UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended ~~September~~June 30, ~~2021~~2022


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

For the transition period from to .

Commission File Number: 001-36042

PRECIGEN, INC.

(Exact name of registrant as specified in its charter)

Virginia

26-0084895

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

20374 Seneca Meadows Parkway

Germantown,

Maryland

20876

(Address of principal executive offices)

(Zip Code)

(301) 556-9900

(Registrant's telephone number, including area code)

N/A

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

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, no par value

PGEN

Nasdaq Global Select Market

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

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

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

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

As of ~~October~~July 31, ~~2021, 206,738,499~~2022, 208,150,021 shares of common stock, no par value per share, were issued and outstanding.

Table of Contents

PRECIGEN, INC.

FORM 10-Q

TABLE OF CONTENTS


Item No.	Item No.		Page	Item No.		Page
PART I - FINANCIAL INFORMATION	PART I - FINANCIAL INFORMATION			PART I - FINANCIAL INFORMATION
1.	1.	Condensed Consolidated Financial Statements (unaudited):	4	1.	Condensed Consolidated Financial Statements (unaudited):	4
		Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	4		Condensed Consolidated Balance Sheets as of June 3 0 , 2022 and December 31, 20 21	4
		Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020	6		Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 3 0 , 2022 and 20 21	6
		Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2021 and 2020	7		Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30 , 2022 and 20 21	7
		Condensed Consolidated Statements of Shareholders' Equity for the Three and Nine Months Ended September 30, 2021 and 2020	8		Condensed Consolidated Statements of Shareholders' Equity for the Three and Six Months Ended June 3 0 , 2022 and 20 21	8
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020	10		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 3 0 , 2022 and 20 21	10
		Notes to the Condensed Consolidated Financial Statements	12		Notes to the Condensed Consolidated Financial Statements	12
2.	2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	36	2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	34
3.	3.	Quantitative and Qualitative Disclosures About Market Risk	53	3.	Quantitative and Qualitative Disclosures About Market Risk	48
4.	4.	Controls and Procedures	53	4.	Controls and Procedures	49

PART II - OTHER INFORMATION	PART II - OTHER INFORMATION			PART II - OTHER INFORMATION
1.	1.	Legal Proceedings	54	1.	Legal Proceedings	50
1A.	1A.	Risk Factors	54	1A.	Risk Factors	50
2.	2.	Unregistered Sales of Equity Securities and Use of Proceeds	54	2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
3.	3.	Defaults on Senior Securities	54	3.	Defaults on Senior Securities	51
4.	4.	Mine Safety Disclosures	54	4.	Mine Safety Disclosures	51
5.	5.	Other Information	54	5.	Other Information	51
6.	6.	Exhibits	55	6.	Exhibits	52
		Signatures	56		Signatures	53

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

Table of Contents

Special Note Regarding Forward-Looking Statements

This Quarterly Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this Quarterly Report, including statements regarding our strategy; future events, including their outcome or timing; future operations; future financial position; future revenue; projected costs; prospects; plans; objectives of management; and expected market growth, are forward-looking statements. The words "aim", "anticipate", "assume", "believe", "continue", "could", "due", "estimate", "expect", "intend", "may", "plan", "positioned", "potential", "predict", "project", "seek", "should", "target", "will", "would", and the negatives of these terms or similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These statements may relate to, among other things: (i) the impact of the COVID-19 pandemic on our clinical trials, businesses, operating results, cash flows, and/or financial condition; (ii) the timeliness of regulatory approvals; (iii) our strategy and overall approach to our business model, our efforts to realign our business, and our ability to exercise more control and ownership over the development process and commercialization path; (iv) our ability to successfully enter new markets or develop additional product candidates, including the expected timing and results of investigational studies and preclinical and clinical trials, including any delays or potential delays as a result of the COVID-19 pandemic, whether with our collaborators or independently; (v) our ability to consistently manufacture our product candidates on a timely basis or to establish agreements with third-party manufacturers; (vi) our ability to successfully enter into optimal strategic relationships with our subsidiaries and operating companies that we may form in the future; (vii) our ability to hold or generate significant operating capital, including through partnering, asset sales, and operating cost reductions; (viii) actual or anticipated variations in our operating results; (ix) actual or anticipated fluctuations in competitors' or collaborators' operating results or changes in their respective growth rates; (x) our cash position; (xi) market conditions in our industry; (xii) the volatility of our stock price; (xiii) the ability, and the ability of our collaborators, to protect our intellectual property and other proprietary rights and technologies; (xiv) our ability, and the ability of our collaborators, to adapt to changes in laws or regulations or policies, including federal, state, and local government responses to the COVID-19 pandemic; (xv) outcomes of pending and future litigation; (xvi) the rate and degree of market acceptance of any products developed by us, our subsidiaries, collaborations, or joint ventures, or JVs, and competition from existing technologies and products or new technologies and products that may emerge; (xvii) our ability to retain and recruit key personnel; (xviii) expectations related to the use of proceeds from public offerings and other financing efforts; (xix) estimates regarding expenses, future revenue, capital requirements, and needs for additional financing; ~~and~~ (xx) the effects, duration, and severity of the ongoing COVID-19 pandemic and the actions we and others have taken or may take in ~~response.~~response; and (xxi) the timing of and the sale of Trans Ova.

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

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

You should read this Quarterly Report, the documents that we reference in this Quarterly Report, our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, the other reports we have filed with the Securities and Exchange Commission, or SEC, and the documents that we have filed as exhibits to our filings with the SEC completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Precigen, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)


(Amounts in thousands, except share data)	(Amounts in thousands, except share data)	September 30, 2021		December 31, 2020		(Amounts in thousands, except share data)	June 30, 2022		December 31, 2021
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	41,728	$	51,792	Cash and cash equivalents	$	43,844	$	36,423

Short-term investments	Short-term investments	72,684		48,325		Short-term investments	71,453		72,240

Receivables	Receivables					Receivables
Trade, less allowance for credit losses of $5,562 and $4,825 as of September 30, 2021 and December 31, 2020, respectively		20,169		16,487
Related parties, less allowance for credit losses of $1,509 as of September 30, 2021 and December 31, 2020		66		19
Notes		—		3,689
Trade, less allowance for credit losses of $184 as of June 30, 2022 and December 31, 2021						Trade, less allowance for credit losses of $184 as of June 30, 2022 and December 31, 2021	1,307		1,341
Related parties, less allowance for credit losses of $1,509 as of June 30, 2022 and December 31, 2021						Related parties, less allowance for credit losses of $1,509 as of June 30, 2022 and December 31, 2021	18		73

Other	Other	848		232		Other	546		566
Inventory	Inventory	9,936		11,359		Inventory	224		326
Prepaid expenses and other	Prepaid expenses and other	7,661		7,192		Prepaid expenses and other	2,654		5,471
Current assets held for sale or abandonment		—		9,853
Current assets held for sale						Current assets held for sale	44,573		40,188
Total current assets	Total current assets	153,092		148,948		Total current assets	164,619		156,628
Long-term investments	Long-term investments	66,926		—		Long-term investments	11,877		48,562

Property, plant and equipment, net	Property, plant and equipment, net	32,757		34,924		Property, plant and equipment, net	7,726		8,599
Intangible assets, net	Intangible assets, net	56,914		65,396		Intangible assets, net	45,933		52,291
Goodwill	Goodwill	54,206		54,363		Goodwill	36,864		37,554

Right-of-use assets	Right-of-use assets	11,765		9,353		Right-of-use assets	8,944		9,990
Other assets	Other assets	1,239		1,603		Other assets	921		936
Noncurrent assets held for sale						Noncurrent assets held for sale	44,340		45,296
Total assets	Total assets	$	376,899	$	314,587	Total assets	$	321,224	$	359,856

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

Table of Contents

Precigen, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)


(Amounts in thousands, except share data)	(Amounts in thousands, except share data)	September 30, 2021		December 31, 2020		(Amounts in thousands, except share data)	June 30, 2022		December 31, 2021
Liabilities and Shareholders' Equity	Liabilities and Shareholders' Equity					Liabilities and Shareholders' Equity
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	3,624	$	4,598	Accounts payable	$	2,668	$	3,112
Accrued compensation and benefits	Accrued compensation and benefits	8,077		8,097		Accrued compensation and benefits	4,864		7,856
Other accrued liabilities	Other accrued liabilities	11,258		9,549		Other accrued liabilities	9,666		7,817
Deferred revenue	Deferred revenue	3,693		2,800		Deferred revenue	164		1,490

Current portion of long-term debt	Current portion of long-term debt	355		360		Current portion of long-term debt	—		52

Current portion of lease liabilities	Current portion of lease liabilities	1,959		2,657		Current portion of lease liabilities	1,033		1,393
Related party payables	Related party payables	23		19		Related party payables	58		74
Current liabilities held for sale or abandonment		—		14,047
Current liabilities held for sale						Current liabilities held for sale	11,448		12,851
Total current liabilities	Total current liabilities	28,989		42,127		Total current liabilities	29,901		34,645
Long-term debt, net of current portion	Long-term debt, net of current portion	179,817		171,522		Long-term debt, net of current portion	198,674		179,882

Deferred revenue, net of current portion, including $21,205 from related parties as of September 30, 2021 and December 31, 2020		23,023		23,023
Deferred revenue, net of current portion, including $21,205 from related parties as of June 30, 2022 and December 31, 2021						Deferred revenue, net of current portion, including $21,205 from related parties as of June 30, 2022 and December 31, 2021	23,023		23,023
Lease liabilities, net of current portion	Lease liabilities, net of current portion	11,199		7,744		Lease liabilities, net of current portion	8,098		8,747
Deferred tax liabilities	Deferred tax liabilities	2,574		2,897		Deferred tax liabilities	2,260		2,539
Other long-term liabilities		50		100

Long-term liabilities held for sale						Long-term liabilities held for sale	3,615		3,672
Total liabilities	Total liabilities	245,652		247,413		Total liabilities	265,571		252,508
Commitments and contingencies (Note 16)	Commitments and contingencies (Note 16)	0		0		Commitments and contingencies (Note 16)	0		0
Shareholders' equity	Shareholders' equity					Shareholders' equity
Common stock, no par value, 400,000,000 shares authorized as of September 30, 2021 and December 31, 2020; 206,738,499 shares and 187,663,207 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		—		—
Common stock, no par value, 400,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 208,150,021 shares and 206,739,874 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively						Common stock, no par value, 400,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 208,150,021 shares and 206,739,874 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	—		—
Additional paid-in capital	Additional paid-in capital	2,020,254		1,886,567		Additional paid-in capital	1,993,979		2,022,701
Accumulated deficit	Accumulated deficit	(1,890,522)		(1,823,390)		Accumulated deficit	(1,933,770)		(1,915,556)
Accumulated other comprehensive income		1,515		3,997
Accumulated other comprehensive (loss) income						Accumulated other comprehensive (loss) income	(4,556)		203
Total shareholders' equity	Total shareholders' equity	131,247		67,174		Total shareholders' equity	55,653		107,348

Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	376,899	$	314,587	Total liabilities and shareholders' equity	$	321,224	$	359,856

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

Table of Contents

Precigen, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)


(Amounts in thousands, except share and per share data)	(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,
		2021		2020		2021		2020			2022		2021		2022		2021
Revenues	Revenues									Revenues
Collaboration and licensing revenues, including $0 and $2,823 from related parties during the three months ended September 30, 2021 and 2020, respectively, and $0 and $3,053 during the nine months ended September 30, 2021 and 2020, respectively		$	22	$	5,223	$	389	$	20,259
Collaboration and licensing revenues										Collaboration and licensing revenues	$	—	$	301	$	—	$	367
Product revenues	Product revenues	7,297		6,896		22,013		20,397		Product revenues	621		694		1,113		1,306
Service revenues	Service revenues	14,117		11,288		56,851		42,615		Service revenues	2,213		2,679		7,146		5,303
Other revenues	Other revenues	125		176		399		574		Other revenues	77		141		165		274
Total revenues	Total revenues	21,561		23,583		79,652		83,845		Total revenues	2,911		3,815		8,424		7,250
Operating Expenses	Operating Expenses									Operating Expenses
Cost of products	Cost of products	7,492		7,296		19,201		21,526		Cost of products	645		436		1,122		824
Cost of services	Cost of services	7,958		5,891		24,258		20,197		Cost of services	1,166		914		2,383		1,888
Research and development	Research and development	12,920		10,172		37,122		30,973		Research and development	11,954		13,184		23,755		23,321
Selling, general and administrative	Selling, general and administrative	18,660		22,310		57,359		61,665		Selling, general and administrative	12,670		14,954		26,359		29,220

Impairment of goodwill										Impairment of goodwill	—		—		482		—
Impairment of other noncurrent assets	Impairment of other noncurrent assets	—		920		543		920		Impairment of other noncurrent assets	638		543		638		543
Total operating expenses	Total operating expenses	47,030		46,589		138,483		135,281		Total operating expenses	27,073		30,031		54,739		55,796
Operating loss	Operating loss	(25,469)		(23,006)		(58,831)		(51,436)		Operating loss	(24,162)		(26,216)		(46,315)		(48,546)
Other Expense, Net	Other Expense, Net									Other Expense, Net

Interest expense	Interest expense	(4,799)		(4,646)		(14,005)		(13,830)		Interest expense	(2,063)		(4,633)		(4,101)		(9,137)
Interest income	Interest income	503		579		1,305		2,025		Interest income	37		49		75		81
Other income (expense), net	Other income (expense), net	(120)		10		(370)		145		Other income (expense), net	40		(199)		238		(297)
Total other expense, net	Total other expense, net	(4,416)		(4,057)		(13,070)		(11,660)		Total other expense, net	(1,986)		(4,783)		(3,788)		(9,353)
Equity in net loss of affiliates	Equity in net loss of affiliates	—		(523)		(3)		(1,125)		Equity in net loss of affiliates	—		—		(1)		(3)
Loss from continuing operations before income taxes	Loss from continuing operations before income taxes	(29,885)		(27,586)		(71,904)		(64,221)		Loss from continuing operations before income taxes	(26,148)		(30,999)		(50,104)		(57,902)
Income tax benefit	Income tax benefit	61		50		173		130		Income tax benefit	89		60		147		112
Loss from continuing operations	Loss from continuing operations	(29,824)		(27,536)		(71,731)		(64,091)		Loss from continuing operations	(26,059)		(30,939)		(49,957)		(57,790)
Income (loss) from discontinued operations, net of income taxes		60		(1,972)		4,599		(64,769)
Income from discontinued operations, net of income taxes										Income from discontinued operations, net of income taxes	8,424		10,889		13,071		20,422
Net loss	Net loss	$	(29,764)	$	(29,508)	$	(67,132)	$	(128,860)	Net loss	$	(17,635)	$	(20,050)	$	(36,886)	$	(37,368)

Net Loss per Share	Net Loss per Share									Net Loss per Share
Net loss from continuing operations per share, basic and diluted	Net loss from continuing operations per share, basic and diluted	$	(0.15)	$	(0.17)	$	(0.36)	$	(0.39)	Net loss from continuing operations per share, basic and diluted	$	(0.13)	$	(0.16)	$	(0.25)	$	(0.29)
Net income (loss) from discontinued operations per share, basic and diluted		—		(0.01)		0.02		(0.40)
Net income from discontinued operations per share, basic and diluted										Net income from discontinued operations per share, basic and diluted	0.04		0.06		0.07		0.10
Net loss per share, basic and diluted	Net loss per share, basic and diluted	$	(0.15)	$	(0.18)	$	(0.34)	$	(0.79)	Net loss per share, basic and diluted	$	(0.09)	$	(0.10)	$	(0.18)	$	(0.19)
Weighted average shares outstanding, basic and diluted	Weighted average shares outstanding, basic and diluted	199,179,963		165,527,024		197,254,438		163,318,375		Weighted average shares outstanding, basic and diluted	200,461,441		199,021,587		200,047,629		196,275,820

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

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Precigen, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
(Amounts in thousands)	(Amounts in thousands)	2021		2020		2021		2020		(Amounts in thousands)	2022		2021		2022		2021
Net loss	Net loss	$	(29,764)	$	(29,508)	$	(67,132)	$	(128,860)	Net loss	$	(17,635)	$	(20,050)	$	(36,886)	$	(37,368)
Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):
Unrealized gain (loss) on investments		42		(186)		(43)		86
Unrealized loss on investments										Unrealized loss on investments	(202)		(37)		(1,004)		(85)
Income (loss) on foreign currency translation adjustments	Income (loss) on foreign currency translation adjustments	(1,068)		2,198		(2,439)		1,787		Income (loss) on foreign currency translation adjustments	(2,655)		832		(3,755)		(1,371)
Release of cumulative foreign currency translation adjustments to loss from discontinued operations		—		—		—		26,957

Comprehensive loss	Comprehensive loss	$	(30,790)	$	(27,496)	$	(69,614)	$	(100,030)	Comprehensive loss	$	(20,492)	$	(19,255)	$	(41,645)	$	(38,824)

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

Table of Contents

Precigen, Inc. and Subsidiaries

Condensed Consolidated Statements of Shareholders' Equity

(Unaudited)


(Amounts in thousands, except share data)	(Amounts in thousands, except share data)	Common Stock			Additional Paid-in Capital				Accumulated Other Comprehensive Income		Accumulated Deficit				Total Shareholders' Equity							(Amounts in thousands, except share data)		Common Stock					Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Shareholders' Equity
		Shares	Amount										(Amounts in thousands, except share data)	Shares				Amount			Additional Paid-in Capital
Balances at June 30, 2021		206,580,928	$	—			$	2,017,413						$			2,541		$	(1,860,758)				$	159,196
Balances at March 31, 2022																							Balances at March 31, 2022		207,693,277		$	—		$	1,991,670		$	(1,699)		$	(1,916,135)		$	73,836

Stock-based compensation expense	Stock-based compensation expense	—	—		2,490				—		—				2,490							Stock-based compensation expense		—		—			2,309			—			—			2,309
Shares issued upon vesting of restricted stock units and for exercises of stock options		157,571	—		351				—		—				351

Shares issued for accrued compensation																						Shares issued for accrued compensation		456,744		—			—			—			—			—

Net loss	Net loss	—	—		—				—		(29,764)				(29,764)							Net loss		—		—			—			—			(17,635)			(17,635)

