related to the investment, resultstransfer of operations,assets between Level 1 and retained earnings retroactively on a step-by-step basis as if the equity method hadLevel 2 hierarchies have been in effect during all previous periods that the investment hadeliminated and various additional disclosures related to Level 3 fair value measurements have been held.added, modified, or removed. The Company adopted this standard effective January 1, 2017,2020, and there was no impact to the implementation of this standard did not have a material impact on the Company'saccompanying consolidated financial statements.
In July 2015,June 2016, the FASB issued ASU 2015-11, Inventory (Topic 330) - Simplifying2016-13, which modifies the Measurementimpairment model to utilize an expected loss methodology in place of Inventory ("ASU 2015-11"). The provisionsthe previous incurred loss methodology, and requires a consideration of ASU 2015-11 provide guidance for simplifying the calculation for subsequent measurementa broader range of inventory measured using the first-in-first-out or average cost methods.reasonable and supportable information to inform credit loss estimates. The Company adopted this standard effective January 1, 2017,2020, and the implementation of this standard did not have athere was no material impact onto the Company'saccompanying consolidated financial statements.
Recently Issued Accounting Pronouncements
In July 2017,December 2019, the FASB issued ASU 2017-11, Earnings Per ShareNo. 2019-12, Income Taxes (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815)740): I.Simplifying the Accounting for Certain Financial Instruments with Down Round Features; II. ReplacementIncome Taxes ("ASU 2019-12"). This ASU is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in ASC Topic 740 and clarifying certain aspects of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception ("current guidance to promote consistency among reporting entities. ASU 2017-11"). The amendments in Part I of ASU 2017-11 change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity's own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity-classified financial instruments, the amendments require entities that present earnings per share ("EPS") in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt-Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of ASU 2017-11 re-characterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the FASB codification, to a scope exception. Those amendments do not have an accounting effect. The guidance2019-12 is effective for annual periods beginning after December 15, 2020 and interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted, and is effective forpermitted. An entity that elects early adoption must adopt all the Company foramendments in the year ended December 31, 2019.same period. Most amendments within this ASU are required to be applied on a prospective basis, while
17
Table of Contents
certain amendments must be applied on a retrospective or modified retrospective basis. The Company is currently evaluating the impact that the implementation of this standard will have on the Company's consolidated financial statements.
In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718) – Scope of Modification Accounting ("ASU 2017-09"). The provisions of ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should account for the effects of a modification unless (a) the fair value of the modified award is the same as the fair value of the original award, (b) the vesting conditions of the modified award are the same as the vesting conditions of the original award and (c) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2017, with early adoption permitted, and is effective for the Company for the year ending December 31, 2018. The amendments in ASU 2017-09 should be applied prospectively to an award modifiednew standard on or after the adoption date. As this standard is prospective in nature, the impact to the Company'sits consolidated financial statements will depend onand related disclosures.
3. Discontinued Operations
On January 1, 2020, the natureCompany and TS Biotechnology Holdings, LLC ("TS Biotechnology"), a related party and an entity managed by Third Security, entered into a Stock and Asset Purchase Agreement pursuant to which the Company agreed to sell a majority of any future award modifications. The Company does not intendthe Company's bioengineering assets and operations to early adopt this standard.

In January 2017, the FASB issued ASU 2017-04, Intangibles-GoodwillTS Biotechnology for $53,000 and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"certain contingent payment rights (the "TS Biotechnology Sale"). The provisions of ASU 2017-04 simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2019, with early adoption permitted, and is effective for the Company for the year ending DecemberTS Biotechnology Sale closed on January 31, 2020. The Company is currently evaluatingassets and operations sold in the impactTS Biotechnology Sale included the following wholly owned subsidiaries, as well as certain equity securities held in Oragenics, Inc. ("Oragenics") and SH Parent, Inc. that were directly related to the implementationsubsidiaries sold:
•Intrexon Produce Holdings, Inc., the parent company of this standard will havetwo companies focused on the development and sale of non-browning apples, Okanagan Specialty Fruits, Inc. and Fruit Orchard Holdings, Inc.;
•Intrexon UK Holdings, Inc., the parent company of Oxitec Limited and its subsidiaries, which is a pioneering company in biological insect solutions;
•ILH Holdings, Inc., a company focused on the production of certain fine chemicals focused primarily on microbial production of therapeutic compounds; and
•Blue Marble AgBio LLC which was formed in January 2020 and included certain agriculture biotechnology assets and operations which were previously an operating division within Precigen.
Additionally, on January 2, 2020, the Company sold its equity interest in EnviroFlight, LLC ("EnviroFlight"), a JV with Darling Ingredients, Inc. ("Darling"), and related intellectual property rights to Darling for $12,200 (the "EnviroFlight Sale"). Unless referenced separately, the TS Biotechnology Sale and the EnviroFlight Sale are collectively referred to as the "Transactions".
The Transactions were approved by the Company's independent members of the board of directors in December 2019. The Transactions represented a strategic shift of the Company towards the Company becoming a primarily healthcare company advancing technologies and products that address complex healthcare challenges. The assets, liabilities, and operations related to the Transactions are reclassified and presented as discontinued operations in the accompanying condensed consolidated financial statements.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash (A Consensus of the FASB Emerging Issues Task Force) ("ASU 2016-18"). The provisions of ASU 2016-18 require amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the total beginning and ending balances for the periods presented on the statement of cash flows. The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2017, with early adoption permitted, and is effective for the Company for the year ending December 31, 2018. The implementation of this standard is not expected to have a material impact on the Company's consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows(Topic 230) - Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"). The provisions of ASU 2016-15 address eight specific cash flow issues and how those certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2017, with early adoption permitted, and is effective for the Company for the year ending December 31, 2018. The Company is currently evaluating the impact that the implementation of this standard will have on the Company's consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). The provisions of ASU 2016-02 set out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liabilitystatements for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for in a similar manner as under existing guidance for operating leases today. ASU 2016-02 supersedes the previous lease standard, Topic 840, Leases. The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2018, and is effective for the Company for the year ending December 31, 2019. The Company is currently evaluating the impact that the implementation of this standard will have on the Company's consolidated financial statements.periods.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"). The provisions of ASU 2016-01 make targeted improvements to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information, including certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2017, and is effective for the Company for the year ending December 31, 2018. The Company is currently evaluating the impact that the implementation of this standard will have on the Company's consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). The FASB issued ASU 2014-09 to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance. This guidance was originally effective for annual periods and interim periods within those annual periods beginning after December 15, 2016 and early adoption was not permitted. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) - Deferral of the Effective Date, which deferred the effective date of the guidance in ASU 2014-09 by one year to December 15, 2017 for interim and annual reporting periods beginning after that date and permitted early adoption of the standard, but not before the original effective date of December 15, 2016, and is effective for the Company for the year ending December 31, 2018. In 2016 and 2017, the FASB clarified the implementation guidance on principal versus agent, identifying performance obligations, licensing, narrow-scope improvements, practical expedients, and to expedite improvements to ASU 2014-09 by issuing ASU 2016-08, Revenue from Contracts with Customers (Topic 606) - Principal versus Agent Considerations, ASU 2016-10, Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing, and ASU 2016-12, Revenue from Contracts with Customers (Topic 606) - Narrow-Scope Improvements and Practical Expedients, ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, and ASU 2017-13, Revenue Recognition

(Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842). The Company continues to progress in the evaluation of its collaborations and licensing agreements and product and service revenue arrangements to determine the impact, if any, that the implementation of this standard will have on the Company's consolidated financial statements. The Company has completed its review of collaboration and licensing agreements and product and service revenue arrangements and plans to finalize its analysis in the fourth quarter of 2017 to determine the impact, if any, this standard may have on its financial position, results of operations and disclosures. Additionally, any revenue arrangements entered into subsequent to December 31, 2017 with financial or other significant terms which differ from the financial or other significant terms of the Company's existing revenue arrangements will be evaluated under this new standard.
3. Mergers and Acquisitions
GenVec Acquisition
In June 2017, pursuant to an Agreement and Plan of Merger (the "GenVec Merger Agreement"), the Company acquired 100% of the outstanding shares of GenVec, Inc. ("GenVec"), a clinical-stage company and pioneer in the development of AdenoVerse gene delivery technology. Pursuant to the GenVec Merger Agreement, the former shareholders of GenVec received an aggregate of 684,240 shares of the Company's common stock and have the right to receive contingent consideration equal to 50% of any milestone or royalty payments received under one of GenVec's collaboration agreements, provided such payments are received within three years afterUpon the closing of the transaction. TS Biotechnology Sale in January 2020, the cumulative foreign currency translation losses totaling $26,957 were released to earnings and included in loss from discontinued operations. See further discussion below.
18
Table of Contents
The Company also assumed warrantscarrying values of the major classes of assets and liabilities included in assets and liabilities held by certain former shareholdersfor sale for the Transactions as of GenVec. December 31, 2019 are as follows:
 TS Biotechnology SaleEnviroFlight SaleTotal
Assets
Cash and cash equivalents$2,223  $—  $2,223  
Other current assets9,698  —  9,698  
Property, plant and equipment, net51,975  —  51,975  
Intangible assets, net20,891  4,383  25,274  
Investments in affiliates—  7,817  7,817  
Right-of-use assets13,622  —  13,622  
Other noncurrent assets212  —  212  
Total assets held for sale$98,621  $12,200  $110,821  
Liabilities
Deferred revenue, current (1)$8,723  $—  $8,723  
Operating lease liabilities, current2,459  —  2,459  
Other current liabilities3,058  41  3,099  
Deferred revenue, net of current portion (2)19,410  —  19,410  
Operating lease liabilities, net of current portion12,623  —  12,623  
Other long-term liabilities1,019  —  1,019  
Total liabilities held for sale$47,292  $41  $47,333  
(1)Includes deferred revenue, current, from related parties of $1,243.
(2)Includes deferred revenue, net of current portion, from related parties of $6,836.
19
Table of Contents
The following table presents the financial results of GenVec'sdiscontinued operations subsequent tofor the acquisition date have been included insix months ended June 30, 2020. There were 0 discontinued operations for the consolidated financial statements.three months ended June 30, 2020.
 Six Months Ended June 30, 2020
 TS Biotechnology SaleEnviroFlight SaleTotal
Revenues (1)$1,294  $—  $1,294  
Operating expenses896  —  896  
Operating income398  —  398  
Gain on sale of discontinued operations633  39  672  
Loss on release of cumulative foreign currency translation adjustment(26,957) —  (26,957) 
Other expense, net(129) —  (129) 
Equity in net loss of affiliates—  (38) (38) 
Income (loss) before income taxes(26,055) 1  (26,054) 
Income tax expense(2) —  (2) 
Income (loss) from discontinued operations$(26,057) $1  $(26,056) 
(1)Includes revenues recognized from related parties of $436.
The fair valuefollowing tables present the financial results of the total consideration transferred was $17,582. The acquisition date fair value of each class of consideration transferred is presented below:
Common shares$15,616
Warrants1,381
Contingent consideration585
 $17,582

The fair value of the shares of the Company's common stock issued was based on the quoted closing price of the Company's common stock immediately prior to the closing of the acquisition. The fair value of the warrants assumed was estimated using the Black-Scholes option-pricing model. The fair value of the contingent consideration was determined using a probability weighted discounted cash flows model and is considered a freestanding financial instrument and recorded at fair value each reporting period. The estimated fair value of assets acquired and liabilities assumed at the acquisition date is shown below:
Cash and cash equivalents$2,054
Short term investments542
Trade receivables75
Other receivables97
Prepaid expenses and other227
Property and equipment250
Intangible assets14,000
Other non-current assets58
Total assets acquired17,303
Accounts payable2,158
Accrued compensation and benefits1,226
Other accrued expenses856
Other long term liabilities92
Deferred tax liabilities239
Total liabilities assumed4,571
Net assets acquired12,732
Goodwill4,850
Total consideration$17,582
The acquired intangible assets include developed technology, the fair value of which was determined using the multi-period excess earning method, which is a variation of the income approach that converts future cash flows to single discounted present value amounts. The intangible assets are being amortized over a useful life of eleven years. Goodwill, which is not deductible for tax purposes, represents the assembled workforce and the anticipated buyer-specific synergies arising from the combination of the Company's and GenVec's technology.
As of September 30, 2017, the Company had incurred $519 of acquisition related costs, of which $9 and $507 is included in selling, general and administrative expenses in the accompanying consolidated statements ofdiscontinued operations for the three and ninesix months ended SeptemberJune 30, 2017, respectively.2019.
Condensed Pro Forma Financial Information
 Three Months Ended June 30, 2019
 TS Biotechnology SaleEnviroFlight SaleTotal
Revenues (1)$3,150  $—  $3,150  
Operating expenses9,069  117  9,186  
Operating loss(5,919) (117) (6,036) 
Other expense, net(75) —  (75) 
Equity in net loss of affiliates—  (1,031) (1,031) 
Loss before income taxes(5,994) (1,148) (7,142) 
Income tax benefit516  —  516  
Loss from discontinued operations$(5,478) $(1,148) $(6,626) 
GenVec's results(1)Includes revenues recognized from related parties of $1,208.
20
Table of Contents
 Six Months Ended June 30, 2019
 TS Biotechnology SaleEnviroFlight SaleTotal
Revenues (1)$3,900  $—  $3,900  
Operating expenses18,188  235  18,423  
Operating loss(14,288) (235) (14,523) 
Other expense, net(497) —  (497) 
Equity in net loss of affiliates—  (1,923) (1,923) 
Loss before income taxes(14,785) (2,158) (16,943) 
Income tax benefit1,081  —  1,081  
Loss from discontinued operations$(13,704) $(2,158) $(15,862) 
(1)Includes revenues recognized from related parties of $230.
The following table presents the significant non-cash items and purchases of property, plant and equipment for the discontinued operations subsequent to the acquisitionthat are included in the accompanying condensed consolidated statements of income. cash flows.
Six Months Ended 
 June 30,
20202019
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization$—  $2,483  
Unrealized and realized depreciation on equity securities and preferred stock, net106  507  
Equity in net loss of EnviroFlight38  1,923  
Stock-based compensation expense(1,346) 1,351  
Deferred income taxes—  (935) 
Gain on sale of discontinued operations(672) —  
Loss on release of cumulative foreign currency translation adjustment26,957  —  
Cash flows from investing activities
Purchases of property, plant and equipment(382) (18,275) 
Also see Note 13 below.
Equity Method Investments
The Company accounted for its investment in EnviroFlight using the equity method of accounting.
Summarized financial data for EnviroFlight are shown in the following condensed pro forma financial informationtables for the threeperiods in which the Company held the equity method investment.
December 31,
2019
Current assets$703 
Noncurrent assets30,549 
Total assets31,252 
Current liabilities2,352 
Non-current liabilities88 
Total liabilities2,440 
Net assets$28,812 
21
Table of Contents
 Three Months Ended 
 June 30,		Six Months Ended 
 June 30,
 201920202019
Revenues$130  $16  $224  
Operating expenses2,200  92  4,081  
Operating loss(2,070) (76) (3,857) 
Other, net8  —  12  
Net loss$(2,062) $(76) $(3,845) 
Where applicable, the notes to the accompanying condensed consolidated financial statements have been updated to reflect information pertaining to the Company's continuing operations.
Out-of-Period Adjustment
During the six months ended SeptemberJune 30, 20162020, the Company recorded an out-of-period adjustment of $26,572 to loss from discontinued operations which relates to the effect of cumulative foreign translation losses associated with the entities sold in the TS Biotechnology Sale. This charge, which is entirely noncash, should have been recorded in the year ended December 31, 2019 as an additional impairment charge included in loss from discontinued operations. There was no impact to net loss from continuing operations, cash and short-term investments, cash flows, or Segment Adjusted EBITDA. The error also had no impact on the ninecash consideration received upon closing of the TS Biotechnology Sale nor the representations and warranties made by the Company in the transaction. The Company evaluated the effects of this out-of-period adjustment, both qualitatively and quantitatively, and concluded that this adjustment was not material to the Company's financial position or results of operations for the six months ended SeptemberJune 30, 2017 and 2016 is presented as if2020 or the acquisition had been consummated on January 1, 2016:year ended December 31, 2019.
 Three Months Ended 
 September 30,
Nine Months Ended 
 September 30,
 2016
2017
2016
 Pro forma
Revenues$49,158
 $154,185
 $145,413
Loss before income taxes(31,954) (102,305) (153,868)
Net loss(31,536) (100,330) (150,389)
Net loss attributable to the noncontrolling interests1,029
 3,123
 2,887
Net loss attributable to Intrexon(30,507) (97,207) (147,502)

4. Investments in Joint Ventures
S & I Ophthalmic
In September 2013, the Company entered into a Limited Liability Company Agreement ("Sun LLC Agreement") with Caraco Pharmaceutical Laboratories, Ltd. ("Sun Pharmaceutical Subsidiary"), an indirect subsidiary of Sun Pharmaceutical Industries Ltd. ("Sun Pharmaceutical"), an international specialty pharmaceutical company focused on chronic diseases, to form S & I Ophthalmic, LLC ("S & I Ophthalmic"). The Sun LLC Agreement governs the affairs and the conduct of business of S & I Ophthalmic. S & I Ophthalmic leverages experience and technology from both the Company and Sun Pharmaceutical. Both the Company and Sun Pharmaceutical Subsidiary made an initial capital contribution of $5,000 in October 2013 for a 50% membership interest in S & I Ophthalmic. S & I Ophthalmic is governed by a board of managers ("S & I Ophthalmic Board") which has four members, two each from the Company and Sun Pharmaceutical Subsidiary. In cases in which the S & I Ophthalmic Board determines that additional capital contributions are necessary in order for S & I Ophthalmic to conduct business and comply with its obligations, each of the Company and Sun Pharmaceutical Subsidiary has committed to making additional capital contributions to S & I Ophthalmic subject to certain limits defined in the Sun LLC Agreement. Each has the right, but not the obligation, to make additional capital contributions above the defined limits when and if solicited by the S & I Ophthalmic Board. In 2015, both the Company and Sun Pharmaceutical Subsidiary made subsequent capital contributions of $5,000.
Beginning on the seventh anniversary of the effective date of the Sun LLC Agreement, and upon the second anniversary thereafter, the Company, as well as Sun Pharmaceutical Subsidiary, may make a cash offer to purchase all of the other party's interest in S & I Ophthalmic. Upon receipt of such an offer, the other party must either agree to tender its interests at the offered price or submit a counteroffer at a price higher than the original offer. Such offer and counteroffer may continue until one party agrees to the other's price.
The Company's investment in S & I Ophthalmic was $2,621 and $3,236 as of September 30, 2017 and December 31, 2016, respectively, and is included in investments in affiliates in the accompanying consolidated balance sheets.
OvaXon
In December 2013, the Company and OvaScience, Inc. ("OvaScience"), a life sciences company focused on the discovery, development, and commercialization of new treatments for infertility, entered into a Limited Liability Company Agreement ("OvaXon LLC Agreement") to form OvaXon, LLC ("OvaXon"), a joint venture to create new applications for improving human and animal health. Both the Company and OvaScience made an initial capital contribution of $1,500 in January 2014 for a 50% membership interest in OvaXon. OvaXon is governed by the OvaXon board of managers ("OvaXon Board") which has four members, two each from the Company and OvaScience. In cases in which the OvaXon Board determines that additional capital contributions are necessary in order for OvaXon to conduct business and comply with its obligations, each of the Company and OvaScience has the right, but not the obligation, to make additional capital contributions to OvaXon subject to the OvaXon LLC Agreement. Through September 30, 2017, both the Company and OvaScience have made subsequent capital contributions of $3,800.
The Company's investment in OvaXon was $(401) and $65 as of September 30, 2017 and December 31, 2016, respectively, and is included in other accrued liabilities and investments in affiliates, respectively, in the accompanying consolidated balance sheets.
Intrexon Energy Partners
In March 2014, the Company and certain investors (the "IEP Investors"), including an affiliate of Third Security, LLC ("Third Security"),a related party, entered into a Limited Liability Company Agreement whichthat governs the affairs and conduct of business of Intrexon Energy Partners, LLC ("Intrexon Energy Partners"), a joint ventureJV formed to optimize and scale-up the Company's gas-to-liquidmethane bioconversion platform technology for the production of certain fuels and lubricants. The Company also entered into an ECCexclusive channel collaboration ("ECC") with Intrexon Energy Partners providing exclusive rights to the Company's technology for the use in bioconversion for the production of certain fuels and lubricants, as a result of which the Company received a technology access fee of $25,000 while retaining a 50% membership interest in Intrexon Energy Partners. The IEP Investors made initial capital contributions, totaling $25,000 in the aggregate, in exchange for pro rata membership interests in Intrexon Energy Partners totaling 50%. In addition, IntrexonPrecigen has committed to make capital contributions of up to $25,000, and the IEP Investors, as a group and pro rata in accordance with their respective membership interests in Intrexon Energy Partners, have committed to make additional capital contributions of up to $25,000, at the request of Intrexon Energy Partners' board of managers (the "Intrexon Energy Partners Board") and subject to certain limitations. As of SeptemberJune 30, 2017,2020, the Company's remaining commitment was $6,011.$4,225. Intrexon Energy Partners is governed by the Intrexon Energy Partners Board, which has five5 members. TwoNaN members of the Intrexon Energy Partners Board are designated by the

Company and three3 members are designated by a majority of the IEP Investors. The Company and the IEP Investors have the right, but not the obligation, to make additional capital contributions above the initial limits when and if solicited by the Intrexon Energy Partners Board.
The Company's investment in Intrexon Energy Partners was $144 and $(477)$(423) as of SeptemberJune 30, 20172020 and December 31, 2016, respectively,2019, and is included in investments in affiliates and other accrued liabilities respectively, in the accompanying condensed consolidated balance sheets.sheets, which represents the Company's equity in losses for contractually committed contributions to Intrexon Energy Partners.
Intrexon Energy Partners II
In December 2015, the Company and certain investors (the "IEPII Investors"), including Harvest, entered into a Limited Liability Company Agreement whichthat governs the affairs and conduct of business of Intrexon Energy Partners II, LLC ("Intrexon Energy Partners II"), a joint ventureJV formed to utilize the Company's natural gasmethane bioconversion platform technology for the production of 1,4-butanediol, an industrial chemical used to manufacture spandex, polyurethane, plastics, and polyester. The Company also entered into an ECC with Intrexon Energy Partners II whichthat provides exclusive rights to the Company's technology for use in the
22
Table of Contents
field, as a result of which the Company received a technology access fee of $18,000 while retaining a 50% membership interest in Intrexon Energy Partners II. The IEPII Investors made initial capital contributions, totaling $18,000 in the aggregate, in exchange for pro rata membership interests in Intrexon Energy Partners II totaling 50%. In December 2015, the owners of Intrexon Energy Partners II made a capital contribution of $4,000, half of which was paid by the Company. IntrexonPrecigen has committed to make additional capital contributions of up to $10,000, and the IEPII Investors, as a group and pro rata in accordance with their respective membership interests in Intrexon Energy Partners II, have committed to make additional capital contributions of up to $10,000, at the request of Intrexon Energy Partners II's board of managers (the "Intrexon Energy Partners II Board") and subject to certain limitations. As of June 30, 2020, the Company's remaining commitment was $10,000. Intrexon Energy Partners II is governed by the Intrexon Energy Partners II Board, which has five5 members. OneNaN member of the Intrexon Energy Partners II Board is designated by the Company and four4 members are designated by a majority of the IEPII Investors. The Company and the IEPII Investors have the right, but not the obligation, to make additional capital contributions above the initial limits when and if solicited by the Intrexon Energy Partners II Board.
The Company's investment in Intrexon Energy Partners II was $698$(434) and $1,414$(435) as of SeptemberJune 30, 20172020 and December 31, 2016,2019, respectively, and is included in investments in affiliatesother accrued liabilities in the accompanying condensed consolidated balance sheets.
EnviroFlight
In February 2016, the Company entered into a series of transactions involving EnviroFlight, LLC ("Old EnviroFlight"), Darling Ingredients Inc. ("Darling") and a newly formed venture between the Company and Darling ("New EnviroFlight"). The Company determined that the series of integrated transactions to acquire substantially all of the assets of Old EnviroFlight for cash, common stock, and contingent consideration should be accounted for as a single transaction,sheets, which constituted a business, and considered New EnviroFlight to be the accounting acquirer. Consideration paid to Old EnviroFlight was $4,244 in cash, 136,340 shares ofrepresents the Company's common stock valued at $4,401 and contingent consideration estimated at $3,660. Contemporaneously, all the assets acquired from Old EnviroFlight, with the exception of certain developed technology, and $3,000 of cash were contributed to New EnviroFlightequity in exchangelosses for a non-controlling, 50% membership interest in New EnviroFlight. The Company'scontractually committed contributions to New EnviroFlight included an exclusive license to the developed technology that was retained by the Company. Darling received the remaining 50% membership interest in New EnviroFlight as consideration for terminating rights previously held in the developed technology with Old EnviroFlight. New EnviroFlight was formed to generate high-nutrition, low environmental impact animal and fish feed, as well as fertilizer products. The Company and Darling as members have each agreed to make additional capital contributions of up to $5,000 to fund ongoing operations of New EnviroFlight. As of September 30, 2017, the Company's remaining commitment was $250. All of the employees of Old EnviroFlight became employees of New EnviroFlight.Intrexon Energy Partners II.
The Company determined that its investment in New EnviroFlight should be accounted for using the equity method of accounting. The Company recorded an estimated fair value of $5,425 for its investment in New EnviroFlight and $9,880 for the retained developed technology intangible asset. The developed technology is being amortized over a period of twenty-one years. The contingent consideration liability payable to the members of Old EnviroFlight is considered a freestanding financial instrument and is recorded at fair value each reporting period. New EnviroFlight met a regulatory milestone, as defined in the asset purchase agreement, and the members of Old EnviroFlight received a portion of the contingent consideration consisting of 59,337 shares of the Company's common stock valued at $1,583 in October 2016. The members of Old EnviroFlight may receive up to $4,000 of additional shares of the Company's common stock if certain commercial milestones are met prior to February 2019. The value of this liability was estimated at $2,326 as of September 30, 2017 (Note 8).

The Company's investment in New EnviroFlight was $7,687 and $4,189 as of September 30, 2017 and December 31, 2016, respectively, and is included in investments in affiliates in the accompanying consolidated balance sheets.
Intrexon T1D Partners
In March 2016, the Company and certain investors (the "T1D Investors"), including affiliates of Third Security, entered into a Limited Liability Company Agreement which governs the affairs and conduct of business of Intrexon T1D Partners, LLC ("Intrexon T1D Partners"), a joint venture formed to utilize the Company's proprietary ActoBiotics platform to develop and commercialize products to treat type 1 diabetes. The Company also entered into an ECC with Intrexon T1D Partners which provides the exclusive rights to the Company's technology for use in the field, as a result of which the Company received a technology access fee of $10,000 while retaining a 50% membership interest in Intrexon T1D Partners. The T1D Investors made initial capital contributions, totaling $10,000 in the aggregate, in exchange for pro rata membership interests in Intrexon T1D Partners totaling 50%. Intrexon has committed to make capital contributions of up to $5,000, and the T1D Investors, as a group and pro rata in accordance with their respective membership interests in Intrexon T1D Partners, have committed to make additional capital contributions of up to $5,000, at the request of Intrexon T1D Partners' board of managers (the "Intrexon T1D Partners Board") and subject to certain limitations. As of September 30, 2017, the Company's remaining commitment was $2,900. Intrexon T1D Partners is governed by the Intrexon T1D Partners Board, which has five members. Two members of the Intrexon T1D Partners Board are designated by the Company and three members are designated by a majority of the T1D Investors. The Company and the T1D Investors have the right, but not the obligation, to make additional capital contributions above these limits when and if solicited by the Intrexon T1D Partners Board.
The Company's investment in Intrexon T1D Partners was $51 and $806 as of September 30, 2017 and December 31, 2016, respectively, and is included in investments in affiliates in the accompanying consolidated balance sheets.