Other comprehensive loss	Other comprehensive loss	—	—		—				(1,026)		—				(1,026)							Other comprehensive loss		—		—			—			(2,857)			—			(2,857)
Balances at September 30, 2021		206,738,499	$	—	$	2,020,254			$	1,515	$	(1,890,522)			$	131,247
Balances at June 30, 2022																						Balances at June 30, 2022		208,150,021		$	—		$	1,993,979		$	(4,556)		$	(1,933,770)		$	55,653


(Amounts in thousands, except share data)	(Amounts in thousands, except share data)	Common Stock			Additional Paid-in Capital				Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit				Total Shareholders' Equity							(Amounts in thousands, except share data)		Common Stock					Additional Paid-in Capital			Accumulated Other Comprehensive Income			Accumulated Deficit			Total Shareholders' Equity
		Shares	Amount										(Amounts in thousands, except share data)	Shares				Amount			Additional Paid-in Capital
Balances at June 30, 2020		172,285,932	$	—			$	1,802,413						$			(650)		$	(1,752,221)				$	49,542
Balances at March 31, 2021																							Balances at March 31, 2021		206,414,135		$	—		$	2,013,757		$	1,746		$	(1,840,708)		$	174,795
Stock-based compensation expense	Stock-based compensation expense	—	—		4,600				—		—				4,600							Stock-based compensation expense		—		—			3,557			—			—			3,557
Shares issued upon vesting of restricted stock units and for exercises of stock options	Shares issued upon vesting of restricted stock units and for exercises of stock options	28,389	—		3				—		—				3							Shares issued upon vesting of restricted stock units and for exercises of stock options		166,793		—			99			—			—			99
Shares issued for accrued compensation		75,000	—		—				—		—				—
Shares issued as payment for services		21,428	—		76				—		—				76

Shares issued upon conversion of long-term debt		6,293,402	—		31,827				—		—				31,827

Net loss	Net loss	—	—		—				—		(29,508)				(29,508)							Net loss		—		—			—			—			(20,050)			(20,050)

Other comprehensive income	Other comprehensive income	—	—		—				2,012		—				2,012							Other comprehensive income		—		—			—			795			—			795
Balances at September 30, 2020		178,704,151	$	—	$	1,838,919			$	1,362	$	(1,781,729)			$	58,552
Balances at June 30, 2021																						Balances at June 30, 2021		206,580,928		$	—		$	2,017,413		$	2,541		$	(1,860,758)		$	159,196

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

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Precigen, Inc. and Subsidiaries

Condensed Consolidated Statements of Shareholders' Equity

(Unaudited)


(Amounts in thousands, except share data)	(Amounts in thousands, except share data)	Common Stock			Additional Paid-in Capital				Accumulated Other Comprehensive Income		Accumulated Deficit				Total Shareholders' Equity							(Amounts in thousands, except share data)		Common Stock					Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Shareholders' Equity
		Shares	Amount										(Amounts in thousands, except share data)	Shares				Amount			Additional Paid-in Capital
Balances at December 31, 2020		187,663,207	$	—			$	1,886,567						$			3,997		$	(1,823,390)				$	67,174
Balances at December 31, 2021																							Balances at December 31, 2021		206,739,874		$	—		$	2,022,701		$	203		$	(1,915,556)		$	107,348
Cumulative effect of adoption of ASU 2020-06																						Cumulative effect of adoption of ASU 2020-06		—		—			(36,868)			—			18,672			(18,196)
Stock-based compensation expense	Stock-based compensation expense	—	—		11,462				—		—				11,462							Stock-based compensation expense		—		—			5,871			—			—			5,871
Shares issued upon vesting of restricted stock units and for exercises of stock options	Shares issued upon vesting of restricted stock units and for exercises of stock options	1,750,521	—		603				—		—				603							Shares issued upon vesting of restricted stock units and for exercises of stock options		354,089		—			1			—			—			1
Shares issued for accrued compensation																						Shares issued for accrued compensation		772,071		—			1,698			—			—			1,698
Shares issued as payment for services																						Shares issued as payment for services		283,987		—			576			—			—			576

Shares issued as payment for services		74,771	—		577				—		—				577
Shares issued in public offering, net of issuance costs		17,250,000	—		121,045				—		—				121,045

Net loss	Net loss	—	—		—				—		(67,132)				(67,132)							Net loss		—		—			—			—			(36,886)			(36,886)

Other comprehensive loss	Other comprehensive loss	—	—		—				(2,482)		—				(2,482)							Other comprehensive loss		—		—			—			(4,759)			—			(4,759)
Balances at September 30, 2021		206,738,499	$	—	$	2,020,254			$	1,515	$	(1,890,522)			$	131,247
Balances at June 30, 2022																						Balances at June 30, 2022		208,150,021		$	—		$	1,993,979		$	(4,556)		$	(1,933,770)		$	55,653

(Amounts in thousands, except share data) Common Stock Additional
Paid-in
Capital Accumulated
Other
Comprehensive
Income (Loss) Accumulated
Deficit Total
Shareholders'
Equity
Shares Amount
Balances at December 31, 2019 163,274,880 $ — $ 1,752,048 $ (27,468) $ (1,652,869) $ 71,711
Stock-based compensation expense — — 13,869 — — 13,869
Shares issued upon vesting of restricted stock units and for exercises of stock options 868,857 — 69 — — 69
Shares issued for accrued compensation 1,880,405 — 5,100 — — 5,100
Shares issued as payment for services 413,911 — 1,006 — — 1,006
Shares issued in private placement 5,972,696 — 35,000 — — 35,000
Shares issued upon conversion of long-term debt 6,293,402 — 31,827 — — 31,827
Net loss — — — — (128,860) (128,860)
Release of cumulative translation adjustments to loss from discontinued operations — — — 26,957 — 26,957
Other comprehensive income — — — 1,873 — 1,873
Balances at September 30, 2020 178,704,151 $ — $ 1,838,919 $ 1,362 $ (1,781,729) $ 58,552


(Amounts in thousands, except share data)	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Shareholders' Equity
	Shares	Amount
Balances at December 31, 2020	187,663,207	$	—	$	1,886,567	$	3,997	$	(1,823,390)	$	67,174
Stock-based compensation expense	—	—		8,972		—		—		8,972
Shares issued upon vesting of restricted stock units and for exercises of stock options	1,592,950	—		252		—		—		252

Shares issued as payment for services	74,771	—		577		—		—		577
Shares issued in public offerings, net of issuance costs	17,250,000	—		121,045		—		—		121,045












Net loss	—	—		—		—		(37,368)		(37,368)

Other comprehensive loss	—	—		—		(1,456)		—		(1,456)
Balances at June 30, 2021	206,580,928	$	—	$	2,017,413	$	2,541	$	(1,860,758)	$	159,196

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

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Precigen, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


		Nine Months Ended September 30,					Six Months Ended June 30,
(Amounts in thousands)	(Amounts in thousands)	2021		2020		(Amounts in thousands)	2022		2021
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net loss	Net loss	$	(67,132)	$	(128,860)	Net loss	$	(36,886)	$	(37,368)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	10,442		13,701		Depreciation and amortization	6,518		7,043
Loss on disposals of assets, net		89		1,606
Loss (gain) on disposals of assets, net						Loss (gain) on disposals of assets, net	360		(229)
Impairment of goodwill	Impairment of goodwill	—		9,635		Impairment of goodwill	482		—
Impairment of other noncurrent assets	Impairment of other noncurrent assets	543		13,326		Impairment of other noncurrent assets	638		543
Gain on sale of discontinued operations		—		(672)
Loss on release of cumulative foreign currency translation adjustments to loss from discontinued operations		—		26,957

Unrealized depreciation on equity securities		—		106
Amortization of premiums (discounts) on investments, net		893		(652)

Amortization of premiums on investments, net						Amortization of premiums on investments, net	468		498
Equity in net loss of affiliates	Equity in net loss of affiliates	3		1,163		Equity in net loss of affiliates	1		3
Stock-based compensation expense	Stock-based compensation expense	11,462		13,869		Stock-based compensation expense	5,871		8,972
Shares issued as payment for services	Shares issued as payment for services	577		1,006		Shares issued as payment for services	576		577
Provision for credit losses	Provision for credit losses	1,219		759		Provision for credit losses	735		645
Accretion of debt discount and amortization of deferred financing costs	Accretion of debt discount and amortization of deferred financing costs	8,641		7,807		Accretion of debt discount and amortization of deferred financing costs	596		5,630
Deferred income taxes	Deferred income taxes	(180)		(204)		Deferred income taxes	(112)		(119)
Noncash gain on termination of operating leases						Noncash gain on termination of operating leases	—		(4,602)
Other noncash items	Other noncash items	(4,600)		108		Other noncash items	105		1
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Receivables:	Receivables:					Receivables:
Trade	Trade	(5,285)		952		Trade	(7,071)		(10,581)
Related parties	Related parties	(47)		265		Related parties	55		(3)

Other	Other	(610)		1,807		Other	10		(403)
Inventory	Inventory	1,422		5,411		Inventory	769		(54)
Prepaid expenses and other	Prepaid expenses and other	(388)		(1,777)		Prepaid expenses and other	3,515		3,794
Other assets	Other assets	282		(125)		Other assets	2		205
Accounts payable	Accounts payable	(678)		(1,556)		Accounts payable	(963)		522
Accrued compensation and benefits	Accrued compensation and benefits	(304)		(1,605)		Accrued compensation and benefits	(1,015)		(627)
Other accrued liabilities	Other accrued liabilities	1,505		(3,072)		Other accrued liabilities	1,862		813
Deferred revenue	Deferred revenue	903		(20,304)		Deferred revenue	(2,184)		482
Lease liabilities	Lease liabilities	107		(508)		Lease liabilities	(40)		145
Related party payables	Related party payables	4		305		Related party payables	(78)		3
Other long-term liabilities	Other long-term liabilities	(50)		—		Other long-term liabilities	(50)		(50)
Net cash used in operating activities	Net cash used in operating activities	(41,182)		(60,552)		Net cash used in operating activities	(25,836)		(24,160)

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

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Precigen, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


		Nine Months Ended September 30,					Six Months Ended June 30,
(Amounts in thousands)	(Amounts in thousands)	2021		2020		(Amounts in thousands)	2022		2021
Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Purchases of investments	Purchases of investments	$	(174,221)	$	(171,360)	Purchases of investments	$	—	$	(174,221)
Sales and maturities of investments	Sales and maturities of investments	82,000		96,000		Sales and maturities of investments	36,000		58,000

Purchases of property, plant and equipment	Purchases of property, plant and equipment	(4,474)		(6,058)		Purchases of property, plant and equipment	(3,297)		(2,208)
Proceeds from sale of assets	Proceeds from sale of assets	2,537		1,831		Proceeds from sale of assets	438		2,258
Proceeds from sale of discontinued operations, net of cash sold		—		64,240

Proceeds from repayment of notes receivable	Proceeds from repayment of notes receivable	3,689		2,942		Proceeds from repayment of notes receivable	—		3,689
Net cash used in investing activities		(90,469)		(12,405)
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	33,141		(112,482)
Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Proceeds from issuance of shares, net of issuance costs	Proceeds from issuance of shares, net of issuance costs	121,045		35,000		Proceeds from issuance of shares, net of issuance costs	—		121,045

Advances from lines of credit		—		10,005
Repayments of advances from lines of credit		—		(11,927)

Payments of long-term debt	Payments of long-term debt	(351)		(370)		Payments of long-term debt	(277)		(234)
Proceeds from stock option exercises	Proceeds from stock option exercises	603		69		Proceeds from stock option exercises	1		252

Net cash provided by financing activities		121,297		32,777
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(276)		121,063
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	Effect of exchange rate changes on cash, cash equivalents, and restricted cash	264		(77)		Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(471)		184
Net decrease in cash, cash equivalents, and restricted cash		(10,090)		(40,257)
Net increase (decrease) in cash, cash equivalents, and restricted cash						Net increase (decrease) in cash, cash equivalents, and restricted cash	6,558		(15,395)
Cash, cash equivalents, and restricted cash	Cash, cash equivalents, and restricted cash					Cash, cash equivalents, and restricted cash
Beginning of period	Beginning of period	52,250		68,434		Beginning of period	43,343		52,250
End of period	End of period	$	42,160	$	28,177	End of period	$	49,901	$	36,855
Supplemental disclosure of cash flow information	Supplemental disclosure of cash flow information					Supplemental disclosure of cash flow information
Cash paid during the period for interest	Cash paid during the period for interest	$	7,116	$	7,155	Cash paid during the period for interest	$	3,568	$	3,578
Cash paid during the period for income taxes	Cash paid during the period for income taxes	4		48		Cash paid during the period for income taxes	—		4
Significant noncash activities	Significant noncash activities					Significant noncash activities
Stock issued upon conversion of long-term debt		$	—	$	31,827

Accrued compensation paid in equity awards	Accrued compensation paid in equity awards	—		5,100		Accrued compensation paid in equity awards	$	1,698	$	—
Purchases of property and equipment included in accounts payable and other accrued liabilities	Purchases of property and equipment included in accounts payable and other accrued liabilities	108		461		Purchases of property and equipment included in accounts payable and other accrued liabilities	234		201

Proceeds from sale of assets included in accounts receivable	Proceeds from sale of assets included in accounts receivable	124		435		Proceeds from sale of assets included in accounts receivable	147		99

The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 as shown above:


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Cash and cash equivalents	Cash and cash equivalents	$	41,728	$	51,792	Cash and cash equivalents	$	43,844	$	36,423

Cash and cash equivalents included in current assets held for sale						Cash and cash equivalents included in current assets held for sale	5,667		6,497
Restricted cash included in other assets	Restricted cash included in other assets	432		458		Restricted cash included in other assets	390		423
Cash, cash equivalents, and restricted cash	Cash, cash equivalents, and restricted cash	$	42,160	$	52,250	Cash, cash equivalents, and restricted cash	$	49,901	$	43,343

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

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Precigen, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

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

1. Organization

Precigen, Inc. ("Precigen"), a Virginia corporation, is a synthetic biology company with an increasing focus on its discovery and clinical stage activities to advance the next generation of gene and cellular therapies to target the most urgent and intractable challenges in immuno-oncology, autoimmune disorders, and infectious diseases. Precigen operates through the following subsidiaries:

PGEN Therapeutics, Inc. ("PGEN Therapeutics") 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 is a wholly owned subsidiary of Precigen with primary operations in Maryland.

Precigen ActoBio, Inc. ("ActoBio") is pioneering a proprietary class of microbe-based biopharmaceuticals that enable expression and 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 operations in Iowa.

Trans Ova Genetics, L.C., including its wholly owned subsidiary Progentus, L.C., are providers of reproductive technologies, including services and products sold to cattle breeders and other producers and are hereinafter collectively referred to as "Trans Ova." Trans Ova is a wholly owned subsidiary with primary operations in California, Iowa, Maryland, Missouri, Texas, Washington, and Wisconsin.

Effective October 1, 2019, Precigen transferred substantially all of its proprietary methane bioconversion platform ("MBP") 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. Prior to October 1, 2019, the operation transferred to MBP Titan was an operating division within Precigen. Beginning in the second quarter of 2020, the Company suspended MBP Titan's operations and began the process to wind down MBP Titan's activities and had substantially completed the wind down by December 31, 2020, with the final disposition of certain property and equipment and the facility operating lease occurring in January 2021. With the exception of certain assets and obligations with which the Company has a continuing involvement after the wind down, MBP Titan has been presented as discontinued operations for all periods presented. See Note 3 for further discussion.

On ~~January 31, 2020,~~July 1, 2022, Precigen ~~completed~~entered into a definitive agreement (the “Purchase Agreement”) for the sale of 100% of the ~~majority of~~membership interests in its ~~non-healthcare assets and operations to an affiliate of Third Security, LLC ("Third Security"~~wholly-owned subsidiary, Trans Ova Genetics, L.C. (“Trans Ova”), a ~~related party, which are~~provider of reproductive technologies, including services and products sold to cattle breeders and other producers. Consummation of this transaction, anticipated in the third quarter of 2022, is subject to customary closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”). The accompanying condensed consolidated financial statements for all periods presented reflect the Trans Ova business as discontinued ~~operations for the nine months ended September 30, 2020.~~operations. See ~~Notes~~Note 3 ~~and 13~~ for further discussion. Trans Ova was formerly a separate reportable segment.

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

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 ~~note~~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 ~~September~~June 30, ~~2021~~2022 and results of operations and cash flows for the interim periods ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021. 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

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results are not necessarily indicative of the results to be expected for the year ending December 31, ~~2021,~~2022, or for any other future annual or interim period. The accompanying ~~interim~~ unaudited condensed consolidated financial statements should be read in

~~Table of Contents~~

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, ~~2020.~~2021.

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

Liquidity

Management believes that existing liquid assets as of ~~September~~June 30, ~~2021~~2022, as well as expected proceeds from the sale of Trans Ova (see Note 3), 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 United States dollars.~~ The Company is subject to a number of risks similar to those of other companies conducting high-risk, early-stage research and development of therapeutic product candidates. Principal among these risks are dependence on key individuals and intellectual property, competition from other products and companies, and the technical risks associated with the successful research, development, and clinical manufacturing of its ~~and its collaborators'~~ therapeutic product candidates. 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 ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, the Company incurred a net loss of ~~$67,132~~$36,886 and, as of ~~September~~June 30, ~~2021,~~2022, had an accumulated deficit of ~~$1,890,522.~~$1,933,770. 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 (which could occur through debt or equity issuances, sales or partnerships of non-core assets, collaborations or licensing of core or non-core assets, or other transactions), adequately satisfy or renegotiate long-term debt obligations, obtain regulatory approval of its therapeutic product candidates, successfully commercialize its therapeutic product candidates, 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 2020, 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 2020, the Company 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, 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 recruitment in the study resumed. 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 that was 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 Phase 1 trial. Furthermore, there is uncertainty regarding the duration and severity of the ongoing pandemic, and the Company could experience ~~further~~ delays or other pandemic-related events that may adversely impact the Company's clinical as well as preclinical pipeline candidates in the future.

The Company is closely monitoring the impact of COVID-19 on ~~these and other~~all aspects of its ~~business, including Trans Ova and Exemplar.~~businesses. Given the dynamic nature of these circumstances, the full impact of the COVID-19 pandemic on the Company's ongoing business, results of operations, and overall financial performance in future periods 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 position, including resulting impairments to goodwill and long-lived assets and additional credit losses.

See Note 3 for further discussion of the impact of COVID-19 on MBP Titan.