5. Collaboration and Licensing Revenue
The Company generates revenue through contractual agreements with collaborators (known as exclusive channelCompany's collaborations "ECC" or "ECCs") and licensing agreements wherebymay provide for multiple promises to be satisfied by the collaborators or the licensees obtain exclusive accessCompany and typically include a license to the Company's proprietary technologies for usetechnology platforms, participation in collaboration committees, and performance of certain research and development services. Based on the nature of the promises in the research, developmentCompany's collaboration and commercializationlicensing agreements, the Company typically combines most of products and/or treatments inits promises into a contractually specified fieldsingle 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 use. Upfront and milestone payments are typically deferred and recognized overprogress under the expected life ofagreement primarily based on inputs necessary to fulfill the Company's technology platform using a straight-line approach. performance obligation.
The Company recognizes the reimbursement payments received for research and development servicesefforts in the period in whichwhen the services are performed, in connection with the single performance obligation discussed above. The reimbursements relate specifically to the Company's efforts to provide services, and collectionthe reimbursements are consistent with what the Company would typically charge other collaborators for similar services. The Company assesses the uncertainty of when and if any milestones will be achieved to determine whether the milestone is reasonably assured. included in the transaction price. The Company then assesses whether the revenue is constrained based on whether it is probable that a significant reversal of revenue would not occur when the uncertainty is resolved. Royalties, including sales-based milestones, received under the agreements will be recognized as revenue when sales have occurred because the Company applies the sales- or usage-based royalties recognition exception provided for under ASC 606. The Company determined the application of this exception is appropriate because at the time the royalties are generated, the technology license granted in the agreement is the predominant item to which the royalties relate.
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.
23
Table of Contents
The following tables summarizetable summarizes the amounts recorded as revenue in the condensed consolidated statements of operations for each significant counterparty to a collaboration or licensing agreement for the three and ninesix months ended SeptemberJune 30, 20172020 and 2016.2019.
 Three Months Ended 
 June 30,		Six Months Ended 
 June 30,
2020201920202019
ZIOPHARM Oncology, Inc.$—  $533  $100  $1,699  
Oragenics, Inc.32  181  230  382  
Intrexon Energy Partners, LLC—  796  —  1,773  
Intrexon Energy Partners II, LLC—  420  —  924  
Fibrocell Science, Inc.4,210  2,462  14,573  2,845  
Harvest start-up entities (1)—  2,039  —  4,762  
Other73  19  133  36  
Total$4,315  $6,450  $15,036  $12,421  
 Three Months Ended September 30, 2017
 Revenue Recognized From Total
 Upfront and Milestone Payments Research and Development Services 
ZIOPHARM Oncology, Inc.$4,843
 $5,530
 $10,373
Oragenics, Inc.262
 213
 475
Fibrocell Science, Inc.604
 1,079
 1,683
Genopaver, LLC68
 1,354
 1,422
S & I Ophthalmic, LLC—
 376
 376
OvaXon, LLC—
 262
 262
Intrexon Energy Partners, LLC625
 1,278
 1,903
Persea Bio, LLC125
 141
 266
Ares Trading S.A.1,597
 759
 2,356
Intrexon Energy Partners II, LLC500
 316
 816
Intrexon T1D Partners, LLC287
 1,175
 1,462
Harvest start-up entities (1)616
 3,404
 4,020
Other979
 1,762
 2,741
Total$10,506
 $17,649
 $28,155
(1)For the three months ended September 30, 2017, revenue recognized from collaborations with Harvest start-up entities include Thrive Agrobiotics, Inc.; Exotech Bio, Inc.; Relieve Genetics, Inc.; AD Skincare, Inc.; Genten Therapeutics, Inc.; and CRS Bio, Inc.

(1)For the three and six months ended June 30, 2019, revenues recognized from collaborations with Harvest start-up entities include: Thrive Agrobiotics, Inc.; Exotech Bio, Inc.; and AD Skincare, Inc.
 Three Months Ended September 30, 2016
 Revenue Recognized From Total
 Upfront and Milestone Payments Research and Development Services 
ZIOPHARM Oncology, Inc.$4,843
 $5,586
 $10,429
Oragenics, Inc.262
 294
 556
Fibrocell Science, Inc.604
 563
 1,167
Genopaver, LLC68
 1,625
 1,693
S & I Ophthalmic, LLC—
 2,782
 2,782
OvaXon, LLC—
 709
 709
Intrexon Energy Partners, LLC625
 4,230
 4,855
Persea Bio, LLC125
 208
 333
Ares Trading S.A.1,597
 719
 2,316
Intrexon Energy Partners II, LLC500
 372
 872
Intrexon T1D Partners, LLC276
 511
 787
Harvest start-up entities (1)425
 868
 1,293
Other895
 1,903
 2,798
Total$10,220
 $20,370
 $30,590
(1)For the three months ended September 30, 2016, revenue recognized from collaborations with Harvest start-up entities include Thrive Agrobiotics, Inc.; Exotech Bio, Inc.; Relieve Genetics, Inc.; and AD Skincare, Inc.
 Nine Months Ended September 30, 2017
 Revenue Recognized From Total
 Upfront and Milestone Payments Research and Development Services 
ZIOPHARM Oncology, Inc.$14,527
 $16,795
 $31,322
Oragenics, Inc.786
 733
 1,519
Fibrocell Science, Inc.1,814
 3,561
 5,375
Genopaver, LLC205
 4,410
 4,615
S & I Ophthalmic, LLC—
 751
 751
OvaXon, LLC—
 1,966
 1,966
Intrexon Energy Partners, LLC1,875
 7,034
 8,909
Persea Bio, LLC375
 446
 821
Ares Trading S.A.4,791
 3,683
 8,474
Intrexon Energy Partners II, LLC1,500
 1,421
 2,921
Intrexon T1D Partners, LLC823
 3,059
 3,882
Harvest start-up entities (1)1,823
 10,012
 11,835
Other3,735
 3,259
 6,994
Total$32,254
 $57,130
 $89,384
(1)For the nine months ended September 30, 2017, revenue recognized from collaborations with Harvest start-up entities include Thrive Agrobiotics, Inc.; Exotech Bio, Inc.; Relieve Genetics, Inc.; AD Skincare, Inc.; Genten Therapeutics, Inc.; and CRS Bio, Inc.

 Nine Months Ended September 30, 2016
 Revenue Recognized From Total
 Upfront and Milestone Payments Research and Development Services 
ZIOPHARM Oncology, Inc.$6,687
 $17,693
 $24,380
Oragenics, Inc.786
 1,083
 1,869
Fibrocell Science, Inc.1,814
 2,604
 4,418
Genopaver, LLC205
 4,703
 4,908
S & I Ophthalmic, LLC—
 6,326
 6,326
OvaXon, LLC—
 2,211
 2,211
Intrexon Energy Partners, LLC1,875
 11,180
 13,055
Persea Bio, LLC375
 613
 988
Ares Trading S.A.4,791
 2,148
 6,939
Intrexon Energy Partners II, LLC1,500
 816
 2,316
Intrexon T1D Partners, LLC554
 543
 1,097
Harvest start-up entities (1)776
 1,890
 2,666
Other4,684
 6,287
 10,971
Total$24,047
 $58,097
 $82,144
(1)For the nine months ended September 30, 2016, revenue recognized from collaborations with Harvest start-up entities include Thrive Agrobiotics, Inc.; Exotech Bio, Inc.; Relieve Genetics, Inc.; and AD Skincare, Inc.
ThereExcept for the agreements discussed below, there have been no significant changes to arrangementsthe agreements with our collaborators and licensees in the ninesix months ended SeptemberJune 30, 2017.2020. See also Note 520.
Fibrocell Science Collaborations
In October 2012, the Company entered into an ECC (the "2012 Fibrocell ECC") with Fibrocell Science, Inc. ("Fibrocell"), a then publicly traded cell and gene therapy company focused on diseases affecting the skin and connective tissue and a related party until the acquisition of Fibrocell by a third party as discussed in Note 17. Pursuant to the 2012 Fibrocell ECC, at the transaction effective date, Fibrocell received a license to the Company's technology platform to develop and commercialize genetically modified and non-genetically modified autologous fibroblasts and autologous dermal cells in the United States of America. The 2012 Fibrocell ECC was subsequently amended in June 2013 to expand the field of use defined in the ECC agreement. In March 2020, the Company and Fibrocell terminated the 2012 Fibrocell ECC by mutual agreement ("Termination Agreement") with the parties agreeing that the two drug product candidates, FCX-007 and FCX-013, pursuant to the ECC would be treated as "Retained Products" under the terms of the 2012 Fibrocell ECC. As Retained Products, Fibrocell retains a license under the 2012 Fibrocell ECC to continue to develop and commercialize the Retained Products within the field of use of the 2012 Fibrocell ECC for so long as Fibrocell continues to pursue such development and commercialization. No further licenses to the Company's Annual Report on Form 10-Ktechnology within the field of use are provided to Fibrocell. Royalty provisions set forth in the 2012 Fibrocell ECC remain in effect for the year endedRetained Products. Additionally, the Termination Agreement provides for the Company to perform certain drug product manufacturing activities related to the Retained Products. The Termination Agreement was accounted for as a new contract, and the remaining deferred revenue from the 2012 Fibrocell ECC is being recognized prospectively as the manufacturing activities are performed.
In December 31, 2016 for additional details2015, the Company entered into a second ECC with Fibrocell (the "2015 Fibrocell ECC"). Pursuant to the ECC, at the transaction effective date, Fibrocell received a license to the Company's technology platform to develop and commercialize genetically-modified fibroblasts to treat chronic inflammatory and degenerative diseases of the Company's existing collaborationjoint, including arthritis and licensing agreements.related conditions. In February 2020, the Company and Fibrocell mutually agreed to terminate the 2015 Fibrocell ECC, and accordingly, the Company recognized the remaining balance of deferred revenue associated with the 2015 Fibrocell ECC totaling $10,000.
24
Table of Contents
Deferred Revenue
Deferred revenue primarily consists of consideration received for upfront and milestone payments in connection with the Company's collaborationscollaboration and licensing agreements. Deferred revenue consisted of the following:
June 30,
2020		December 31,
2019
Collaboration and licensing agreements$36,152  $50,593  
Prepaid product and service revenues3,033  2,805  
Other265  435  
Total$39,450  $53,833  
Current portion of deferred revenue$6,592  $5,697  
Long-term portion of deferred revenue32,858  48,136  
Total$39,450  $53,833  
Revenue is recognized under the collaboration and licensing agreements prepayments for research and developmentas services performed for collaborators and licensees, and prepayments for product and service revenues. Deferred revenue consistsare performed. Certain of the following:
 September 30,
2017		 December 31,
2016
Upfront and milestone payments$269,649
 $297,867
Prepaid research and development services1,718
 6,015
Prepaid product and service revenues4,869
 5,554
Other51
 706
Total$276,287
 $310,142
Current portion of deferred revenue$48,289
 $53,364
Long-term portion of deferred revenue227,998
 256,778
Total$276,287
 $310,142

arrangements are not active while the other party evaluates the status of the project and its desired future development activities. The following table summarizes the remaining balance of deferred revenue associated with upfront and milestone payments for each significant counterparty to a collaboration or licensing agreement as of June 30, 2020 and licensing agreement.December 31, 2019, as well as the estimated remaining performance period as of June 30, 2020.
Average Remaining Performance Period (Years)June 30,
2020		December 31,
2019
Oragenics, Inc.3.9$2,823  $2,864  
Intrexon Energy Partners, LLC3.78,362  8,362  
Intrexon Energy Partners II, LLC4.412,843  12,843  
Fibrocell Science, Inc.1.03,308  17,697  
Harvest start-up entities (1)4.76,993  6,993  
Other2.31,823  1,834  
Total$36,152  $50,593  
 September 30,
2017		 December 31,
2016
ZIOPHARM Oncology, Inc.$124,282
 $138,809
Oragenics, Inc.6,980
 7,766
Fibrocell Science, Inc.17,212
 19,026
Genopaver, LLC1,772
 1,977
Intrexon Energy Partners, LLC16,250
 18,125
Persea Bio, LLC3,625
 4,000
Ares Trading S.A.42,387
 47,178
Intrexon Energy Partners II, LLC14,333
 15,833
Intrexon T1D Partners, LLC8,628
 8,653
Harvest start-up entities (1)18,953
 20,208
Other15,227
 16,292
Total$269,649
 $297,867
(1)As of June 30, 2020 and December 31, 2019, the balance of deferred revenue for collaborations with Harvest start-up entities includes: Thrive Agrobiotics, Inc.; Exotech Bio, Inc.; and AD Skincare, Inc.
(1)As of September 30, 2017 and December 31, 2016, the balance of deferred revenue for collaborations with Harvest start-up entities includes Thrive Agrobiotics, Inc.; Exotech Bio, Inc.; Relieve Genetics, Inc.; AD Skincare, Inc.; Genten Therapeutics, Inc.; and CRS Bio, Inc.
6. Short-term and Long-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 SeptemberJune 30, 2017:2020:
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Aggregate
Fair Value
U.S. government debt securities$85,749  $279  $—  $86,028  
Certificates of deposit264  —  —  264  
Total$86,013  $279  $—  $86,292  
25
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Aggregate
Fair Value
U.S. government debt securities$44,000
 $2
 $(17) $43,985
Corporate notes and bonds242
 —
 —
 242
Certificates of deposit275
 —
 —
 275
Total$44,517
 $2
 $(17) $44,502
Table of Contents
The following table summarizes the amortized cost, gross unrealized gains and losses, and fair value of available-for-sale investments as of December 31, 2016:2019:
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Aggregate
Fair Value
U.S. government debt securities$180,412
 $5
 $(94) $180,323
Certificates of deposit272
 —
 —
 272
Total$180,684
 $5
 $(94) $180,595
For more information on the Company's method for determining the fair value of its assets, see Note 2 – "Fair Value of Financial Instruments" in the Company's Annual Report on Form 10-K for the year ended December 31, 2016.

Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Aggregate
Fair Value
U.S. government debt securities$8,989  $7  $—  $8,996  
Certificates of deposit264  —  —  264  
Total$9,253  $7  $—  $9,260  
As of SeptemberJune 30, 2017,2020, all of the available-for-sale investments were due within one year based on their contractual maturities.
Changes in market interest rates and bond yields cause certain investments to fall below their cost basis, resulting in unrealized losses on investments. The unrealized lossesNone of the Company's debt security investments were primarily a result of unfavorable changes in interest rates subsequent to the initial purchase of these investments and are not significantan unrealized loss position as of SeptemberJune 30, 2017.2020.
As of September 30, 2017 and December 31, 2016, the Company did not consider any of its investments to be other-than-temporarily impaired. When evaluating its investments for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer, the Company's ability and intent to hold the security and whether it is more likely than not that it will be required to sell the investment before recovery of its cost basis.
7. Investments in Preferred Stock
Investment in ZIOPHARM Preferred Stock
In June 2016, the Company received 100,000 shares of Series 1 Preferred Stock (the "Preferred Shares") of ZIOPHARM Oncology Inc. ("ZIOPHARM"), a related party, with a per share stated value of $1,200, as consideration for amending their two previously existing ECC agreements. A summary of the terms of the Preferred Shares follows.
Conversion. The Preferred Shares shall automatically convert into shares of ZIOPHARM common stock upon the date the first approval in the United States of (i) a ZIOPHARM product, as defined in and developed under one of the ECC agreements, or (ii) a product, as defined and developed under the License and Collaboration Agreement with Ares Trading S.A., a subsidiary of the biopharmaceutical business of Merck KGaA, and ZIOPHARM, is publicly announced (the "Conversion Event Date"). The Preferred Shares shall convert into a number of shares of ZIOPHARM common stock equal to the stated value of such Preferred Share, divided by the greater of: (i) the volume weighted average closing price of ZIOPHARM's common stock over the twenty trading days ending on the Conversion Event Date or (ii) $1.00. The number of converted shares is subject to certain limitations defined in the amended and restated Certificate of Designation, Preferences, and Rights of Series 1 Preferred Stock (the "A&R Certificate of Designation").
Dividend Rights. The Company shall receive a monthly dividend, payable in additional Preferred Shares, equal to $12.00 per Preferred Share held per month divided by the stated value of the Preferred Shares, which is referred to as the PIK Dividend. For any Preferred Shares that are not converted on the Conversion Event Date, the rate of PIK Dividend on these unconverted Preferred Shares will automatically increase from $12.00 to $24.00 per Preferred Share per month.
Voting Rights. The Preferred Shares do not have any voting rights except for certain protective voting rights defined in the A&R Certificate of Designation.
Liquidation Rights. In the event of any voluntary or involuntary liquidation, dissolution or winding up of ZIOPHARM or a deemed liquidation event, as defined in the A&R Certificate of Designation, including a change of control or the sale, lease transfer, or exclusive license of all or substantially all of ZIOPHARM's assets, the holders of the Preferred Shares shall be entitled to receive a portion of all funds to be distributed in proportion to the holders' proportionate share of ZIOPHARM's common stock on an as-converted to common stock basis (the "Series 1 Liquidation Amount"). For purposes of calculating the Series 1 Liquidation Amount, if such liquidation event occurs prior to the Conversion Event Date, each Preferred Share shall be deemed to be convertible into the number of shares of ZIOPHARM's common stock equal to (i) the stated value of each Preferred Share, divided by (ii) the volume weighted average price of ZIOPHARM's common stock for the twenty day period ending on the date of the public announcement of the liquidation event. In addition, ZIOPHARM may elect to redeem the Preferred Shares in connection with or following a deemed liquidation event at a price per share equal to the Series 1 Liquidation Amount.
The investment in ZIOPHARM preferred stock is categorized as Level 3 as there are significant unobservable inputs and the Preferred Shares are not traded on a public exchange. The fair value of the investment in ZIOPHARM preferred stock is estimated using a probability-weighted expected return ("PWERM") model. The key inputs used in the PWERM model are (i) estimating the future returns for conversion of the Preferred Shares for both product approval and a change in control of ZIOPHARM (the "conversion events") using market data of the change in value for guideline companies as a result of these conversion events; (ii) estimating the expected date and likelihood of each conversion event; and (iii) discounting these estimated future returns using a discount rate for the Preferred Shares considering industry debt issuances originated by public funds and venture capital rates of return. A significant change in unobservable inputs discussed above could result in a

significant impact on the fair value of the Company's investment in ZIOPHARM preferred stock. The fair value of the Company's investment in ZIOPHARM preferred stock, including additional Preferred Shares received as dividends, was $146,637 and $129,545 as of September 30, 2017 and December 31, 2016, respectively. During the three and nine months ended September 30, 2017, the Company received 3,414 shares and 9,943 shares, respectively, of additional Preferred Shares and recognized $4,311 and $12,276, respectively, of dividend income in the accompanying consolidated statements of operations. During the three and nine months ended September 30, 2016, the Company received 3,063 shares of additional Preferred Shares and recognized $3,676 of dividend income in the accompanying consolidated statements of operations.
Investment in Fibrocell Preferred Stock
In March 2017, Fibrocell Science, Inc. ("Fibrocell"), one of the Company's collaborators and a related party, sold Series A Convertible Preferred Stock (the "Convertible Preferred Shares") convertible into shares of Fibrocell common stock and warrants to purchase shares of Fibrocell common stock to certain institutional and accredited investors, including the Company and affiliates of Third Security. The Company paid $1,161 in exchange for 1,161 Convertible Preferred Shares and warrants to acquire 498,843 shares of Fibrocell common stock, reflective of the 1-for-3 reverse stock split of Fibrocell's common stock effective March 10, 2017. The Convertible Preferred Shares are convertible at any time at the election of the Company and accrue dividends at 4% per annum, compounded quarterly, increasing the stated value of the shares. The investment in Fibrocell preferred stock is categorized as Level 3 as there are significant unobservable inputs and the Convertible Preferred Shares are not traded on a public exchange. The fair value of the investment in Fibrocell preferred stock is estimated using a conversion plus dividend approach utilizing the trading value of the underlying common stock and an estimated premium for the preferred stock dividend and other preferences. Market price volatility of Fibrocell's common stock and a significant change in the estimated preferred stock premium could result in a significant impact to the fair value of the investment in Fibrocell preferred stock. As of September 30, 2017, the fair value of the Company's investment in Fibrocell preferred stock totaled $1,862. See Note 17 for additional discussion of the warrants.
Changes in the Fair Value of Investments in Preferred Stock
The following table summarizes the changes in the Level 3 investments in preferred stock during the nine months ended September 30, 2017.
 Nine Months Ended 
 September 30, 2017
Beginning balance$129,545
Purchase of preferred stock766
Dividend income from investments in preferred stock12,303
Unrealized appreciation in the fair value of the investments in preferred stock5,885
Ending balance$148,499
8. Fair Value Measurements
The carrying amount of cash and cash equivalents, restricted cash, receivables, prepaid expenses and other current assets, accounts payable, accrued compensation and benefits, other accrued liabilities, and related party payables 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, including the items for which the fair value option has been elected, at Septemberas of June 30, 2017:2020:
Quoted Prices in Active Markets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
 September 30,
2017		Quoted Prices in Active Markets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		June 30,
2020
Assets       Assets
U.S. government debt securities$—
 $43,985
 $—
 $43,985
U.S. government debt securities$—  $86,028  $—  $86,028  
Equity securities19,830
 6,812
 —
 26,642
Preferred stock—
 —
 148,499
 148,499
Other—
 7,089
 —
 7,089
Other—  264  —  264  
Total$19,830
 $57,886
 $148,499
 $226,215
Total$—  $86,292  $—  $86,292  
The following table presents the placement in the fair value hierarchy of financial assets that are measured at fair value on a recurring basis, including the items for which the fair value option has been elected, atas of December 31, 2016:2019:
Quoted Prices in Active Markets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		December 31,
2019
Assets
U.S. government debt securities$—  $8,996  $—  $8,996  
Other—  264  —  264  
Total$—  $9,260  $—  $9,260  
 Quoted Prices in Active Markets
(Level 1)		 Significant Other Observable Inputs
(Level 2)		 Significant Unobservable Inputs
(Level 3)		 December 31,
2016
Assets       
U.S. government debt securities$—
 $180,323
 $—
 $180,323
Equity securities15,544
 7,978
 —
 23,522
Preferred stock—
 —
 129,545
 129,545
Other—
 1,917
 —
 1,917
Total$15,544
 $190,218
 $129,545
 $335,307
The method used to estimate the fair value of the Level 1 assets in the tables above is based on observable market data as these equity securities are publicly-traded. The method used to estimate the fair value of the Level 2 short-term and long-termdebt 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. The method used to estimate the fair value
26
Table of the Level 2 equity securities in the tables above is based on the quoted market price of the publicly-traded security, adjusted for a discount for lack of marketability. The methods used to estimate the fair value of the Level 3 assets are discussed in Note 7.Contents
There were no transfers between levels of the fair value hierarchy during the nine months ended September 30, 2017.

Liabilities
The carrying values of the Company's long termlong-term debt, excluding the 3.50% convertible senior notes due 2023 (the "Convertible Notes"), approximates fair value due to the length of time to maturity and/or the existence of interest rates that approximate prevailing market rates.
The Company's contingent consideration liabilities (Notes 3 and 4) are measured on a recurring basis and were $2,911 and $2,081 at September 30, 2017 and December 31, 2016, respectively. These fair value measurements were based on significant inputs not observable in the market and thus represented a Level 3 measurement. A significant change in unobservable inputs could result in a significant impact on thecalculated fair value of the Convertible Notes (Note 11) was approximately $73,000 and $126,000 as of June 30, 2020 and December 31, 2019, respectively, and is based on the recent third-party trades of the instrument as of the balance sheet date. The fair value of the Convertible Notes is classified as Level 2 within the fair value hierarchy as there is not an active market for the Convertible Notes, however, third-party trades of the instrument are considered observable inputs. The Convertible Notes are reflected on the accompanying condensed consolidated balance sheets at amortized cost, which was $162,661 and $157,560 as of June 30, 2020 and December 31, 2019, respectively.
As of June 30, 2020, the Company's contingent consideration liabilities.liability, which was $585 as of December 31, 2019, was reduced to $0 as the period for potential payment of this contingent consideration expired without payment in June 2020. The contingent consideration liabilities areliability was remeasured to fair value at each reporting date until the contingencies arecontingency was resolved, and those changes in fair value arewere recognized in earnings. The changes in the fair value of the Level 3 liabilitiesliability during the ninesix months ended SeptemberJune 30, 20172020 were as follows:
Balance at December 31, 2019$585 
Change in fair value of contingent consideration recognized in selling, general and administrative expenses(585)
Balance at June 30, 2020$— 
See Notes 9 and 10 for discussion of non-recurring fair value estimates used in calculating impairment charges recorded during the three and six months ended June 30, 2020.
 Nine Months Ended 
 September 30, 2017
Beginning balance$2,081
Acquisition date fair value of contingent consideration liability (Note 3)585
Change in fair value of contingent consideration recognized in selling, general and administrative expenses245
Ending balance$2,911
9.8. Inventory
Inventory consists of the following:
June 30,
2020		December 31,
2019
Supplies, embryos and other production materials$2,214  $2,282  
Work in process3,470  3,702  
Livestock5,777  7,553  
Feed1,268  2,560  
Total inventory$12,729  $16,097  
27
 September 30,
2017		 December 31,
2016
Supplies, embryos and other production materials$2,185
 $1,835
Work in process4,618
 5,466
Livestock8,738
 11,752
Feed2,189
 2,086
Total inventory$17,730
 $21,139
Table of Contents
10.9. Property, Plant and Equipment, Net
Property, plant and equipment consist of the following:
September 30,
2017		 December 31,
2016		June 30,
2020		December 31,
2019
Land and land improvements$11,642
 $10,904
Land and land improvements$9,814  $9,814  
Buildings and building improvements15,216
 8,123
Buildings and building improvements11,765  11,765  
Furniture and fixtures2,220
 2,176
Furniture and fixtures1,293  1,315  
Equipment58,851
 44,392
Equipment47,456  54,448  
Leasehold improvements22,974
 15,105
Leasehold improvements9,016  12,821  
Breeding stock3,822
 3,893
Breeding stock5,587  5,191  
Computer hardware and software9,817
 6,844
Computer hardware and software8,922  9,434  
Trees5,719
 2,772
Construction and other assets in progress15,138
 4,513
Construction and other assets in progress4,799  5,313  
145,399
 98,722
98,652  110,101  
Less: Accumulated depreciation and amortization(42,523) (34,050)Less: Accumulated depreciation and amortization(51,696) (49,132) 
Property, plant and equipment, net$102,876
 $64,672
Property, plant and equipment, net$46,956  $60,969  
Depreciation expense was $2,989$2,900 and $2,332$2,932 for the three months ended SeptemberJune 30, 20172020 and 2016,2019, respectively, and $8,623$5,831 and $6,769$6,110 for the ninesix months ended SeptemberJune 30, 20172020 and 2016,2019, respectively.