Equity Method Investments

The Company accounts for its investments in each of its joint ventures ("JVs") ~~and accounted for its investments in start-up entities backed by the Harvest Intrexon Enterprise Fund I, LP ("Harvest"), all of which are related parties,~~ using the equity method of accounting based upon relative ownership interest. See additional discussion related to certain of the Company's JVs in Note ~~4 and additional discussion related to certain of the Harvest start-up entities in Note 16.~~

~~Table of Contents~~

Variable Interest Entities

As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company determined that its JVs were variable interest entities ("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. As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had no risk of loss related to the identified VIEs. See Note 4 for discussion of the Company's future funding commitments for its significant JVs.

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Net Loss per Share

Basic net loss per share is calculated by dividing net loss attributable to common shareholders by the weighted average shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, using the treasury-stock method. For purposes of the diluted net loss per share calculation, shares to be issued pursuant to convertible debt, stock options, RSUs, and warrants are considered to be common stock equivalents but are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive and, therefore, basic and diluted net loss per share were the same for all periods presented.

The following potentially dilutive securities as of June 30, 2022 and 2021, have been excluded from the above computations of diluted weighted average shares outstanding for the three and six months then ended as they would have been anti-dilutive:


	June 30,
	2022	2021
Convertible debt	11,732,440	11,732,440
Options	15,492,339	12,660,387
Restricted stock units	714,687	554,146
Warrants	121,888	121,888
Total	28,061,354	25,068,861

Segment Information

The Company's chief operating decision maker ("CODM") regularly reviews disaggregated financial information for various operating segments. ~~Starting in the first quarter of 2021, the~~The financial information regularly reviewed by the CODM ~~was revised~~ and the operating segments, which were determined to be operating and reportable segments, ~~were~~are (i) Biopharmaceuticals and (ii) ~~Exemplar, and (iii) Trans Ova.~~Exemplar. The Biopharmaceuticals reportable segment is primarily comprised of the Company's legal entities of PGEN Therapeutics and ~~ActoBio, as well as~~ActoBio. All of Precigen's consolidated subsidiaries and operating divisions that did not meet the ~~Company's majority-owned subsidiary Triple-Gene LLC~~quantitative thresholds to report separately are combined and ~~its partnered program with~~ ~~Castle Creek Biosciences, Inc. ("Castle Creek"), represent the Biopharmaceuticals reportable segment as these businesses share resources and the CODM manages these operations as~~reported in a ~~group.~~single category, All Other. See Note 1 for a description of PGEN Therapeutics, ActoBio, ~~Exemplar,~~ and ~~Trans Ova.~~Exemplar. 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 the Company's finance, accounting, legal, human resources, information technology, ~~corporate communication,~~business development, and investor relations functions. Corporate expenses exclude interest expense, depreciation and amortization, gain or loss on disposals of assets, stock-based compensation expense, loss on settlement agreement, and equity in net loss of ~~affiliates. As a result of~~affiliates and include unrealized and realized gains and losses on the ~~revision of the reportable segments, the Company has restated its historical~~Company's securities portfolio. The Company's segment presentation ~~to conform~~excludes amounts related to the ~~revised segment determination.~~operations of Trans Ova and MBP Titan which are reported as discontinued operations (Note 3). See Note 1918 for further discussion of the Company's segments.

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 ~~December 2019,~~August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ~~2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~ ("ASU 2019-12"). The provisions of ASU 2019-12 are intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Accounting Standards Codification ("ASC") Topic 740 and clarifying certain aspects of the current guidance to promote consistency among reporting entities. The Company adopted this standard effective January 1, 2021, and there was no material impact to the accompanying condensed consolidated financial statements.

~~Recently Issued Accounting Pronouncements~~

~~In August 2020, the FASB issued ASU~~ 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06"). ~~The provisions of~~Under ASU 2020-06, ~~simplify accounting~~the embedded conversion features are no longer separated from the host contract for convertible instruments ~~by removing major separation models~~with conversion features that are not required to be accounted for as derivatives under ~~current U.S. GAAP.~~Topic 815, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, ~~more~~a convertible debt ~~instruments~~instrument will be ~~reported~~accounted for as a single liability ~~instrument with~~measured at its amortized cost, as long as no ~~separate accounting~~other features require bifurcation and recognition as derivatives. The new guidance also requires the if-converted method to be applied for ~~embedded conversion features.~~all convertible instruments.

We adopted ASU 2020-06 ~~removes certain settlement conditions that are required for equity contracts~~on January 1, 2022 using the modified retrospective transition method, which resulted in an increase to ~~qualify for the derivative scope exception, which will permit more equity contracts~~our reported long-term debt outstanding, net of current portion, of $18,196, a decrease to ~~qualify for the exception.~~our additional paid-in capital of $36,868, and a corresponding cumulative-effect reduction to our opening accumulated deficit of $18,672. The adoption of ASU 2020-06 also simplifies the diluted net income per share calculation in certain areas. The amendments in ASU 2020-06 are effective for annual periods beginning after December 15, 2021, and is effective for the Company for the year ending December 31, 2022. The Company is currently evaluating the impact of the new standard on its consolidated financial statements.

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2020-06 is expected to reduce non-cash interest expense related to existing convertible debt outstanding by approximately $11,800 for the year ending December 31, 2022, and did not have an impact on our consolidated cash flows. The use of the if-converted method did not have an impact on our overall earnings per share calculation.

Recently Issued Accounting Pronouncements Not Yet Adopted

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

3. Discontinued Operations

Where applicable, the notes to the accompanying condensed consolidated financial statements have been updated to reflect information pertaining to the Company's continuing operations based on the discontinued operations summarized below.

Trans Ova

As part of the Company's strategic shift to becoming a primarily healthcare company, as discussed in Note 1, on July 1, 2022, the Company entered into a Purchase Agreement for the sale of 100% of the membership interests in its wholly-owned subsidiary, Trans Ova, to Spring Bidco LLC, a Delaware limited liability company (the “Buyer”), for $170,000 payable at the closing of the transaction (plus the cash balance of Trans Ova at the date of closing, less the debt balance of Trans Ova at the date of closing, and subject to a net working capital adjustment mechanism) and up to $10,000 in cash earn - out payments contingent upon the performance of Trans Ova in 2022 and 2023 (the “Transaction”). In connection with the Transaction, the Company will hold a total of $200,000, comprising the purchase price and additional funds provided by the Company, in a segregated account and will use such funds for certain permitted purposes, including resolution of the Company’s outstanding convertible bonds described in Note 11. The board of directors of the Company approved the sale in June 2022. In addition, the Company is required to indemnify the Buyer for certain expenses incurred post close, if incurred, in amounts not to exceed $5,750.

The Purchase Agreement contains representations and warranties, and covenants customary for a transaction of this nature. The consummation of the Transaction is subject to customary closing conditions, including (among others) the expiration or termination of any applicable waiting period under the HSR Act with respect to the Transaction, the absence of an injunction or order of any court of competent jurisdiction in the United States enjoining, prohibiting or rendering illegal the consummation of the Transaction, the absence of any material adverse effect on the business, assets, results of operations or condition of Trans Ova and its subsidiaries, the accuracy of the representations and warranties of each party (subject to materiality qualifiers) and the compliance by each party with its covenants in all material respects. The Transaction is currently expected to close in the third quarter of 2022.

The Purchase Agreement contains certain termination rights for the Company and Buyer, including, among other events, (1) if the Transaction has not been completed on or prior to July 1, 2023, (2) if the closing of the Transaction would violate any non-appealable, final injunction or order of any court of competent jurisdiction in the United States or (3) following a breach by the other party that would cause certain closing conditions not to be satisfied and is not or cannot be cured within 45 days’ notice of such breach. If the Purchase Agreement is terminated under certain circumstances relating to the failure of the expiration or termination of the applicable waiting period under the HSR Act to occur, Buyer is obligated pay a termination fee of $12,750 to the Company.

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The carrying values of the major classes of assets and liabilities included in assets and liabilities held for sale related to Trans Ova as of June 30, 2022 and December 31, 2021, are as follows:


	June 30, 2022		December 31, 2021
Assets
Cash and cash equivalents	$	5,667	$	6,497
Trade receivables, net	26,020		19,491
Inventory	12,262		12,935
Other current assets	624		1,265
Property, plant and equipment, net	25,507		25,716
Intangible assets, net	736		1,824
Goodwill	16,594		16,594
Right-of-use assets	1,321		910
Other noncurrent assets	182		252
Total assets held for sale	$	88,913	$	85,484
Liabilities
Accounts payable	$	1,332	$	2,293
Accrued compensation and benefits	3,632		3,367
Other accrued liabilities	3,764		3,778
Deferred revenue	2,080		2,952
Current portion of long-term debt	359		350
Other current liabilities	281		111
Long-term debt, net of current portion	2,633		2,867
Other long-term liabilities	982		805
Total liabilities held for sale	$	15,063	$	16,523

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The following table presents the financial results of discontinued operations related to Trans Ova for the for the three and six months ended June 30, 2022 and 2021:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Product revenues	$	8,940	$	7,641	$	17,172	$	13,410
Service revenues	23,501		22,124		41,777		37,431
Total revenues	32,441		29,765		58,949		50,841
Cost of products	7,438		5,699		14,471		10,885
Cost of services	9,977		7,984		18,349		14,412
Research and development	908		497		1,867		881
Selling, general and administrative	6,124		5,043		12,011		9,479
Total operating expenses	24,447		19,223		46,698		35,657
Operating income	7,994		10,542		12,251		15,184
Other income, net	430		334		820		699


Income from discontinued operations	$	8,424	$	10,876	$	13,071	$	15,883

The following table presents the significant noncash items, purchases of property, plant and equipment, and proceeds from sales of assets for the discontinued operations related to Trans Ova that are included in the accompanying condensed consolidated statements of cash flow:


	Six Months Ended June 30,
	2022		2021
Adjustments to reconcile net income to net cash used in operating activities
Depreciation and amortization	$	2,765	$	2,898


Loss on disposal of assets	360		242

Stock-based compensation expense	68		204

Provision for credit losses	735		645
Cash flows from investing activities
Purchases of property, plant and equipment	(2,629)		(1,625)
Proceeds from sale of assets	438		1,168

MBP Titan

As a result of market uncertainty driven by the COVID-19 pandemic and the state of the energy sector raising significant challenges for the strategic alternatives pursued by MBP Titan, beginning in the second quarter of 2020 and throughout the remainder of 2020, the Company suspended MBP Titan's operations, preserved certain of MBP Titan's intellectual property, terminated all of its personnel, and undertook steps to dispose of its other assets and obligations. The wind down of MBP Titan's activities was substantially completed by December 31, 2020, with the final disposition of certain property and equipment and the facility operating lease occurring in January 2021. This discontinuation of operations represented the continuation of a strategic shift to becoming a primarily healthcare company advancing technologies and products that address complex healthcare challenges that the Company commenced ~~as part of the Transactions defined and discussed below.~~in 2020. The assets, liabilities, and expenses related to the discontinued operations of MBP Titan are reclassified and presented as discontinued operations in the accompanying condensed consolidated financial statements for all periods.

The January 2021 sale of property and equipment resulted in a gain on disposal of assets of $464, which is included in income from discontinued operations in the accompanying condensed consolidated statement of operations for the ~~nine~~six months ended ~~September~~June 30, 2021. In January 2021, the Company executed termination and recapture agreements with the landlord of the leased facility used in MBP Titan's operations, thereby relieving the Company of all of its obligations related to the facility that were originally due to expire in July 2025. This lease termination resulted in a gain of $4,602, which is also included in income from

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discontinued operations in the accompanying condensed consolidated statement of operations for the ~~nine~~six months ended ~~September~~June 30, 2021.

After the wind down of MBP Titan, certain assets and contractual obligations which were previously managed by MBP Titan continue to be managed at the Precigen corporate level. These remaining assets and contractual obligations include the Company's equity interest in and collaboration agreements with Intrexon Energy Partners, LLC ("Intrexon Energy Partners"), and Intrexon Energy Partners II, LLC ("Intrexon Energy Partners II"), including the associated deferred revenue remaining under each collaboration agreement (Notes 4 and 5), as well as the associated intellectual property developed by MBP Titan to date. These assets, liabilities, and related historical revenue and equity losses are included in the Company's operating results from continuing operations in the accompanying condensed consolidated financial statements for all periods presented as a result of the Company's continuing involvement.

~~The carrying values of the major classes of assets and liabilities included in assets and liabilities held for sale or abandonment~~There were no discontinued operations related to MBP Titan ~~as of September~~for the three and six months ended June 30, ~~2021 and December 31, 2020, are as follows:~~


	September 30, 2021		December 31, 2020
~~Assets~~

~~Property, plant and equipment, net~~	$	—	$	~~586~~



~~Right-of-use assets~~	—		~~9,131~~
~~Other assets~~	—		~~136~~
~~Total assets held for sale or abandonment~~	$	—	$	~~9,853~~
~~Liabilities~~

~~Lease liabilities, current~~	$	—	$	~~1,890~~
~~Other current liabilities~~	—		~~619~~

~~Lease liabilities, net of current portion~~	—		~~11,538~~

~~Total liabilities held for sale or abandonment~~	$	—	$	~~14,047~~

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2022. The following table presents the financial results of discontinued operations related to MBP ~~Titan:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Operating (gains) expenses (1) $ (60) $ 1,972 $ (4,599) $ 38,713
Operating income (loss) 60 (1,972) 4,599 (38,713)
Income (loss) before income taxes 60 (1,972) 4,599 (38,713)
Income (loss) from discontinued operations $ 60 $ (1,972) $ 4,599 $ (38,713)

~~(1)Includes a goodwill impairment charge of $9,635~~Titan for the three and ~~an impairment charge on property, plant and equipment and right-of-use assets of $12,406 in the nine~~six months ended ~~September~~June 30, ~~2020 in conjunction with the suspension of MBP Titan's operations discussed above.~~2021:


	Three Months Ended June 30,			Six Months Ended June 30,
		2021		2021

Operating gains		$	13	$	4,539
Operating income		13		4,539






Income from discontinued operations		$	13	$	4,539

The following table presents the significant noncash items, purchases of property, plant and equipment, and proceeds from sales of assets for the discontinued operations related to MBP Titan for the six months ended June 30, 2021 that are included in the accompanying condensed consolidated statements of cash flows.

Nine Months Ended
September 30,
2021 2020
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization $ — $ 2,337
Impairment of goodwill — 9,635
Impairment of other noncurrent assets — 12,406
(Gain) loss on disposals of assets, net (464) 13
Stock-based compensation expense — (34)
Gain on lease termination (1) (4,602) —
Cash flows from investing activities
Purchases of property, plant and equipment — (88)
Proceeds from sales of assets 1,083 —

~~(1)Included in other noncash items on the accompanying condensed consolidated statement of cash flows.~~

~~Transactions with TS Biotechnology Holdings, LLC and Darling Ingredients, Inc.~~

On January 1, 2020, the Company 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 the Company's non-healthcare assets and operations to TS Biotechnology for $53,000 and certain contingent payment rights (the "TS Biotechnology Sale"). The TS Biotechnology Sale closed on January 31, 2020. The assets and operations sold in the TS Biotechnology Sale included the following wholly owned subsidiaries, as well as certain equity securities that were directly related to the subsidiaries sold:

•~~Intrexon Produce Holdings, Inc., the parent company of two 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 focused on 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 that were previously an operating division within Precigen.~~

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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 operations related to the Transactions are reclassified and presented as discontinued operations in the accompanying condensed consolidated financial statements for all periods.

Upon the closing of the 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.

The following table presents the financial results of discontinued operations related to the Transactions for the nine months ended September 30, 2020. There were no discontinued operations related to the Transactions for the three months ended September 30, 2020.

Nine Months Ended September 30, 2020
TS Biotechnology Sale EnviroFlight Sale Total
Revenues (1) $ 1,294 $ — $ 1,294
Operating expenses 896 — 896
Operating income 398 — 398
Gain on sale of discontinued operations 633 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 revenue recognized from related parties of $436.~~

The following table presents the significant noncash items and purchases of property, plant and equipment for the discontinued operations related to the Transactions that are included in the accompanying condensed consolidated statement of cash flows.


		~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~
			2021
Adjustments to reconcile net loss to net cash used in operating activities




Gain on ~~sale~~disposals of ~~discontinued operations~~assets			$	~~(672)~~(464)





~~Loss~~Noncash gain on ~~release~~termination of ~~cumulative foreign currency translation adjustment~~leases			~~26,957~~ (4,602)
~~Unrealized depreciation on equity securities~~	~~106~~
~~Equity in net loss of EnviroFlight~~	38
~~Stock-based compensation expense~~	~~(1,346)~~

Cash flows from investing activities

~~Purchases of property, plant and equipment~~	~~(382)~~

~~Also see Note 13 regarding TS Biotechnology's purchase of the Company's common stock in January 2020, concurrent with the TS Biotechnology Sale.~~

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~~Equity Method Investments~~

~~The Company accounted for its investment in EnviroFlight using the equity method of accounting.~~

~~Summarized financial data for EnviroFlight is shown in the following table for the period in which the Company held the equity method investment.~~

Proceeds from sales of assets

Nine Months Ended
September 30, 2020

~~Revenues~~

161,083

~~Operating expenses~~

~~Operating loss~~

~~(76)~~

~~Net loss~~

~~(76)~~

~~Out-of-Period Adjustment~~

During the nine months ended September 30, 2020, 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 cash 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 results of operations for the nine months ended September 30, 2020.

4. Investments in Joint Ventures

Intrexon Energy Partners

In ~~March~~ 2014, the Company and certain investors (the "IEP Investors"), including an affiliate of Third Security, LLC ("Third Security"), entered into a Limited Liability Company Agreement that governs the affairs and conduct of business of Intrexon Energy Partners, a JV formed to optimize and scale-up the Company's MBP technology for the production of certain fuels and lubricants. The Company also entered into an exclusive 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, Precigen 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, 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 ~~September~~June 30, ~~2021,~~2022, the Company's remaining commitment was $4,225. Intrexon Energy Partners is governed by the Intrexon Energy Partners Board, which has 5 members. NaN members of the Intrexon Energy Partners Board are designated by the

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Company and 3 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 ~~$(428)~~$(429) and ~~$(425)~~$(428) as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, and is included in other accrued liabilities in the accompanying condensed consolidated balance sheets, which represents the Company's equity in losses for contractually committed contributions to Intrexon Energy Partners.

See ~~Note~~Notes 3 and 16 for additional discussion regarding the Company's investment in 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 that governs the affairs and conduct of business of Intrexon Energy Partners II, a JV formed to

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utilize the Company's MBP 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 that provides 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 $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. Precigen 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, 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 ~~September~~June 30, ~~2021,~~2022, the Company's remaining commitment was $10,000. Intrexon Energy Partners II is governed by the Intrexon Energy Partners II Board, which has 5 members. NaN member of the Intrexon Energy Partners II Board is designated by the Company and 4 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 $(435) as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, and is included in other accrued liabilities in the accompanying condensed consolidated balance sheets, which represents the Company's equity in losses for contractually committed contributions to Intrexon Energy Partners II.

See Notes 3 and 16 for additional discussion regarding the Company's investment in Intrexon Energy Partners II.

5. Collaboration and Licensing Revenue

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

The Company recognizes the reimbursement payments received for research and development efforts in the period when 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 the 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 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 Topic 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.

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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.

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The following table 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 ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021.


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
ZIOPHARM Oncology, Inc.		$	—	$	—	$	—	$	100
Oragenics, Inc.		—		2,823		—		3,053

Castle Creek Biosciences, Inc.	Castle Creek Biosciences, Inc.	18		2,394		371		16,967		Castle Creek Biosciences, Inc.	$	—	$	294	—		353
Other	Other	4		6		18		139		Other	—		7		—		14
Total (1)	Total (1)	$	22	$	5,223	$	389	$	20,259	Total (1)	$	—	$	301	$	—	$	367

(1)Collaboration and licensing revenues include the recognition of ~~$22~~$0 and ~~$5,213~~$292 for the three months ended ~~September~~June 30, 2022 and 2021, and ~~2020, respectively,~~$0 and ~~$380 and $19,654~~$358 for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, associated with upfront and milestone payments which were previously deferred.

There have been no significant changes to the agreements with our collaborators and licensees in the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022.

Deferred Revenue

Deferred revenue primarily consists of upfront and milestone consideration received for the Company's collaboration and licensing agreements. ~~Deferred revenue consisted of the following:~~

September 30,
2021 December 31,
2020
Collaboration and licensing agreements $ 23,040 $ 23,420
Prepaid product and service revenues 3,493 2,126
Other 183 277
Total $ 26,716 $ 25,823
Current portion of deferred revenue $ 3,693 $ 2,800
Long-term portion of deferred revenue 23,023 23,023
Total $ 26,716 $ 25,823

Revenue is recognized ~~under collaboration and licensing agreements~~ as services are performed. ~~Certain of the~~The arrangements classified as long-term (of which $21,205 is related to agreements with Intrexon Energy Partners and Intrexon Energy Partners II) are not active while the ~~other party evaluates~~respective counterparties evaluate the status of the project and its desired future development ~~activities. The following table summarizes~~activities since the ~~remaining balance~~Company cannot reasonably estimate the amount of ~~deferred~~service to be performed over the next year.

Deferred revenue ~~associated with upfront and milestone payments for each significant counterparty to a collaboration or licensing agreement as~~consisted of ~~September 30, 2021 and December 31, 2020, as well as~~ the ~~estimated remaining performance period as of September 30, 2021.~~following:

Average Remaining Performance Period (Years) September 30,
2021 December 31,
2020
Intrexon Energy Partners, LLC 2.5 $ 8,362 $ 8,362
Intrexon Energy Partners II, LLC 3.2 12,843 12,843
Castle Creek Biosciences, Inc. 0.3 17 379
Other 3.1 1,818 1,836
Total $ 23,040 $ 23,420


	June 30, 2022		December 31, 2021
Collaboration and licensing agreements	$	23,023	$	23,023
Prepaid product and service revenues	90		1,277
Other	74		213
Total	$	23,187	$	24,513
Current portion of deferred revenue	$	164	$	1,490
Long-term portion of deferred revenue	23,023		23,023
Total	$	23,187	$	24,513

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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 ~~September~~June 30, ~~2021:~~2022:


		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value
U.S. government debt securities	U.S. government debt securities	$	139,375	$	5	$	(35)	$	139,345	U.S. government debt securities	$	84,568	$	—	$	(1,335)	$	83,233
Certificates of deposit	Certificates of deposit	265		—		—		265		Certificates of deposit	97		—		—		97
Total	Total	$	139,640	$	5	$	(35)	$	139,610	Total	$	84,665	$	—	$	(1,335)	$	83,330

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The following table summarizes the amortized cost, gross unrealized gains and losses, and fair value of available-for-sale investments as of December 31, ~~2020:~~2021:


		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value
U.S. government debt securities	U.S. government debt securities	$	48,048	$	14	$	(1)	$	48,061	U.S. government debt securities	$	121,036	$	—	$	(331)	$	120,705
Certificates of deposit	Certificates of deposit	264		—		—		264		Certificates of deposit	97		—		—		97
Total	Total	$	48,312	$	14	$	(1)	$	48,325	Total	$	121,133	$	—	$	(331)	$	120,802

The estimated fair value of available-for-sale investments classified by their contractual maturities as of ~~September~~June 30, ~~2021~~2022 was:


Due within one year	$	~~72,684~~71,453
After one year through two years	~~66,926~~11,877
Total	$	~~139,610~~83,330

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~~Company has a practice of minimizing realized losses ofor maximizing realized gains based upon the ~~Company's debt security investments are not significant as of September 30, 2021.~~Company’s cash requirements and general market conditions.

7. Fair Value Measurements

The carrying amount of cash and cash equivalents, receivables, 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 as of ~~September~~June 30, ~~2021:~~2022:

Quoted Prices in Active Markets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3) September 30,
2021
Assets
U.S. government debt securities $ — $ 139,345 $ — $ 139,345
Certificates of deposit — 265 — 265
Total $ — $ 139,610 $ — $ 139,610

~~Table of Contents~~


	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		June 30, 2022
Assets
U.S. government debt securities	$	—	$	83,233	$	—	$	83,233
Certificates of deposit	—		97		—		97
Total	$	—	$	83,330	$	—	$	83,330

The following table presents the placement in the fair value hierarchy of financial assets that are measured at fair value on a recurring basis as of December 31, ~~2020:~~2021:


		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		December 31, 2020			Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		December 31, 2021
Assets	Assets									Assets
U.S. government debt securities	U.S. government debt securities	$	—	$	48,061	$	—	$	48,061	U.S. government debt securities	$	—	$	120,705	$	—	$	120,705
Certificates of deposit	Certificates of deposit	—		264		—		264		Certificates of deposit	—		97		—		97
Total	Total	$	—	$	48,325	$	—	$	48,325	Total	$	—	$	120,802	$	—	$	120,802

The method used to estimate the fair value of the Level 2 short-term and long-term debt 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.

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Liabilities

The ~~carrying values~~fair value of ~~the Company's long-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 calculated fair value of the Convertible Notes~~ (Note 11) was approximately ~~$169,000~~$159,000 and ~~$165,000~~$160,000 as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, 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 ~~$176,788~~$198,674 and ~~$168,147~~$179,882 as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020, respectively.~~2021, respectively (see Note 2 regarding adoption of ASU 2020-06 on January 1, 2022).

8. Inventory

Inventory consists of the following:


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Supplies, embryos and other production materials	Supplies, embryos and other production materials	$	2,230	$	2,060	Supplies, embryos and other production materials	$	30	$	23
Work in process		1,837		2,348

Livestock	Livestock	3,803		5,047		Livestock	194		303
Feed		2,066		1,904

Total inventory	Total inventory	$	9,936	$	11,359	Total inventory	$	224	$	326

~~Table of Contents~~

9. Property, Plant and Equipment, Net

Property, plant and equipment consist of the following:


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Land and land improvements	Land and land improvements	$	9,844	$	9,844	Land and land improvements	$	164	$	164
Buildings and building improvements	Buildings and building improvements	12,088		12,088		Buildings and building improvements	2,592		2,592
Furniture and fixtures	Furniture and fixtures	1,236		1,228		Furniture and fixtures	449		434
Equipment	Equipment	32,634		31,150		Equipment	17,570		16,812
Leasehold improvements	Leasehold improvements	6,452		6,260		Leasehold improvements	3,495		3,366
Breeding stock	Breeding stock	968		868		Breeding stock	49		36
Computer hardware and software	Computer hardware and software	5,425		5,684		Computer hardware and software	4,537		4,823
Construction and other assets in progress	Construction and other assets in progress	2,729		2,754		Construction and other assets in progress	1,059		1,829
		71,376		69,876			29,915		30,056
Less: Accumulated depreciation and amortization	Less: Accumulated depreciation and amortization	(38,619)		(34,952)		Less: Accumulated depreciation and amortization	(22,189)		(21,457)
Property, plant and equipment, net	Property, plant and equipment, net	$	32,757	$	34,924	Property, plant and equipment, net	$	7,726	$	8,599

Depreciation expense was ~~$1,525~~$616 and ~~$1,873~~$734 for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$4,711~~$1,269 and ~~$5,689~~$1,469 for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

10. Goodwill and Intangible Assets, Net

The changes in the carrying amount of goodwill for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 were as follows:


Balance at December 31, ~~2020~~2021	$	~~54,363~~37,554
Impairment	(482)
Foreign currency translation adjustments	~~(157)~~(208)
Balance at ~~September~~June 30, ~~2021~~2022	$	~~54,206~~36,864

The Company recorded $482 of goodwill impairment related to the total goodwill assigned to 1 reporting unit within the biopharmaceutical segment during the first quarter of 2022.

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The Company had ~~$43,643~~$14,483 and $14,001 of cumulative impairment losses as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021, respectively.

Intangible assets consist of the following as of ~~September~~June 30, ~~2021:~~2022:


		Gross Carrying Amount		Accumulated Amortization		Net			Gross Carrying Amount		Accumulated Amortization		Net
Patents, developed technologies and know-how	Patents, developed technologies and know-how	$	92,859	$	(37,667)	$	55,192	Patents, developed technologies and know-how	$	79,009	$	(33,076)	$	45,933
Customer relationships	Customer relationships	10,850		(10,024)		826		Customer relationships	1,600		(1,600)		—
Trademarks	Trademarks	5,900		(5,004)		896		Trademarks	200		(200)		—
Total	Total	$	109,609	$	(52,695)	$	56,914	Total	$	80,809	$	(34,876)	$	45,933

Intangible assets consist of the following as of December 31, ~~2020:~~2021:

Gross Carrying Amount Accumulated Amortization Net
Patents, developed technologies and know-how $ 96,927 $ (34,412) $ 62,515
Customer relationships 10,850 (9,340) 1,510
Trademarks 5,900 (4,529) 1,371
Total $ 113,677 $ (48,281) $ 65,396

~~Table of Contents~~


	Gross Carrying Amount		Accumulated Amortization		Net
Patents, developed technologies and know-how	$	85,173	$	(32,882)	$	52,291
Customer relationships	1,600		(1,600)		—
Trademarks	200		(200)		—
Total	$	86,973	$	(34,682)	$	52,291

Amortization expense was ~~$1,874~~$1,219 and ~~$1,913~~$1,337 for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$5,731~~$2,484 and ~~$5,675~~$2,676 for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

11. Lines of Credit and Long-Term Debt

Lines of Credit

Trans Ova has a $5,000 revolving line of credit with First National Bank of Omaha that matures on April 1, 2022. The line of credit bears interest at the greater of the U.S. Prime Rate or 3.00%, and the actual rate was 3.25% as of September 30, 2021. As of September 30, 2021 and December 31, 2020, there was no outstanding balance. The amount available under the line of credit is based on eligible accounts receivable and inventory up to the maximum principal amount and was $5,000 as of September 30, 2021. 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.

Exemplar has a $700 revolving line of credit with American State Bank that matures on October 31, 2022. As of ~~September~~June 30, ~~2021,~~2022, the line of credit bore interest at a stated rate of 4.00% per annum. As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, there was no outstanding balance.

Long-Term Debt

Long-term debt consists of the following:


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Convertible debt(1)	Convertible debt(1)	$	176,788	$	168,147	Convertible debt(1)	$	198,674	$	179,882
Notes payable		3,328		3,655

Other	Other	56		80		Other	—		52
Long-term debt	Long-term debt	180,172		171,882		Long-term debt	198,674		179,934
Less current portion	Less current portion	355		360		Less current portion	—		52
Long-term debt, less current portion	Long-term debt, less current portion	$	179,817	$	171,522	Long-term debt, less current portion	$	198,674	$	179,882

(1)See Note 2 regarding adoption of ASU 2020-06 as of January 1, 2022.

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 and are repayable in cash, unless earlier repurchased or converted. Upon conversion by the holders, 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 or six months ended ~~September~~June 30, ~~2021.~~2022. 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 described in Note 2, the Company adopted ASU 2020-06 on January 1, 2022. Pursuant to ASU 2020-06, the equity components of the Convertible Notes separated from the debt components as required under the cash conversion model is required to be recombined into the Convertible Notes as a single instrument upon the adoption of ASU 2020-06. The Convertible Notes shall be accounted for as if the conversion option had not been separated. As the Company elected the modified retrospective approach, the difference between the accounting under the cash conversion model and new model after the adoption of ASU 2020-06 (i.e., the single debt instrument with no separation) was recorded as an adjustment on the adoption date (i.e., January 1, 2022) through accumulated deficit. Tax accounting consequences of the adoption also required the reversal of the previously reported deferred tax benefit on the date of adoption.

Adoption of ASU 2020-06 resulted in an increase to long-term debt outstanding, net of current portion, of $18,196, a decrease to additional paid-in capital of $36,868, and a decrease to accumulated deficit of $18,672. Interest expense recognized on the

convertible notes in future periods will be reduced as a result of accounting for the convertible debt instrument as a single liability measured at its amortized cost.

As of ~~September~~June 30, ~~2021,~~2022, the outstanding principal balance on the Convertible Notes was $200,000 and the carrying value of the long-term debt was ~~$176,788.~~$198,674. The effective interest rate on the Convertible Notes, including amortization of the long-term debt discount and debt issuance costs, is ~~11.02%~~4.25%. As of ~~September~~June 30, ~~2021,~~2022, the unamortized long-term debt discount and debt issuance costs related to the Convertible Notes totaled ~~$23,212.~~$1,326.

The components of interest expense related to the Convertible Notes were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Cash interest expense	Cash interest expense	$	1,750	$	1,750	$	5,250	$	5,250	Cash interest expense	$	1,750	$	1,750	$	3,500	$	3,500
Non-cash interest expense	Non-cash interest expense	3,011		2,706		8,641		7,807		Non-cash interest expense	312		2,879		596		5,630
Total interest expense	Total interest expense	$	4,761	$	4,456	$	13,891	$	13,057	Total interest expense	$	2,062	$	4,629	$	4,096	$	9,130

Accrued interest of ~~$1,750~~$3,500 is included in other accrued liabilities on the accompanying condensed consolidated balance sheet as of ~~September~~June 30, ~~2021.~~

~~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, which accrued interest at 3.0% compounded annually ("accrued PIK interest"), matured in September 2020. The Company issued 6,293,402 shares of Precigen common stock upon conversion of the outstanding principal balance and accrued PIK interest at maturity. Interest expense was $147 and $616 for the three and nine months ended September 30, 2020, respectively.

~~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. In October 2020, pursuant to the terms of the Merck Note, Ares Trading voluntarily elected to convert the entire $25,000 outstanding into 6,758,400 shares of Precigen common stock.

~~Notes Payable~~

Trans Ova has a note payable to American State Bank that matures in April 2033 and had an outstanding principal balance of $3,328 as of September 30, 2021. 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.2022.

Future Maturities

Future maturities of long-term debt as of ~~September~~June 30, ~~2021~~2022 are as follows:

2021 $ 90
2022 400
2023 200,363
2024 378
2025 393
2026 408
Thereafter 1,352
Total $ 203,384


2022	$	—
2023	200,000





Total	$	200,000

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. The Company has U.S. taxable loss of approximately ~~$24,700~~$1,000 and ~~$26,900~~$17,100 for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$82,200~~$6,300 and ~~$133,900~~$57,500 for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The following table presents the components of income tax benefit from continuing operations.


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021

Current foreign income tax expense from continuing operations		$	—	$	18	$	7	$	74
Current foreign income tax expense (benefit) from continuing operations										Current foreign income tax expense (benefit) from continuing operations	$	(35)	$	3	$	(35)	$	7
Deferred income tax benefit from continuing operations	Deferred income tax benefit from continuing operations	(61)		(68)		(180)		(204)		Deferred income tax benefit from continuing operations	(54)		(63)		(112)		(119)
Total income tax benefit from continuing operations	Total income tax benefit from continuing operations	$	(61)	$	(50)	$	(173)	$	(130)	Total income tax benefit from continuing operations	$	(89)	$	(60)	$	(147)	$	(112)

The Company's net deferred tax assets ~~excluding certain deferred tax liabilities totaling $2,574,~~ 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 ~~September~~June 30, ~~2021,~~2022, the Company ~~has~~had net operating loss carryforwards for U.S. federal income tax purposes of approximately ~~$836,600~~$862,000 available to offset future taxable income, including approximately ~~$583,900~~$610,000 generated after 2017, U.S. capital loss carryforwards of approximately $212,500, and federal and state research and development tax credits of approximately ~~$10,900,~~$11,500, prior to consideration of annual limitations that may be imposed under Section 382 of the Internal Revenue Code of 1986, as amended. Net operating loss carryforwards generated prior to 2018 ~~will begin~~have begun to expire in 2022, and capital loss carryforwards will expire if unutilized beginning in 2024. As of ~~September~~June 30, ~~2021,~~2022, the Company's foreign subsidiaries have foreign loss carryforwards of approximately ~~$76,800,~~$68,600, most of which do not expire.

13. Shareholders' Equity

Issuances of Precigen Common Stock

In January 2021, the Company closed a public offering of 17,250,000 shares of its common stock, resulting in net proceeds of $121,045, after deducting underwriting discounts and ~~$568~~ of capitalized offering expenses.

Concurrent with entering into the TS Biotechnology Sale on January 1, 2020, the Company also entered into a subscription agreement with TS Biotechnology pursuant to which TS Biotechnology purchased 5,972,696 shares of the Company's common stock for $35,000 on January 31, 2020.

See ~~Notes~~Note 11 ~~and 16~~ for discussion regarding ~~additional issuances~~conversion features of ~~Precigen common stock.~~the convertible notes.

Share Lending Agreement

Concurrently with the offering of the 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 which 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 Borrowed 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 common stock in the Borrowed Shares Offering.