During the three months ended June 30, 2020, the Company suspended MBP Titan'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 and discounted cash flow models. The estimated fair values were lower than the carrying values, and the Company recorded impairment losses of $9,914 related to property, plant, and equipment and $2,492 related to the right-of-use assets, which are included in impairment of assets on the accompanying condensed consolidated statements of operations.
In June 2017, AquaBounty purchased a land-based aquaculture facility to be used in the production of its AquAdvantage salmon in Indiana for $14,219.
11.10. Goodwill and Intangible Assets, Net
The changes in the carrying amount of goodwill for the ninesix months ended SeptemberJune 30, 2017 are2020 were as follows:
Balance at December 31, 2019$63,754 
Impairment(9,635)
Foreign currency translation adjustments3 
Balance at June 30, 2020$54,122 
Balance at December 31, 2016$157,175
Acquisitions4,850
Foreign currency translation adjustments4,796
Balance at September 30, 2017$166,821
No accumulatedThe Company had $53,278 and $43,643 of cumulative impairment losses existed as of SeptemberJune 30, 20172020 and December 31, 2016.2019, respectively.
During the three and six months ended June 30, 2020, the Company recorded $9,635 of goodwill impairment in conjunction with the suspension of MBP Titan's operations. The Company estimated the fair value of MBP Titan using discounted cash flows and determined that the carrying value exceeded its estimated fair value, resulting in the impairment charge.
28
Table of Contents
Intangible assets consist of the following as of SeptemberJune 30, 2017:2020:
Weighted Average Useful Life (Years) Gross Carrying Amount Accumulated Amortization NetGross Carrying AmountAccumulated AmortizationNet
Patents, developed technologies and know-how15.7 $266,697
 $(43,465) $223,232
Patents, developed technologies and know-how$90,686  $(29,603) $61,083  
Customer relationships6.5 10,700
 (6,033) 4,667
Customer relationships10,850  (8,883) 1,967  
Trademarks9.3 6,800
 (2,373) 4,427
Trademarks5,900  (4,191) 1,709  
In-process research and development 8,571
 —
 8,571
Total $292,768
 $(51,871) $240,897
Total$107,436  $(42,677) $64,759  
Intangible assets consist of the following as of December 31, 2016:2019:
 Gross Carrying Amount Accumulated Amortization Net
Patents, developed technologies and know-how$236,401
 $(29,748) $206,653
Customer relationships10,700
 (4,672) 6,028
Trademarks6,800
 (1,792) 5,008
Covenant not to compete370
 (339) 31
In-process research and development7,895
 —
 7,895
Total$262,166
 $(36,551) $225,615
The balance of in-process research and development includes certain in-process research and development technology acquired in the Company's acquisition of Oxitec in September 2015, and amortization will begin once certain regulatory approvals have been obtained for the in-process programs.
Gross Carrying AmountAccumulated AmortizationNet
Patents, developed technologies and know-how$90,659  $(26,619) $64,040  
Customer relationships10,700  (8,440) 2,260  
Trademarks5,900  (3,854) 2,046  
Total$107,259  $(38,913) $68,346  
Amortization expense was $5,001$1,883 and $3,651$1,931 for the three months ended SeptemberJune 30, 20172020 and 2016,2019, respectively, and $14,258$3,762 and $10,888$4,097 for the ninesix months ended SeptemberJune 30, 20172020 and 2016,2019, respectively.
12.11. Lines of Credit and Long TermLong-Term Debt
Lines of Credit
Trans Ova has a $5,000 revolving line of credit with First National Bank of Omaha whichthat matures on MayApril 1, 2018.2021. The line of credit bears interest at the greater of 2.95% above the London Interbank OfferedU.S. Prime Rate or 3.00%, and the actual rate was 4.19%3.25% as of SeptemberJune 30, 2017.2020. As of SeptemberJune 30, 2017,2020, there were no amounts outstanding.was 0 outstanding balance. The amount available under the line of credit is based on eligible accounts receivable and inventory up to the maximum principal amount.amount and was $4,930 as of June 30, 2020. The line of credit is collateralized by certain of Trans Ova's assets and contains certain restricted covenants that include maintaining minimum


tangible net worth and working capital and maximum allowable annual capital expenditures. Trans Ova was in compliance with these covenants as of September 30, 2017.
Exemplar has a $700 revolving line of credit with American State Bank whichthat matures on October 30, 2018. As of September 30, 2017, the interest rate on this31, 2020. The line of credit was 4.50%bears interest at 5.50% per annum, andannum. As of June 30, 2020, there was an0 outstanding balance of $234.balance.
Long TermLong-Term Debt
Long termLong-term debt consists of the following:
June 30,
2020		December 31,
2019
Convertible debt$219,341  $213,771  
Notes payable3,868  4,089  
Other104  131  
Long-term debt223,313  217,991  
Less current portion32,108  31,670  
Long-term debt, less current portion$191,205  $186,321  
29

 September 30,
2017		 December 31,
2016
Notes payable$5,122
 $5,453
Royalty-based financing2,108
 1,896
Other882
 599
Long term debt8,112
 7,948
Less current portion439
 386
Long term debt, less current portion$7,673
 $7,562
Convertible Debt
Precigen 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 (the "Base Indenture") between Precigen and The Bank of New York Mellon Trust Company, N.A., as trustee, as supplemented by the First Supplemental Indenture (together with the Base Indenture, the "Indenture"). Precigen received net proceeds of $193,958 after deducting underwriting discounts and offering expenses of $6,042.
The Convertible Notes are senior unsecured obligations of Precigen and bear interest at a rate of 3.50% per year, payable semiannually in arrears on January 1 and July 1 of each year beginning on January 1, 2019. The Convertible Notes mature on July 1, 2023, unless earlier repurchased or converted. The Convertible Notes are convertible into cash, shares of Precigen's common stock or a combination of cash and shares, at Precigen's election. The initial conversion rate of the Convertible Notes is 58.6622 shares of Precigen common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $17.05 per share of common stock). The conversion rate is subject to adjustment upon the occurrence of certain events, but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date as defined in the Indenture, Precigen will increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such a corporate event in certain circumstances. Prior to April 1, 2023, the holders may convert the Convertible Notes at their option only upon the satisfaction of the following circumstances:
•During any calendar quarter commencing after the calendar quarter ended on September 30, 2018, if the last reported sales price of Precigen's common stock for at least 20 trading days (whether or not consecutive) during the last 30 consecutive trading days of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
•During the 5 business day period after any 5 consecutive trading day period in which the trading price, as defined in the Indenture, for the Convertible Notes is less than 98% of the product of the last reported sales price of Precigen's common stock and the conversion rate for the Convertible Notes on each such trading day; or
•Upon the occurrence of specified corporate events as defined in the Indenture.
None of the above events allowing for conversion prior to April 1, 2023 occurred during the three months ended June 30, 2020. On or after April 1, 2023 until June 30, 2023, holders may convert their Convertible Notes at any time. Precigen may not redeem the Convertible Notes prior to the maturity date.
If Precigen undergoes a fundamental change, as defined in the Indenture, holders of the Convertible Notes may require Precigen to repurchase for cash all or any portion of their Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The Indenture contains customary events of default, as defined in the agreement, and, if any of the events occur, could require repayment of a portion or all of the Convertible Notes, including accrued and unpaid interest. Additionally, the Indenture provides that Precigen shall not consolidate with or merge with or into, or sell, convey, transfer or lease all or substantially all of its properties and assets to, another entity, unless (i) the surviving entity is organized under the laws of the United States and such entity expressly assumes all of Precigen's obligations under the Convertible Notes and the Indenture; and (ii) immediately after such transaction, no default or event of default has occurred and is continuing under the Indenture.
The net proceeds received from the issuance of the Convertible Notes were initially allocated between long-term debt, the liability component, in the amount of $143,723, and additional paid-in capital, the equity component, in the amount of $50,235. Additional paid-in capital was further reduced by $13,367 of deferred taxes resulting from the difference between the carrying amount and the tax basis of the Convertible Notes that is created by the equity component, which also resulted in deferred tax benefit recognized from the reversal of valuation allowances on the then current year domestic operating losses in the same amount. As of June 30, 2020, the outstanding principal balance on the Convertible Notes was $200,000 and the carrying value of long-term debt was $162,661. The effective interest rate on the Convertible Notes, including amortization of the long-term debt discount and debt issuance costs, is 11.02%. As of June 30, 2020, the unamortized long-term debt discount and debt issuance costs totaled $37,339.
The components of interest expense related to the Convertible Notes were as follows:
30

 Three Months Ended 
 June 30,		Six Months Ended 
 June 30,
 2020201920202019
Cash interest expense$1,750  $1,750  $3,500  $3,500  
Non-cash interest expense2,585  2,319  5,101  4,532  
Total interest expense$4,335  $4,069  $8,601  $8,032  
Accrued interest of $3,500 is included in other accrued liabilities on the accompanying condensed consolidated balance sheet as of June 30, 2020.
ActoBio Convertible Notes
In September 2018, ActoBio issued $30,000 of convertible promissory notes (the "ActoBio Notes") to a related party in conjunction with an asset acquisition with Harvest. The ActoBio Notes have a maturity date of September 6, 2020, accrue interest at 3.0% compounded annually ("accrued PIK interest"), are convertible into shares of ActoBio common stock at any time by the holder, and are automatically convertible in shares of ActoBio common stock upon the closing of certain financing events as defined in the ActoBio Notes. If the ActoBio Notes have not been converted to ActoBio common stock by the maturity date, ActoBio can pay the principal and accrued PIK interest in cash or with shares of Precigen common stock at its election. There are no embedded features that are required to be separated from the debt host and accounted for separately, so the ActoBio Notes were recorded at $30,000. Interest expense was $234 and $228 for the three months ended June 30, 2020 and 2019, respectively, and $469 and $453 for the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020, the carrying value of the ActoBio Notes, including accrued interest, was $31,680.
Precigen and PGEN Therapeutics Convertible Note
In December 2018, in conjunction with the Securities Purchase, Assignment and Assumption Agreement with Ares Trading S.A. ("Ares Trading"), Precigen and PGEN Therapeutics jointly and severally issued a $25,000 convertible note (the "Merck Note") to Ares Trading in exchange for cash. The Merck Note has a maturity date of June 28, 2021 although it automatically converts to Precigen common stock on the first trading day following the second anniversary of issuance if not otherwise converted prior to that date. Prior to the automatic conversion, Ares Trading may convert the Merck Note, at their election, into (i) Precigen common stock at any time, (ii) Precigen common stock upon the Company's closing of qualified financing as defined in the agreement, (iii) PGEN Therapeutics equity upon PGEN Therapeutics closing a qualified financing as defined in the agreement, and (iv) PGEN Therapeutics common stock upon the closing of a qualified initial public offering ("IPO") of PGEN Therapeutics common stock. There is no stated interest rate on the Merck Note. However, in the event of a conversion upon a qualified IPO, the conversion price will be 90% of the IPO price. In the event Ares Trading elects to convert the Merck Note into PGEN Therapeutics equity, the Merck Note accrues interest at a rate of 5% per year ("PIK interest") and will be converted with the outstanding principal. The Company determined that the potential PIK interest and IPO conversion discount represented embedded derivatives requiring bifurcation from the debt host but had no significant value as of June 30, 2020. The Merck Note is classified as long-term as of June 30, 2020 and December 31, 2019 since the Merck Note will be settled through a conversion to common stock, and no cash payment is required.
Notes Payable
Trans Ova has a note payable to American State Bank whichthat matures in April 2033 and hashad an outstanding principal balance of $4,967$3,868 as of SeptemberJune 30, 2017.2020. Trans Ova pays monthly installments of $39, which includes interest at 3.95%. The note payable is collateralized by certain of Trans Ova's real estate and non-real estate assets.
AquaBounty has a royalty-based financing grant from the Atlantic Canada Opportunities Agency, a Canadian government agency, to provide funding of a research and development project. The total amount available under the award was $2,302, which AquaBounty claimed over a five year period. All amounts claimed by AquaBounty must be repaid in the form of a 10% royalty on any products commercialized out of this research and development project until fully paid. Because the timing of commercialization is subject to additional regulatory considerations, the timing of repayment is uncertain. As of the date of the acquisition by Intrexon in March 2013, AquaBounty had claimed $1,952 of the available funds and this amount was recorded at its acquisition date fair value of $1,107. The Company accretes the difference of $845 between the face value of amounts drawn and the acquisition date fair value over the expected period of repayment. Subsequent to the acquisition date, AquaBounty claimed the remaining balance available under the grant, resulting in total long term debt of $2,108 as of September 30, 2017.
31

Future Maturities
Future maturities of long termlong-term debt are as follows:
2020$56,945  
2021330  
2022344  
2023200,357  
2024372  
2025387  
Thereafter1,918  
Total$260,653  
2017$107
2018462
2019400
2020371
2021834
2022360
Thereafter3,470
Total$6,004
The AquaBounty royalty-based financing grant is not included in the table above due to the uncertainty of the timing of repayment.
13.12. Income Taxes
Tax provisions for interim periods are calculated using an estimate of actual taxable income or loss for the respective period, rather than estimating the Company's annual effective income tax rate, as the Company is currently unable to reliably estimate its income for the full year. ForThe Company has U.S. taxable loss of approximately $27,700 and $55,700 for the three and nine months ended SeptemberJune 30, 2017,2020 and 2019, respectively, and $107,000 and $147,300 for the Company had U.S. taxable income of


approximately $3,930 and $23,680, respectively, for which $78 and $473, respectively, in current income tax expense was recognized due to the alternative minimum tax. For the three and ninesix months ended SeptemberJune 30, 2017,2020 and 2019, respectively. The following table presents the Company recognized $121 and $343, respectively,components of current foreign income tax benefit. For the three and nine months ended September 30, 2016, the Company had U.S. taxable income (loss) of approximately $8,334 and $(9,346), respectively, for which no current income tax benefit was recognized. For the three and nine months ended September 30, 2016, the Company recognized $110 and $323, respectively, of current foreign income tax benefit. For the three and nine months ended September 30, 2017, the Company recorded deferred tax benefit of $775 and $2,294, respectively. For the three and nine months ended September 30, 2016, the Company recorded deferred tax benefit of $308 and $2,967, respectively. from continuing operations.
 Three Months Ended 
 June 30,		Six Months Ended 
 June 30,
 2020201920202019
Current foreign income tax expense from continuing operations$16  $10  $56  $24  
Deferred income tax benefit from continuing operations(136) (19) (136) (46) 
Total income tax benefit from continuing operations$(120) $(9) $(80) $(22) 
The Company's net deferred tax assets, excluding certain deferred tax liabilities totaling $15,868,$2,698, 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 losses 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.
As of SeptemberJune 30, 2017,2020, the Company has operating loss carryforwards for U.S. federal income tax purposes of approximately $243,700$675,200 available to offset future taxable income, including approximately $13,400 acquired in our acquisition$422,500 generated after 2017, U.S. capital loss carryforwards of GenVec,approximately $199,700, and federal and state research and development tax credits of approximately $7,800,$10,100, prior to consideration of annual limitations that may be imposed under Section 382 of the Internal Revenue Code of 1986, as amended. TheseCarryforwards generated prior to 2018 begin to expire in 2022, and capital loss carryforwards will begin to expire if unutilized in 2022.2024. As of SeptemberJune 30, 2017,2020, the Company's direct foreign subsidiaries have foreign loss carryforwards of approximately $146,800,$74,200, most of which do not expire.
14.13. Shareholders' Equity
Dividend to ShareholdersIssuances of Precigen Common Stock
InConcurrent with entering into the TS Biotechnology Sale on January 2017,1, 2020, the Company distributed to its shareholders 1,776,557 shares of AquaBounty common stock valued at $22,385. The distribution constitutedalso entered into a dividend to shareholders of record as of January 9, 2017. In connectionsubscription agreement with the distribution andTS Biotechnology pursuant to the terms of the Company's equity incentive plans, the conversion terms of all outstanding options forwhich TS Biotechnology purchased 5,972,696 shares of the Company's common stock asfor $35,000 on January 31, 2020.
32

Share Lending Agreement
Concurrently with the offering of January 9, 2017 were adjustedthe Convertible Notes (Note 11), Precigen entered into a share lending agreement (the "Share Lending Agreement") with J.P. Morgan Securities LLC (the "Share Borrower") pursuant to reflectwhich Precigen loaned and delivered 7,479,431 shares of its common stock (the "Borrowed Shares") to the Share Borrower. The Share Lending Agreement will terminate, and the Borrowed Shares will be returned to Precigen within five business days of such termination, upon (i) termination by the Share Borrower or (ii) the earliest to occur of (a) October 1, 2023 and (b) the date, if any, on which the Share Lending Agreement is either mutually terminated or terminated by one party upon a default by the other party. The Share Borrower maintains collateral in the form of cash or certain permitted non-cash collateral with a market value at least equal to the market value of the distribution with respectBorrowed Shares as security for the obligation of the Share Borrower to return the Borrowed Shares when required by the terms above. The Borrowed Shares were offered and sold to the public at a price of $13.37 per share under a registered offering (the "Borrowed Shares Offering"). Precigen did not receive any proceeds from the sale of the Borrowed Shares to the public or any lending fees from the Share Lending Agreement. The Share Borrower or its affiliates received all the proceeds from the sale of the Borrowed Shares to the public. Affiliates of Third Security purchased all of the shares of the Company's common stock by decreasingin the exercise pricesBorrowed Shares Offering.
The Share Lending Agreement was entered into at fair value and increasingmet the number outstanding options. This adjustmentrequirements 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 unless the Share Borrower defaults on the Share Lending Agreement.
Issuances of AquaBounty Common Stock
In March 2019, AquaBounty completed an underwritten public offering that resulted in 46,766net proceeds of $6,611 after deducting discounts, fees, and expenses. See Note 1 for additional outstanding options at a weighted average exercise pricediscussion of $31.11.issuances of AquaBounty common stock in April 2019, which resulted in the deconsolidation of AquaBounty.
Components of Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss are as follows:
June 30,
2020		December 31,
2019
Unrealized gain on investments$279  $7  
Loss on foreign currency translation adjustments(929) (27,475) 
Total accumulated other comprehensive loss$(650) $(27,468) 
See Note 3 for further discussion of the release of cumulative losses on foreign currency translation adjustments upon the closing of the TS Biotechnology Sale.
33
 September 30,
2017		 December 31,
2016
Unrealized loss on investments$(15) $(89)
Loss on foreign currency translation adjustments(16,735) (36,113)
Total accumulated other comprehensive loss$(16,750) $(36,202)



15.14. Share-Based Payments
The Company recordsmeasures the fair value of stock options and restricted stock units ("RSUs") issued to employees and non-employeesnonemployees as of the grant date asfor recognition of stock-based compensation expense. Stock-based compensation expense for employees and non-employeesnonemployees 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,
2020201920202019
Cost of products$2  $4  $6  $12  
Cost of services35  52  64  117  
Research and development364  1,360  953  2,701  
Selling, general and administrative4,496  (1,900) 9,592  4,934  
Discontinued operations—  545  (1,346) 1,351  
Total$4,897  $61  $9,269  $9,115  
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
Cost of products$30
 $21
 $86
 $61
Cost of services82
 68
 242
 206
Research and development2,383
 2,236
 7,018
 6,979
Selling, general and administrative9,562
 8,467
 24,603
 23,385
Total$12,057
 $10,792
 $31,949
 $30,631
IntrexonPrecigen Stock Option Plans
In April 2008, IntrexonPrecigen adopted the 2008 Equity Incentive Plan (the "2008 Plan") for employees and nonemployees pursuant to which Intrexon'sPrecigen's board of directors granted share basedshare-based awards, including stock options, to officers, key employees and nonemployees. Upon the effectiveness of the 2013 Omnibus Incentive Plan (the "2013 Plan"), no0 new awards may be granted under the 2008 Plan. As of SeptemberJune 30, 2017,2020, there were 492,414223,451 stock options outstanding under the 2008 Plan.
IntrexonPrecigen adopted the 2013 Plan for employees and nonemployees pursuant to which Intrexon'sPrecigen's board of directors may grant share basedshare-based awards, including stock options and shares of common stock, to employees, officers, consultants, advisors, and nonemployee directors. The 2013 Plan became effective upon the closing of the Company's initial public offering in August 2013, and as of SeptemberJune 30, 2017,2020, there were 18,000,00027,000,000 shares authorized for issuance under the 2013 Plan, of which 12,149,35610,388,996 stock options and 1,399,669 RSUs were outstanding and 3,743,1876,848,044 shares were available for grant.
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 non-employee service providers, including board members. As of June 30, 2020, there were 5,000,000 shares authorized for issuance under the 2019 Plan, of which 770,592 stock options and 497,512 RSUs were outstanding and 2,582,279 shares were available for grant.
Stock option activity was as follows:
Number of SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual Term (Years)
Balances at December 31, 20199,022,282  $21.94  6.10
Granted5,287,092  10.43  
Exercised(20,780) (3.17) 
Forfeited(834,286) (16.27) 
Expired(2,071,269) (27.30) 
Balances at June 30, 202011,383,039  16.07  7.55
Exercisable at June 30, 20205,604,412  20.02  5.86
34

 Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years)
Balances at December 31, 201611,640,383
 $31.25
 8.21
Granted3,880,950
 21.51
  
Adjustment due to dividend (Note 14)46,766
 31.11
  
Exercised(109,971) (7.63)  
Forfeited(2,610,431) (29.93)  
Expired(205,927) (33.17)  
Balances at September 30, 201712,641,770
 28.59
 7.86
Exercisable at September 30, 20175,313,100
 29.85
 6.77
RSU activity was as follows:
Intrexon
Number of Restricted Stock UnitsWeighted Average Grant Date Fair ValueWeighted Average Remaining Contractual Term (Years)
Balances at December 31, 20191,781,982  $8.71  1.24
Granted3,103,819  3.08  
Vested(2,625,093) (3.97) 
Forfeited(363,527) (8.57) 
Balances at June 30, 20201,897,181  6.09  0.87
Precigen currently uses authorized and unissued shares to satisfy share award exercises.
In October 2015, the compensation committee and the independent members of Intrexon's board of directors approved a compensation arrangement wherebyThe Company's Executive Chairman ("Executive Chairman"), who previously served as the Company's Chief Executive Officer ("CEO") would receive a monthly salary. Previously, the CEO did not receive compensation for his services as an employee of the Company other than through his participation in the Company's Annual Executive Incentive Plan which became effectiveuntil January 1, 2015. Pursuant to the compensation agreement, the CEO receives2020, received a base salary of $200 per month through March 31, 2020, payable in fully vestedfully-vested shares of IntrexonPrecigen common stock with such shares subject to a three-year lock-up on resale. The monthly number of shares of common stock iswas calculated based on the closing price on the last trading day of each month through March 2019 and based on the volume weighted average of the price of Precigen common stock over the 30 day period ending on the last calendar day of each month thereafter, and the shares arewere issued pursuant to the terms of a Restricted Stock Unit Agreement ("RSU Agreement") which was executed between IntrexonPrecigen and the CEOExecutive Chairman pursuant to the terms of the


2013 Plan. The RSU Agreement became effective in November 2015, and had an initial term of 12 months. In October 2016, the independent members of Intrexon's board of directors, with the recommendation of the compensation committee of the board of directors, approved an extension of the RSU Agreement through December 31, 2016, and in December 2016 further approved an extension of the RSU Agreement to expire onexpired March 31, 2017, both of which were on the same terms as the original RSU Agreement. In March 2017, the independent members of Intrexon's board of directors, with the recommendation of the compensation committee of the board of directors, approved a renewal of the RSU Agreement through March 31, 2018 on the same terms as the original RSU Agreement.2020. The fair value of the shares issued as compensation for services is included in selling, general, and administrative expenses in the Company's condensed consolidated statements of operations and totaled $480 and $463$495 for the three months ended SeptemberJune 30, 20172019, and 2016, respectively,$454 and $1,428 and $1,397$981 for the ninesix months ended SeptemberJune 30, 20172020 and 2016,2019, respectively.
AquaBounty Stock Option Plans
In March 2016, AquaBounty's board of directors adopted the AquaBounty 2016 Equity Incentive Plan ("AquaBounty 2016 Plan") to replace the AquaBounty 2006 Equity Incentive Plan ("AquaBounty 2006 Plan"). The AquaBounty 2016 Plan provides for the issuance of incentive stock options, non-qualified stock options and awards of restricted and direct stock purchases to directors, officers, employees, and consultants of AquaBounty.  The AquaBounty 2016 Plan was approved by AquaBounty's shareholders at its annual meeting in April 2016. Upon the effectiveness of the AquaBounty 2016 Plan, no new awards may be granted under the AquaBounty 2006 Plan.
As of September 30, 2017, there were 227,203 options outstanding under both AquaBounty plans, of which 183,373 were exercisable, at a weighted average exercise price of $9.39 per share. As of December 31, 2016, there were 185,591 options outstanding under these plans, of which 181,766 were exercisable, at a weighted average exercise price of $7.89 per share. The AquaBounty stock option data reflect a 1-for-30 reverse stock split of AquaBounty's common stock effective January 5, 2017.
16. Commitments and Contingencies
15. Operating Leases
The Company leases certain facilities and equipment under noncancelable 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 ten 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 equipmentCompany 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. At September 30, 2017, future minimumCompany and do not contain residual value guarantees, covenants, or other restrictions.
The components of lease payments under operating leases having initial or remaining noncancelable lease terms in excess of one year arecosts were as follows:
Three Months Ended 
 June 30,		Six Months Ended 
 June 30,
2020201920202019
Operating lease costs$1,756  $1,777  $3,516  $3,618  
Short-term lease costs415  535  852  1,014  
Variable lease costs544  508  1,037  1,022  
Lease costs$2,715  $2,820  $5,405  $5,654  
35
2017$1,252
20188,083
20198,042
20208,063
20217,132
20226,085
Thereafter25,695
Total$64,352

Rent expense, including other facility expenses, was $3,165 and $2,075 for the three months ended September 30, 2017 and 2016, respectively, and $7,772 and $6,410 for the nine months ended September 30, 2017 and 2016, respectively.
The Company maintains subleases for certain of its facilities. Rental income under sublease agreements was $32 and $184 for the three months ended September 30, 2017 and 2016, respectively, and $105 and $854 for the nine months ended September 30, 2017 and 2016, respectively. Future rental income is expected to be $20 for 2017, $80 for 2018, and $67 for 2019.
Purchase Commitments
As of SeptemberJune 30, 2017, the Company had outstanding contractual purchase commitments2020, maturities of $10,618, which primarily relatelease liabilities, excluding short-term and variable leases, were as follows:
2020$3,281  
20217,465  
20226,993  
20235,819  
20245,718  
20253,428  
Thereafter826  
Total33,530  
Present value adjustment(7,804) 
Total$25,726  
Current portion of operating lease liabilities$4,514  
Long-term portion of operating lease liabilities21,212  
Total$25,726  
Other information related to amounts that will be paidoperating leases in 2018continuing operations was as follows:
June 30,
2020		December 31,
2019
Weighted average remaining lease term (years)4.805.24
Weighted average discount rate10.97 %10.96 %
Six Months Ended 
 June 30,
20202019
Supplemental disclosure of cash flow information
Cash paid for operating lease liabilities$3,764  $3,627  
Operating lease right-of-use assets added in exchange for new lease liabilities65  —  
16. Commitments and 2019 upon delivery of commercial non-browning apple trees.