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

Components of Accumulated Other Comprehensive (Loss) Income

The components of accumulated other comprehensive (loss) income are as follows:

September 30,
2021 December 31,
2020
Unrealized gain (loss) on investments $ (30) $ 13
Income on foreign currency translation adjustments 1,545 3,984
Total accumulated other comprehensive income $ 1,515 $ 3,997


	June 30, 2022		December 31, 2021
Unrealized loss on investments	$	(1,335)	$	(331)
Income (loss) on foreign currency translation adjustments	(3,221)		534
Total accumulated other comprehensive (loss) income	$	(4,556)	$	203

2726

14. Share-Based Payments

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Cost of products	Cost of products	$	8	$	1	$	23	$	7	Cost of products	$	7	$	6	$	15	$	15
Cost of services	Cost of services	35		35		134		99		Cost of services	23		24		48		78
Research and development	Research and development	555		435		2,180		1,383		Research and development	589		581		1,134		1,610
Selling, general and administrative	Selling, general and administrative	1,892		4,157		9,125		13,760		Selling, general and administrative	1,660		2,870		4,606		7,065
Discontinued operations	Discontinued operations	—		(28)		—		(1,380)		Discontinued operations	30		76		68		204
Total	Total	$	2,490	$	4,600	$	11,462	$	13,869	Total	$	2,309	$	3,557	$	5,871	$	8,972

Precigen Stock Option Plans

In April 2008, Precigen adopted the 2008 Equity Incentive Plan (the "2008 Plan") for employees and nonemployees pursuant to which Precigen's board of directors granted share-based awards, including stock options, to officers, key employees and nonemployees. Upon the effectiveness of the 2013 Omnibus Incentive Plan (the "2013 Plan"), no new awards may be granted under the 2008 Plan. As of ~~September~~June 30, ~~2021,~~2022, there were ~~104,354~~14,843 stock options outstanding under the 2008 Plan.

Precigen adopted the 2013 Plan for employees and nonemployees pursuant to which Precigen's board of directors may grant share-based awards, including stock options and shares of common stock, to employees, officers, consultants, advisors, and nonemployee directors. The 2013 Plan became effective in August 2013, and as of ~~September~~June 30, ~~2021,~~2022, there were ~~27,000,000~~37,000,000 shares authorized for issuance under the 2013 Plan, of which ~~11,078,437~~13,579,288 stock options and ~~306,360~~98,927 RSUs were outstanding and ~~5,900,357~~12,641,525 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 ~~September~~June 30, ~~2021,~~2022, there were ~~5,000,000~~12,000,000 shares authorized for issuance under the 2019 Plan, of which ~~1,066,318~~1,898,208 stock options and ~~162,121~~615,760 RSUs were outstanding and ~~1,974,662~~7,243,025 shares were available for grant.

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Stock option activity was as follows:


		Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
Balances at December 31, 2020		11,255,896	$	15.53	7.25
Balances at December 31, 2021						Balances at December 31, 2021	12,260,187	$	14.06	6.79
Granted	Granted	1,802,820	8.02			Granted	4,172,390	2.23

Exercised	Exercised	(126,508)	(4.77)			Exercised	(375)	2.28
Forfeited	Forfeited	(255,467)	(6.83)			Forfeited	(365,552)	5.42
Expired	Expired	(427,632)	(25.93)			Expired	(574,311)	23.31
Balances at September 30, 2021		12,249,109	14.35		6.89
Exercisable at September 30, 2021		7,227,624	16.87		5.68
Balances at June 30, 2022						Balances at June 30, 2022	15,492,339	10.73		7.28
Exercisable at June 30, 2022						Exercisable at June 30, 2022	8,768,295	14.00		6.15

RSU activity was as follows:


		Number of Restricted Stock Units	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (Years)		Number of Restricted Stock Units	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (Years)
Balances at December 31, 2020		1,727,712	$	6.11	0.42
Balances at December 31, 2021						Balances at December 31, 2021	468,481	$	8.47	0.33
Granted	Granted	462,019	7.87			Granted	1,387,831	2.12
Vested	Vested	(1,624,013)	(5.76)			Vested	(1,125,785)	4.29
Forfeited	Forfeited	(97,237)	(8.96)			Forfeited	(15,840)	7.26
Balances at September 30, 2021		468,481	8.47		0.58
Balances at June 30, 2022						Balances at June 30, 2022	714,687	2.77		0.63

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

The Company's Executive Chairman ("Executive Chairman"), who previously served as an employee and executive officer until September 24, 2020, received a base salary of $200 per month through March 31, 2020, payable in fully-vested shares of Precigen common stock with such shares subject to a three-year lock-up on resale. In September 2020, the Company's board of directors, upon the recommendation of the compensation committee of the board, approved a new compensation arrangement for the Executive Chairman consisting of (i) an annual retainer of $100 payable in cash or, at the Executive Chairman's election, shares of Precigen common stock; (ii) an annual grant of fully vested stock options having a grant date fair value of $250; and (iii) an annual grant of RSUs having a grant date fair value of $250 vesting over one year. The new compensation arrangement began in calendar year 2021 and was prorated for the nine months of 2020 not covered by the Executive Chairman's previous compensation arrangement discussed above. Expense associated with the arrangements above is included in selling, general, and administrative expenses in the Company's condensed consolidated statements of operations and totaled ~~$76~~$62 and ~~$266~~$109 for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$585~~$495 and ~~$720~~$509 for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

15. Operating Leases

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

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The components of lease costs were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Operating lease costs	Operating lease costs	$	843	$	892	$	2,511	$	2,690	Operating lease costs	$	613	$	755	$	1,240	$	1,520
Short-term lease costs	Short-term lease costs	464		480		1,411		1,332		Short-term lease costs	49		46		102		93
Variable lease costs	Variable lease costs	199		205		663		654		Variable lease costs	121		221		224		438
Lease costs	Lease costs	$	1,506	$	1,577	$	4,585	$	4,676	Lease costs	$	783	$	1,022	$	1,566	$	2,051

As of ~~September~~June 30, ~~2021,~~2022, maturities of lease liabilities, excluding short-term and variable leases, for continuing operations were as follows:


2021		$	718
2022	2022	3,405		2022	$	1,042
2023	2023	2,945		2023	1,992
2024	2024	3,009		2024	2,065
2025	2025	2,283		2025	2,062
2026	2026	1,796		2026	1,659
2027				2027	1,246
Thereafter	Thereafter	4,638		Thereafter	3,108
Total	Total	18,794		Total	13,174
Present value adjustment	Present value adjustment	(5,636)		Present value adjustment	(4,043)
Total	Total	$	13,158	Total	$	9,131
Current portion of operating lease liabilities	Current portion of operating lease liabilities	$	1,959	Current portion of operating lease liabilities	$	1,033
Long-term portion of operating lease liabilities	Long-term portion of operating lease liabilities	11,199		Long-term portion of operating lease liabilities	8,098
Total	Total	$	13,158	Total	$	9,131

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


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Weighted average remaining lease term (years)	Weighted average remaining lease term (years)	6.38		4.21		Weighted average remaining lease term (years)	6.43		6.72
Weighted average discount rate	Weighted average discount rate	10.99	%	10.27	%	Weighted average discount rate	11.01	%	10.94	%


		Nine Months Ended September 30,					Six Months Ended June 30,
		2021		2020			2022		2021
Supplemental disclosure of cash flow information	Supplemental disclosure of cash flow information					Supplemental disclosure of cash flow information
Cash paid for operating lease liabilities	Cash paid for operating lease liabilities	$	2,835	$	3,013	Cash paid for operating lease liabilities	$	1,264	$	1,805
Operating lease right-of-use assets obtained in exchange for new lease liabilities (includes new leases or modifications of existing leases)	Operating lease right-of-use assets obtained in exchange for new lease liabilities (includes new leases or modifications of existing leases)	4,868		395		Operating lease right-of-use assets obtained in exchange for new lease liabilities (includes new leases or modifications of existing leases)	65		4,868

16. Commitments and Contingencies

Contingencies

On December 1, 2020, Trans Ova settled 1one of 2 patent infringement lawsuits brought by XY, LLC ("XY"). The lawsuit, originally filed in 2012, was tried and appealed between 2016 and 2020. On December 1, 2020, the parties reached a settlement resolving all remaining disputes. As part of that settlement, Trans Ova remitted to XY a settlement payment, which, in addition to all the other monies Trans Ova had previously paid XY, constituted full payment and satisfaction of the judgment, including pre-judgment interest, post-judgment interest, costs, and all past, current and future royalty obligations under the judgment. In exchange, XY released and forever discharged Trans Ova from all obligations arising out of the judgment.

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AXY filed a second ~~patent infringement~~ lawsuit ~~brought on by XY was filed~~ in December ~~2016.~~2016, alleging infringement of 7 additional patents. Two of those patents were later invalidated in different proceedings and dismissed from the lawsuit. A third patent was settled out of the case in April 2022. There are thus currently 54 patents remaining ~~at issue~~ in the case. NaN of the patents have expired and for the last 2 patents, Trans Ova has stopped practicing the technologies claimed therein. The Company expects ~~the~~a trial to occur sometime in ~~early~~ 2023.

While ~~this patent infringement lawsuit~~Trans Ova is ~~pending,~~confident in its claims and defenses, litigation is uncertain and there is a possibility that the Trans Ova is found liable and ordered to pay damages for past infringement. In the interim, Trans Ova shall continue to ~~utilize~~operate its business otherwise unaffected by the ~~technology consistent with the determinations~~litigation. This litigation will remain an obligation of Trans Ova, which will be owned by Spring Bidco LLC upon consummation of the court proceedings. Nonetheless, these disputes remain subject to a number of uncertainties, including the outcome of district court and appellate proceedings, the possibility of further claims by XY, and the impact of these matters on Trans Ova's ability to utilize the technology. Trans Ova and the Company could elect to enter into a settlement agreementTransaction described in ~~order to avoid the further costs and uncertainties of litigation.~~Note 3.

In September 2020, the Company reached a final settlement with the Securities and Exchange Commission ("SEC") with respect to an investigation concerning the Company's disclosures regarding its MBP program in the first three quarters of 2017. Under the terms of the settlement, the Company, without admitting or denying the allegations of the SEC, consented to the entry of an administrative order requiring that the Company: (i) cease and desist from committing or causing any violations and future violations under Section 13(a) of the Securities Exchange Act of 1934, as amended, and Rules 13a-11 and 12b-20 promulgated thereunder; and (ii) pay a $2,500 civil money penalty to the ~~SEC.~~SEC (which was paid in September 2020).

In October 2020, several ~~purported~~ shareholder class action lawsuits were filed in the ~~U.S.~~United States District Court for the Northern District of California on behalf of certain purchasers of the Company's common stock. The complaints name as defendants the Company and certain of its current and former officers. The ~~plaintiff's~~plaintiffs' claims track the allegations in the SEC's administrative order described above but challenge disclosures about the MBP program through September 2020, i.e., the date of the SEC administrative order. The plaintiffs seek compensatory damages, interest, and an award of reasonable ~~attorney's~~attorneys' fees and costs. In April 2021, the court granted an order consolidating the claims and appointed a lead plaintiff and lead counsel in the case, captioned Abailla v. Precigen, Inc., F/K/A Intrexon Corp., et al. In May 2021, the lead plaintiff filed an amended complaint. The defendants moved to dismiss that complaint. In September 2021, the court issued an order mooting the defendants' motion to dismiss in light of the lead plaintiff's stated intent to file a second amended complaint in response to the motion to dismiss. On September 27, 2021, the lead plaintiff filed a second amended complaint. On May 31, 2022, the court granted the Company’s motion, dismissing the second amended complaint with leave to amend. On August 1, 2022, the lead plaintiff filed a third amended and restated complaint. The defendants intend to move to dismiss that complaint.

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

On July 10, 2020, the Company received a notice of arbitration from Harvest pursuant to the Collaboration Investment Opportunity Agreement dated March 13, 2015. In December 2020, the Company entered into an agreement with Harvest to resolve matters related to the parties' contractual and equity relationships and to settle all claims made in connection with the notice of arbitration noted above. Pursuant to the settlement agreement, the Company issued 2,117,264 shares of its common stock to Harvest valued at $18,103 in consideration of (i) the termination of the ECC agreements with Thrive Agrobiotics, Inc., Exotech Bio, Inc., and AD Skincare, Inc., which the Company had $6,993 of deferred revenue remaining related to these ECCs prior to the settlement agreement; (ii) the return of the Company's ownership interest in these Harvest start-up entities that had a total value of $326 prior to the settlement agreement; (iii) the commitment of Harvest (which is still ongoing) to take reasonable commercial efforts to transfer to the Company its membership interests in Intrexon Energy Partners II; and (iv) mutual irrevocable and unconditional releases of claims. The Company wrote off the investment balances and netted the deferred revenue balances associated with the eliminated service obligation against the consideration paid. Outstanding receivables from these Harvest start-up entities related to research and development services performed by the Company under the ECC agreements, which had been fully reserved in 2019, were also forgiven as part of the settlement agreement and written off by the Company. Following the settlement agreement, these Harvest start-up entities are no longer related parties.

The Company 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 its collaborators, which can occur as a result of operations under those collaborations, business or technological developments, or as the Company transitions away from, or terminates, certain strategic collaborations. The Company has had, and has, disagreements and disputes with certain collaborators and JV partners, including the IEP Investors and the IEPII Investors. While the Company believes it is entitled to payment for work performed per its collaborations and JVs, consistent with its policy for accounting for accounts receivable, in 2019, the Company has fully reserved the amount of any disputed accounts receivable that remained ~~outstanding as~~outstanding.

On December 29, 2021, the Company received a letter from a group of ~~September 30, 2021. These~~investors in each of Intrexon Energy Partners and Intrexon Energy Partners II, referring certain issues to arbitration pursuant to the arbitration provisions of the Amended and Restated Limited Liability Company Agreements of Intrexon Energy Partners and Intrexon Energy Partners II (the “Arbitration Matters”). In July 2022, the arbitration panel ruled on the Arbitration Matters, and adopted the Company’s proposed terms with respect to each of the Arbitration Matters and, therefore, the Company will acquire the membership interests of the investors for an aggregate amount of approximately $7,000 in cash. The Company paid the $7,000 on July 21, 2022.The accounting for the acquisition of the membership interests will be recorded in the third quarter of 2022 upon consummation of the transfer of the membership interests to Precigen. The Company expects to record a gain in conjunction with this settlement because deferred revenue under these arrangements, which the Company will control, exceed the settlement payment.

Such disagreements and disputes result in management

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distraction and may result in further litigation, arbitration, unfavorable settlements, or concessions by the Company, or adverse regulatory action, any of which could harm the Company's business or operations.

In the course of its business, the Company is involved in litigation or legal matters, including governmental investigations. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. The Company accrues liabilities for

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such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. As of ~~September~~June 30, ~~2021,~~2022, 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 Executive Chairman is also the Senior Managing Director and Chairman of Third Security and owns 100% of the equity interests of Third Security. The Company ~~has~~had an agreement with Third Security under which the Company ~~reimburses~~reimbursed Third Security for certain tax-related services performed by Third Security as requested by the Company. The Company also reimburses Third Security for certain out-of-pocket expenses incurred on the Company's behalf. The agreement with Third Security expired on December 31, 2021. As the Company evaluates its alternatives, it continues to utilize these services on a limited basis under the terms of the original agreement. The total expenses incurred by the Company under these arrangements were ~~$43 and $56~~$5 for the three months ended ~~September~~June 30, 2021, and ~~2020, respectively,~~$25 and ~~$89 and $132~~$46 for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

See also Note 14 regarding compensation arrangements between the Company and its Executive Chairman.

~~The~~Through November 2021, the Company also ~~subleases~~subleased certain administrative offices to Third Security. The significant terms of the lease ~~mirror~~mirrored the terms of the Company's lease with the landlord, and the Company recorded sublease income of ~~$20 and $18~~$21 for the three months ended ~~September~~June 30, 2021, and ~~2020, respectively, and $61 and $64~~$41 for the ~~nine~~six months ended ~~September~~June 30, ~~2021 and 2020, respectively.~~2021.

See Notes 1 3, and 13 regarding additional transactions with affiliates of Third Security.

~~Transactions with ECC Parties~~

Collaborators in which the Company holds more than a de minimis equity interest, including interests received as upfront or milestone payments through collaborations, are considered related parties. The Company held Series A Convertible Preferred Stock (the "Convertible Preferred Shares"), a convertible note, common shares of Castle Creek, and warrants to purchase shares of Castle Creek common stock previously acquired through collaborations and other transactions. As a result of the acquisition of Castle Creek by Castle Creek Pharmaceutical Holdings, Inc. ("Castle Creek Pharmaceutical") in December 2019, the Company received $1,280 in December 2019 for its shares of Castle Creek common stock and received a total of $3,311 in January 2020 for the Convertible Preferred Shares and the convertible note, including accrued interest thereon. Subsequent to the acquisition by Castle Creek Pharmaceutical, Castle Creek is no longer a related party.

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18. ~~Net Loss per Share~~

~~The following table presents the computation of basic and diluted net income (loss) per share:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Historical net loss per share:
Numerator:
Net loss from continuing operations $ (29,824) $ (27,536) $ (71,731) $ (64,091)
Net income (loss) from discontinued operations 60 (1,972) 4,599 (64,769)
Net loss $ (29,764) $ (29,508) $ (67,132) $ (128,860)
Denominator:
Weighted average shares outstanding, basic and diluted 199,179,963 165,527,024 197,254,438 163,318,375
Net loss per share:
Net loss from continuing operations per share, basic and diluted $ (0.15) $ (0.17) $ (0.36) $ (0.39)
Net income (loss) from discontinued operations per share, basic and diluted — (0.01) 0.02 (0.40)
Net loss per share, basic and diluted $ (0.15) $ (0.18) $ (0.34) $ (0.79)

The following potentially dilutive securities as of September 30, 2021 and 2020, have been excluded from the above computations of diluted weighted average shares outstanding for the three and nine months then ended as they would have been anti-dilutive:

September 30,
2021 2020
Convertible debt 11,732,440 17,843,715
Options 12,249,109 11,379,605
Restricted stock units 468,481 1,813,043
Warrants 121,888 133,264
Total 24,571,918 31,169,627

~~19.~~ Segments

The Company's CODM assesses the operating performance of and allocates resources for several operating segments using Segment Adjusted ~~EBITDA.~~EBITDA as a basis. Management believes this financial metric is a key indicator of operating results since it excludes noncash revenues and expenses that are not reflective of the underlying business performance of an individual enterprise. The Company defines Segment Adjusted EBITDA as net income (loss) before (i) interest expense, (ii) income tax expense or benefit, (iii) depreciation and amortization, (iv) stock-based compensation expense, (v) loss on settlement agreements where noncash consideration is paid, (vi) adjustments for accrued bonuses paid in equity awards, (vii) gain or loss on disposals of assets, (viii) loss on impairment of goodwill and other noncurrent assets, (ix) equity in net loss of affiliates, and (x) recognition of previously deferred revenue associated with upfront and milestone payments as well as cash outflows from capital expenditures and investments in affiliates, but includes proceeds from the sale of assets in the period sold. During the nine months ended September 30, 2021, the Company modified the definition of Segment Adjusted EBITDA to exclude the gain or loss on disposals of assets and include proceeds from the sale of assets in the period sold. Segment Adjusted EBITDA for the three and nine months ended September 30, 2020 was restated to reflect 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

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accordingly, these amounts are not required to be disclosed. The Company's segment presentation excludes amounts related to the ~~businesses included in the Transactions and the~~ operations of Trans Ova and MBP Titan which are reported as discontinued operations (Note 3).