Contingencies
Contingencies
In March 2012, Trans Ova was named as a defendant in a licensing and patent infringement suit brought by XY, LLC ("XY"), alleging that certain of Trans Ova's activitiessale of semen-sorting products and services breached a 2004 licensing agreement and infringed on XY's patents that XY allegedly owned.related to semen sorting. Trans Ova filed a numbercounterclaimed for breach of counterclaims in the case. In Colorado District Court,contract, antitrust, and patent invalidity, and the matter proceeded to a jury trial in the United States District Court for the District of Colorado in January 2016. The jury determined that XY and Trans Ova had each breached the licensing agreement and that Trans Ova had infringed on XY's patents. In April 2016, the court issued its post-trial order,final judgment, awarding $528 in damages to Trans Ova and $6,066 in damages to XY. The order also provided Trans Ova with a compulsory licensethe ability to continue to practice XY's technology, subject to an ongoing royalty obligation.obligation of 12.5% of gross proceeds on Trans Ova's standard sorted semen products, plus a 2% enhancement on those products utilizing "reverse-sorted semen",or semen that is frozen before being sorted. In addition, the court assigned a $5.00 minimum royalty for a straw of sexed semen. Both parties appealed the district court's order, which appeal is pending beforeorder. In May 2018, the Court of Appeals for the Federal Circuit. Circuit denied Trans Ova's appeal of its claims for antitrust, breach of contract and patent invalidity (except as to one patent, for which the Federal Circuit affirmed invalidity in a separate, same-day ruling in a third-party case). The Federal Circuit remanded the district court's calculation of the ongoing royalty and instructed the district court to re-calculate the ongoing royalty in light of post-verdict economic factors. In March 2019, the district court clarified the royalty base and reset the royalty rates consistent with the Federal Circuit's opinion. In an amended final judgment, the district court increased the royalty rate on Trans Ova's standard sorted semen products to 18.75%. For the reverse-sort enhancement, however, it applied a weighted, blended royalty of 12.63% to Trans Ova's entire in vitro fertilization ("IVF") service cycle that utilizes reverse-sorted semen. The district court also changed the minimum royalty for a straw of sexed semen to $6.25 for a 2-
36
Table of Contents
million cell straw (prorated appropriately for straws of higher cell counts), and assigned a minimum royalty for a sexed embryo at $6.25 per embryo. The new royalty rates were made retroactive to February 2016 (the end date of the trial).
Since the inception of the 2004 licensing agreement, Trans Ova has remitted payments to XY pursuant to the terms of that agreement, or pursuant to the terms of the district court's April 2016 post-trial order and its March 2019 post-remand order, and has recorded these payments in cost of services in the condensed consolidated statements of operations for the respective periods. For the period from inception of the 2004 licensing agreement through the district court's April 2016 order, aggregate royalty and license payments were $3,170, of which $2,759 had not yet been deposited by XY. For the nine months ended September 30,In 2016, the Company recorded litigationthe expense of $4,228, which is included in selling, general and administrative expenses on the accompanying consolidated statement of operations and representsrepresenting the excess of the net damages awarded to XY, including prejudgment interest, over the liability previously recorded by Trans Ova for uncashed checks previously remitted to XY. In August 2016, Trans Ova deposited the net damages amount, including prejudgment interest, into the district court's treasury,registry, to be held until the appeals process iswas complete and final judgment amounts arewere determined. After the appeal, the district court subsequently released the funds held in its registry to XY in January 2019. As of September 30, 2017, this amount is included in restricted cashfor post-trial damages, Trans Ova continued to remit payment to XY every quarter based on the accompanying consolidated balance sheet.original ongoing royalty rates set by the district court, though XY refused to cash those checks.
Under the district court's March 2019 post-remand order clarifying the royalty base and resetting the royalty rates, Trans Ova recalculated royalties owed from February 2016 through the first quarter of 2019, plus applicable pre- and post-judgment interest, and remitted that payment, totaling $5,801, to XY in May 2019. In June 2019, XY deposited the $5,801 into the district court's registry while the parties resolved a separate dispute over the appropriate calculation of royalties. XY filed a motion claiming over $1,000 in additional back royalties. Trans Ova contested XY's motion. On February 6, 2020, the district court denied XY's motion without prejudice, holding that XY failed to satisfy its obligation under the court's local rules to meaningfully confer with Trans Ova before filing its motion. The district court held that, should XY choose to re-file its motion, it must include a substantial certificate of conferral demonstrating that it seriously and in good faith tried to resolve its disputes with Trans Ova.
Since 2016, 7 of XY's patents subject to the ongoing royalty have expired or been invalidated. The remaining 3 patents, which all expire in the first half of 2022, are limited to the use of reverse-sorted semen. In December 2016,2019, shortly after XY's last patent not limited to reverse-sorting expired, Trans Ova electedmoved for partial relief from judgment. Trans Ova sought an appropriate reduction in its royalty obligation in light of the fact that many of its products and services do not employ reverse sorting, whereas all of XY's remaining non-expired patents are limited to voidreverse sorting. On May 5, 2020, the outstanding checks discussed above,court granted Trans Ova's motion in its entirety and these amounts have been reclassified to other accrued liabilitiesissued a second amended final judgment, which substantially reduced Trans Ova's royalty obligation. The court held that, as of December 4, 2019, Trans Ova's royalty obligation on standard sorted semen products terminated. For the reverse-sort enhancement, the court held that, from December 4, 2019 through January 14, 2022, Trans Ova owes a weighted, blended royalty of 3.93% on the accompanying consolidated balance sheets asentire IVF service cycle. From January 15, 2022 through May 21, 2022, Trans Ova will owe XY a royalty rate of September 30, 20175% on just the reverse-sort and December 31, 2016. DependingIVF procedure components of the IVF service cycle, with no royalty being owed on the outcome of an appeal decision, the damages awarded to either party could decrease, increase, or be eliminated. The appeal decision may also remand to the Colorado District Court all, or a portion,ovum pick-up and IVF drug components of the issues being appealed. cycle. The order is subject to appeal by XY. On May 22, 2022, Trans Ova will cease owing XY any royalty for the litigated patents.
In June 2020, XY filed a notice of appeal with the Federal Circuit, seeking reversal of the district court's May 5 order and second amended final judgment that reduced Trans Ova's royalty obligation. XY's appeal is expected to be argued and decided sometime in 2021.
In December 2016, XY filed a complaint for patent infringement, and trade secret misappropriation, and various state law claims against Trans Ova in the United States District Court for the Western District of Texas in Waco, Texas. Since the claims in thisthe 2016 complaint directly relate to the 2012 licensing dispute and patent issues,parties' other litigation, Trans Ova filedsucceeded in transferring the case to the same Colorado district court that presided over the 2012 litigation. That court subsequently dismissed 9 of the complaint's 12 counts, including all 5 non-patent counts and 4 patent counts. The court subsequently dismissed a fifth patent count after ruling that the patent was grantedinvalid, leaving only 2 patent counts left in the case. In February 2019, a motionWisconsin district court invalidated 1 of the 2 remaining patents, which XY had asserted against another competitor. After initially appealing the Wisconsin court's invalidation of its patent, XY subsequently withdrew the appeal. In March 2019, the Colorado district court stayed the 2 remaining patent counts (including the 1 later invalidated by the Wisconsin court) and entered final judgment against XY's 10 other dismissed counts. The 2016 litigation is administratively closed, pending disposition of XY's appeal to the Federal Circuit, in which XY has appealed the district court's dismissal of four of its patent causes of action. XY did not appeal the dismissal of any of the non-patent causes of action. The Federal Circuit opinion was issued on July 31, 2020. The appellate court reversed the Colorado district court's dismissal of the appealed patents and remanded the disposition of those patents back to the district court for change of venue to Colorado District Court. further proceedings consistent with its opinion.
Trans Ova also filedshall continue to utilize the technology consistent with the determinations of the court proceedings. Nonetheless, these disputes remain subject to a motionnumber of uncertainties, including the outcome of appellate proceedings, the possibility of
37
Table of Contents
further claims by XY, and the impact of these matters on Trans Ova's ability to dismiss, which is now pending beforeutilize the Colorado court.technology. Trans Ova and the Company could elect to enter into a settlement agreement in order to avoid the further costs and uncertainties of litigation, to modifylitigation.
In October 2018, the court-ordered license to XY's technologies, or to recover monetary damages stemmingCompany received a subpoena from Trans Ova's counterclaims for antitrust violations by XY and its parent company, Inguran.
In May 2016, two putative shareholder class action lawsuits, captioned Hoffman v. Intrexon Corporation et al. and Gibrall v. Intrexon Corporation et al., were filed in the U.S. District Court for the Northern DistrictDivision of California on behalf of purchasers of Intrexon's common stock between May 12, 2015 and April 20, 2016 (the "Class Period"). In July 2016, the court consolidated the lawsuits and appointed a lead plaintiff. The consolidated amended complaint names as defendants Intrexon and certain of Intrexon's current and former officers (the "Defendants"). It alleges, among other things, that the Defendants made materially false and/or misleading statements during the Class Period with respect to the Company's business, operations, and prospects in violation of Sections 10(b) and 20(a)Enforcement of the Securities and Exchange ActCommission ("SEC") informing the Company of 1934, as amended. The plaintiffs' claims are based in part upon allegations in a report published in April 2016 on the Seeking Alpha financial blog. The plaintiffs seek compensatory damages, interest and an award of reasonable attorneys' fees and costs. The Defendants moved to dismiss the case. On February 24, 2017, the court grantednon-public, fact-finding investigation concerning the Company's motiondisclosures regarding its methane bioconversion platform. The Company has produced documents to, dismissand met with, the lawsuit on the grounds that the plaintiff failed to state a claim, while granting the plaintiff leave to amend. The plaintiff subsequently notified the court that it would seek to appeal the court's ruling rather than amend its complaint. On April 26, 2017, the court entered final judgment in the case. Notice of appeal was filed by the plaintiff on May 26, 2017. On October 26, 2017, the plaintiff filed a voluntary motion to dismiss the case, which the court of appeals granted on November 1, 2017.
In July 2016, a putative shareholder derivative action captioned Basile v. Kirk et al. was filed in the Circuit Court of Fairfax County, Virginia, against certainstaff of the Company's directors,SEC and is voluntarily cooperating with the Company's CEO, and Third Security, and namingSEC investigation. In November 2019, the staff of the SEC informed the Company as a nominal defendant.that its investigative work was largely completed. The complaint alleges causes of action for breaches of fiduciary dutyCompany and unjust enrichment relating to the entry by the Company into the Services Agreement with Third Security. The plaintiff seeks, among other things, damages in an unspecified amount, disgorgement of improper benefits, appropriate equitable relief, and an award of attorney fees and other costs and expenses. The complaint is substantially similar to two separate demands made by shareholders concerning the Services Agreement and Mr. Kirk's compensation. The board of directorsstaff of the Company appointed a Special Litigation Committee ("SLC") consisting of independent directors to investigate the claims and allegations made in the derivative action and in the two shareholder demands and to decide on behalf of the Company whether the claims and allegations should be pursued. The Basile case was stayed pending the report of the SLC. In November 2016, the SLC completed its review and evaluation and unanimously determined that the claims were without merit because the compensation arrangements were the result of an informed and disinterested decision-making process and were fair to the Company, and that prosecution of the asserted claims was not in the best interest of Intrexon or its shareholders. Based upon the determination of the SLC, on February 24, 2017, the Company moved to dismiss the court action pursuant to Virginia statute. On June 8, 2017,

the court granted the Company's motion to dismiss while granting the plaintiff leave to amend. On August 30, 2017, the plaintiff filed a consent motion for leave to amend along with the amended shareholder derivative complaint. The Company moved to dismiss the amended complaint on October 6, 2017. The Company intends toSEC continue to defend the lawsuit vigorously. There can be no assurance, however, regarding the ultimate outcome of the case.
In addition to the shareholder demands above,engage in June and July 2016, two shareholders made separate demands under Virginia law demanding that the Company file suit against certain of its current officers and directors for alleged breaches of fiduciary duty and other claims. The demands were based upon and asserted the allegations previously published in April 2016 in the Seeking Alpha financial blog. In July 2016, the Company's board of directors authorized the SLC to expand its review to include all such allegations. In February 2017, the SLC completed its review and evaluation and unanimously determined that there was no basis for any of the allegations, that the Company's officers and directors did not breach their fiduciary duties or any other applicable law, and that prosecution of the asserted claims was not in the best interest of Intrexon or its shareholders. Following the SLC's determination, in March 2017, one of the putative shareholders filed a derivative complaint captioned Luger v. Kirk et al. in the Circuit Court of Fairfax County, Virginia. The Company is a nominal defendant in this action, and other defendants include certain of the Company's directors, the Company's CEO, and Third Security. The complaint alleges causes of action for breaches of fiduciary duty and unjust enrichment relating to the entry by the Company into the Services Agreement with Third Security, Mr. Kirk's compensation, and certain allegations contained in the April 2016 Seeking Alpha financial blog piece. Based on the determination of the SLC and a review of applicable law, the Company intends to defend the lawsuit vigorously; however,discussions about potential resolutions, but there can be no assurance regarding the ultimate outcome of the investigation.
On July 10, 2020, the Company received a notice of arbitration from Harvest pursuant to the Collaboration Investment Opportunity Agreement dated March 13, 2015. The Company intends to defend itself vigorously, but there can be no assurance as to the ultimate outcome of this case.arbitration.
The DivisionCompany has previously entered into strategic collaborations, including ECCs and JVs, to fund and develop products enabled by its technologies. These relationships involve complex interests, and the Company's interests may diverge with those of Enforcementits collaborators, which can occur as a result of operations under those collaborations, business or technological developments, or as the U.S. SecuritiesCompany transitions away from, or terminates, certain strategic collaborations. The Company has had, and Exchange Commission ("SEC") is conducting an investigation whichhas, disagreements and disputes with certain collaborators and JV partners, including Harvest, the IEP Investors, and the IEPII Investors. While the Company believes concerns certain issues raisedit is entitled to payment for work performed per its collaborations and JVs, consistent with its policy for accounting for accounts receivable, the Company has fully reserved the amount of any disputed accounts receivable that remained outstanding as of June 30, 2020. These disagreements and disputes may result in litigation, unfavorable settlements, or concessions by the foregoing matters. The Company, has met with the SEC staff and is voluntarily cooperating with their investigation. The Company's boardadverse regulatory action, or management distraction, any of directors has authorized the SLC to monitorwhich could harm the Company's interaction with the SEC staff.business or operations.
The Company may become subject to other claims, assessments, and assessmentsgovernmental investigations from time to time in the ordinary course of business. 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 SeptemberJune 30, 2017 and December 31, 2016,2020, 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.
17. Related Party Transactions
Third Security and Affiliates
The Company's CEOExecutive Chairman and Chairmana member of the board of directors of the Company is also the Senior Managing Director and CEO of Third Security and owns 100% of the equity interests of Third Security.
In November 2015, Through December 2019, the independent members of Intrexon's board of directors, with the recommendation of the audit committee of the board of directors, approved the execution ofCompany was party to a Services Agreement ("Services Agreement") with Third Security pursuant to which Third Security providesprovided the Company with certain professional, legal, financial, administrative, and other support services necessary to support the Company and its CEO. AsExecutive Chairman. Under the Services Agreement, as consideration for providing these services, Third Security iswas entitled to a fee of $800 per month to be paid in the form of fully-vested shares of the Company'sPrecigen common stock. Thestock that approximated $800 per month. In 2019, the number of shares of common stock iswas calculated based on the volume weighted average of the closing price of the Company's common stock over the 30-day period ending on the 15th day of each month. The payments made by the Company undercalendar month when the Services Agreement constitute, in the aggregate, an award under the 2013 Plan and are subject to the terms of the 2013 Plan (Note 15). The Services Agreement had a term of one year, can be terminated by the Company at any time, and may be extended only by agreement of the parties, including approval of a majority of the independent members of Intrexon's board of directors. In October 2016, the independent members of Intrexon's board of directors, with the recommendation of the audit committee of the board of directors, approved an extension of the Services Agreement through December 31, 2016. In December 2016, the independent members of Intrexon's board of directors, with the recommendation of the audit committee of the board of directors, approved an extension of the Services Agreement through December 31, 2017.applicable services were provided. For the three and six months ended SeptemberJune 30, 2017 and 2016,2019, the Company issued 118,828483,279 shares and 89,326839,993 shares, respectively, with values of $2,251$2,284 and $2,132,$4,362, respectively, to Third Security as payment for services rendered pursuant to the Services Agreement. For
Following the nine months ended September 30, 2017 and 2016,expiration of the Services Agreement, the Company issued 329,649 shares and 254,496 shares, respectively,entered into a new agreement with values of $6,506 and $6,542, respectively, toThird Security under which the Company reimburses Third Security for certain tax-related services performed by Third Security as payment for services pursuant torequested by the Services Agreement. In addition to the foregoing Services Agreement, theCompany. The Company also reimburses Third Security for certain out-of-pocket expenses incurred on the Company's behalf prior to and after the expiration of the Services Agreement under a separate agreement. The total expenses incurred by the Company

under this arrangementthese arrangements were $4$38 and $156$1 for the three months ended SeptemberJune 30, 20172020 and 2016,2019, respectively, and $428$76 and $301$18 for the ninesix months ended SeptemberJune 30, 20172020 and 2016,2019, respectively.
See also Note 1514 regarding compensation arrangements between the Company and its CEO.Executive Chairman.
38
Table of Contents
The Company also subleases certain administrative offices to Third Security. The significant terms of the lease mirror the terms of the Company's lease with the landlord, and the Company recorded sublease income of $24 and $22 for the three months ended June 30, 2020 and 2019, respectively, and $46 and $44 for the six months ended June 30, 2020 and 2019, respectively.
See Notes 1, 3, and 13 regarding additional transactions with affiliates of Third Security.
Transactions with ECC Parties
In addition to entities controlled by Third Security, any entityCollaborators in which the Company holds more than a de minimis equity securities,interest, including securitiesinterests received as upfront or milestone consideration, and which also are party to a collaboration with the Companypayments through collaborations, are considered to be related parties.
The Company holds promissory notesheld Series A Convertible Preferred Stock (the "Convertible Preferred Shares"), a convertible intonote, common shares of Fibrocell, common stock ("convertible note") and warrants to purchase shares of Fibrocell common stock.stock previously acquired through collaborations and other transactions. In December 2019, Fibrocell was acquired by Castle Creek Pharmaceutical Holdings, Inc. ("Castle Creek"), a privately held company focused on developing medicine for rare genetic disorders. As a result, the Company received $1,280 in December 2019 for its shares of September 30, 2017Fibrocell common stock and December 31, 2016,received a total of $3,311 in January 2020 for the value ofConvertible Preferred Shares and the convertible note, and warrants totaled $4,172 and $1,642, respectively, andincluding accrued interest thereon. The $3,311 is included in other assetsreceivables on the accompanying consolidated balance sheets. See Note 7 for additional discussion of the Company's investments in Fibrocell.
In May 2017, the Company purchased a promissory note from Oragenics ("Oragenics' Promissory Note") with a principal value of $2,400 which matures in May 2019 and accrues interest at a rate of 12% per annum. This note is included in other assets on the accompanyingcondensed consolidated balance sheet as of September 30, 2017. See Note 19 for additional discussion regardingDecember 31, 2019. Subsequent to the Oragenics Promissory Note.
Other Related Parties
In June 2015, the Company entered into an agreement with Harvest, an investment fund sponsoredacquisition by Harvest Capital Strategies, LLC, andCastle Creek, Fibrocell is no longer a related party based on ownership in the fund by affiliates of Third Security. Harvest was established to invest in life science research and development start-up opportunities that the Company offered to Harvest with exclusive rights of first-look and first negotiation. Based on this agreement, Harvest established six new collaboration entities, each of which entered into an ECC with the Company in a designated field. The terms of such ECCs were negotiated between the Company and Harvest. As consideration for providing exclusive rights of first-look and first negotiation for start-up opportunities, the Company received a portion of the management fee collected by the fund sponsor of Harvest. These fees are included in other income in the accompanying consolidated statements of operations and totaled $613 for the three months ended September 30, 2017 and 2016, and $1,839 and $1,871 for the nine months ended September 30, 2017 and 2016, respectively. In September 2017, the commitment period for Harvest was terminated and, as a result, our agreement with Harvest terminated. The termination of the agreement had no effect on the already-established collaborations with Harvest-sponsored entities.party.
18. Net Loss per Share
The following table presents the computation of basic and diluted net loss per share:
Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,		 Three Months Ended 
 June 30,		Six Months Ended 
 June 30,
2017 2016 2017 2016 2020201920202019
Historical net loss per share:       Historical net loss per share:
Numerator:       Numerator:
Net loss attributable to Intrexon$(39,689) $(28,982) $(89,752) $(142,475)
Net loss from continuing operations attributable to PrecigenNet loss from continuing operations attributable to Precigen$(43,354) $(32,140) $(73,296) $(83,613) 
Net loss from discontinued operations attributable to PrecigenNet loss from discontinued operations attributable to Precigen—  (6,626) (26,056) (15,862) 
Net loss attributable to PrecigenNet loss attributable to Precigen$(43,354) $(38,766) $(99,352) $(99,475) 
Denominator:       Denominator:
Weighted average shares outstanding, basic and diluted120,518,885
 118,346,782
 119,741,291
 117,785,160
Weighted average shares outstanding, basic and diluted164,065,087  153,749,929  162,201,915  153,351,208  
Net loss attributable to Intrexon per share, basic and diluted$(0.33) $(0.24) $(0.75) $(1.21)
Net loss per share:Net loss per share:
Net loss from continuing operations attributable to Precigen per share, basic and dilutedNet loss from continuing operations attributable to Precigen per share, basic and diluted$(0.26) $(0.21) $(0.45) $(0.55) 
Net loss from discontinued operations attributable to Precigen per share, basic and dilutedNet loss from discontinued operations attributable to Precigen per share, basic and diluted—  (0.04) (0.16) (0.10) 
Net loss attributable to Precigen per share, basic and dilutedNet loss attributable to Precigen per share, basic and diluted$(0.26) $(0.25) $(0.61) $(0.65) 
The following potentially dilutive securities as of SeptemberJune 30, 20172020 and 2016,2019, have been excluded from the above computations of diluted weighted average shares outstanding for the three and ninesix months then ended as they would have been anti-dilutive:
June 30,
20202019
Convertible debt24,750,914  19,667,765  
Options11,383,039  11,730,954  
Restricted stock units1,897,181  2,271,277  
Warrants133,264  133,264  
Total38,164,398  33,803,260  
39
 September 30,
 2017 2016
Options12,641,770
 12,103,407
Warrants133,264
 30,191
Total12,775,034
 12,133,598
Table of Contents
19. Segments
In April 2019, the Company initiated efforts to better deploy resources, realize inherent synergies, and position the Company for growth with a core focus on healthcare and initiated plans to achieve this through various corporate activities ultimately resulting in the closing of the Transactions in January 2020 (Note 3). Beginning in the second quarter of 2019, the Company's CODM assessed the operating performance of and allocated 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 loss before (i) interest expense, (ii) income tax expense or benefit, (iii) depreciation and amortization, (iv) stock-based compensation expense, (v) adjustments for bonuses paid in equity awards, (vi) loss on impairment of goodwill and other long-lived assets, (vii) equity in net loss of affiliates, and (viii) recognition of previously deferred revenue associated with upfront and milestone payments as well as cash outflows from capital expenditures and investments in affiliates. For the six months ended June 30, 2020, the Company modified the current period definition of Segment Adjusted EBITDA to exclude adjustments recorded to reverse the difference of bonuses accrued as of December 31, 2019 compared to the value of equity awards granted, as the Company determined in March 2020 that those accrued bonuses would be paid through the grant of equity awards instead of cash. Segment Adjusted EBITDA for the three and six months ended June 30, 2019 was not impacted by this change.
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. Corporate expenses are not allocated to the segments and are managed at a consolidated level. 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. The Company's CODM now regularly reviews disaggregated financial information for each of the Company's operating segments. The Company's segment presentation excludes consideration of all of the businesses included in the Transactions (Note 3).
For the three and six months ended June 30, 2020, the Company's reportable segments were (i) PGEN Therapeutics, (ii) ActoBio, (iii) MBP Titan, (iv) Trans Ova, and (v) the Human Biotherapeutics division. These identified reportable segments met the quantitative thresholds to be reported separately for the six months ended June 30, 2020. See Note 1 for a description of PGEN Therapeutics, ActoBio, MBP Titan, and Trans Ova. The Company's Human Biotherapeutics division is an operating division within Precigen which includes the Company's majority-owned subsidiary, Triple-Gene LLC, and its collaborations with Fibrocell (Note 5). The All Other category as reported below reflects Precigen's other operating segments that do not meet the quantitative thresholds to be reported separately. The Company has also recast 2019 segment information on the same basis as the current presentation.
Information by reportable segment was as follows:
Three Months Ended June 30, 2020
PGEN TherapeuticsActoBioMBP TitanTrans OvaHuman BiotherapeuticsAll OtherTotal
Revenues from external customers$218  $32  $—  $23,845  $4,210  $2,105  $30,410  
Intersegment revenues1,612  (3) —  90  —  —  1,699  
Total segment revenues$1,830  $29  $—  $23,935  $4,210  $2,105  $32,109  
Segment Adjusted EBITDA$(5,698) $(1,135) $(5,199) $6,528  $(495) $637  $(5,362) 
Three Months Ended June 30, 2019
PGEN TherapeuticsActoBioMBP TitanTrans OvaHuman BiotherapeuticsAll OtherTotal
Revenues from external customers$549  $181  $1,215  $24,392  $2,462  $3,998  $32,797  
Intersegment revenues2,412  52  2  674  —  60  3,200  
Total segment revenues$2,961  $233  $1,217  $25,066  $2,462  $4,058  $35,997  
Segment Adjusted EBITDA$(7,467) $(4,124) $(9,188) $4,932  $(354) $(2,479) $(18,680) 
40
Table of Contents
Six Months Ended June 30, 2020
PGEN TherapeuticsActoBioMBP TitanTrans OvaHuman BiotherapeuticsAll OtherTotal
Revenues from external customers$378  $230  $—  $40,630  $14,573  $4,397  $60,208  
Intersegment revenues3,715  (3) 7  199  —  281  4,199  
Total segment revenues$4,093  $227  $7  $40,829  $14,573  $4,678  $64,407  
Segment Adjusted EBITDA$(12,617) $(3,125) $(13,963) $5,329  $(1,833) $1,129  $(25,080) 
Six Months Ended June 30, 2019
PGEN TherapeuticsActoBioMBP TitanTrans OvaHuman BiotherapeuticsAll OtherTotal
Revenues from external customers$1,730  $582  $2,696  $39,326  $2,845  $8,095  $55,274  
Intersegment revenues4,777  495  2  947  —  73  6,294  
Total segment revenues$6,507  $1,077  $2,698  $40,273  $2,845  $8,168  $61,568  
Segment Adjusted EBITDA$(14,836) $(6,562) $(17,214) $2,706  $(577) $(3,717) $(40,200) 
The table below reconciles total segment revenues from reportable segments to total consolidated revenues:
Three Months Ended 
 June 30,		Six Months Ended 
 June 30,
2020201920202019
Total segment revenues from reportable segments$30,004  $31,939  $59,729  $53,400  
Other revenues, including from other operating segments2,526  4,097  5,740  8,315  
Elimination of intersegment revenues(2,106) (3,200) (5,207) (6,294) 
Total consolidated revenues$30,424  $32,836  $60,262  $55,421  
41
Table of Contents
The table below reconciles Segment Adjusted EBITDA for reportable segments to consolidated net loss from continuing operations before income taxes:
Three Months Ended 
 June 30,		Six Months Ended 
 June 30,
2020201920202019
Segment Adjusted EBITDA for reportable segments$(5,999) $(16,201) $(26,209) $(36,483) 
All Other Segment Adjusted EBITDA637  (2,479) 1,129  (3,717) 
Remove cash paid for capital expenditures and investments in affiliates1,879  4,155  4,620  7,667  
Add recognition of previously deferred revenue associated with upfront and milestone payments5,573  6,247  18,046  10,859  
Other expenses:
Interest expense(4,592) (4,353) (9,184) (8,658) 
Depreciation and amortization(4,783) (4,863) (9,593) (10,207) 
Impairment losses(22,041) —  (22,041) —  
Stock-based compensation expense(4,897) 484  (10,615) (7,764) 
Adjustment related to bonuses paid in equity awards—  —  2,833  —  
Equity in net loss of affiliates(251) (716) (602) (1,464) 
Other3  —  12  —  
Unallocated corporate costs(7,344) (11,426) (17,526) (29,448) 
Eliminations(1,659) (3,162) (4,246) (6,012) 
Consolidated net loss from continuing operations before income taxes$(43,474) $(32,314) $(73,376) $(85,227) 
As of June 30, 2020 and December 31, 2019, the Company had $5,997 and $6,724, respectively, of long-lived assets in foreign countries from continuing operations. The Company recognized revenues from continuing operations derived in foreign countries totaling $122 and $233 for the three months ended June 30, 2020 and 2019, respectively, and $363 and $765 for the six months ended June 30, 2020 and 2019, respectively.
20. Subsequent Events
In November 2017, concurrent with the closing of Oragenics' preferred stock financing, the Company exchanged its Oragenics' Promissory Note and receivables due from Oragenics, as well as accrued interest, totaling $3,376 for Oragenics Series C preferred stock ("Series C Preferred Stock"). The Series C Preferred Stock is non-voting and non-convertible and is redeemable in whole or part at any time by Oragenics in cash. The Series C Preferred Stock accrues an annual 12% dividend payable in additional Series C Preferred Stock through May 10, 2019, and after such date, the annual dividend increases to 20%. Additionally,July 2020, the Company and Oragenics, amended certain future payment terms under its ECCs.
In October 2017,a related party, mutually agreed to terminate the ECC for the treatment of oral mucositis effective immediately. Accordingly, the Company entered into a Preferred Stock Equity Facility ("Preferred Stock Facility") with an affiliatewill recognize the remaining balance of Third Security ("Third Security Affiliate"). Under the Preferred Stock Facility, the Company may, from time to time at its sole and exclusive option, issue and sell to the Third Security Affiliate, up to $100,000 of newly issued Series A Redeemable Preferred Stock ("Series A Preferred Stock"). Any issued Series A Preferred Stock is non-voting, accrues dividends of 8% per annum and, subject to limited exceptions, is senior to Intrexon's common stock with respect to the rights to the payment of dividends and on paritydeferred revenue associated with the common stock with respect toECC totaling $2,823 as collaboration and licensing revenue during the distributionthird quarter of assets in the event2020.
42
Table of any liquidation, dissolution or winding up or change of control of Intrexon. Any issued Series A Preferred Stock is convertible into common stock only following receipt of shareholder approval by the Company, including a majority of the shares voted by those shareholders unaffiliated with Mr. Kirk (the "Shareholder Approval"), subject to any necessary regulatory approvals. Following receipt of the Shareholder Approval and receipt of any necessary regulatory approvals, any issued Series A Preferred Stock is convertible into Intrexon common stock based on a conversion price using the 20-day volume-weighted average market price as of market closing on the fifth business day prior to the mailing of the proxy statement soliciting the Shareholder Approval, subject to adjustment for certain stock splits and similar events. The Company has agreed to take all reasonable steps necessary to seek Shareholder Approval on or before the date of its annual meeting of shareholders in 2019. Any issued Series A Preferred Stock is redeemable at the election of the Company at any time, or at the election of the Third Security Affiliate after December 31, 2020. The Preferred Stock Facility will expire on the earliest to occur of: (i) the date on which the Third Security Affiliate has purchased shares of Series A Preferred Stock in the aggregate amount of $100,000, (ii) April 30, 2019, (iii) the date of the Shareholder Approval, and (iv) the mutual agreement of the parties.Contents
Also, in November 2017, the Company filed with the State Corporation Commission of the Commonwealth of Virginia (the "SCC") Articles of Amendment to the Company's Amended and Restated Articles of Incorporation (the "Amendment"), which amended Article III thereof to set the designations of the Series A Preferred Stock (described above) to be issued pursuant to the Preferred Stock Facility. The Amendment became effective upon the issuance by the SCC in November 2017 of a certificate of amendment.