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, the Company's reportable segments were (i) Biopharmaceuticals and (ii) ~~Exemplar, and (iii) Trans Ova.~~Exemplar. These identified reportable segments met the quantitative thresholds to be reported separately for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. See Note 2 for a description of ~~Biopharmaceuticals.~~the Biopharmaceuticals segment. See Note 1 for a description of the Exemplar ~~and Trans Ova.~~segment.

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Segment Adjusted EBITDA by reportable segment was as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Biopharmaceuticals	Biopharmaceuticals	$	(12,661)	$	(8,761)	$	(34,055)	$	(26,106)	Biopharmaceuticals	$	(11,249)	$	(12,540)	$	(22,869)	$	(21,394)
Exemplar	Exemplar	1,617		1,654		5,312		2,511		Exemplar	795		1,889		4,353		3,695
Trans Ova		(2,552)		(251)		15,881		7,417

Segment Adjusted EBITDA for reportable segments	Segment Adjusted EBITDA for reportable segments	$	(13,596)	$	(7,358)	$	(12,862)	$	(16,178)	Segment Adjusted EBITDA for reportable segments	$	(10,454)	$	(10,651)	$	(18,516)	$	(17,699)

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Segment Adjusted EBITDA for reportable segments	Segment Adjusted EBITDA for reportable segments	$	(13,596)	$	(7,358)	$	(12,862)	$	(16,178)	Segment Adjusted EBITDA for reportable segments	$	(10,454)	$	(10,651)	$	(18,516)	$	(17,699)

Remove cash paid for capital expenditures, net of proceeds from sale of assets, and cash paid for investments in affiliates	Remove cash paid for capital expenditures, net of proceeds from sale of assets, and cash paid for investments in affiliates	1,962		244		3,360		3,395		Remove cash paid for capital expenditures, net of proceeds from sale of assets, and cash paid for investments in affiliates	172		257		668		535
Add recognition of previously deferred revenue associated with upfront and milestone payments	Add recognition of previously deferred revenue associated with upfront and milestone payments	1,163		7,132		1,849		25,178		Add recognition of previously deferred revenue associated with upfront and milestone payments	—		379		1,446		686
Other expenses:	Other expenses:									Other expenses:
Interest expense	Interest expense	(4,799)		(4,646)		(14,005)		(13,830)		Interest expense	(2,063)		(4,633)		(4,101)		(9,137)
Depreciation and amortization	Depreciation and amortization	(3,399)		(3,786)		(10,442)		(11,364)		Depreciation and amortization	(1,835)		(2,071)		(3,753)		(4,145)
Loss on disposals of assets		(318)		(615)		(553)		(1,593)
Gain on disposals of assets										Gain on disposals of assets	—		7		—		7
Impairment losses	Impairment losses	—		(920)		(543)		(920)		Impairment losses	(638)		(543)		(1,120)		(543)

Stock-based compensation expense	Stock-based compensation expense	(2,490)		(4,628)		(11,462)		(15,249)		Stock-based compensation expense	(2,279)		(3,481)		(5,803)		(8,768)
Adjustment related to accrued bonuses paid in equity awards	Adjustment related to accrued bonuses paid in equity awards	—		—		—		2,833		Adjustment related to accrued bonuses paid in equity awards	—		—		1,698		—
Equity in net loss of affiliates	Equity in net loss of affiliates	—		(523)		(3)		(1,125)		Equity in net loss of affiliates	—		—		(1)		(3)
Other	Other	(5)		4		(19)		16		Other	(105)		(7)		(105)		(14)
Unallocated corporate costs	Unallocated corporate costs	(7,166)		(10,452)		(25,412)		(29,102)		Unallocated corporate costs	(8,914)		(10,052)		(18,974)		(18,246)
Eliminations	Eliminations	(1,237)		(2,038)		(1,812)		(6,282)		Eliminations	(32)		(204)		(1,543)		(575)
Consolidated net loss from continuing operations before income taxes	Consolidated net loss from continuing operations before income taxes	$	(29,885)	$	(27,586)	$	(71,904)	$	(64,221)	Consolidated net loss from continuing operations before income taxes	$	(26,148)	$	(30,999)	$	(50,104)	$	(57,902)

Revenues by reportable segment were as follows:


	Three Months Ended June 30, 2022
	Biopharmaceuticals		Exemplar		Total
Revenues from external customers	$	70	$	2,841	$	2,911
Intersegment revenues	—		—		—
Total segment revenues	$	70	$	2,841	$	2,911


	Three Months Ended June 30, 2021
	Biopharmaceuticals		Exemplar		Total
Revenues from external customers	$	416	$	3,399	$	3,815
Intersegment revenues	87		—		87
Total segment revenues	$	503	$	3,399	$	3,902

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~~Revenues by reportable segment were as follows:~~


	Six Months Ended June 30, 2022
	Biopharmaceuticals		Exemplar		Total
Revenues from external customers	$	154	$	8,270	$	8,424
Intersegment revenues	1,446		—		1,446
Total segment revenues	$	1,600	$	8,270	$	9,870


		Three Months Ended September 30, 2021									Six Months Ended June 30, 2021
		Biopharmaceuticals		Exemplar		Trans Ova		Total			Biopharmaceuticals		Exemplar		Total
Revenues from external customers	Revenues from external customers	$	129	$	3,204	$	18,228	$	21,561	Revenues from external customers	$	594	$	6,656	$	7,250
Intersegment revenues	Intersegment revenues	1,141		—		126		1,267		Intersegment revenues	328		—		328
Total segment revenues	Total segment revenues	$	1,270	$	3,204	$	18,354	$	22,828	Total segment revenues	$	922	$	6,656	$	7,578

Three Months Ended September 30, 2020
Biopharmaceuticals Exemplar Trans Ova Total
Revenues from external customers $ 5,381 $ 2,974 $ 15,228 $ 23,583
Intersegment revenues 1,919 — 55 1,974
Total segment revenues $ 7,300 $ 2,974 $ 15,283 $ 25,557

Nine Months Ended September 30, 2021
Biopharmaceuticals Exemplar Trans Ova Total
Revenues from external customers $ 723 $ 9,860 $ 69,069 $ 79,652
Intersegment revenues 1,469 — 324 1,793
Total segment revenues $ 2,192 $ 9,860 $ 69,393 $ 81,445

Nine Months Ended September 30, 2020
Biopharmaceuticals Exemplar Trans Ova Total
Revenues from external customers $ 20,703 $ 7,230 $ 55,858 $ 83,791
Intersegment revenues 5,521 — 254 5,775
Total segment revenues $ 26,224 $ 7,230 $ 56,112 $ 89,566

The table below reconciles total segment revenues from reportable segments to total consolidated revenues:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Total segment revenues from reportable segments	Total segment revenues from reportable segments	$	22,828	$	25,557	$	81,445	$	89,566	Total segment revenues from reportable segments	$	2,911	$	3,902	$	9,870	$	7,578
Other revenues		—		—		—		54

Elimination of intersegment revenues	Elimination of intersegment revenues	(1,267)		(1,974)		(1,793)		(5,775)		Elimination of intersegment revenues	—		(87)		(1,446)		(328)
Total consolidated revenues	Total consolidated revenues	$	21,561	$	23,583	$	79,652	$	83,845	Total consolidated revenues	$	2,911	$	3,815	$	8,424	$	7,250

For the three months ended June 30, 2022 and 2021, 64.9% and 58.0%, respectively, of total consolidated revenue was attributable to two and one customer, respectively, in the Exemplar segment. For the six months ended June 30, 2022 and 2021, 67.9% and 58.9%, respectively, of total consolidated revenue was attributable to one customer in the Exemplar segment.

As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had ~~$4,869~~$3,537 and ~~$5,908,~~$4,463, respectively, of long-lived assets in foreign countries. The Company recognized revenues derived in foreign countries totaling ~~$93~~$70 and ~~$118~~$103 for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$443~~$154 and ~~$481~~$202 for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

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

The following "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report on Form 10-Q, or Quarterly Report, and our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, or Annual Report.

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

Overview

We are a dedicated discovery and clinical-stage biopharmaceutical company advancing the next generation of gene and cell therapies with the overall goal of improving outcomes for patients with significant unmet medical needs. We are leveraging our proprietary technology platforms to develop product candidates designed to target urgent and intractable diseases in our core therapeutic areas of immuno-oncology, autoimmune disorders, and infectious diseases. We have developed an extensive pipeline of therapies across multiple indications within these core focus areas.

We believe that our array of technology platforms uniquely positions us among other biotechnology companies to advance precision medicine. Precision medicine is the practice of therapeutic product development that takes into account specific genetic variations within populations impacted by a disease to design targeted therapies to improve outcomes for a disease or patient population. Our proprietary and complementary technology platforms provide a strong foundation to realize the core promise of precision medicine by supporting our efforts to construct powerful gene programs to drive efficacy, deliver these programs through viral, non-viral, and microbe-based approaches to drive lower costs, and control gene expression to drive safety. Our therapeutic platforms, including UltraCAR-T, AdenoVerse immunotherapy, and ActoBiotics, are designed to allow us to precisely control the level and physiological location of gene expression and modify biological molecules to control the function and output of living cells to treat underlying disease conditions.

We are actively advancing our lead clinical programs, including: PRGN-3005 and PRGN-3006, which are built on our UltraCAR-T platform; and PRGN-2009 and PRGN-2012, which are based on our AdenoVerse immunotherapy ~~platform; and AG019, which is built on our ActoBiotics~~ platform. In addition, we have completed a Phase 11b/2a study of ~~INXN-4001, a non-viral triple-effector plasmid DNA,~~AG019, which is built on our ~~UltraVector~~ActoBiotics platform. We also have a robust pipeline of preclinical programs that we are pursuing in order to drive long-term value creation.

We have developed a proprietary electroporation device, UltraPorator, designed to further streamline and ensure the rapid and cost-effective manufacturing of UltraCAR-T therapies. ~~In October 2020, we announced that~~ UltraPorator has received U.S. Food and Drug Administration, or FDA, clearance for manufacturing UltraCAR-T cells in clinical trials, and insince November 2020, we ~~announced that we~~ have ~~begun~~been dosing patients with UltraCAR-T cells manufactured with UltraPorator in our PRGN-3005 and PRGN-3006 clinical trials.

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 believe we can more effectively allocate resources to programs that we believe show the most promise and advance such programs to clinical trials.

Our Healthcare Business

Our healthcare business focuses on human therapeutics and developing research models and services for healthcare research applications. Our Biopharmaceuticals segment includes our wholly owned subsidiaries PGEN Therapeutics, Inc., or PGEN Therapeutics, and Precigen ActoBio, Inc., or ActoBio, and our majority ownership interest in Triple-Gene LLC, doing business as Precigen Triple-Gene, or Triple-Gene, as well as royalty interests in therapeutics and therapeutic platforms from companies not controlled by us. Exemplar Genetics LLC, doing business as Precigen Exemplar, or Exemplar, is a wholly owned subsidiary which is focused on developing research models and services for healthcare research applications.

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Biopharmaceuticals

PGEN Therapeutics

PGEN Therapeutics 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

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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 expresses antigen-specific chimeric antigen receptor, or CAR, kill switch, and our proprietary membrane-bound interleukin-15, or mbIL15, genes in any genetically modified UltraCAR-T cell. Our decentralized and rapid proprietary manufacturing process allows us to manufacture UltraCAR-T cells overnight at a medical center's current good manufacturing practices facility, or cGMP, and reinfuse the patient the following day after gene transfer. This process improves upon current approaches to CAR-T manufacturing, which require extensive ex vivo expansion following viral vector transduction to achieve clinically relevant cell numbers that we believe can result in the exhaustion of CAR-T cells prior to their administration, limiting their potential for persistence in patients. We have developed a proprietary electroporation device, UltraPorator, designed to further streamline and ensure the rapid and cost-effective manufacturing of UltraCAR-T therapies. The UltraPorator system includes proprietary hardware and software solutions and potentially represents major advancements over current electroporation devices by significantly reducing the processing time and contamination risk. UltraPorator is intended to be a viable scale-up and commercialization solution for decentralized UltraCAR-T manufacturing. Our AdenoVerse immunotherapy platform utilizes a library of proprietary adenovectors for the efficient gene delivery of therapeutic effectors, immunomodulators, and vaccine antigens. We have established proprietary manufacturing cell lines and production methodologies from our AdenoVerse immunotherapy platform, which we believe are easily scalable for commercial supply. We believe that our proprietary gorilla adenovectors, part of the AdenoVerse technology, have superior performance characteristics as compared to current competition, including standard human adenovirus serotype 5, rare human adenovirus types and other non-human primate adenovirus types.

The most advanced programs within PGEN Therapeutics are as follows:

PRGN-3005 is a first-in-class, investigational autologous CAR-T therapy that utilizes our UltraCAR-T platform to simultaneously express a CAR targeting the unshed portion of the Mucin 16 antigen, mbIL15, and kill switch genes. PRGN-3005 is currently being evaluated in a Phase 1/1b clinical trial for the treatment of advanced, recurrent platinum-resistant ovarian ~~cancer,~~, fallopian tube, or primary peritoneal cancer. AIn January 2022, we announced the completion of enrollment in the dose escalation phase of both IP and IV arms without lymphodepletion in the ~~intraperitoneal (IP) arm of the PRGN-3005~~ongoing Phase 1 ~~trial is ongoing, and an expansion phase is planned~~clinical trial. We have initiated dosing at ~~the maximum tolerated dose, or MTD. A dose escalation phase~~Dose Level 3 with lymphodepletion prior to IV administration of ~~the intravenous (IV) arm of the PRGN-3005 trial is ongoing concurrently with the IP arm.~~PRGN-3005.

PRGN-3006 is a first-in-class, investigational autologous CAR-T therapy that utilizes our UltraCAR-T platform to express a CAR to target CD33 (Siglec-3), mbIL15 and akill switch ~~genes.~~gene. PRGN-3006 is currently being evaluated in a Phase 1/1b clinical trial for the treatment of relapsed or refractory, or r/r, acute myeloid leukemia, or AML, ~~higher-risk~~or high-risk myelodysplastic syndromes, or ~~MDS, and chronic myelomonocytic leukemia, or CMML. A~~MDS. In January 2022, we announced the completion of enrollment in the dose escalation phase ~~of each of~~in both the non-lymphodepletion and the lymphodepletion ~~arms~~cohorts of this Phase 1 ~~trial~~trial. The Phase 1b expansion arm is ~~ongoing concurrently. An expansion phase is planned at~~ongoing. In April 2022, we announced that PRGN-3006 was granted Fast Track designation in patients with r/r AML by the ~~MTD.~~ FDA. Previously PRGN-3006 was granted Orphan Drug ~~designation for the treatment of~~Designation in patients with AML by the FDA.

PRGN-3007 is a first-in-class, investigational autologous CAR-T therapy that utilizes the next generation UltraCAR-T platform to express a CAR to target ROR1, mbIL15, kill switch, and a novel mechanism for the intrinsic blockade of the programmed death 1, or PD-1, gene expression. PRGN-3007 has received FDA clearance to initiate a Phase 1/1b clinical trial for patients with advanced receptor tyrosine kinase-like orphan receptor 1-positive, or ROR1+, hematological (Arm 1) and solid tumors (Arm 2). The target patient population for Arm 1 includes relapsed or refractory CLL, relapsed or refractory MCL, relapsed or refractory B-ALL, and relapsed or refractory DLBCL. The target patient population for Arm 2 includes locally advanced unresectable or metastatic histologically confirmed TNBC. The study will enroll in two parts: an initial 3+3 dose escalation in each arm followed by a dose expansion at the maximum tolerated dose. Arm 1 and Arm 2 will enroll in parallel.

PRGN-2009 is a first-in-class, "off-the-shelf" investigational immunotherapy designed to activate the immune system to recognize and target human papillomavirus-positive, or HPV+, solid tumors. PRGN-2009 leverages our UltraVector and AdenoVerse platforms to optimize HPV type 16 and HPV type 18, antigen design for delivery via a proprietary gorilla adenovector with a large genetic payload capacity and the ability for repeat administrations. PRGN-2009 is in a Phase 1/2 clinical trial as a monotherapy or in combination with bintrafusp alfa, or M7824, an investigational bifunctional fusion protein, for patients with HPV-associated cancers in collaboration with the National Cancer Institute, or NCI, pursuant to a cooperative research and development arrangement, or CRADA.

PRGN-2012 is a first-in-class, investigational "off-the-shelf" AdenoVerse immunotherapy for the treatment of recurrent respiratory papillomatosis, or RRP. PRGN-2012 is an innovative therapeutic vaccine with optimized antigen design that uses our gorilla adenovector technology, part of our proprietary AdenoVerse platform, to elicit immune responses directed against cells infected with HPV type 6 and HPV type 11. PRGN-2012 is in a Phase 11/2 clinical trial for adult patients with RRP.

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PRGN-2012 is being developed in collaboration with the Center for Cancer Research at the NCI pursuant to a CRADA. PRGN-2012 ~~was~~has been granted Orphan Drug designation for treatment of RRP by the FDA.

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In addition to our clinical programs, PGEN Therapeutics has a robust pipeline of preclinical programs in our core therapeutic areas of immune-oncology, infectious diseases, and autoimmune disorders that we are pursuing in order to drive long-term value creation. Our pipeline includes a number of product candidates, including UltraCAR-T therapeutics for various cancers, and "off-the-shelf" AdenoVerse ~~immunotherapy for infectious disease, and a multifunctional~~ therapeutic ~~for solid tumors.~~platforms. We expect to continue development of various preclinical programs to identify product candidates for evaluation in clinical trials.

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 with the potential for superior efficacy and safety. 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.ActoBiotics work via genetically modified bacteria that deliver proteins and peptides at mucosal sites, rather than the insertion of one or more genes into a human cell by means of a virus or other delivery mechanism. By foregoing this insertion, ActoBiotics allow "gene therapy" without the need for cell transformation.

ActoBio's most advanced internal pipeline candidate, AG019, is a first-in-class disease modifying antigen-specific, investigational immunotherapy for the prevention, delay, or reversal of type 1 diabetes mellitus, or T1D. AG019 is an easy-to-take capsule formulation of ActoBiotics engineered to deliver the autoantigen human proinsulin, or hPINS, and the tolerance-enhancing cytokine human interleukin-10 to the mucosal lining of gastro-intestinal tissues in patients with T1D. ~~AG019 is currently in~~We have completed a Phase 1b/2a clinical trial of AG019 for the treatment of early-onset T1D. The Phase 1b portion of the study ~~evaluates~~evaluated the safety and tolerability of AG019 monotherapy administered as a single dose and repeated daily doses in adult and adolescent patients. The Phase 2a double-blind portion of the study ~~investigates~~investigated the safety and tolerability of AG019 in combination with teplizumab, or PRV-031. ~~Enrollment and dosing in the Phase 1b and Phase 2a portions of the study are complete.~~ The primary endpoint of assessing safety and tolerability in both the Phase 1b AG019 monotherapy and the Phase 2a AG019 combination ~~arms~~therapy has been met. AG019 was well-tolerated when administered to adults and adolescents either as monotherapy or in combination with teplizumab. A single 8-week treatment cycle of ~~the study was met. No dose-related adverse events~~oral AG019 as a monotherapy and in combination with teplizumab showed stabilization or ~~serious adverse events were reported in either portion~~increase of ~~this trial. Interim data presented showed an encouraging trend in~~ C-peptide levels a biomarker for T1D disease progression, at six months after AG019 monotherapy treatment initiation. AG019 monotherapy resulted in stabilization of glycated hemoglobin, or HbA1c, and insulin-dose adjusted HbA1c, or IDAA1c, levels, important indicators of long-term glycemic control in T1D patients, up to twelve months after treatment initiation. Furthermore, AG019 monotherapy induced antigen-specific tolerance in conjunction withduring the ~~reduction of disease-specific T cell responses six~~first 6 months post treatment ~~initiation. Interim data from the Phase 2a portion showed an encouraging trend~~initiation in C-peptide levels at six months after treatment initiation and stabilization of HbA1c and IDAA1c levels up to twelve months after treatment initiation. The combination of AG019 and teplizumab showed the induction of antigen-specific tolerance in conjunction with reduction of disease-specific T cell responses at six months post treatment initiation.recent-onset T1D.

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 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,~~VEGF-165. INXN-4001 is engineered to address multiple pathways of heart failure. Utilizing a single plasmid comprising all three genes, instead of each individual gene on separately delivered plasmids, INXN-4001 can control for delivery and ensure expression of the three genes in all transfected cells. A

We have completed a first-in-human, open label Phase 1 ~~trial~~study designed to evaluate the safety of retrograde coronary sinus infusion, or RCSI, of INXN-4001 in outpatient left ventricular assist device, or LVAD, ~~recipients has been completed. Six-month follow-up data demonstrated that the study~~recipients.The Phase 1 trial met the primary endpoints to evaluate safety and feasibility for INXN-4001.

Partnered Program

We have partnered with Castle Creek Biosciences, Inc., or Castle Creek, to advance product candidates D-Fi (debcoemagene autoficel), formerly designated FCX-007, for the treatment of recessive dystrophic epidermolysis bullosa, or RDEB, and FCX-013 for the treatment of localized scleroderma. In October 2020, Castle Creek announced the dosing of the first patient in the ongoing Phase 3 trial of D-Fi and the dosing of the first patient in the ongoing Phase 1/2 trial of FCX-013. The FDA has granted Orphan Drug designation to D-Fi for the treatment of Dystrophic Epidermolysis Bullosa, which includes RDEB. In addition, D-Fi has been granted Rare Pediatric Disease designation, Fast Track designation, and Regenerative Medicine Advanced Therapy designation by the FDA for treatment of RDEB. The FDA has granted Orphan Drug designation to FCX-013 for the treatment of localized scleroderma. In addition, FCX-013 has been granted Rare Pediatric Disease designation

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~~and Fast Track designation for the treatment of moderate to severe localized scleroderma.~~ Pursuant to ~~the~~a previous collaboration, we licensed our technology platforms to Castle Creek 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 Castle Creek 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. Castle Creek retains a license to continue to develop and commercialize the Retained Products within the field of use for so long as

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Castle Creek 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.~~

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.

~~Our Non-Healthcare Business~~

~~At September 30, 2021, our only non-healthcare business is our established bovine genetics company, Trans Ova Genetics, L.C., or Trans Ova.~~

~~Trans Ova~~

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 are evaluating strategic alternatives to determine 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 for our shareholders, including a potential sale of the business, the development of collaborations with third parties, and other strategic opportunities.

COVID-19 Impact

COVID-19 has had and continues to have an extensive impact on the global health and economic environments.Furthermore, there is uncertainty regarding the duration and severity of the ongoing pandemic, and we could experience delays of other pandemic-related events that may adversely impact our clinical as well as preclinical pipeline candidates in the future.

We are also closely monitoring the impact of COVID-19 on all aspects of our businesses. 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 cannot be reasonably estimated at this time.

The health and safety of our employees is of the utmost importance. We have implemented safety measures in our facilities for the well-being of our employees and visitors. These measures have permitted us to continue to advance our programs, with the ultimate goal of benefiting patients.

Commencing in the second half of March 2020, our healthcare business began to experience delays to certain of our clinical trials as a result of COVID-19. For example, starting in March 2020, we 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 recruitment in the study resumed. 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 that was instituted in light of the COVID-19 pandemic. Recruitment resumed in the PRGN-3005 trial in May 2020. Although these suspensions did not result in significant overall delay, there is uncertainty regarding the duration and severity of the ongoing pandemic, and we could experience further delays of other pandemic-related events that may adversely impact our clinical as well as preclinical pipeline candidates in the future. 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.

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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.

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 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.

Discontinued Operations

Historically, we developed technology platforms for application across a variety of diverse end markets, including health, food, energy, and the environment. In January 2020, we announced that we were increasing our focus on our healthcare opportunities, which reflected our most advanced platforms, and in connection therewith, we divested a number of our non-healthcare assets ~~(referred to collectively as the Transactions)~~ and changed our name to Precigen, Inc.

In 2020, as a result of market uncertainty driven by the COVID-19 pandemic and the state of the energy sector raising significant challenges for the strategic alternatives pursued by MBP Titan, LLC, or MBP Titan, our methane bioconversion business, we suspended MBP Titan's operations, preserved certain of MBP Titan's intellectual property, terminated all of its personnel, and undertook steps to dispose of its other assets and obligations. The wind down of MBP Titan's activities was substantially complete by December 31, 2020, with the final disposition of certain property and equipment and the facility operating lease occurring in January 2021. This discontinuation of operations represented the continuation of a strategic shift that we commenced in early 2020 to becoming a primarily healthcare company advancing technologies and products that address complex healthcare challenges. After the wind down of MBP Titan, certain assets and contractual obligations which were originally related to MBP Titan continue to be managed at the Precigen corporate level. These remaining assets and contractual obligations include our equity interests in and collaboration agreements with Intrexon Energy Partners, LLC, or Intrexon Energy Partners, and Intrexon Energy Partners II, LLC, or Intrexon Energy Partners II, including the associated deferred revenue remaining under each collaboration agreement, as well as the associated intellectual property.

As disclosed in "Notes to Condensed Consolidated Financial Statements (Unaudited) - Note 1", on July 1, 2022, we entered into an agreement to sell 100% of the outstanding membership interests of Trans Ova (the "Trans Ova Sale"), our established bovine genetics company, which is expected to close in Q3 2022. The consummation of the Trans Ova Sale is subject to customary closing conditions, including: (i) the expiration of the waiting period applicable to the Purchase Agreement under the HSR act, as amended, (ii) the absence of any law or governmental order prohibiting the Trans Ova Sale, (iii) the absence of any material adverse effect on the business, assets, results of operation of Trans Ova and its subsidiaries since the signing of the Purchase Agreement, and (iv) the accuracy of the representations and warranties of each party (subject to materiality qualifiers) in the Purchase Agreement and the compliance by each party with its covenants in all material respects. The consummation of the Trans Ova Sale is not subject to any financing contingency.

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See also "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 3" appearing elsewhere in this Quarterly Report for additional discussion of our discontinued operations.

See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 4" appearing elsewhere in this Quarterly Report for a discussion of Intrexon Energy Partners and Intrexon Energy Partners II.

Segments

As of ~~September~~June 30, ~~2021,~~2022, our reportable segments were (i) Biopharmaceuticals and (ii) ~~Exemplar, and (iii) Trans Ova.~~Exemplar. These identified reportable segments met the quantitative thresholds to be reported separately for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The Company's segment presentation excludes amounts related to the operations of Trans Ova and MBP Titan which are reported as discontinued operations.

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, corporate communication, and investor relations functions. Corporate expenses exclude interest expense, depreciation and amortization, gain or loss on disposals of assets, stock-based compensation expense, loss on settlement agreement, and equity in net loss of affiliates. See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note ~~19"~~18" 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. Our historical collaboration and licensing revenues were generated under a business model from which we have gradually transitioned, and we do not expect to expend significant resources servicing our historical collaborations in the future. We may enter into strategic transactions for individual platforms or programs in the future from which we may generate new collaboration and licensing revenues. We continue to generate product and service revenues through our ~~Trans Ova and~~ Exemplar ~~subsidiaries,~~subsidiary, and in the ~~nine~~six months ended ~~September~~June 30, ~~2021, both of these subsidiaries~~2022, generated positive Segment Adjusted EBITDA. Products currently in our clinical pipeline will require regulatory approval and/or commercial scale-up before they may commence significant product sales and operating profits.

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As we continue our efforts to focus our business and generate additional capital, we may be willing to enter into transactions involving one or more of our operating segments and reporting units for which we have goodwill and intangible assets. These efforts could result in us identifying impairment indicators or recording impairment charges in future periods. In addition, market changes and changes in judgements, assumptions, and estimates that we have made in assessing the fair value of goodwill could cause us to consider some portion or all of certain assets to become impaired.

Sources of revenue

Historically, we have derived our collaboration and licensing revenues through 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.

As we continue to shift our focus on our healthcare business, we have and may continue to mutually terminate collaboration agreements or repurchase rights to the exclusive fields from collaborators, relieving us of any further performance obligations under the agreement. Upon such circumstances or when we determine no further performance obligations are required of us under an agreement, we may recognize any remaining deferred revenue as either collaboration revenue or as a reduction of operating expense, depending on the circumstances. See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 5" appearing elsewhere in the Quarterly Report for a discussion of changes to our significant collaborations.

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We generate product and service revenues primarily through sales of products or services that are created from technologies developed or owned by us. Our primary current revenues arise from Trans Ova and include sales of advanced reproductive technologies, including our bovine embryo transfer and IVF 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. Exemplar ~~also~~ generates product and service revenues through the development and sale of genetically engineered miniature swine models. We recognize revenue when control of the promised product is transferred to the customer or when the promised service is completed.

In future periods, in connection with our focus on healthcare, our revenues will primarily depend on our ability to advance and create our own programs and the extent to which we bring products enabled by our technologies to market. Other than for collaboration revenues recognized upon cancellation or modification of an existing collaboration or for revenues generated pursuant to future strategic transactions for any of our existing platforms or programs, we expect our collaboration revenues will continue to decrease in the near term. Our revenues will also depend upon our ability to maintain or improve the volume and pricing of ~~Trans Ova's and~~ Exemplar's current product and service offerings and to develop and scale up production of new offerings from the various technologies of our subsidiaries. As we focus on our healthcare business, we anticipate that our expenses will increase substantially if, and as, we continue to advance the preclinical and clinical development of our existing product candidates and our research programs. We expect a significant period of time could pass before commercialization of our various product candidates or before the achievement of contractual milestones and the realization of royalties on product candidates commercialized under our collaborations 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 Trans Ova's embryo transfer and IVF 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.

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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 and acquiring, developing, and manufacturing preclinical study and clinical trial materials;

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

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

•facility-related expenses, which include direct depreciation costs and unallocated expenses for rent and maintenance of facilities and other operating costs.

Our research and development expenses are generally incurred by our reportable segments and primarily relate to either costs incurred to expand or otherwise improve our technologies or the costs incurred to develop our own products and services. Our Biopharmaceuticals segment is progressing preclinical and clinical programs that target urgent and intractable diseases in our core therapeutic areas of immuno-oncology, autoimmune disorders, and infectious diseases, including PRGN-3005, PRGN-3006, PRGN-2009, PRGN-2012, ~~AG019,~~ and ~~INXN-4001.~~AG019. Exemplar's research and development activities relate to new and improved pig research models. ~~Trans Ova's research and development activities support new and improved product and service offerings for its customers.~~ The following table summarizes our research and development expenses incurred by reportable segment and reconciles those expenses to research and development expenses on the condensed consolidated statements of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021.

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Biopharmaceuticals $ 12,355 $ 9,490 $ 35,539 $ 29,028
Exemplar 79 146 216 497
Trans Ova 488 538 1,375 1,632
Total research and development expenses from reportable segments 12,922 10,174 37,130 31,157
Other research and development expenses — — — (173)
Eliminations (2) (2) (8) (11)
Total consolidated research and development expenses $ 12,920 $ 10,172 $ 37,122 $ 30,973

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	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Biopharmaceuticals	$	11,879	$	13,121	$	23,597	$	23,184
Exemplar	75		63		158		137

Total research and development expenses from reportable segments	11,954		13,184		23,755		23,321

Eliminations	—		—		—		—
Total consolidated research and development expenses	$	11,954	$	13,184	$	23,755	$	23,321

The amount of research and development expenses may be impacted by, among other things, the number and nature of our own proprietary programs, and the number and size of programs we may support on behalf of collaboration agreements. We expect that our research and development expenses will increase as we continue to develop our own proprietary programs, including progression of these programs into preclinical and clinical stages. We believe these increases will likely include increased costs paid to consultants and contract research organizations and increased costs related to laboratory supplies.

Research and development expenses may also increase as a result of in-licensing of technologies or ongoing research and development operations that we might assume through mergers and acquisitions.

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, information technology, legal, and corporate

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communications functions. Other significant SG&A expenses include rent and utilities, insurance, accounting, and legal services (including the cost of settling any claims and lawsuits), and expenses associated with obtaining and maintaining our intellectual property.

SG&A expenses may fluctuate in the future depending on the scaling of our corporate functions required to support our corporate initiatives and the outcomes of legal claims and assessments against us.

Other income (expense), net

Interest expense is expected to increase in future periods due to the noncash amortization of the long-term debt discount and debt issuance costs related to the 3.50% convertible senior notes due 2023 issued in July 2018.

~~Interest~~ income consists of interest earned on our cash and cash equivalents and short-term and long-term investments and may fluctuate based on amounts invested and current interest rates.

Interest expense decreased in the current period, and is expected to decrease in future periods upon the adoption of a new accounting standard effective January 1, 2022, which simplified the accounting for the Convertible Notes. See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 2" appearing elsewhere in this Quarterly Report for further discussion.

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 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. We previously accounted for our investments in start-up entities backed by the Harvest Intrexon Enterprise Fund I, LP, or Harvest, using the equity method of accounting. In December 2020, we entered into an agreement with Harvest to resolve matters related to the parties' contractual and equity relationships and our remaining equity interests in start-up entities backed by Harvest were terminated.

Segment performance

We use Segment Adjusted EBITDA as our primary measure of segment performance. We define Segment Adjusted EBITDA as net income (loss) before (i) interest expense, (ii) income tax expense or benefit, (iii) depreciation and amortization, (iv) stock-based compensation expense, (v) loss on settlement agreements where noncash consideration is paid, (vi) adjustments for accrued bonuses paid in equity awards, (vii) gain or loss on disposals of assets, (viii) loss on impairment of goodwill and other noncurrent assets, (ix) equity in net loss of affiliates, and (x) recognition of previously deferred revenue associated with upfront and milestone payments as well as cash outflows from capital expenditures and investments in affiliates, but includes proceeds from the sale of assets in the period sold. Corporate expenses are not allocated to the segments and are managed at a

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consolidated level. See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note ~~19"~~18" appearing elsewhere in this Quarterly Report for further discussion of Segment Adjusted EBITDA.