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.10-K for the year ended December 31, 2019, or Annual Report.
The following discussion contains forward-looking statements that reflect our plans, estimates, 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, on Form 10-Q, particularly in "Special Note Regarding Forward-Looking Statements" and "Risk Factors." The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date hereof.
Overview
We believe we are a leaderdedicated 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 have developed an extensive pipeline of therapies across multiple indications within these core focus areas.
We believe that our array of technology platforms uniquely position us among other biotechnology companies to advance precision medicine. Precision medicine is the fieldpractice of synthetic biology, an emerging and rapidly evolving disciplinetherapeutic product development that applies engineering principlestakes into account specific genetic variations within populations impacted by a disease to biological systemsdesign targeted therapies to enable rational, design-based control of cellular functionimprove outcomes for a specific purpose. Using our suite ofdisease or patient population. Our proprietary and complementary technologies, we design, build and regulatetechnology platforms provide a strong foundation to realize the core promise of precision medicine by supporting our efforts to construct powerful gene programs which are DNA sequences that consist of key genetic components. A singleto drive efficacy, deliver these programs through viral, non-viral, and microbe-based approaches to drive lower costs, and control gene program or a complex, multi-genic program are fabricatedexpression to drive safety. Our therapeutic platforms, including UltraCAR-T, ActoBiotics, and stored within a DNA vector. Vectors are segments of DNA used as a vehicle to transmit genetic information. DNA vectors can, in turn, be introduced into cells in order to generate a simple or complex cellular system, which are the basic and complex cellular activities that take place within a cell and the interaction of those systems in the greater cellular environment. It is these genetically modified cell systems that can be used to produce biological effector molecules, or be employed directly to enable the development of new and improved products and manufacturing processes across a variety of end markets, including health, food, energy, environment, and consumer. Our synthetic biology capabilities include the abilityAdenoVerse Immunotherapy, allow us to precisely control the amount,level and physiological location of gene expression and modification ofmodify biological molecules to control the function and output of living cells to treat underlying disease conditions.
We are actively advancing our lead programs, including: PRGN-3005 and optimizePRGN-3006, which are built on our UltraCAR-T platform; AG019, which is built on our ActoBiotics platform; and INXN-4001, a non-viral triple-effector plasmid DNA, which is built on our UltraVector platform. In addition, the U.S. Food and Drug Administration, or FDA, has cleared the Investigational New Drug, or IND, application to initiate a Phase 1/2 trial to study PRGN-2009 in participants with human papillomavirus-associated, or HPV-associated, cancers. We also have a robust pipeline of preclinical programs that we are pursuing in order to drive long-term value creation. We exercise discipline in our portfolio management by systematically evaluating data from our preclinical programs in order to make rapid "go" and "no go" decisions. Through this process, we can more effectively allocate resources to programs that we believe show the most promise and advance such programs to clinical trials.
Our Healthcare Subsidiaries
Our healthcare business is operated by our wholly owned subsidiaries PGEN Therapeutics, Inc., or PGEN Therapeutics, Precigen ActoBio, Inc., or ActoBio, and Exemplar Genetics LLC, doing business as Precigen Exemplar, or Exemplar, and also includes our majority ownership interest in Triple-Gene LLC, doing business as Precigen Triple-Gene, or Triple-Gene, as well as equity and royalty interests in therapeutics and therapeutic platforms from companies not controlled by us.
PGEN Therapeutics, Inc.
PGEN Therapeutics (formerly Precigen, Inc.) is a dedicated discovery and clinical stage biopharmaceutical company advancing the next generation of gene and cell therapies using precision technology to target urgent and intractable diseases in immuno-oncology, autoimmune disorders and infectious diseases. PGEN Therapeutics operates as an innovation engine, progressing a preclinical and clinical pipeline of well-differentiated therapies toward clinical proof-of-concept and commercialization.
PGEN Therapeutics is developing therapies primarily built on our UltraCAR-T therapeutics platform and our "off-the-shelf" AdenoVerse Immunotherapy platform. Through our UltraCAR-T therapeutics platform, we are able to precision-engineer UltraCAR-T cells to produce a homogeneous cell product that simultaneously co-expresses antigen-specific chimeric antigen receptor, or CAR, cells, 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 these
43
Table of Contents
UltraCAR-T cells overnight at a medical center's current good manufacturing practices facility 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 desired results at an industrial scale.
persistence in patients. Our AdenoVerse Immunotherapy platform utilizes a library of proprietary adenovectors for the efficient gene delivery of therapeutic effectors, immunomodulators, and vaccine antigens. We believe that because synthetic biologyour 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.
Our most advanced programs within PGEN Therapeutics include two therapies: PRGN-3005, a first-in-class autologous CAR-T therapy that utilizes our UltraCAR-T platform to simultaneously co-express a CAR targeting the Mucin 16 antigen, mbIL15, and kill switch genes, which is in a Phase 1 clinical trial for the treatment of advanced ovarian cancer; and PRGN-3006, a first-in-class autologous CAR-T therapy that utilizes our UltraCAR-T platform to co-express a CAR to target CD33 (also known as Siglec-3), mbIL15 and a kill switch for better precision and control, which is in a Phase 1/1b clinical trial for the treatment of relapsed or refractory acute myeloid leukemia, or AML, and higher-risk myelodysplastic syndromes, or MDS. We expect to announce initial data from the Arm A: Intraperitoneal (IP) infusion portion of the PRGN-3005 trial in the second half of 2020. We continue to enroll patients in the Phase 1 trial of PRGN-3006 and expect to announce initial trial data from this study in the second half of 2020.
We also recently received IND clearance to initiate a Phase 1/2 clinical trial of PRGN-2009 for patients with HPV-associated cancers. PRGN-2009 is a first-in-class,"off-the-shelf" investigational immunotherapy utilizing the AdenoVerse platform. PRGN-2009 is designed to activate the immune system to recognize and target human papillomavirus-positive, or HPV+, solid tumors using a gorilla adenovector with a large payload capacity and the ability for repeat injections. The Phase 1 portion of the study will follow a 3+3 dose escalation design to evaluate the safety of PRGN-2009 administered as a monotherapy and to determine the recommended Phase 2 dose. This will then be followed by an evaluation of the safety of the combination of PRGN-2009 at the recommended dose and bintrafusp alfa (M7824), a proprietary investigational bifunctional fusion protein, in patients with recurrent or metastatic HPV-associated cancers. The Phase 2 portion of the study will evaluate PRGN-2009 as a monotherapy or in combination with the bifunctional fusion protein in patients with newly-diagnosed stage II/III HPV16-positive oropharyngeal cancer. We expect to initiate this study in 2020 in collaboration with the National Cancer Institute pursuant to a cooperative research and development arrangement.
In addition to our clinical programs, PGEN Therapeutics has applicabilitya robust preclinical pipeline that includes UltraCAR-T therapeutics for various cancers, "off-the-shelf" AdenoVerse immunotherapeutics for infectious diseases, an AdenoVerse cytokine therapy for solid tumors, and a multifunctional therapeutic for solid tumors.
Precigen ActoBio, Inc.
ActoBio is pioneering a proprietary class of microbe-based biopharmaceuticals that enable expression and local delivery of disease-modifying therapeutics. We refer to these microbe-based biopharmaceuticals as ActoBiotics. Our ActoBiotics platform is a unique delivery platform precisely tailored for specific disease modification via local delivery directly to the relevant tissue. ActoBiotics combine the advantages of highly selective protein-based therapeutic agents with local delivery by the well-characterized and food-grade bacterium Lactococcus lactis, or L. lactis. ActoBiotics can be delivered orally in a capsule, through an oral rinse, or in a topical solution. We believe ActoBiotics have the potential to provide superior safety and efficacy via the sustained release of appropriate quantities of select therapeutic agents as compared to injectable biologics, while reducing the side effects commonly attributed to systemic delivery and corresponding peaks in concentration.
ActoBio's most advanced internal pipeline candidate is AG019, a first-in-class disease modifying antigen-specific immunotherapy for the prevention, delay, or reversal of type 1 diabetes mellitus, or T1D. AG019 is currently in a Phase 1b/2a clinical trial for the treatment of recent onset T1D. The Phase 1b portion of the study evaluates the safety and tolerability of AG019 monotherapy administered as a single dose and repeated daily doses in adult and adolescent patients. The Phase 2a portion of the study investigates the safety and tolerability of AG019 in combination with teplizumab (PRV-031). ActoBio recently announced top line data from the Phase 1b portion of the ongoing Phase 1b/2a clinical trial. Recruitment in the Phase 2a portion of the trial is ongoing.
Precigen Triple-Gene
Triple-Gene is a clinical stage gene therapy company focused on developing advanced treatments for complex cardiovascular diseases. Triple-Gene's approach is to develop a holistic treatment for heart failure through improvements in angiogenesis, calcium homeostasis-associated cellular energetics, reductions in inflammatory signals, and the activation/recruitment of stem
44
Table of Contents
cells to support heart remodeling. Triple-Gene's most advanced candidate, INXN-4001, a non-viral triple-effector plasmid based on our UltraVector platform designed for constitutive expression of human S100A1, SDF-1a, and VEGF-165 genes to address multiple pathways of heart failure, is currently in a Phase 1 clinical trial. Triple-Gene recently announced six-month follow-up data from the Phase 1 study of INXN-4001.
Precigen Exemplar
Exemplar is committed to enabling the study of life-threatening human diseases through the development of MiniSwine Yucatan miniature pig research models and services, as well as enabling the production of cells and organs in its genetically engineered swine for regenerative medicine applications. 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; and the ability to predict in humans the efficacy of those 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.
Partnered Programs
We also are engaged in a number of collaborations, pursuant to which our platforms are being used to advance additional product candidates. Our most advanced currently partnered program is with Fibrocell Science, Inc., or Fibrocell, to advance product candidates FCX-007, which initiated a pivotal Phase 3 clinical trial for the treatment of recessive dystrophic epidermolysis bullosa, or RDEB, in July 2019, and FCX-013, which is currently enrolling the Phase 1 portion of its Phase 1/2 clinical trial for the treatment of localized scleroderma. FCX-007 and FCX-013 each have been granted Orphan Drug designation, Rare Pediatric Disease designation and Fast Track designation by the FDA. The FDA has also granted FCX-007 Regenerative Medicine Advanced Therapy designation. Pursuant to the collaboration, we licensed our technology platforms to Fibrocell for use in certain specified fields and in exchange we received and were entitled to certain access fees, milestone payments, royalties, and sublicensing fees related to the development and commercialization of product candidates. In March 2020, we and Fibrocell terminated the original collaboration agreement by mutual agreement, with the parties agreeing that FCX-007 and FCX-013 would be treated as "Retained Products" under the terms of the original agreement. Fibrocell retains a license to continue to develop and commercialize the Retained Products within the field of use for so long as Fibrocell continues to pursue such development and commercialization, and we are also entitled to certain royalties with respect to the Retained Products. We are also required to perform certain drug product manufacturing activities related to the Retained Products.
Until July 2020, ActoBio was in collaboration with Oragenics, Inc., or Oragenics, for the continued development and commercialization of AG013 for use in the treatment of oral mucositis in humans through the administration of an effector via genetically modified bacteria. In July 2020, we and Oragenics mutually agreed to terminate this collaboration, and we will recognize the remaining balance of deferred revenue as collaboration and licensing revenue during the third quarter of 2020. Following the termination of the collaboration, all rights to develop AG013 reverted to us, and we are presently considering strategic options for the program.
Our Non-Healthcare Businesses
While our primary focus is in healthcare, we also own the following non-healthcare businesses:
Trans Ova Genetics, L.C.
Trans Ova Genetics, L.C., or Trans Ova, is internationally recognized as a provider of industry-leading bovine reproductive technologies. Trans Ova offers bovine embryo transfer technologies, in addition to other advanced reproductive technologies, including in vitro fertilization, or IVF, sexed-semen, genetic preservation, and cloning. Through extensive research programs and applied science, Trans Ova has developed and implemented new technologies that, we believe, have helped to move the science of bovine genetic improvement forward. We and Trans Ova continue to evaluate the optimal means to utilize these technology assets and Trans Ova's broad customer base and deep industry knowledge to maximize the value of the business.
MBP Titan LLC
Through the first quarter of 2020, we operated MBP Titan, LLC, or MBP Titan, as our standalone subsidiary comprising our Methane Bioconversion Platform, or MBP, and our associated technologies, personnel, and facilities.
45
Table of Contents
We previously announced that the market uncertainty driven by the COVID-19 pandemic and the current state of the energy sector raised significant challenges for the strategic alternatives we have been pursuing for the MBP platform in the near term. As a result, we terminated or furloughed certain non-essential personnel in the first quarter of 2020, and in the second quarter of 2020, we suspended MBP Titan's operations while preserving the MBP intellectual property. We recorded noncash impairment charges of $22.0 million during the second quarter related to the write-down of goodwill, property and equipment, and right-of-use assets to their net realizable values. We continue to assess potential next steps with respect to the future of the MBP programs, intellectual property, and other long-lived assets.
COVID-19 Impact
COVID-19 has had and continues to have an extensive impact on the global health and economic environments.
At Precigen, the health and safety of our employees is of the utmost importance. Our essential employees are practicing appropriate safety measures, including social distancing and use of personal protective equipment. These efforts have permitted us to continue to advance our programs, with the ultimate goal of benefiting patients.
Commencing in the second half of March, our healthcare business began to experience delays to certain of our clinical trials as a result of COVID-19. For example, starting in March, ActoBio temporarily suspended the last cohort of the Phase 1b/2a clinical trial for AG019 as a proactive measure to protect the welfare and safety of patients, caregivers, clinical site staff, our employees, and contractors. The temporary suspension of the AG019 trial was voluntary and was not related to any patient safety issues in the study. The voluntary suspension of the AG019 trial was lifted in June 2020, and the study is recruiting patients again. Additionally, from April to May 2020, enrollment of new patients in our PRGN-3005 Phase 1 trial was temporarily suspended due to a mandated hold on certain early and late-stage clinical trials at the Fred Hutchinson Cancer Research Center in Seattle instituted in light of the COVID-19 pandemic. The temporary suspension of the PRGN-3005 trial was not related to safety issues in the studies, and recruitment resumed in the PRGN-3005 trial in May 2020. At this time, we do not expect that these suspensions will result in a significant overall delay. We expect to announce initial data from the Arm A: Intraperitoneal (IP) infusion portion of the PRGN-3005 trial in the second half of 2020. Furthermore, we continue to enroll patients in the Phase 1 trial of PRGN-3006 for patients with relapsed or refractory AML and MDS and expect to announce initial trial data from this study in the second half of 2020. Notwithstanding the foregoing, as the COVID-19 pandemic continues to evolve, we may experience additional delays to our clinical trials, including related to enrollment, site closures, reduced availability of key personnel, or our ability to receive the necessary approvals from the FDA or other regulatory agencies to advance our programs.
We are also closely monitoring the impact of COVID-19 on other aspects of our business. While Trans Ova and Exemplar have not experienced any significant impacts as a result of COVID-19 at this time, we are unable to reliably quantify or estimate what the future impacts may be. In addition, we have taken certain steps with respect to our operations of MBP Titan as a result of the impacts of the COVID-19 pandemic and other factors. See "Our Non-Healthcare Businesses - MBP Titan LLC" above.
Given the dynamic nature of these circumstances, the full impact of the COVID-19 pandemic on our ongoing business, results of operations, and overall financial performance for the balance of 2020 and beyond cannot be reasonably estimated at this time. For more information regarding the risks associated with COVID-19 and its impact on our business, see "Risk Factors" in Part II - Item 1A.
TS Biotechnology Sale
Historically, we focused on programming biological systems for application across manya variety of diverse end markets, we cannot take full advantage of synthetic biology with internal development programs alone. To address this,including health, food, energy, and environment, but we have devised our business model to allow us to focus on our core expertisealso consistently evolved the way in synthetic biology while bringing many different commercial products to market via collaborations in a broad range of industries or end markets, thus minimizing and leveraging the use of our own capital.
Our business model was built primarily around the formation of exclusive channel collaborations, or ECCs. An ECC is an agreement with a collaborator to develop products based on technologies in a specifically defined field. Historically, we have sought collaborators with expertise within a specific industry sector and the commitment to provide resources for the commercialization of products within that industry sector. In our ECCs, we provide expertise in the engineering of gene programs and cellular systems, and our collaborators are responsible for providing market and product development expertise, as well as sales and marketing capabilities.
This business model allows us to leverage our capabilities and capital across numerous product development programs and a broader landscape of end markets than we would be capable of addressing on our own. Our ECC business model also allows us to participate in the potential upside from products that are enabled by our technologies across an extensive range of industries, without the need for us to invest considerable resources in bringing individual products to market. Additionally, the flexibility of the business model allows us to collaborate with a range of counterparts, from small innovative companies to global multinational conglomerates.
Alternatively, we have sometimes executed a research collaboration to develop an early-stage program pursuant to which we received reimbursement for our development costs but the exclusive commercial rights, and related access fees, were deferred until completion of an initial research program.
Over time, our business model has evolved. First, in certain strategic circumstances, we may enter into a joint venture, or JV, with a third party collaborator whereby we may contribute access to our technology, cash or both into the JV which we will jointly control with our collaborator. Pursuant to a JV agreement, we may be required to contribute additional capital to the JV, and we may be able to receive a higher financial return than we would normally receive from an ECC to the extent that we and our collaborator are successful in developing one or more products. For a discussion of our JVs, see the "Notes to the Consolidated Financial Statements (Unaudited) - Note 4" appearing elsewhere in this Quarterly Report on Form 10-Q. Second, while we seek to maintain a competitive edge in gene program creation and host cell and genome expertise, we have begun to finance internally early stage proof of concept programs and have sought to partner, on an industry segment basis, more mature

programs and capabilities. By doing this, we endeavor to maximize leverage of our capital resources and ultimately hope to realize significant value from mature assets.
As we consider the broad potential applications ofapply our synthetic biology technologies and consistent with the evolution of our business model,opportunities on which we have identifiedfocused. In January 2020, we furthered our plans to enhance our focus on the healthcare industry when we sold a number of ventures that are already enabling products that benefit fromour bioengineering assets, or the application of such technology. We believe that the strategic acquisition of certain such companies will allow usTS Biotechnology Sale, to develop and commercialize innovative products and create significant value for us. Our business model therefore includes the acquisition of certain product-focused companies that may leverage our technologies and expertise in order to expand their respective product applications.
AsTS Biotechnology Holdings, LLC, or TS Biotechnology, a means to further the development of our business model, in June 2015, we entered into an agreement with Harvest Intrexon Enterprise Fund I, LP, or Harvest, an investment fund sponsoredlimited liability company managed by Harvest Capital Strategies, LLC, and a related party based on ownership in the fund by affiliates of Third Security, LLC, or Third Security. Harvest was established to investRandal J. Kirk, who is the former Chief Executive Officer, or CEO, of Precigen and is currently the Executive Chairman and a member of our board of directors, serves as the Senior Managing Director and CEO of Third Security and owns 100 percent of the equity interests of Third Security. The assets divested in life science researchthe TS Biotechnology Sale included our domain name dna.com and development start-up opportunitiesall of our equity interests in (1) Blue Marble AgBio LLC, a Delaware limited liability company, that we offeredformed to Harvest with exclusive rightshold our agricultural biotechnology assets, (2) ILH Holdings, Inc., a Delaware corporation, which housed our yeast fermentation technology platform for the biologic production of first-look and first negotiation. Based on this agreement, Harvest established six new collaboration entities, each of which entered into an ECC with us in a designated field. The terms of such ECCs were negotiated between us and Harvest. As consideration for providing exclusive rights of first-look and first negotiation for start-up opportunities, we received a portion of the management fee collected by the fund sponsor of Harvest. In September 2017, the commitment period for Harvest was terminated and, as a result, our agreement with Harvest terminated. The termination of the agreement had no effect on the already-established collaborations with Harvest-sponsored entities.
Pursuant to our business model, we may receive equity in lieu of cash for technology access fees and milestones and also may participate in capital raises to allow earlier-stage collaborators to focus their resources on product development. However, when such a collaborator develops greater operational or financial resources, its shares become a financial asset within Intrexon that is independent of our operational or collaborative purposes.
Mergers, acquisitions, and technology in-licensing
We may augment our suite of proprietary technologies through mergers or acquisitions of technologies which then become available to new or existing collaborators. Among other things, we pursue technologies that we believe will be generally complementary to our existing technologies and also meet our desired return on investmentactive pharmaceutical ingredients and other economic criteria. In certain cases, such technologies may already be applied infine chemicals, (3) Intrexon Produce Holdings, Inc., a Delaware corporation, which owned Okanagan Specialty Fruits, Inc., the production of products or services and in these cases we may seek to expand the breadth or efficacy of such products or services throughagricultural company developing non-browning apples without the use of any artificial additives, (4) Intrexon UK Holdings Inc., a Delaware corporation, which owned Oxitec, Ltd., the developer of an insect-based biological control system, (5) Oragenics, and
46
Table of Contents
(6) SH Parent, Inc., a Delaware corporation, which held our technologies.ownership interests in Surterra Holdings, Inc., a cannabinoid-based wellness company. In addition, in January 2020, in a separate transaction, we sold our interest in EnviroFlight, LLC to Darling Ingredients, Inc., referred to collectively with the TS Biotechnology Sale as the Transactions.
Beginning in the fourth quarter of 2019, we determined that assets, liabilities, and operations sold in the Transactions collectively met the criteria for discontinued operations. As such, the assets, liabilities, and operations related to the Transactions are reclassified and presented as discontinued operations for all periods presented. See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 3" appearing elsewhere in this Quarterly Report on Form 10-Q, for furthera discussion of mergers, acquisitionsthe Transactions and the discontinued operations.
As we continue our efforts to focus our business and generate additional capital, we may be willing to enter into transactions involving one or significantmore of our operating segments and reporting units for which we have goodwill and intangible assets. These efforts could result in our identifying impairment indicators or recording impairment charges in future periods. In addition, market changes and changes in judgments, 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.
Segments
As of June 30, 2020, our reportable segments were (i) PGEN Therapeutics, (ii) ActoBio, (iii) MBP Titan, (iv) Trans Ova, and (v) the Human Biotherapeutics division, an operating division of Precigen. These identified reportable segments met the quantitative thresholds to be reported separately for the six months ended June 30, 2020.
Corporate expenses, which are not allocated to the segments and are managed at a consolidated level, include costs associated with general and administrative functions, including our finance, accounting, legal, human resources, information technology, in-licensing activitiescorporate communication, and investor relations functions. Corporate expenses exclude interest expense, depreciation and amortization, stock-based compensation expense, and equity in 2017.net loss of affiliates and, for 2019, include unrealized and realized gains and losses on our securities portfolio as well as dividend income. See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 19" appearing elsewhere in this Quarterly Report for a discussion of our reportable segments and Segment Adjusted EBITDA.
Financial overview
We have incurred significant losses since our inception. We anticipate that we may continue to incur significant losses for the foreseeable future, and we may never achieve or maintain profitability. Outside of collaboration and license fee payments, which vary over time, we have not generated significant revenues from our collaborations, including revenues or royalties from product sales by us or our collaborators. We have never generated any royalty revenues from sales of products byand services through Trans Ova and Exemplar, two of our collaborators and may never be profitable.operating subsidiaries. Certain of our consolidated subsidiaries require regulatory approval and/or commercial scale-up before they may commence significant product sales and operating profits.
We expect our future capital requirements will be substantial, particularly as we continue to developare closely monitoring the impacts of the COVID-19 pandemic on our business, operations, and expand our synthetic biology technology platform. In October 2017, we entered into a Preferred Stock Equity Facility, or Preferred Stock Facility, with an affiliatefinancial results, any of Third Security, which will terminate no later than April 30, 2019. Our Chairman and Chief Executive Officer also serves ascould be significantly impacted by the Senior Managing Director and Chief Executive Officer of Third Security and owns all of the outstanding equity interests. Under the Preferred Stock Facility, we may, at our sole and exclusive option, issue and sell to the affiliate of Third Security, up to $100 million of newly issued Series A Redeemable Preferred Stock, or Series A Preferred Stock. We believe that our existing cash and cash equivalents, short-term investments, cash expected to be received through our current collaborators andCOVID-19 pandemic. See "COVID-19 Impact" for sales of products and services provided by our consolidated subsidiaries, and any issuances of Series A Preferred Stock under the Preferred Stock Facility will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months.additional discussion above.
Sources of revenue
We deriveHistorically, we have derived our collaboration and licensing revenues through the execution of agreements with counterparties for the development and commercialization of products enabled by our technologies. Generally, the terms of these collaborations provide that we receive some or all of the following: (i) technology access fees upon signing; (ii) reimbursements of costs

incurred by us for our research and development and/or manufacturing efforts related to specific applications provided for in the collaboration; (iii) milestone payments upon the achievement of specified development, regulatory and commercial activities; and (iv) royalties on sales of products arising from the collaboration.
Our technology access fees and milestone payments may be in the form of cash or securities of the collaborator. Our collaborations contain multiple arrangements, and we typically defer revenues from the technology access fees and milestone payments received and recognize such revenues in the future over the anticipated performance period. We are also entitled to sublicensing revenues in those situations where our collaborators choose to license our technologies to other parties.
From timeAs we continue to time,shift our focus on our healthcare business, we and certainmay mutually terminate collaboration agreements or we may repurchase rights to the exclusive fields from collaborators, may cancel the agreements, relieving us of any further performance obligations under the agreement. WhenUpon such circumstances or when we determine no further performance obligations are required of us under an agreement, we may recognize any remaining deferred revenue.revenue as either collaboration revenue or as a reduction of in-process
47
Table of Contents
research and development expense, depending on the circumstances. See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Notes 5 and 20" appearing elsewhere in the Quarterly Report for a discussion of changes to our significant collaborations.
We generate product and service revenues primarily through sales of products or services whichthat are created from technologies developed or owned by us. Our primary current offerings arise from Trans Ova and include sales of advanced reproductive technologies, including our bovine embryo transfer and in vitro fertilizationIVF processes and from genetic preservation and sexed semen processes, and applications of such processes to other livestock, as well as sales of livestock and embryos produced using these processes and used in production. RevenueWe recognize revenue when control of the promised product is recognized when (i) persuasive evidence of an arrangement exists, (ii) services have been rendered or delivery has occurred such that risk of loss has passedtransferred to the customer (iii)or when the pricepromised service is fixed or determinable, and (iv) collection from the customer is reasonably assured.completed.
In future periods, in connection with our focus on healthcare, our revenues will primarily depend on our ability to partneradvance and create our more matureown programs and capabilities,the extent to which we bring products enabled by our technologies to market. Other than for collaboration revenues recognized upon cancellation or modification of a collaboration, we expect our collaboration revenues will continue to decrease in the near term as the number of collaborations to which we are party the advancementdeclines and creation of programs withinas we fulfill our obligations under any remaining exclusive channel collaborations, and the extent to which our collaborators bring products enabled by our technologies to market.or ECCs. Our revenues will also depend upon our ability to maintain or improve the volume and pricing of ourTrans Ova's current product and service offerings and to develop and scale up production of new offerings from the various technologies of our subsidiaries. Our future revenues may also include additional revenue streamsAs we may acquire through mergersfocus on our healthcare business, we anticipate that our expenses will increase substantially if, and acquisitions. In lightas, we continue to advance the preclinical and clinical development of our limited operating historyexisting product candidates and experience,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 and revenues sufficient to achieve profitability. Accordingly, there can be no assurance as to the timing, magnitude, and predictability of revenues to which we might be entitled.
Cost of products and services
Cost of products and services includes primarily labor and related costs, drugs and supplies used primarily in theTrans Ova's embryo transfer and in vitro fertilizationIVF processes, livestock and 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, for personnel in research and development functions;
•fees paid to consultants and contract research organizations who perform research on our behalf and under our direction;
•costs related to laboratory supplies used in our research and development efforts;efforts and acquiring, developing, and manufacturing preclinical study and clinical trial materials;
•costs related to certain in-licensed technology rights;rights or reacquired in-process research and development;
depreciation of leasehold improvements and laboratory equipment;
•amortization of patents and related technologies acquired in mergers and acquisitions; and
•facility-related expenses, which include direct depreciation costs and unallocated expenses for rent and utility costs for our researchmaintenance of facilities and development facilities.other operating costs.
We currently have no individually significant research and development projects, and our research and development expenses primarily relate to either the costs incurred to expand or otherwise improve our multiple platform technologies or the costs incurred to

develop a specific application of our technologies in support of current or prospective collaborators, or costs incurred to expand or otherwise improve ourown products and services. Research and development expenses, including costs for preclinical and clinical development, incurred for programs we support pursuant to an ECC agreement are typically reimbursed by the collaborator at cost and all other research and development programs may be terminated or otherwise deferred at our discretion. The amount of our research and development expenses may be impacted by, among other things, the number and nature of ECCsour own proprietary programs, and the number and size of programs we may support on behalf of an ECC.
The table below summarizes our research and development expenses incurred to expand or otherwise improve our multiple platform technologies, the costs incurred to develop a specific application
48
Table of our technologies in support of current or prospective collaborators and licensees, or costs incurred to expand or otherwise improve our products and services for the three and nine months ended September 30, 2017 and 2016. Other research and development expenses for these periods include indirect salaries and overhead expenses that are not allocated to either expanding or improving our multiple platform technologies, specific applications of our technologies in support of current or prospective collaborators and licensees, or expanding or improving our product and services offerings.Contents
 Three Months Ended 
 September 30,		 Nine Months Ended 
 September 30,
 2017 2016 2017 2016
 (In thousands)
Expansion or improvement of our platform technologies$3,652
 $3,014
 $10,476
 $8,881
Specific applications of our technologies in support of current and prospective collaborators and licensees19,363
 17,004
 56,369
 47,171
Expansion or improvement of our product and service offerings6,917
 4,245
 20,030
 13,012
Other6,540
 4,772
 17,788
 14,202
Total research and development expenses$36,472
 $29,035
 $104,663
 $83,266
We expect that our research and development expenses will increase as we enter into new collaborations,continue to develop our own proprietary programs, and expand our offerings across additional market sectors.including the progression of these programs into preclinical or clinical stages. We believe these increases will likely include increased costs related to the hiring of additional personnel in research and development functions, increased costs paid to consultants and contract research organizations, and increased costs related to laboratory supplies. However, we expect research and development expenses for MBP Titan to decrease as we suspended its operations in the second quarter of 2020. See "Our Non-Healthcare Businesses - MBP Titan LLC" above.
Research and development expenses may also increase as a result of ongoing research and development operations whichthat we might assume through mergers and acquisitions.acquisitions or in-licensing of technologies.
Selling, general and administrative expenses
Selling, general and administrative, or SG&A, expenses consist primarily of salaries and related costs, including stock-based compensation expense, for employees in executive, operational, finance, sales and marketing, information technology, legal, and corporate communications functions. Other significant SG&A expenses include rent and utilities, insurance, accounting, and legal services, and expenses associated with obtaining and maintaining our intellectual property.
We expect that our SG&A expenses will continue to increase to supportmay fluctuate in the future depending on the number and nature of transactions we may undertake with certain of our expanding operations as we explore new partnering opportunities and continue to develop our proprietary programs. We believe that these increases will likely include costssubsidiaries. These fluctuations could be related to the hiring of additional personnel, and increasedlegal fees, for business development functions, costs associated with defending the Company in litigation matters, the costs of outside consultants, and other professional services. SG&A expenses may also increase as a result of ongoing operations which we might assume through mergers and acquisitions.
Other income (expense), net
We holdhistorically held equity securities and preferred stock of private and publicly traded companies, including investments received and/or purchased from certain collaborators. Other than investments accounted for using the equity method discussed below, we elected the fair value option to account for our equity securities and preferred stock held in these collaborators. These equity securities and preferred stock arewere recorded at fair value at each reporting date. Unrealized appreciation (depreciation) resulting from fair value adjustments arewere reported as other income (expense) in the condensed consolidated statementstatements of operations. As such,In January 2020, as part of the TS Biotechnology Sale, we bearsold our remaining equity securities and investment in preferred stock, and therefore, no future gains (losses) will be incurred.
Interest expense is expected to increase in future periods due to the risk that fluctuationsnoncash amortization of the long-term debt discount and debt issuance costs related to the 3.50% convertible senior notes due 2023 issued in the securities' share prices may significantly impact our results of operations.

July 2018.
Interest income consists of interest earned on our cash and cash equivalents and short-term investments and long-term investments. Dividend income consists of the monthly preferred stock dividends received from our investments in preferred stock.
Through September 2017, as consideration for providing exclusive rights of first-lookmay fluctuate based on amounts invested and first negotiation, we received a portion of the management fee collected by the fund sponsor of Harvest for our obligation to provide Harvest with investment proposals that were suitable for pursuit by a start-up. We expect these fees to decrease subsequent to the termination of the commitment period for Harvest as provided for in the agreement. These fees are included in other income.current interest rates.
Equity in net income (loss) of affiliates
Equity in net income or loss of affiliates is our pro-rata share of our equity method investments' operating results, adjusted for accretion of basis difference. We account for investments in our joint ventures, or JVs, and start-up entities backed by Harvest Intrexon Enterprise Fund I, LP, or Harvest, using the equity method of accounting since we have the ability to exercise significant influence, but not control, over the operating activities of these entities.
Segment performance
We use Segment Adjusted EBITDA as our primary measure of segment performance. We define Segment Adjusted EBITDA as net loss before (i) interest expense, (ii) income tax expense or benefit, (iii) depreciation and amortization, (iv) stock-based compensation expense, (v) adjustments for bonuses paid in equity awards, (vi) loss on impairment of goodwill and other long-lived assets, (vii) equity in net loss of affiliates, and (viii) recognition of previously deferred revenue associated with upfront and milestone payments as well as cash outflows from capital expenditures and investments in affiliates. Corporate expenses are not allocated to the segments and are managed at a consolidated level.
49
Table of Contents
Results of operations
Comparison of the three months ended SeptemberJune 30, 20172020 and the three months ended SeptemberJune 30, 20162019
The following table summarizes our results of operations for the three months ended SeptemberJune 30, 20172020 and 2016,2019, together with the changes in those items in dollars and as a percentage:
 Three Months Ended 
 June 30,		Dollar
Change		Percent
Change
 20202019
 (In thousands) 
Revenues
Collaboration and licensing revenues (1)$4,315  $6,450  $(2,135) (33.1)%
Product revenues8,540  7,800  740  9.5 %
Service revenues17,381  18,400  (1,019) (5.5)%
Other revenues188  186  2  1.1 %
Total revenues30,424  32,836  (2,412) (7.3)%
Operating expenses
Cost of products8,141  8,502  (361) (4.2)%
Cost of services6,770  8,218  (1,448) (17.6)%
Research and development14,208  28,239  (14,031) (49.7)%
Selling, general and administrative18,739  19,250  (511) (2.7)%
Impairment of goodwill9,635  —  9,635  N/A
Impairment of assets12,406  —  12,406  N/A
Total operating expenses69,899  64,209  5,690  8.9 %
Operating loss(39,475) (31,373) (8,102) 25.8 %
Total other expense, net(3,748) (225) (3,523) >200%
Equity in loss of affiliates(251) (716) 465  (64.9)%
Loss from continuing operations before income taxes(43,474) (32,314) (11,160) 34.5 %
Income tax benefit120  9  111  >200%
Loss from continuing operations(43,354) (32,305) (11,049) 34.2 %
Loss from discontinued operations, net of income taxes (2)—  (6,626) 6,626  (100.0)%
Net loss(43,354) (38,931) (4,423) 11.4 %
Net loss attributable to noncontrolling interests—  165  (165) (100.0)%
Net loss attributable to Precigen$(43,354) $(38,766) $(4,588) 11.8 %
(1)Includes $32 and $5,902 from related parties for the three months ended June 30, 2020 and 2019, respectively.
(2)The results of operations in the table above include the operations related to the Transactions, which are included as loss from discontinued operations, net of income taxes. See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 3" appearing elsewhere in this Quarterly Report.
50
 Three Months Ended 
 September 30,		 
Dollar
Change
 
Percent
Change
 2017 2016 
 (In thousands)  
Revenues       
Collaboration and licensing revenues$28,155
 $30,590
 $(2,435) (8.0)%
Product revenues7,670
 9,260
 (1,590) (17.2)%
Service revenues9,975
 8,706
 1,269
 14.6 %
Other revenues216
 429
 (213) (49.7)%
Total revenues46,016
 48,985
 (2,969) (6.1)%
Operating expenses      

Cost of products8,001
 9,156
 (1,155) (12.6)%
Cost of services7,013
 5,803
 1,210
 20.9 %
Research and development36,472
 29,035
 7,437
 25.6 %
Selling, general and administrative39,277
 33,812
 5,465
 16.2 %
Total operating expenses90,763
 77,806
 12,957
 16.7 %
Operating loss(44,747) (28,821) (15,926) 55.3 %
Total other income, net6,086
 4,647
 1,439
 31.0 %
Equity in loss of affiliates(2,993) (6,255) 3,262
 (52.2)%
Loss before income taxes(41,654) (30,429) (11,225) 36.9 %
Income tax benefit818
 418
 400
 95.7 %
Net loss(40,836) (30,011) (10,825) 36.1 %
Net loss attributable to noncontrolling interests1,147
 1,029
 118
 11.5 %
Net loss attributable to Intrexon$(39,689) $(28,982) $(10,707) 36.9 %
Table of Contents

Collaboration and licensing revenues
The following table shows the collaboration and licensing revenues recognized for the three months ended SeptemberJune 30, 20172020 and 2016,2019, together with the changes in those items. See "Notes to
 Three Months Ended 
 June 30,		Dollar
Change
 20202019
 (In thousands)
ZIOPHARM Oncology, Inc.$—  $533  $(533) 
Oragenics, Inc.32  181  (149) 
Intrexon Energy Partners, LLC—  796  (796) 
Intrexon Energy Partners II, LLC—  420  (420) 
Fibrocell Science, Inc.4,210  2,462  1,748  
Harvest start-up entities (1)—  2,039  (2,039) 
Other73  19  54  
Total$4,315  $6,450  $(2,135) 
(1)For the Consolidated Financial Statements (Unaudited) - Note 5" appearing elsewhere in this Quarterly Report on Form 10-Q for further discussion of our collaborationthree months ended June 30, 2019, revenues recognized from collaborations with Harvest start-up entities include: Thrive Agrobiotics, Inc.; Exotech Bio, Inc.; and licensing revenues.AD Skincare, Inc.
 Three Months Ended 
 September 30,		 Dollar
Change
 2017 2016 
 (In thousands)
ZIOPHARM Oncology, Inc.$10,373
 $10,429
 $(56)
Oragenics, Inc.475
 556
 (81)
Fibrocell Science, Inc.1,683
 1,167
 516
Genopaver, LLC1,422
 1,693
 (271)
S & I Ophthalmic, LLC376
 2,782
 (2,406)
OvaXon, LLC262
 709
 (447)
Intrexon Energy Partners, LLC1,903
 4,855
 (2,952)
Persea Bio, LLC266
 333
 (67)
Ares Trading S.A.2,356
 2,316
 40
Intrexon Energy Partners II, LLC816
 872
 (56)
Intrexon T1D Partners, LLC1,462
 787
 675
Harvest Start-up Entities (1)4,020
 1,293
 2,727
Other2,741
 2,798
 (57)
Total$28,155
 $30,590
 $(2,435)
(1)For the three months ended September 30, 2017, revenue recognized from collaborations with Harvest start-up entities include Thrive Agrobiotics, Inc.; Exotech Bio, Inc.; Relieve Genetics, Inc.; AD Skincare, Inc.; Genten Therapeutics, Inc.; and CRS Bio, Inc. For the three months ended September 30, 2016, revenue recognized from collaborations with Harvest start-up entities include Thrive Agrobiotics, Inc.; Exotech Bio, Inc.; Relieve Genetics, Inc.; and AD Skincare Inc.
Collaboration and licensing revenues decreased $2.4$2.1 million, or 8 percent,33%, from the three months ended SeptemberJune 30, 20162019 primarily due to a decrease in researchcollaboration revenues related to programs that have been paused since the second half of 2019 while the other parties evaluate the status of the projects and their desired future development services for certain of our ECCs as we temporarily redeployed certain resources towards supporting prospective new platforms and partnering opportunities.activities.
Product revenues and gross margin
Product revenues decreased $1.6 million, or 17 percent, fromwere comparable to the three months ended SeptemberJune 30, 2016. The decrease in product revenues was primarily due to lower customer demand for cows and live calves.2019 as expected. Gross margin on products also decreasedimproved in the current period primarily due to customer demand.as a result of operational efficiencies gained through reductions in workforce and improved inventory management and a decrease in the cost of cows used in production.
Service revenues and gross margin
Service revenues increased $1.3decreased $1.0 million, or 15 percent, over6%, from the three months ended SeptemberJune 30, 2016. The increase in service revenues relates to2019. Despite an increase in the number of bovineservices provided, a shift in vitro fertilization cycles performedthe mix of services provided towards lower priced offerings with commercial dairy customers resulted in lower revenues. Gross margin increased primarily due to higher customer demand. Gross margin on these services was consistent period over period.a reduction in third-party royalty rate obligations for certain licensed technologies.
Research and development expenses
Research and development expenses increased $7.4decreased $14.0 million, or 26 percent, over50%, from the three months ended SeptemberJune 30, 2016.2019. Salaries, benefits, and other personnel costs decreased $4.8 million, and contract research organization costs and lab supplies decreased $7.8 million as we suspended MBP Titan's operations and deprioritized certain programs at ActoBio. The increase is due primarily to increasesdecrease in (i) salaries, benefits, and other personnel costs for research and development employees, (ii) depreciation and amortization, (iii) rent and utilities expenses, and (iv) lab supplies and consulting expenses. Salaries, benefits and other personnelis offset by $0.7 million of one-time severance costs increased $2.6 million dueincurred related primarily to an increase in research and development headcount necessary to invest in current or expanding platforms and to develop new prospective collaborations and other partnering

opportunities. Depreciation and amortization increased $2.0 million primarily as a result of (i) the amortization of developed technology acquired from Oxitec Limited, or Oxitec, which began in November 2016 upon the completion of certain operational and regulatory events, and (ii) the amortization of developed technology acquired from GenVec, Inc., or GenVec, in June 2017. Rent and utilities expenses increased $1.4 million due to the expansion of certain facilities to support our increased headcount. Lab supplies and consulting expenses increased $1.1 million as a result of (i) the progression of certain programs into the preclinical and clinical phases with certain of our collaborators and (ii) the expansion or improvement of certain of our platform technologies.MBP Titan employees.
Selling, general and administrative expenses
SG&A expenses increased $5.5decreased $0.5 million, or 16 percent, over3%, from the three months ended SeptemberJune 30, 2016.2019. Professional fees decreased $2.8 million primarily due to the expiration of the services agreement with Third Security on December 31, 2019. Other corporate expenses, such as travel, marketing, and supplies, decreased $1.2 million due to scaling back our corporate functions and the impact of the COVID-19 pandemic on travel. Salaries, benefits, and other personnel costs increased $2.7$3.8 million primarily due to (i) increased share-based compensation expense attributable to equity grants made in January 2020 as well as one-time severance costs incurred related to MBP Titan and certain corporate employees. These increased costs were offset by a reduction in salaries and benefits as a result of reduced headcount as we scaled down our corporate functions to support our expandingmore streamlined organization.
51
Impairment of goodwill and assets
In conjunction with the suspension of MBP Titan's operations in the second quarter of 2020, we recorded $22.0 million of impairment charges related to goodwill and (ii) increased stock-based compensation expense resulting from grants to certain of our officers in February 2017. Legal and professional fees increased $0.9 million primarily due to (i) increased legal fees to defend ongoing litigation and (ii) increased fees incurred for business development and prospective partnering efforts.long-lived assets.
Total other income,expense, net
Total other expense, net, is comprised primarily of interest expense and interest income in 2020 whereas 2019 also included the net increased $1.4effect of $3.1 million of other income related to our deconsolidation of AquaBounty Technologies, Inc., or 31 percent, overAquaBounty, in the three months ended September 30, 2016. This increase was primarily attributable to (i) increases in fair market valuesecond quarter.
Segment performance
The following table summarizes Segment Adjusted EBITDA, which is our primary measure of our equity securities portfolio and (ii) dividend income from our investments in preferred stock.
Equity in net loss of affiliates
Equity in net loss of affiliatessegment performance, for the three months ended SeptemberJune 30, 20172020 and 2016 includes our pro-rata share of the net losses2019, for each of our investments we accountreportable segments and for usingAll Other segments combined, as well as unallocated corporate costs.
 Three Months Ended 
 June 30,		Dollar
Change		Percent
Change
 20202019
 (In thousands) 
Segment Adjusted EBITDA:
PGEN Therapeutics$(5,698) $(7,467) $1,769  23.7 %
ActoBio(1,135) (4,124) 2,989  72.5 %
MBP Titan(5,199) (9,188) 3,989  43.4 %
Trans Ova6,528  4,932  1,596  32.4 %
Human Biotherapeutics(495) (354) (141) (39.8)%
All Other637  (2,479) 3,116  125.7 %
Unallocated corporate costs7,344  11,426  (4,082) (35.7)%
For a reconciliation of Segment Adjusted EBITDA to net loss before income taxes, see "Notes to the equity method of accounting. Condensed Consolidated Financial Statements (Unaudited) - Note 19" appearing elsewhere in this Quarterly Report.
The $3.3 million, or 52 percent, decreasefollowing table summarizes revenues from external customers for the three months ended SeptemberJune 30, 20162020 and 2019, for each of our reportable segments and for All Other segments combined.
 Three Months Ended 
 June 30,		Dollar
Change		Percent
Change
 20202019
 (In thousands) 
PGEN Therapeutics$218  $549  $(331) (60.3)%
ActoBio32  181  (149) (82.3)%
MBP Titan—  1,215  (1,215) (100.0)%
Trans Ova23,845  24,392  (547) (2.2)%
Human Biotherapeutics4,210  2,462  1,748  71.0 %
All Other2,105  3,998  (1,893) (47.3)%
PGEN Therapeutics
Segment Adjusted EBITDA improved due to higher costs for contract research organizations and lab supplies incurred in 2019 for preclinical activities on programs that entered clinical trials in late 2019. Additionally, fewer costs related to the PRGN-3005 Phase 1 trials were incurred in April and May 2020 as enrollment of new patients in this trial was temporarily suspended due to a mandated hold on certain early and late-stage clinical trials at the Fred Hutchinson Cancer Research Center in Seattle instituted in light of the COVID-19 pandemic. Costs related to PGEN Therapeutics' clinical trials are expected to increase in the third quarter of 2020 and beyond as the trials progress.
52
ActoBio
Segment Adjusted EBITDA improved as ActoBio incurred fewer costs with contract research organizations due to deprioritizing certain programs in late 2019 and fewer AG019 trial costs in the current period due to the temporary suspension of the last cohort of the Phase 1b/2a clinical trial.
MBP Titan
Revenues for MBP Titan have decreased as our partnered programs have been paused since the fourth quarter of 2019. Segment Adjusted EBITDA improved in 2020 because we reduced our workforce during the first quarter of 2020 and suspended MBP Titan's operations in the second quarter of 2020.
Trans Ova
Revenues for Trans Ova decreased due to a change in the mix of services provided during the period towards lower priced offerings. The improvement in Segment Adjusted EBITDA was primarily due to reduced costs as a result of operational efficiencies gained through reductions in workforce and improved inventory management and a reduction in third-party royalty rate obligations for certain licensed technologies.
Human Biotherapeutics
The increase in Human Biotherapeutics' revenues was due to an increase in the temporary redeploymentrecognition of certain resources awaypreviously deferred revenue in the current period which arose from these JVthe termination and modification of a collaboration with Fibrocell in the first quarter of 2020.
All Other
Segment Adjusted EBITDA improved period over period as a result of the closure of two reporting units in 2019. Revenues in All Other decreased in 2020 as our partnered programs towards supporting prospective new platforms and additional collaborations.with Harvest start-up entities have been paused since the third quarter of 2019.

Unallocated Corporate Costs
Unallocated corporate costs decreased primarily due to a 25% reduction of corporate employees as we scaled down our corporate functions to support our more streamlined organization, as well as a decrease in professional fees as we eliminated third-party vendors that were not critical to our most valuable enterprises.
53
Comparison of the ninesix months ended SeptemberJune 30, 20172020 and the ninesix months ended SeptemberJune 30, 20162019
The following table summarizes our results of operations for the ninesix months ended SeptemberJune 30, 20172020 and 2016,2019, together with the changes in those items in dollars and as a percentage:
 Six Months Ended 
 June 30,		Dollar
Change		Percent
Change
 20202019
 (In thousands) 
Revenues
Collaboration and licensing revenues (1)$15,036  $12,421  $2,615  21.1 %
Product revenues13,501  12,637  864  6.8 %
Service revenues31,327  29,783  1,544  5.2 %
Other revenues398  580  (182) (31.4)%
Total revenues60,262  55,421  4,841  8.7 %
Operating expenses
Cost of products14,230  16,224  (1,994) (12.3)%
Cost of services14,306  15,310  (1,004) (6.6)%
Research and development33,099  55,177  (22,078) (40.0)%
Selling, general and administrative41,757  50,299  (8,542) (17.0)%
Impairment of goodwill9,635  —  9,635  N/A
Impairment of assets12,406  —  12,406  N/A
Total operating expenses125,433  137,010  (11,577) (8.4)%
Operating loss(65,171) (81,589) 16,418  (20.1)%
Total other expense, net(7,603) (2,174) (5,429) >200%
Equity in loss of affiliates(602) (1,464) 862  (58.9)%
Loss from continuing operations before income taxes(73,376) (85,227) 11,851  (13.9)%
Income tax benefit80  22  58  >200%
Loss from continuing operations(73,296) (85,205) 11,909  (14.0)%
Loss from discontinued operations, net of income taxes (2)(26,056) (15,862) (10,194) 64.3 %
Net loss(99,352) (101,067) 1,715  (1.7)%
Net loss attributable to noncontrolling interests—  1,592  (1,592) (100.0)%
Net loss attributable to Precigen$(99,352) $(99,475) $123  (0.1)%
(1)Includes $230 and $10,692 from related parties for the six months ended June 30, 2020 and 2019, respectively.
(2)The results of operations in the table above include the operations related to the Transactions, as well as adjustments to those businesses as a result of the Transactions, all of which are included as loss from discontinued operations, net of income taxes. See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 3" appearing elsewhere in this Quarterly Report.
54
 Nine Months Ended 
 September 30,		 
Dollar
Change
 
Percent
Change
 2017 2016 
 (In thousands)  
Revenues       
Collaboration and licensing revenues$89,384
 $82,144
 $7,240
 8.8 %
Product revenues25,780
 28,699
 (2,919) (10.2)%
Service revenues37,890
 33,298
 4,592
 13.8 %
Other revenues899
 783
 116
 14.8 %
Total revenues153,953
 144,924
 9,029
 6.2 %
Operating expenses       
Cost of products25,625
 29,471
 (3,846) (13.1)%
Cost of services21,805
 17,807
 3,998
 22.5 %
Research and development104,663
 83,266
 21,397
 25.7 %
Selling, general and administrative113,258
 106,956
 6,302
 5.9 %
Total operating expenses265,351
 237,500
 27,851
 11.7 %
Operating loss(111,398) (92,576) (18,822) 20.3 %
Total other income (expense), net27,632
 (39,125) 66,757
 170.6 %
Equity in loss of affiliates(11,273) (16,951) 5,678
 (33.5)%
Loss before income taxes(95,039) (148,652) 53,613
 (36.1)%
Income tax benefit2,164
 3,290
 (1,126) (34.2)%
Net loss(92,875) (145,362) 52,487
 (36.1)%
Net loss attributable to noncontrolling interests3,123
 2,887
 236
 8.2 %
Net loss attributable to Intrexon$(89,752) $(142,475) $52,723
 (37.0)%

Collaboration and licensing revenues
The following table shows the collaboration and licensing revenues recognized for the ninesix months ended SeptemberJune 30, 20172020 and 2016,2019, together with the changes in those items. See "Notes to
 Six Months Ended 
 June 30,		Dollar
Change
 20202019
 (In thousands)
ZIOPHARM Oncology, Inc.$100  $1,699  $(1,599) 
Oragenics, Inc.230  382  (152) 
Intrexon Energy Partners, LLC—  1,773  (1,773) 
Intrexon Energy Partners II, LLC—  924  (924) 
Fibrocell Science, Inc.14,573  2,845  11,728  
Harvest start-up entities (1)—  4,762  (4,762) 
Other133  36  97  
Total$15,036  $12,421  $2,615  
(1)For the Consolidated Financial Statements (Unaudited) - Note 5" appearing elsewhere in this Quarterly Report on Form 10-Q for further discussion of our collaborationsix months ended June 30, 2019, revenues recognized from collaborations with Harvest start-up entities include: Thrive Agrobiotics, Inc.; Exotech Bio, Inc.; and licensing revenues.AD Skincare, Inc.
 Nine Months Ended 
 September 30,		 Dollar
Change
 2017 2016 
 (In thousands)
ZIOPHARM Oncology, Inc.$31,322
 $24,380
 $6,942
Oragenics, Inc.1,519
 1,869
 (350)
Fibrocell Science, Inc.5,375
 4,418
 957
Genopaver, LLC4,615
 4,908
 (293)
S & I Ophthalmic, LLC751
 6,326
 (5,575)
OvaXon, LLC1,966
 2,211
 (245)
Intrexon Energy Partners, LLC8,909
 13,055
 (4,146)
Persea Bio, LLC821
 988
 (167)
Ares Trading S.A.8,474
 6,939
 1,535
Intrexon Energy Partners II, LLC2,921
 2,316
 605
Intrexon T1D Partners, LLC3,882
 1,097
 2,785
Harvest Start-up Entities (1)11,835
 2,666
 9,169
Other6,994
 10,971
 (3,977)
Total$89,384
 $82,144
 $7,240
(1)For the nine months ended September 30, 2017, revenue recognized from collaborations with Harvest start-up entities include Thrive Agrobiotics, Inc.; Exotech Bio, Inc.; Relieve Genetics, Inc.; AD Skincare, Inc.; Genten Therapeutics, Inc.; and CRS Bio, Inc. For the nine months ended September 30, 2016, revenue recognized from collaborations with Harvest start-up entities include Thrive Agrobiotics, Inc.; Exotech Bio, Inc.; Relieve Genetics, Inc; and AD Skincare, Inc.
Collaboration and licensing revenues increased $7.2$2.6 million, or 9 percent,21%, over the ninesix months ended SeptemberJune 30, 20162019 primarily due to the accelerated recognition of previously deferred revenue associatedupon the mutual termination of a collaboration with Fibrocell in February 2020. This increase was partially offset by a decrease in collaboration revenues related to programs that have been paused since the payment received in June 2016 from ZIOPHARM to amend our collaborationssecond half of 2019 while the other parties evaluate the status of the projects and increased revenues associated with collaborations entered into with the Harvest start-up entities in 2016.their desired future development activities.
Product revenues and gross margin
Product revenues decreased $2.9 million, or 10 percent, fromwere comparable to the ninesix months ended SeptemberJune 30, 2016. The decrease in product revenues was primarily due to lower customer demand for cows and live calves.2019 as expected. Gross margin on products improved in the current period primarily due toas a declineresult of operational efficiencies gained through reductions in workforce and improved inventory management and a decrease in the average cost of cows.cows used in production.
Service revenues and gross margin
Service revenues increased $4.6$1.5 million, or 14 percent,5%, over the ninesix months ended SeptemberJune 30, 2016. The increase in2019. Trans Ova's service revenues relates to an increase in the number of bovine in vitro fertilization cycles performed due to higher customer demand. Gross margin on services decreased slightly in the current period primarilyand gross margins thereon increased due to an increase in royaltiesservices performed for new and commissionsexisting customers and the expansion of its commercial dairy business. Gross margin increased primarily due to vendors.a reduction in third-party royalty rate obligations for certain licensed technologies.
Research and development expenses
Research and development expenses increased $21.4decreased $22.1 million, or 26 percent, over40%, from the ninesix months ended SeptemberJune 30, 2016.2019. Salaries, benefits, and other personnel costs decreased $6.9 million, and contract research organization costs and lab supplies decreased $12.8 million as we suspended MBP Titan's operations and deprioritized certain programs at ActoBio. The increase is due primarily to increasesdecrease in (i) salaries, benefits, and other personnel costs for research and development employees, (ii) lab supplies and consulting expenses, (iii) depreciation and amortization, and (iv) rent and utilities expenses.

Salaries, benefits and other personnelis offset by $1.8 million of one-time severance costs increased $7.4 million dueincurred related primarily to an increase in research and development headcount necessary to invest in current or expanding platforms and to develop new prospective collaborations and other partnering opportunities. Lab supplies and consulting expenses increased $6.3 million due to (i) the progression of certain programs into the preclinical and clinical phases with certain of our collaborators and (ii) the expansion or improvement of certain of our platform technologies. Depreciation and amortization increased $4.3 million primarily as a result of (i) the amortization of developed technology acquired from Oxitec, which began in November 2016 upon the completion of certain operational and regulatory events, and (ii) the amortization of developed technology acquired from GenVec in June 2017. Rent and utilities expenses increased $2.5 million due to the expansion of certain facilities to support our increased headcount.MBP Titan employees.
Selling, general and administrative expenses
SG&A expenses increased $6.3decreased $8.5 million, or 6 percent, over17%, from the ninesix months ended SeptemberJune 30, 2016.2019. Professional fees decreased $6.5 million primarily due to the expiration of the services agreement with Third Security on December 31, 2019. Other corporate expenses, such as travel, marketing, and supplies, decreased $1.4 million due to scaling back our corporate functions and the impact of the COVID-19 pandemic on travel. Salaries, benefits, and other personnel costs increased $4.2 million primarily due to (i) increaseddecreased as a result of reduced corporate headcount as we scaled down our corporate functions to support our expanding operations and (ii) increased stock-based compensation expense resulting from grants to certain of our officers in February 2017. Legal and professional fees increased $4.7 million primarily due to (i) increased legal fees to defend ongoing litigation, (ii) increased business development and public relations consulting expenses, and (iii) our acquisition of GenVec in June 2017.more streamlined organization. These increasesdecreased costs were offset by $4.2 millionincreased share-based compensation expense attributable to equity grants made in litigation expenses recordedJanuary 2020 as well as one-time severance costs incurred related to MBP Titan and certain corporate employees.
55
Impairment of goodwill and assets
In conjunction with the suspension of MBP Titan's operations in the prior period arising from the entrancesecond quarter of a court order in our trial with XY, LLC.2020, we recorded $22.0 million of impairment charges related to goodwill and long-lived assets.
Total other income (expense),expense, net
Total other expense, net, is comprised primarily of interest expense and interest income (expense),in 2020 whereas 2019 also included the net increased $66.8effect of $3.1 million or 171 percent, overof other income related to our deconsolidation of AquaBounty in the ninesecond quarter.
Segment performance
The following table summarizes Segment Adjusted EBITDA, which is our primary measure of segment performance, for the six months ended SeptemberJune 30, 2016. This increase was primarily attributable to (i) increases in fair market value2020 and 2019, for each of our equity securities portfolio, investments in preferred stock,reportable segments and other convertible instruments and (ii) dividend income from our investments in preferred stock.for All Other segments combined, as well as unallocated corporate costs.
Equity in
 Six Months Ended 
 June 30,		Dollar
Change		Percent
Change
 20202019
 (In thousands) 
Segment Adjusted EBITDA:
PGEN Therapeutics$(12,617) $(14,836) $2,219  15.0 %
ActoBio(3,125) (6,562) 3,437  52.4 %
MBP Titan(13,963) (17,214) 3,251  18.9 %
Trans Ova5,329  2,706  2,623  96.9 %
Human Biotherapeutics(1,833) (577) (1,256) <(200)%
All Other1,129  (3,717) 4,846  130.4 %
Unallocated corporate costs17,526  29,448  (11,922) (40.5)%
For a reconciliation of Segment Adjusted EBITDA to net loss of affiliatesbefore income taxes, see "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 19" appearing elsewhere in this Quarterly Report.
Equity in net loss of affiliatesThe following table summarizes revenues from external customers for the ninesix months ended SeptemberJune 30, 20172020 and 2016 includes2019, for each of our pro-rata sharereportable segments and for All Other segments combined.
 Six Months Ended 
 June 30,		Dollar
Change		Percent
Change
 20202019
 (In thousands) 
PGEN Therapeutics$378  $1,730  $(1,352) (78.2)%
ActoBio230  582  (352) (60.5)%
MBP Titan—  2,696  (2,696) (100.0)%
Trans Ova40,630  39,326  1,304  3.3 %
Human Biotherapeutics14,573  2,845  11,728  >200%
All Other4,397  8,095  (3,698) (45.7)%
PGEN Therapeutics
Revenues for PGEN Therapeutics declined from 2019 to 2020 because we had no significant collaborations requiring services in 2020. Segment Adjusted EBITDA improved due to higher costs for contract research organizations and lab supplies incurred in 2019 for preclinical activities on programs that entered clinical trials in late 2019. Additionally, fewer costs related to the PRGN-3005 Phase 1 trials were incurred in April and May 2020 as enrollment of new patients in this trial was temporarily suspended due to a mandated hold on certain early and late-stage clinical trials at the Fred Hutchinson Cancer Research Center in Seattle instituted in light of the net lossesCOVID-19 pandemic. Costs related to PGEN Therapeutics' clinical trials are expected to
56
increase in the third quarter of 2020 and beyond as the trials progress. Additionally, capital expenditures decreased in the current period as PGEN Therapeutics completed an expansion of its lab facilities in 2019.
ActoBio
Segment Adjusted EBITDA has improved as ActoBio incurred fewer costs with contract research organizations due to deprioritizing certain programs in late 2019 and fewer AG019 trial costs in the current period due to the temporary suspension of the last cohort of the Phase 1b/2a clinical trial.
MBP Titan
Revenues for MBP Titan have decreased as our investmentspartnered programs have been paused since the fourth quarter of 2019. Segment Adjusted EBITDA improved in 2020 because we account for usingreduced our workforce during the equity methodfirst quarter of accounting. 2020 and suspended MBP Titan's operations in the second quarter of 2020.
Trans Ova
The $5.7 million, or 33 percent, decreaseimprovement in both Trans Ova's Segment Adjusted EBITDA and revenues was primarily due to increased service revenues and improved margins thereon as a result of more procedures performed for new and existing customers, including expansion of its commercial dairy business and a reduction in third-party royalty rate obligations for certain licensed technologies. Additionally, Segment Adjusted EBITDA improved due to operational efficiencies gained through reductions in workforce and improved inventory management and a decrease in the temporary redeploymentcost of certain resources away from these JVcows used in production.
Human Biotherapeutics
The increase in Human Biotherapeutics' revenues was due to the accelerated recognition of previously deferred revenue upon the mutual termination of a collaboration with Fibrocell. Segment Adjusted EBITDA decreased due to one-time severance costs associated with workforce reductions in the first quarter of 2020.
All Other
Segment Adjusted EBITDA improved period over period as a result of the closure of two reporting units in 2019, as well as an improvement in Exemplar's Segment Adjusted EBITDA due to increased revenues and reduced costs. Revenues in All Other decreased in 2020 as our partnered programs towards supporting prospective new platforms and additional collaborations.with Harvest start-up entities have been paused since the third quarter of 2019.
Unallocated Corporate Costs
Unallocated corporate costs decreased primarily due to a 25% reduction of corporate employees as we scaled down our corporate functions to support our more streamlined organization, as well as a decrease in professional fees as we eliminated third-party vendors that were not critical to our most valuable enterprises.
Liquidity and capital resources
Sources of liquidity
We have incurred losses from operations since our inception, and as of SeptemberJune 30, 2017,2020, we had an accumulated deficit of $820.6 million.$1.8 billion. From our inception through SeptemberJune 30, 2017,2020, we have funded our operations principally with proceeds received from private and public equity and debt offerings, cash received from our collaborators, and through product and service sales made directly to customers. As of SeptemberJune 30, 2017,2020, we had cash and cash equivalents of $64.2$46.7 million and short-term investments of $44.5$86.3 million. Additionally, in October 2017, we entered into the Preferred Stock Facility with an affiliate of Third Security through which we may draw an additional $100 million through the issuance of Series A Preferred Stock. Cash in excess of immediate requirements is typically invested primarily in money market funds and U.S. government debt securities in order to maintain liquidity and preserve capital.
We currently generate cash receipts primarily from technology access fees, reimbursement of research and development services performed by us and sales of products and services.services and from strategic transactions.

As of June 30, 2020, Trans Ova was in compliance with the debt covenants associated with its line of credit as discussed in "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 11" appearing elsewhere in this Quarterly Report.
57
Cash flows
The following table sets forth the significant sources and uses of cash for the periods set forth below:
Nine Months Ended 
 September 30,		 Six Months Ended 
 June 30,
2017 2016 20202019
(In thousands) (In thousands)
Net cash provided by (used in):   Net cash provided by (used in):
Operating activities$(70,259) $(31,780)Operating activities$(41,548) $(76,637) 
Investing activities80,418
 (45,144)Investing activities(12,586) 18,565  
Financing activities(9,420) 11,162
Financing activities32,891  6,894  
Effect of exchange rate changes on cash and cash equivalents870
 (313)
Net increase in cash and cash equivalents$1,609
 $(66,075)
Effect of exchange rate changes on cash, cash equivalents, and restricted cashEffect of exchange rate changes on cash, cash equivalents, and restricted cash(59) (418) 
Net decrease in cash, cash equivalents, and restricted cashNet decrease in cash, cash equivalents, and restricted cash$(21,302) $(51,596) 
Cash flows from operating activities:
Our current periodDuring the six months ended June 30, 2020, our net loss of $92.9was $99.4 million, after adjustment forwhich includes the following significant noncash items ofexpenses totaling $73.0 million from both continuing and discontinued operations: (i) $31.9$27.0 million of stock-based compensation expense,accumulated foreign currency translation losses that were realized upon the closing of the Transactions, (ii) $22.9$22.0 million of impairment losses related to goodwill and long-lived assets, (iii) $9.6 million of depreciation and amortization expense, (iii) $12.3(iv) $9.3 million of noncash dividend income, (iv) $11.3stock-based compensation expense, and (v) $5.1 million accretion of debt discount and amortization of deferred financing costs. These expenses were partially offset by the recognition of $10.0 million of equitypreviously deferred revenue upon the mutual termination of a collaboration agreement with Fibrocell in February 2020.
During the six months ended June 30, 2019, our net loss of affiliates, (v) $9.2was $101.1 million, which includes the following significant noncash expenses totaling $35.4 million from both continuing and discontinued operations: (i) $12.7 million of noncash net unrealizeddepreciation and realized gains on our equity securities and preferred stock, and (vi) $8.4amortization expense, (ii) $9.1 million of stock-based compensation expense, (iii) $5.7 million of shares issued as payment for services, was $39.9 million.(iv) $4.5 million accretion of debt discount and amortization of deferred financing costs, and (v) $3.4 million of equity in net loss of affiliates. These expenses were partially offset by $5.7 million of noncash net unrealized gains on our equity securities and preferred stock. Additionally, we had a $29.1an $8.4 million net increase in our operating assets and liabilities, primarilyincluding the receipt of $10.0 million cash payment from Surterra Holdings, Inc., as upfront consideration for a resultcollaboration agreement in the second quarter of the recognition of previously deferred revenue. 2019.
Our prior period net loss of $145.4 million, after deduction of significant noncash items of (i) $45.4 million of noncash unrealized losses on our equity securities, (ii) $30.6 million of stock-based compensation expense, (iii) $17.7 million of depreciation and amortization expense, (iv) $17.0 million of equity in net loss of affiliates, and (v) $8.3 million of shares issued as payment for services, was $26.4 million. Alsocash outflows from operations during the ninesix months ended SeptemberJune 30, 2016,2020 decreased $35.1 million from the six months ended June 30, 2019 primarily due to (i) the reduction in cash required to fund the businesses sold in the TS Biotechnology Sale, (ii) the reduction in cash requirements for MBP Titan as we received a $10.0 million technology access fee pursuantsuspended those operations in the second quarter of 2020, and (iii) reductions in operating expenses for our ActoBio and corporate operations as we streamlined both in order to a new collaboration and had an additional $12.7 million net increase infurther prioritize the use of our operating assets and liabilities primarily as a result of the recognition of previously deferred revenue and payments of accrued compensation.capital.
Cash flows from investing activities:
During the ninesix months ended SeptemberJune 30, 2017,2020, we purchased $76.3 million of investments, net of maturities, primarily using the $64.2 million of proceeds received from the Transactions, net of cash sold, and the private placement discussed below.
During the six months ended June 30, 2019, we received net proceeds of $136.3$52.8 million from the maturitymaturities of short-term investments and we used $32.7$25.4 million for purchases of property, plant and equipment, $14.2 million for the purchase of a land-based aquaculture facility by AquaBounty Technologies, Inc., or AquaBounty, and $10.6 million for investments inequipment. Additionally, our JVs. During the nine months ended September 30, 2016, we used $20.2 million in purchases of property, plant and equipment, $9.4 million for investments in our JVs,cash balance decreased $7.2 million to acquireas a result of the assetsdeconsolidation of EnviroFlight, LLC, and purchased $3.3 million of net short-term and long-term investments.AquaBounty.
Cash flows from financing activities:
During the ninesix months ended SeptemberJune 30, 2017,2020, we paid $8.7received $35.0 million proceeds from the sale of deferred considerationour common stock in a private placement to former shareholders of acquired businesses. TS Biotechnology.
During the ninesix months ended SeptemberJune 30, 2016,2019, we received $18.2$6.6 million in net proceeds from stock option exercises and paid $6.7 millionan underwritten public offering completed by AquaBounty in March 2019.
58
Future capital requirements
We established our strategy and business model of commercializing our technologies through collaborations with development expertise in 2010, and we consummated our first collaboration in January 2011. We believe that our efforts to partner our more mature programs and capabilities and to continue to consummate collaborations across our various market sectors will result in additional upfront, milestone and cost recovery payments in the future.
We believe that our existing cash and cash equivalents, short-term investments, cash expected to be received from our current collaborators and for sales of products and services provided by our consolidated subsidiaries, and proceeds received from any issuance of Series A Preferred Stock under the Preferred Stock Facilityliquid assets will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months.

We have based our estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Our future capital requirements will depend on many factors, including:
•progress in our research and development programs, as well as the magnitude of these programs;
•any delays or potential delays to our clinical trials as a result of the COVID-19 pandemic;
•the timing of regulatory approval of our product candidates and those of our collaborations;
•the timing, receipt and amount of any payments received in connection with strategic transactions;
•the timing, receipt, and amount of upfront, milestone, and other payments, if any, from present and future collaborators, if any;
•the timing, receipt, and amount of sales and royalties, if any, from our potential products;product candidates;
•the timing and capital requirements to scale up our ability to maintain or improve the volume and pricing of our currentvarious product candidates and service offerings and to develop new offerings, including those which may incorporate new technologies;customer acceptance thereof;
the timing, receipt and amount of funding under future government contracts, if any;
•our ability to maintain and establish additional collaborative arrangements and/or new businessstrategic initiatives;
the timing of regulatory approval of products of our collaborations and operations;
•the resources, time, and cost required for the preparation, filing, prosecution, maintenance, and enforcement of patent claims;our intellectual property portfolio;
investments we may make in current and future collaborators, including JVs;
•strategic mergers and acquisitions, if any, including both the upfront acquisition cost as well as the cost to integrate, maintain, and expand the strategic target; and
•the costs associated with legal activities, including litigation, arising in the course of our business activities and our ability to prevail in any such legal disputes.disputes; and
•the effects, duration, and severity of the ongoing COVID-19 pandemic and the actions we have taken or may take in response, any of which could significantly impact our business, operations, and financial results.
Until such time, if ever, as we can regularly generate positive operating cash flows, we mayplan to finance our cash needs through a combination of equity offerings, including issuances from the Preferred Stock Facility; debt financings;financings, government or other third-party funding;funding, strategic alliances, sales of assets, and licensing arrangements. As the COVID-19 pandemic continues to negatively impact the economy, our future access to capital on favorable terms may be materially impacted. We may not be able to raise sufficient additional funds on terms that are favorable to us, if at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our common shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common shareholders. Our current stock price may make it more difficult to pursue equity financings and lead to substantial dilution if the price of our common stock does not increase. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise additional funds through government or other third-party funding, marketing and distribution arrangements or otherstrategic transactions, collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or product candidates, or to grant licenses on terms that may not be favorable to us.

We are subject to a number of risks similar to those of other companies conducting high-risk, early stage research and development of 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 product candidates. Our success is dependent upon our ability to continue to raise additional capital in order to fund ongoing research and development, obtain regulatory approval of our products, successfully commercialize our products, generate revenue, meet our obligations, and, ultimately, attain profitable operations. Our ability to achieve what is necessary for our success may be negatively impacted by the uncertainty caused by the COVID-19 pandemic.
59
Contractual obligations and commitments
The following table summarizes our significant contractual obligations and commitments as of SeptemberJune 30, 20172020 and the effects such obligations are expected to have on our liquidity and cash flows in future periods:
TotalLess Than 1 Year1 - 3 Years3 - 5 YearsMore Than 5 Years
 (In thousands)
Operating leases$33,530  $7,139  $13,580  $11,143  $1,668  
Convertible debt (1)256,680  56,680  —  200,000  —  
Cash interest payable on convertible debt24,500  7,000  14,000  3,500  —  
Long-term debt, excluding convertible debt3,973  428  687  744  2,114  
Total$318,683  $71,247  $28,267  $215,387  $3,782  
 Total Less Than 1 Year 1 - 3 Years 3 - 5 Years More Than 5 Years
 (In thousands)
Operating leases$64,352
 $7,314
 $16,131
 $13,699
 $27,208
Purchase commitments10,618
 3,373
 7,245
 —
 —
Long term debt6,004
 434
 816
 1,194
 3,560
Contingent consideration2,911
 —
 2,911
 —
 —
 $83,885
 $11,121
 $27,103
 $14,893
 $30,768
(1)Of the $256.7 million convertible debt, $200.0 million may be converted into Precigen common stock and $56.7 million may be converted into either Precigen common stock or the common stock of certain of our subsidiaries. See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 11" appearing elsewhere in this Quarterly Report for further discussion of these instruments.
In addition to the obligations in the table above, as of SeptemberJune 30, 20172020 we also have the following significant contractual obligations described below.
In conjunction with the formation of our JVs, we committed to making future capital contributions of at least $45.0 million to the JVs, subject to certain conditions and limitations. As of SeptemberJune 30, 2017,2020, our remaining capital contribution commitments to our JVs were $19.2$14.2 million. These future capital contributions are not included in the table above due to the uncertainty of the timing and amounts of such contributions.
We are party to in-licensed research and development agreements with various academic and commercial institutions where we could be required to make future payments for annual maintenance fees as well as for milestones and royalties we might receive upon commercial sales of products whichthat incorporate their technologies. These agreements are generally subject to termination by us and therefore no amounts are included in the tables above. At SeptemberAs of June 30, 2017,2020, we also had research and development commitments with third parties totaling $9.5$13.5 million that had not yet been incurred.
In January 2015, we and ZIOPHARM jointly entered into a license agreement with the University of Texas MD Anderson Cancer Center, or MD Anderson, whereby we received an exclusive license to certain technologies owned by MD Anderson. ZIOPHARM will receive access to these technologies pursuant to the terms of our ECC. We and ZIOPHARM are obligated to reimburse MD Anderson for out of pocket expenses for maintaining patents covering the licensed technologies. These reimbursements are not included in the table above due to the uncertainty of the timing and amounts of such reimbursements.
As part of our August 2014 acquisition of Trans Ova, we agreed to pay a portion of certain cash proceeds received from the litigation with XY. These amounts are not included in the table above due to the uncertainty of whether and when any amounts may be due.
In conjunction with a prior transaction associated with Trans Ova's subsidiary, ViaGen, L.C., or ViaGen, in September 2012, we may be obligated to make certain future contingent payments to the former equity holders of ViaGen, up to a total of $3.0 million if certain revenue targets, as defined in the share purchase agreement, are met. This amount is not included in the table above due to the uncertainty of when we will make any of these future payments, if ever.
In January 2009, AquaBounty was awarded a grant to provide funding of a research and development project from the Atlantic Canada Opportunities Agency, a Canadian government agency. Amounts claimed by AquaBounty must be repaid in the form of a 10 percent royalty on any products commercialized out of this research and development project until fully paid. Because the timing of commercialization is subject to additional regulatory considerations, the timing of repayment is uncertain. AquaBounty claimed all amounts available under the grant, resulting in total long term debt of $2.1 million on our consolidated financial statements as of September 30, 2017. This amount is not included in the table above due to the uncertainty of the timing of repayment.
Net operating losses
As of SeptemberJune 30, 2017,2020, we had net operating loss carryforwards of approximately $243.7$675.2 million for U.S. federal income tax purposes available to offset future taxable income, including approximately $13.4$422.5 million acquired in our acquisitiongenerated after 2017, U.S. capital loss carryforwards of GenVec,$199.7 million, and U.S. federal and state research and development tax credits of approximately $7.8$10.1 million, prior to consideration of annual limitations that may be imposed under Section 382 of the Internal Revenue Code of 1986, as amended, or

Section 382. TheseNet operating loss carryforwards generated prior to 2018 begin to expire in 2022.2022, and capital loss carryforwards will begin to expire if unutilized in 2024. Our direct foreign subsidiaries included in continuing operations have foreign loss carryforwards of approximately $146.8$74.2 million, most of which do not expire. Excluding certain deferred tax liabilities totaling $15.9$2.7 million, our remaining net deferred tax assets, which primarily relate to these loss carryforwards, are offset by a valuation allowance due to our history of net losses.
OurAs a result of our past issuances of stock, andas well as due to prior mergers and acquisitions, have resulted in ownership changes within the meaning of Section 382. As a result, the utilization of portionscertain of our net operating losses may behave been subject to annual limitations.limitations pursuant to Section 382. As of SeptemberJune 30, 2017, approximately $15.1 million of our domestic2020, Precigen has utilized all net operating losses generated priorsubject to 2008 are limited by Section 382 to annual usage limits of approximately $1.5 million.limitations, other than those losses inherited via acquisitions. As of SeptemberJune 30, 2017,2020, approximately $33.6$42.1 million of domestic net operating losses were inherited via acquisitionacquisitions and are limited based on the value of the respective targetstarget at the time of the transaction. Future changes in stock ownership may also trigger an ownership change and, consequently, a Section 382 limitation.
60
Off-balance sheet arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements other than operating leases and purchase commitments as mentioned above, as defined under Securities and Exchange Commission, or SEC, rules.
Critical accounting policies and estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which we have prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.States. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.
There have been no material changes to our critical accounting policies from those described in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2016.Report.
Recent accounting pronouncements
For information with respect to recent accounting pronouncements and the impact of these pronouncements on our condensed consolidated financial statements, see "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 2" appearing elsewhere in this Quarterly Report on Form 10-Q.Report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The following sections provide quantitative information on our exposure to interest rate risk, stock price risk, and foreign currency exchange risk. We make use of sensitivity analyses whichthat are inherently limited in estimating actual losses in fair value that can occur from changes in market conditions.
Interest rate risk
We had cash, cash equivalents and short-term and long-term investments of $108.7$133.0 million and $243.2$75.1 million at Septemberas of June 30, 20172020 and December 31, 2016,2019, respectively. Our cash and cash equivalents and short-term and long-term investments consist of cash, money market funds, U.S. government debt securities, corporate notes and bonds, and certificates of deposit. The primary objectiveobjectives of our investment activities isare to preserve principal, maintain liquidity, and maximize income without significantly increasing risk. Our investments consist of U.S. government debt securities corporate notes and bonds, and certificates of deposit, which may be subject to market risk due to changes in prevailing interest rates that may cause the fair values of our investments to fluctuate. We believe that a hypothetical 100 basis point increase in interest rates would not materially affect the fair value of our interest-sensitive financial instruments and any such losses would only be realized if we sold the investments prior to maturity.


Investments in publicly traded companies' common stock
We have common stock investments in several publicly traded companies that are subject to market price volatility. We have adopted the fair value method of accounting for these investments, except for our investment in AquaBounty as further described below, and therefore, have recorded them at fair value at the end of each reporting period with the unrealized gain or loss recorded as a separate component of other income (expense), net for the period. As of September 30, 2017 and December 31, 2016, the original aggregate cost basis of these investments was $102.6 million and $104.0 million, respectively, and the market value was $26.6 million and $23.5 million, respectively. The fair value of these investments is subject to fluctuation in the future due to the volatility of the stock market, changes in general economic conditions and changes in the financial conditions of these companies. The fair value of these investments as of September 30, 2017 would be approximately $29.3 million and $21.3 million, respectively, based on a hypothetical 10 percent increase or 20 percent decrease in the value of the investments. The fair value of these investments as of December 31, 2016 would be approximately $25.9 million and $18.8 million, respectively, based on a hypothetical 10 percent increase or 20 percent decrease in the value of the investments.
The common stock of AquaBounty commenced trading on the NASDAQ Stock Market in January 2017 and ceased trading on the London Stock Exchange in May 2017. As of September 30, 2017, we owned 5,162,277 shares or approximately 58 percent of AquaBounty. The fair value of our investment in AquaBounty as of September 30, 2017 and December 31, 2016 was $36.7 million and $40.1 million, respectively, based on AquaBounty's quoted closing price on the NASDAQ Stock Market and London Stock Exchange, respectively. The fair value of our investment in AquaBounty as of September 30, 2017 would be approximately $40.4 million and $29.4 million, respectively, based on a hypothetical 10 percent increase or 20 percent decrease in the share price of AquaBounty. The fair value of our investment in AquaBounty as of December 31, 2016 would be approximately $44.1 million and $32.1 million, respectively, based on a hypothetical 10 percent increase or 20 percent decrease in the share price of AquaBounty.
Investments in publicly traded companies' preferred stock
We have preferred stock investments in two publicly traded companies, which may be converted to common stock in the future. We have adopted the fair value method of accounting for these investments whereby the value of preferred stock is adjusted to fair value as of each reporting date. As of September 30, 2017 and December 31, 2016, the original cost basis of these investments, including dividends, was $140.5 million and $127.4 million, respectively, and the fair value of these investments was $148.5 million and $129.5 million, respectively. The fair value of these investments is subject to fluctuation in the future due to, among other things, the likelihood and timing of conversion of the preferred stock into common stock, the volatility of each company's common stock, and changes in general economic and financial conditions of these companies. The fair value of these investments as of September 30, 2017 would be approximately $163.4 million and $118.8 million, respectively, based on a hypothetical 10 percent increase or 20 percent decrease in the value of the investments. The fair value of these investments as of December 31, 2016 would be approximately $142.5 million and $103.6 million, respectively, based on a hypothetical 10 percent increase or 20 percent decrease in the value of the investments.
Foreign currency exchange risk
We have international subsidiaries in Belgium Brazil, Canada, England, and Hungary.Germany. These subsidiaries' assets, liabilities, and current revenues and expenses are denominated in their respective foreign currency. We do not hedge our foreign currency exchange rate risk. The effect of a hypothetical 10 percent change in foreign currency exchange rates applicable to our business would not have a material impact on our condensed consolidated financial statements.

61


Item 4. Controls and Procedures
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we carried out an evaluation, under supervision and with the participation of our management, including our Chief Executive Officer ("CEO"), who is our principal executive officer, and our Chief Financial Officer ("CFO"), who is our principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Rule 13a-15(e) and 15(d)-15(e)15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, as of the end of the period covered by this report, our CEO and CFO concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
There has been no change in our internal control over financial reporting during the three months ended SeptemberJune 30, 2017,2020, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. As a result of the COVID-19 pandemic, certain employees of the Company have been working remotely, but these changes to the working environment did not have a material effect on the Company's internal control over financial reporting.

62
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We may become subject to other claims, assessments, and governmental investigations from time to time in the ordinary course of business. Such matters are involved in litigation or legalsubject to many uncertainties and outcomes are not predictable with assurance. We accrue liabilities for such matters incidental to our business activities. While the outcomewhen it is probable that future expenditures will be made and such expenditures can be reasonably estimated. As of these matters cannot be predicted with certainty,June 30, 2020, we do not currently expectbelieve that any of thesesuch matters, individually or in the aggregate, will have a material adverse effect on our business, or financial position. However, should one or more of these matters be resolved in a manner adverse to our current expectation, the effect on ourcondition, results of operations, for a particular fiscal reporting period could be material.or cash flows.
In May 2016, two putative shareholder class action lawsuits, captioned Hoffman v. Intrexon Corporation et al. and Gibrall v. Intrexon Corporation et al., were filed in the U.S. District Court for the Northern District of California on behalf of purchasers of our common stock between May 12, 2015 and April 20, 2016, or the Class Period. In July 2016, the court consolidated the lawsuits and appointed a lead plaintiff. The consolidated amended complaint names as defendants us and certain of our current and former officers, or the Defendants. It alleges, among other things, that the Defendants made materially false and/or misleading statements during the Class Period with respect to our business, operations, and prospects in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended. The plaintiffs' claims are based in part upon allegations in a report published in April 2016 on the Seeking Alpha financial blog. The plaintiffs seek compensatory damages, interest and an award of reasonable attorneys' fees and costs. The Defendants moved to dismiss the case. On February 24, 2017, the court granted our motion to dismiss the lawsuit on the grounds that the plaintiff failed to state a claim, while granting the plaintiff leave to amend. The plaintiff subsequently notified the court that it would seek to appeal the court's ruling rather than amend its complaint. On April 26, 2017, the court entered final judgment in the case. Notice of appeal was filed by the plaintiff on May 26, 2017. On October 26, 2017, the plaintiff filed a voluntary motion to dismiss the case, which the court of appeals granted on November 1, 2017.
In July 2016, a putative shareholder derivative action captioned Basile v. Kirk et al. was filed in the Circuit Court of Fairfax County, Virginia, against certain of our directors, our CEO, and Third Security, and naming us as a nominal defendant. The complaint alleges causes of action for breaches of fiduciary duty and unjust enrichment relatingSee "Notes to the entry by us into the Services Agreement with Third Security. The plaintiff seeks, among other things, damages in an unspecified amount, disgorgement of improper benefits, appropriate equitable relief, and an award of attorney fees and other costs and expenses. The complaint is substantially similar to two separate demands made by shareholders concerning the Services Agreement and Mr. Kirk's compensation. Our board of directors appointed a Special Litigation Committee, or the SLC, consisting of independent directors to investigate the claims and allegations made in the derivative action and in the two shareholder demands and to decide on our behalf whether the claims and allegations should be pursued. The Basile case was stayed pending the report of the SLC. In November 2016, the SLC completed its review and evaluation and unanimously determined that the claims were without merit because the compensation arrangements were the result of an informed and disinterested decision-making process and were fair to the Company, and that prosecution of the asserted claims was not in our or our shareholders' best interest. Based upon the determination of the SLC, on February 24, 2017 we moved to dismiss the court action pursuant to Virginia statute. On June 8, 2017, the court granted our motion to dismiss while granting the plaintiff leave to amend. On August 30, 2017, the plaintiff filed a consent motion for leave to amend along with the amended shareholder derivative complaint. The Company moved to dismiss the amended complaint on October 6, 2017. We intend to continue to defend the lawsuit vigorously. There can be no assurance, however, regarding the ultimate outcome of the case.
In addition to the shareholder demands described above, in June and July 2016, two shareholders made separate demands under Virginia law demanding that we file suit against certain of our current officers and directors for alleged breaches of fiduciary duty and other claims. The demands were based upon and asserted the allegations previously published in April 2016 in the Seeking Alpha financial blog. In July 2016, our board of directors authorized the SLC to expand its review to include all such allegations. In February 2017, the SLC completed its review and evaluation and unanimously determined that there was no basis for any of the allegations, that our officers and directors did not breach their fiduciary duties or any other applicable law, and that prosecution of the asserted claims was not in our or our shareholders' best interest. Following the SLC's determination, in March 2017, one of the putative shareholders filed a derivative complaint captioned Luger v. Kirk et al. in the Circuit Court of Fairfax County, Virginia. We are a nominal defendantCondensed Consolidated Financial Statements - Note 16" appearing elsewhere in this action, and other defendants include certainQuarterly Report for further discussion of our directors, our CEO, and Third Security. The complaint alleges causes of action for breaches of fiduciary duty and unjust enrichment relating to our entry into the Services Agreement with Third Security, our CEO's compensation, and certain allegations contained in the April 2016 Seeking Alpha financial blog piece. Based on the determination of the SLC and a review of applicable law, we intend to defend the lawsuit vigorously; however, there can be no assurance regarding the ultimate outcome of this case.ongoing legal matters.


The Division of Enforcement of the SEC is conducting an investigation which we believe concerns certain issues raised by the foregoing matters. We have met with the SEC staff and are voluntarily cooperating with their investigation. Our board of directors has authorized the SLC to monitor our interaction with the SEC staff.
Item 1A. Risk Factors
As disclosed in "Item 1A. Risk Factors" in our Annual Report, on Form 10-K for the year ended December 31, 2016, there are a number of risks and uncertainties that may have a material effect on the operating results of our business and our financial condition. There are no additional material updates or changes to our risk factors since the filing of our Annual Report, on Form 10-K for the year ended December 31, 2016, except as follows:
Randal J. Kirk controls approximately 47 percentThe ongoing COVID-19 pandemic could cause a disruption of the development of our common stockproduct candidates and adversely impact our healthcare business.
In response to the COVID-19 pandemic, ActoBio took the initiative to temporarily suspend the last remaining cohort of the Phase1b/2a trial for AG019, which is the combination of AG019 plus teplizumab in patients 12 to 17 years of age, as a proactive measure to protect the welfare and safety of September 30, 2017,patients, caregivers, clinical site staff, and our employees and contractors. This voluntary suspension was lifted in June 2020, and the study is ablerecruiting patients again. Further, from April to controlMay 2020, enrollment of new patients in our PRGN-3005 Phase 1 trial was temporarily suspended due to a mandated hold on certain early and late-stage clinical trials at the Fred Hutchinson Cancer Research Center in Seattle instituted in light of the COVID-19 pandemic. As the COVID-19 pandemic continues to evolve, we may experience delays in the development of our product candidates, including as a result of declines in new patient enrollment for new and existing trials, ability to recruit and retain principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19 if an outbreak occurs in their geography, site closures, reduced availability of other key personnel, availability of supplies, or significantly influence corporate actions,for other reasons that may be difficult to anticipate. For example, we recently received IND clearance to initiate a Phase 1/2 trial to study PRGN-2009 in participants with HPV+ cancers, but our ability to initiate such a trial may be delayed or impeded by any of the foregoing factors as a result of the COVID-19 pandemic. In addition, the FDA or other regulatory authorities may have their resources diverted to responding to, or otherwise may be disrupted by, the COVID-19 pandemic, which could result in delays of reviews, approvals, and communications with regulatory authorities related to our clinical trials and product candidates. As the focus of our business is on healthcare, disruptions to our clinical trials could result in increased costs, delays in advancing product candidates, or ultimately, termination of clinical trials altogether resulting in a material adverse impact to our overall business. Furthermore, a failure to achieve meaningful clinical trial results, or even progress toward those results, could have a material adverse effect on the value of our securities and our ability to secure needed additional capital.
The effects of the COVID-19 pandemic have disrupted, and will likely continue to disrupt, our business operations, which could have a material adverse effect on our results of operations, cash flows, and financial position.
We are closely monitoring the impacts of COVID-19 on all aspects of our business. The operations of our businesses may be adversely impacted by COVID-19, including, for example, if we are unable to secure necessary supplies, including personal protection equipment for our employees. We also rely on third parties for various aspects of our business, including developing some of our product candidates. These third parties may experience similar disruptions or negative impacts to their businesses due to COVID-19, which may result in Mr. Kirk taking actions contraryadditional delays or otherwise adversely impact our operations.
While our established bovine genetics company, Trans Ova, experienced a strong half of 2020, the significant disruptions from COVID-19 and its cascading effects could mean that the business may be materially adversely affected in the future, including by a decrease in sales or overall demand for our products, the inability of our customers to pay for our services and products, similar negative effects on our suppliers, and disruptions to the desiresglobal supply chain generally. There have already been a number of initial reports regarding such disruptions to the beef and dairy industry as a result of the COVID-19 pandemic, which impact both Trans Ova's potential customers and its sources of certain resources, such as embryos. Exemplar, our subsidiary that develops MiniSwine models to enable the study of life-threatening diseases, could face similar types of challenges,
63

including its customers delaying or refusing shipments because of delays in their research and development operations similar to, or more severe than, the challenges and risks we face with our operations.
In addition to the potential impacts to our operations, we have initiated several precautions to mitigate the spread of the illness across our businesses, which may impact our ability to carry out our business as usual, including additional sanitation and cleaning procedures in our laboratories and other facilities, instituting remote working when possible, and implementing social distancing and staggered worktime requirements for our employees that must work on-site. The increase in remote working may also result in elevated susceptibility to cyber security risks. We have incurred additional costs as a result of these measures and will likely continue to do so as a result of these and any future measures necessary to ensure the safety of our employees and the continuity of our operations. These measures could also lead to reduced efficiency in our operations.
Several of our subsidiaries are leanly staffed and rely on key personnel to manage operations. The loss of our key scientific staff, personnel, or other shareholders.key employees, as a result of illness or otherwise, could negatively impact our business and operations, particularly if we are unable to adequately find or train replacements. Certain of our subsidiaries, such as Trans Ova and Exemplar, that operate in industries in which remote working is not possible may be particularly at risk.
Given the dynamic nature of these circumstances, the full impact of the COVID-19 pandemic on our ongoing business, results of operations, and overall financial performance for the balance of 2020 and beyond cannot be reasonably estimated at this time, and it could have a material adverse effect on our results of operations, cash flows, and financial position, including resulting in impairments to goodwill, long-lived assets, and additional credit losses.
The future of our MBP platform is uncertain, and the impacts of the COVID-19 pandemic may create additional challenges in the future with respect to MBP's operations and related opportunities.
We have historically been controlled, managed and principally funded by Randal J. Kirk, our Chairman and Chief Executive Officer, and affiliates of Mr. Kirk, including Third Security. As of September 30, 2017, Mr. Kirk and shareholders affiliated with him beneficially owned approximately 47 percent of our voting stock. In addition, pursuant to our Preferred Stock Facility,previously announced that we may, from time to time at our sole and exclusive option, issue and sell to an affiliate of Mr. Kirk up to 1,000,000 shares of our Series A Preferred Stock, which will be convertible into shares of our common stock uponare assessing the approval of our shareholders, subject to regulatory approval, at a conversion rate based on future market prices. Mr. Kirk is able to control or significantly influence all matters requiring approval by our shareholders, including the election of directors and the approval of mergers or other business combination transactions. The interests of Mr. Kirk may not always coincide with the interests of other shareholders, and he may take actions that advance his personal interests and are contrary to the desires of our other shareholders.
In connection with the Preferred Stock Facility, we have filed an amendment to our articles of incorporation to set the designations of our new Series A Preferred Stock with terms that are preferential to those of our common stock.
Our articles of incorporation authorize us to issue, without the approval of our shareholders, one or more classes or series of preferred stock having such designations, preferences, limitations and relative rights, including preferences over our common stock respecting dividends and distributions, as our board of directors may determine. In connection with our Preferred Stock Facility, we filed an amendment to our articles of incorporation to set the designations of our Series A Preferred Stock, which, if and when issued, will have certain preferences over our common stock, including accrued dividends of 8 percent per annum and, subject to limited exceptions, seniority to our common stockappropriate next steps with respect to the rights tofuture of our MBP platform, which could include a financing directly into MBP Titan or other strategic alternatives. At this time, a financing or other strategic alternative does not appear imminent, and the paymentmarket uncertainty driven by the COVID-19 pandemic and the current state of dividendsthe energy sector raise additional challenges for the strategic alternatives we have been pursuing for the MBP platform in the near term. In the second quarter of 2020, we suspended MBP Titan operations and on parity with our common stockare assessing potential next steps with respect to the distributionMBP platform and related long-lived assets. As a result of assetsthe current situation and the actions we have taken, we will continue to incur costs associated with the MBP platform, but we have placed on hold the developmental advancement of the underlying technology. It may be more difficult in the event of a liquidation, dissolution,future to raise funds for the MBP platform or winding up or change of control of the Company.
After December 31, 2020, the holder of the Series A Preferred Stock, ifpursue strategic alternatives, and when issued,we may require us to redeem any or all of the outstanding Series A Preferred Stock.
If we are unable to obtain the approval of our shareholders to convert any outstanding shares of Series A Preferred Stock prior to December 31, 2020, the holder of the Series A Preferred Stock may require us to redeem any or all of the outstanding shares of Series A Preferred Stock at the issue price of $100 per share plus any accumulated but unpaid dividends thereon to, but not including, the redemption date, subject to adjustments. Any such redemption of our Series A Preferred Stock in cash would reduce the cashlose value that we have available to investcreated in our business.the MBP platform. In the eventsecond quarter of 2020, we incurred $22.0 million of impairment charges related to goodwill and other long-lived assets associated with MBP Titan.
The COVID-19 pandemic has created significant volatility, uncertainty, and economic disruption that wecould have issued Series A Preferred Stockan adverse effect on the Company's access to capital on favorable terms.
Our operations have consumed substantial amounts of cash since our inception. We expect to continue to spend substantial amounts to continue the preclinical and redemption is required, there canclinical development of our current and future programs. We are and will continue to be no assurancedependent on public or private financings, new collaborations or licensing arrangements with strategic partners, or additional debt financing sources to fund continuing operations. As the COVID-19 pandemic continues to negatively impact the economy, our future access to capital on favorable terms may be materially impacted. We may not be able to raise sufficient additional funds on terms that we will have enough cashare favorable to us, if at such timeall. Given the rapid evolution of the COVID-19 pandemic and the uncertainty surrounding it, its impact to redeem the outstanding shares.our financial condition, including but not limited to, possible impairment, restructuring, and other changes, cannot be reliably quantified or estimated.
Additionally, inIn evaluating our risks, readers also should carefully consider the risk factors discussed in our Annual Report, on Form 10-K for the year ended December 31, 2016, which could materially affect our business, financial condition or operating results, in addition to the other information set forth in this report and in our other filings with the SEC.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) Sales of UnregisteredNone.
Item 3. Defaults on Senior Securities
From July 1, 2017 through September 30, 2017, we consummated the following transactions involving the issuance of unregistered securities:None.
the issuance of 118,828 unregistered shares of our common stock in July, August, and September 2017, as payment under the Services Agreement entered into and effective as of November 1, 2015, as amended, by and between us and Third Security as previously discussed in our Current Report on Form 8-K filed on October 30, 2015; November 3, 2016; and December 30, 2016. We issued these shares of common stock in reliance on exemptions from registration under Section 4(a)(2) of the Securities Act.
64
(b) Use of Proceeds

On January 27, 2015, we closed a public offering of 4,312,500 shares of our common stock (inclusive of 562,500 shares of common stock sold by us pursuant to the full exercise of an option granted to the underwriters in connection with the offering) at a public offering price of $27.00 per share for aggregate gross offering proceeds of approximately $116.4 million. J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated acted as joint book-running managers. Net proceeds to us were approximately $110.0 million after deducting underwriting discounts and commissions of approximately $6.1 million and other offering expenses of approximately $0.3 million. No payments were made by us to directors, officers or persons owning ten percent or more of our common stock or to their associates, or to our affiliates. We invested the funds received in cash equivalents and other short-term and long-term investments in accordance with our investment policy. There has been no material change in the planned use of proceeds from this offering as described in our final prospectus, dated January 21, 2015, and filed with the SEC on January 22, 2015 pursuant to Rule 424(b).
On August 26, 2015, we closed a public offering of 5,609,756 shares of our common stock (inclusive of 731,707 shares of common stock sold by us pursuant to the full exercise of an option granted to the underwriters in connection with the offering) at a public offering price of $41.00 per share for aggregate gross offering proceeds of approximately $230.0 million. JMP Securities LLC acted as sole book-running manager. Stifel, Nicolaus & Company, Incorporated acted as lead manager. Griffin Securities, Inc. and Wunderlich Securities, Inc. acted as co-managers. Net proceeds to us were approximately $218.2 million after deducting underwriting discounts and commissions of approximately $11.5 million and other offering expenses of approximately $0.3 million. No payments were made by us to directors, officers or persons owning ten percent or more of our common stock or to their associates, or to our affiliates. We invested the funds received in cash equivalents and other short-term and long-term investments in accordance with our investment policy. There has been no material change in the planned use of proceeds from this offering as described in our final prospectus, dated August 21, 2015, and filed with the SEC on August 25, 2015 pursuant to Rule 424(b).
(c) Issuer Purchases of Equity SecuritiesItem 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
On November 6, 2017, we filed with the State Corporation Commission of the Commonwealth of Virginia, the SCC, Articles of Amendment to our Amended and Restated Articles of Incorporation, or the Amendment, which amended Article III thereof to set the designations of the Series A Preferred Stock to be issued pursuant to the Preferred Stock Facility. The Amendment became effective upon the issuance by the SCC on November 6, 2017, of a certificate of amendment.None.
The Amendment authorizes 1,000,000 shares of Series A Preferred Stock, which are non-voting, accrue dividends of 8 percent per annum and, subject to limited exceptions, are senior to our common stock with respect to the rights to the payment of dividends and on parity with our common stock with respect to the distribution of assets in the event of any liquidation, dissolution or winding up or change of control. The Series A Preferred Stock is also redeemable at our election at any time, or at the election of the holders thereof after December 31, 2020.
The Series A Preferred Stock is convertible into shares of our common stock following the approval of our shareholders, including a majority of the shares voted by shareholders unaffiliated with Mr. Kirk, subject to any regulatory approvals. The conversion price used for the conversion will be the 20-day volume-weighted average market price of our common stock as of market closing on the fifth business day prior to the mailing of the proxy statement soliciting the shareholder approval, subject to adjustment for certain stock splits and similar events. We have agreed to take all reasonable steps necessary to seek


shareholder approval on or before the date of our annual meeting of shareholders in 2019. In addition, prior to conversion, in the event of any voluntary or involuntary liquidation, dissolution or winding up or change of control, the holders of the Series A Preferred Stock will be entitled to participate with the holders of our common stock on a pro rata, as-converted basis, based on a deemed conversion rate of $18.96, which was calculated using the 20-day volume-weighted average market price of our common stock as of market closing on October 13, 2017, subject to adjustment for certain stock splits and similar events.
The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the Amendment and the Amended and Restated Articles of Incorporation, as amended, copies of which are attached hereto as Exhibit 3.2 and Exhibit 3.1, respectively, and incorporated herein by reference.


Item 6. Exhibits
Exhibit
No.		Description
3.1*
Amended and Restated Bylaws, effective June 3, 2020 (incorporated by reference to Exhibit 3.1 of the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 4, 2020).
Exhibit
No.
4.1*		Description
3.1*
Amended and Restated ArticlesSpecimen certificate evidencing shares of Incorporationcommon stock (incorporated by reference to Exhibit 3.14.1 of the Company's Registration Statement of Form S-3 (File No. 333-239366), filed on June 22, 2020).
10.1†*
Amendment to Intrexon Corporation'sthe Precigen, Inc. Amended and Restated 2013 Omnibus Incentive Plan, as Amended, effective as of June 19, 2020 (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, filed on August 15, 2013 with the Securities and Exchange Commission)Commission on June 19, 2020).
3.2**31.1
10.1*†
Amendment to the Intrexon Corporation 2013 Amended and Restated Omnibus Incentive Plan, effective as of June 28, 2017 (incorporated by reference to Exhibit 10.1 to Intrexon Corporation's Current Report on Form 8-K filed on June 30, 2017 with the Securities and Exchange Commission).
10.2*
Preferred Stock Equity Facility Agreement, dated October 16, 2017, by and between Kapital Joe, LLC and Intrexon Corporation (incorporated by reference to Exhibit 10.1 to Intrexon Corporation's Current Report on Form 8-K filed on October 16, 2017 with the Securities and Exchange Commission).
31.1
Certification of Randal J. Kirk, Chairman andHelen Sabzevari, Chief Executive Officer (Principal Executive Officer) of Intrexon Corporation,the Company, pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
32.1**
32.2**
101.0101**
Interactive Data File (Quarterly Report on Form 10-Q, for the quarterly period ended SeptemberJune 30, 2017,2020, formatted in Inline XBRL (eXtensible Business Reporting Language)).
 
Attached as Exhibit 101.0 to this Quarterly Report on Form 10-Q are the following documents formatted in XBRL: (i) the Condensed Consolidated Balance Sheets at Septemberas of June 30, 20172020 and December 31, 2016,2019, (ii) the Condensed Consolidated Statements of Operations for the three and ninesix months ended SeptemberJune 30, 20172020 and 2016,2019, (iii) the Condensed Consolidated Statements of Comprehensive Loss for the three and ninesix months ended SeptemberJune 30, 20172020 and 2016,2019, (iv) the Condensed Consolidated Statements of Shareholders' and Total Equity for the ninethree and six months ended September 31, 2017,June 30, 2020 and 2019, (v) the Condensed Consolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 30, 20172020 and 2016,2019, and (vi) the Notes to the Condensed Consolidated Financial Statements.
104**Cover Page Interactive Data File (embedded within the Inline XBRL document).
* Previously filed.
**
** Furnished herewith.
†Indicates management contract or compensatory plan.


† Indicates management contract or compensatory plan.

65

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Precigen, Inc.
(Registrant)
Date: August 10, 2020Intrexon Corporation
By:(Registrant)
Date: November 9, 2017By:/s/  Rick L. Sterling
Rick L. Sterling
Chief Financial Officer
(Principal Financial and Accounting Officer)



60
66