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Results of operations

Comparison of the three months ended ~~September~~June 30, ~~2021~~2022 and the three months ended ~~September~~June 30, ~~2020~~2021

The following table summarizes our results of operations for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, together with the changes in those items in dollars and as a percentage:


		Three Months Ended September 30,				Dollar Change		Percent Change			Three Months Ended June 30,				Dollar Change		Percent Change
		2021		2020							2022		2021
		(In thousands)									(In thousands)
Revenues	Revenues									Revenues
Collaboration and licensing revenues ~~(1)~~	Collaboration and licensing revenues ~~(1)~~	$	22	$	5,223	$	(5,201)	(99.6)	%	Collaboration and licensing revenues ~~(1)~~	$	—	$	301	$	(301)	(100.0)	%
Product revenues	Product revenues	7,297		6,896		401		5.8	%	Product revenues	621		694		(73)		(10.5)	%
Service revenues	Service revenues	14,117		11,288		2,829		25.1	%	Service revenues	2,213		2,679		(466)		(17.4)	%
Other revenues	Other revenues	125		176		(51)		(29.0)	%	Other revenues	77		141		(64)		(45.4)	%
Total revenues	Total revenues	21,561		23,583		(2,022)		(8.6)	%	Total revenues	2,911		3,815		(904)		(23.7)	%
Operating expenses	Operating expenses									Operating expenses
Cost of products	Cost of products	7,492		7,296		196		2.7	%	Cost of products	645		436		209		47.9	%
Cost of services	Cost of services	7,958		5,891		2,067		35.1	%	Cost of services	1,166		914		252		27.6	%
Research and development	Research and development	12,920		10,172		2,748		27.0	%	Research and development	11,954		13,184		(1,230)		(9.3)	%
Selling, general and administrative	Selling, general and administrative	18,660		22,310		(3,650)		(16.4)	%	Selling, general and administrative	12,670		14,954		(2,284)		(15.3)	%

Impairment of other noncurrent assets	Impairment of other noncurrent assets	—		920		(920)		(100.0)	%	Impairment of other noncurrent assets	638		543		95		17.5	%
Total operating expenses	Total operating expenses	47,030		46,589		441		0.9	%	Total operating expenses	27,073		30,031		(2,958)		(9.8)	%
Operating loss	Operating loss	(25,469)		(23,006)		(2,463)		10.7	%	Operating loss	(24,162)		(26,216)		2,054		(7.8)	%
Total other expense, net	Total other expense, net	(4,416)		(4,057)		(359)		8.8	%	Total other expense, net	(1,986)		(4,783)		2,797		(58.5)	%
Equity in loss of affiliates		—		(523)		523		(100.0)	%

Loss from continuing operations before income taxes	Loss from continuing operations before income taxes	(29,885)		(27,586)		(2,299)		8.3	%	Loss from continuing operations before income taxes	(26,148)		(30,999)		4,851		(15.6)	%
Income tax benefit	Income tax benefit	61		50		11		22.0	%	Income tax benefit	89		60		29		48.3	%
Loss from continuing operations	Loss from continuing operations	(29,824)		(27,536)		(2,288)		8.3	%	Loss from continuing operations	(26,059)		(30,939)		4,880		(15.8)	%
Income (loss) from discontinued operations, net of income taxes (2)		60		(1,972)		2,032		103.0	%
Income from discontinued operations, net of income taxes (1)										Income from discontinued operations, net of income taxes (1)	8,424		10,889		(2,465)		(22.6)	%

Net loss	Net loss	$	(29,764)	$	(29,508)	$	(256)	0.9	%	Net loss	$	(17,635)	$	(20,050)	$	2,415	(12.0)	%

(1)~~Includes $0 and $2,823 from related parties for the three months ended September 30, 2021 and 2020, respectively.~~

~~(2)~~See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 3" appearing elsewhere in this Quarterly Report.

~~Collaboration~~Product revenues and ~~licensing revenues~~gross margin

~~Collaboration and licensing~~Product revenues decreased ~~$5.2~~$0.1 million, or ~~100%~~11%, from the three months ended ~~September~~June 30, ~~2020~~2021. The decrease in product revenues was primarily due to ~~accelerated recognition of previously deferred revenue upon the mutual termination of a collaboration with Oragenics, Inc., or Oragenics, in July 2020~~product mix and ~~a decrease in the recognition of previously deferred revenue~~lower customer demand. Gross margin on products declined in the current period as a result of the decreased revenues and an increase in salaries, benefits, and other personnel costs.

Service revenues and gross margin

Service revenues decreased $0.5 million, or 17%, from the three months ended June 30, 2021. The decrease in service revenues was primarily resulting from ~~fewer~~a lower demand from existing customers. Gross margin on services ~~being performed pursuant~~declined in the current period as a result of decreased revenues and an increase in salaries, benefits, other personnel costs.

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Research and development expenses

Research and development expenses decreased $1.2 million, or 9%, from the three months ended June 30, 2021. Contract research organization costs and lab supplies decreased $1.9 million due to timing differences, the completion of our 1b/2a clinical trial of AG019 in the fourth quarter of the prior year, as well as a continued prioritization of clinical product candidates with less expense incurred related to preclinical research programs for the comparable period. This decrease was partially offset with an increase in salaries, benefits, and other personnel costs of $0.7 million primarily due to an increase in the hiring of employees to support the growth in our operations.

Selling, general and administrative expenses

SG&A expenses decreased $2.3 million, or 15%, from the three months ended June 30, 2021. Salaries, benefits, and other personnel costs decreased $1.5 million primarily due to reduced stock compensation in 2022 and a reduction in salaries, benefits and other personnel costs due to reduced head count. Professional fees decreased $0.4 million, primarily due to decreased legal fees associated with certain matters.

Total other expense, net

Total other expense, net, is comprised primarily of interest expense associated with our Convertible Notes issued July 2018. The current period decrease is primarily due to the adoption of a new accounting standard effective January 1, 2022 noted above, which simplified the accounting for the Convertible Notes and reduced non-cash interest expense.

Segment performance

The following table summarizes Segment Adjusted EBITDA, which is our primary measure of segment performance, for the three months ended June 30, 2022 and 2021, for each of our reportable segments as well as unallocated corporate costs.


	Three Months Ended June 30,				Dollar Change		Percent Change
	2022		2021
	(In thousands)
Segment Adjusted EBITDA:
Biopharmaceuticals	$	(11,249)	$	(12,540)	$	1,291	10.3	%
Exemplar	795		1,889		(1,094)		(57.9)	%

Unallocated corporate costs	(8,914)		(10,052)		1,138		(11.3)	%

For a reconciliation of Segment Adjusted EBITDA to net loss from continuing operations before income taxes, see "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 18" appearing elsewhere in this Quarterly Report.

The following table summarizes revenues from external customers for the three months ended June 30, 2022 and 2021, for each of our reportable segments.


	Three Months Ended June 30,				Dollar Change		Percent Change
	2022		2021
	(In thousands)
Biopharmaceuticals	$	70	$	416	$	(346)	(83.2)	%
Exemplar	2,841		3,399		(558)		(16.4)	%

Biopharmaceuticals

Segment Adjusted EBITDA improved as we had decreased costs associated with the advancement of our clinical and preclinical programs.

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Exemplar

Revenues for Exemplar decreased due to a ~~March 2020 termination agreement~~decrease in services performed resulting from a lower demand from existing customers. The decline in Segment Adjusted EBITDA was primarily due to the decreased revenues and increased personnel costs.

Unallocated Corporate Costs

Unallocated corporate costs decreased primarily due to decreased professional fees including legal fees associated with ~~Castle Creek.~~certain matters and reduced head count.

Comparison of the six months ended June 30, 2022 and the six months ended June 30, 2021

The following table summarizes our results of operations for the six months ended June 30, 2022 and 2021, together with the changes in those items in dollars and as a percentage:


	Six Months Ended June 30,				Dollar Change		Percent Change
	2022		2021
	(In thousands)
Revenues
Collaboration and licensing revenues	$	—	$	367	$	(367)	(100.0)	%
Product revenues	1,113		1,306		(193)		(14.8)	%
Service revenues	7,146		5,303		1,843		34.8	%
Other revenues	165		274		(109)		(39.8)	%
Total revenues	8,424		7,250		1,174		16.2	%
Operating expenses
Cost of products	1,122		824		298		36.2	%
Cost of services	2,383		1,888		495		26.2	%
Research and development	23,755		23,321		434		1.9	%
Selling, general and administrative	26,359		29,220		(2,861)		(9.8)	%
Impairment of goodwill	482		—		482		N/A
Impairment of other noncurrent assets	638		543		95		17.5	%
Total operating expenses	54,739		55,796		(1,057)		(1.9)	%
Operating loss	(46,315)		(48,546)		2,231		(4.6)	%
Total other expense, net	(3,788)		(9,353)		5,565		(59.5)	%
Equity in net loss of affiliates	(1)		(3)		2		(66.7)	%
Loss from continuing operations before income taxes	(50,104)		(57,902)		7,798		(13.5)	%
Income tax benefit	147		112		35		31.3	%
Loss from continuing operations	(49,957)		(57,790)		7,833		(13.6)	%
Income from discontinued operations, net of income taxes (1)	13,071		20,422		(7,351)		(36.0)	%


Net loss	$	(36,886)	$	(37,368)	$	482	(1.3)	%

(1)See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 3" appearing elsewhere in this Quarterly Report.

Product revenues and gross margin

Product revenues ~~were comparable to~~decreased $0.2 million, or 15%, from the ~~three~~six months ended ~~September~~June 30, ~~2020 as expected.~~2021. The decrease in product revenues was primarily due to product mix and lower customer demand. Gross margin on products ~~improved~~declined in the current period as a result of ~~increased focus on selling higher margin products,~~the decreased revenues and ~~operational efficiencies that have been gained through reductions~~an increase in ~~workforce~~salaries, benefits, and ~~improved inventory management.~~other personnel costs.

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Service revenues and gross margin

Service revenues increased ~~$2.8~~$1.8 million, or ~~25%~~35%, over the ~~three~~six months ended ~~September~~June 30, ~~2020. Trans Ova's~~2021. The increase in service revenues ~~improved~~was primarily due to an increase in services performed as a result of higher customer demand as the beef and dairy industries have been stronger in the current year and a change in pricing structure with certain customers. Additionally, Exemplar's service revenues improved in the current period due to an increase in services performed resulting from a higher demand from existing and new customers as well as a combination of price increases and a change in the pricing structure with certain customers. Gross margin on services ~~declined in~~remained comparable to the ~~current period~~prior year as ~~a result of~~increased revenues were offset by increased costs for supplies, drugs, and ~~drugs.~~personnel costs.

Research and development expenses

Research and development expenses increased ~~$2.7~~$0.4 million, or ~~27%~~2%, over the ~~three~~six months ended ~~September~~June 30, ~~2020. Contract~~2021. Salaries, benefits, and other personnel costs increased $1.2 million due to an increase in the hiring of employees to support the growth in the Company's development activities. This increase was partially offset with a decrease of contract research organization costs and lab supplies ~~increased $2.2~~of $0.9 million, ~~with~~primarily due to timing differences, the ~~advancement~~completion of our 1b/2a clinical trial of AG019 in the fourth quarter of the prior year, and as well as a continued prioritization of clinical product candidates with less expense incurred related preclinical ~~programs.~~research programs for the comparable period.

Selling, general and administrative expenses

SG&A expenses decreased ~~$3.7~~$2.9 million, or ~~16%~~10%, from the ~~three~~six months ended ~~September~~June 30, ~~2020.~~2021. Salaries, benefits, and other personnel costs decreased ~~$2.2~~$3.5 million primarily due to ~~(i) a reduced headcount as we scaled down our corporate functions to support our more streamlined organization and (ii)~~ reduced stock compensation ~~for previously granted awards that became fully vested~~ in ~~2021. There was a reduction of $2.5 million for the nonrecurring settlement with the Securities~~2022 and ~~Exchange Commission, or SEC, in the prior period.~~reduced head count. This decrease was partially offset bywith an increase in legal and professional fees of ~~$0.7~~$1.1 million, primarily due to increased consulting fees and legal fees associated with certain ~~litigation~~ matters.

Total other expense, net

Segment performance

The following table summarizes Segment Adjusted EBITDA, which is our primary measure of segment performance, for the ~~three~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, for each of our reportable segments as well as unallocated corporate costs.


		Three Months Ended September 30,				Dollar Change		Percent Change			Six Months Ended June 30,				Dollar Change		Percent Change
		2021		2020							2022		2021
		(In thousands)									(In thousands)
Segment Adjusted EBITDA:	Segment Adjusted EBITDA:									Segment Adjusted EBITDA:
Biopharmaceuticals	Biopharmaceuticals	$	(12,661)	$	(8,761)	$	(3,900)	(44.5)	%	Biopharmaceuticals	$	(22,869)	$	(21,394)	$	(1,475)	(6.9)	%
Exemplar	Exemplar	1,617		1,654		(37)		(2.2)	%	Exemplar	4,353		3,695		658		17.8	%
Trans Ova		(2,552)		(251)		(2,301)		<(200)%

Unallocated corporate costs	Unallocated corporate costs	(7,166)		(10,452)		3,286		(31.4)	%	Unallocated corporate costs	(18,974)		(18,246)		(728)		4.0	%

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The following table summarizes revenues from external customers for the ~~three~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, for each of our reportable segments.


		Three Months Ended September 30,				Dollar Change		Percent Change			Six Months Ended June 30,				Dollar Change		Percent Change
		2021		2020							2022		2021
		(In thousands)									(In thousands)
Biopharmaceuticals	Biopharmaceuticals	$	129	$	5,381	$	(5,252)	(97.6)	%	Biopharmaceuticals	$	154	$	594	$	(440)	(74.1)	%
Exemplar	Exemplar	3,204		2,974		230		7.7	%	Exemplar	8,270		6,656		1,614		24.2	%
Trans Ova		18,228		15,228		3,000		19.7	%

Biopharmaceuticals

The decrease in revenues for Biopharmaceuticals was primarily due to accelerated recognition of previously deferred revenue upon the mutual termination of a collaboration with Oragenics in July 2020 and due to a decrease in the recognition of

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~~previously deferred revenue in the current period resulting from fewer services being performed pursuant to a termination agreement with Castle Creek.~~ Segment Adjusted EBITDA declined as we had increased costs associated with the advancement of our clinical and preclinical programs.

Exemplar

Revenues for Exemplar increased due to an increase in services performed resulting from a higher demand from existing and new customers. ~~Segment Adjusted EBITDA was comparable period over period as expected.~~

~~Trans Ova~~

Revenues for Trans Ova increased primarily due to (i) higher customer demand for pregnant cows, (ii) more procedures performed as a result of stronger beef and dairy industries in the current year, and (iii) a change in the pricing structure with certain customers. Segment Adjusted EBITDA declined due to (i) increased costs for supplies and drugs, (ii) increased costs for certain legal matters, and (iii) increased provision for credit losses driven by increased sales.

~~Unallocated Corporate Costs~~

~~Unallocated corporate costs decreased primarily due to decreased legal fees associated with certain litigation matters, including our settlement with the SEC in the prior period.~~

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~~Comparison of the nine months ended September 30, 2021 and the nine months ended September 30, 2020~~

~~The following table summarizes our results of operations for the nine months ended September 30, 2021 and 2020, together with the changes in those items in dollars and as a percentage:~~

Nine Months Ended
September 30, Dollar
Change Percent
Change
2021 2020
(In thousands)
Revenues
Collaboration and licensing revenues (1) $ 389 $ 20,259 $ (19,870) (98.1) %
Product revenues 22,013 20,397 1,616 7.9 %
Service revenues 56,851 42,615 14,236 33.4 %
Other revenues 399 574 (175) (30.5) %
Total revenues 79,652 83,845 (4,193) (5.0) %
Operating expenses
Cost of products 19,201 21,526 (2,325) (10.8) %
Cost of services 24,258 20,197 4,061 20.1 %
Research and development 37,122 30,973 6,149 19.9 %
Selling, general and administrative 57,359 61,665 (4,306) (7.0) %
Impairment of other noncurrent assets 543 920 (377) (41.0) %
Total operating expenses 138,483 135,281 3,202 2.4 %
Operating loss (58,831) (51,436) (7,395) 14.4 %
Total other expense, net (13,070) (11,660) (1,410) 12.1 %
Equity in loss of affiliates (3) (1,125) 1,122 (99.7) %
Loss from continuing operations before income taxes (71,904) (64,221) (7,683) 12.0 %
Income tax benefit 173 130 43 33.1 %
Loss from continuing operations (71,731) (64,091) (7,640) 11.9 %
Income (loss) from discontinued operations, net of income taxes (2) 4,599 (64,769) 69,368 107.1 %
Net loss $ (67,132) $ (128,860) $ 61,728 (47.9) %

~~(1)Includes $0 and $3,053 from related parties for the nine months ended September 30, 2021 and 2020, respectively.~~

~~(2)See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 3" appearing elsewhere in this Quarterly Report.~~

~~Collaboration and licensing revenues~~

Collaboration and licensing revenues decreased $19.9 million, or 98%, from the nine months ended September 30, 2020 primarily due to the accelerated recognition of previously deferred revenue in the prior period upon the mutual terminations of collaborations with Castle Creek and Oragenics in 2020.

~~Product revenues and gross margin~~

Product revenues increased $1.6 million, or 8%, over the nine months ended September 30, 2020. The increase in product revenue was primarily due to higher customer demand for animals as a result of stronger beef and dairy industries in the current year. Gross margin on products improved in the current period as a result of the increased revenues, increased focus on selling higher margin products, and operational efficiencies that have been gained through reductions in workforce and improved inventory management.

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~~Service revenues and gross margin~~

Service revenues increased $14.2 million, or 33%, over the nine months ended September 30, 2020. Trans Ova's revenues and gross margins thereon improved primarily due to an increase in services performed as a result of higher customer demand as the beef and dairy industries have been stronger in the current year and a change in pricing structure with certain customers. Additionally, Exemplar's service revenues and gross margins thereon improved in the current period due to an increase in services performed resulting from a higher demand from existing and new customers as well as a combination of price increases and a change in pricing structure with certain customers.

~~Research and development expenses~~

Research and development expenses increased $6.1 million, or 20%, over the nine months ended September 30, 2020. Contract research organization costs and lab supplies increased $5.9 million with the advancement of our clinical and preclinical programs.

~~Selling, general and administrative expenses~~

SG&A expenses decreased $4.3 million, or 7%, from the nine months ended September 30, 2020. Salaries, benefits, and other personnel costs decreased $3.8 million in 2021 primarily due to (i) a reduced headcount as we scaled down our corporate functions to support our more streamlined organization and (ii) reduced stock compensation costs for previously granted awards that became fully vested in early 2021. There was a reduction of $2.5 million for the nonrecurring settlement with the SEC in the prior period. This was partially offset by an increase in professional fees of $1.5 million, primarily due to an increase in legal fees associated with certain litigation matters.

~~Segment performance~~

The following table summarizes Segment Adjusted EBITDA, which is our primary measure of segment performance, for the nine months ended September 30, 2020 and 2020, for each of our reportable segments as well as unallocated corporate costs.

Nine Months Ended
September 30, Dollar
Change Percent
Change
2021 2020
(In thousands)
Segment Adjusted EBITDA:
Biopharmaceuticals $ (34,055) $ (26,106) $ (7,949) (30.4) %
Exemplar 5,312 2,511 2,801 111.5 %
Trans Ova 15,881 7,417 8,464 114.1 %
Unallocated corporate costs (25,412) (29,102) 3,690 (12.7) %

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~~The following table summarizes revenues from external customers for the nine months ended September 30, 2021 and 2020, for each of our reportable segments.~~

Nine Months Ended
September 30, Dollar
Change Percent
Change
2021 2020
(In thousands)
Biopharmaceuticals $ 723 $ 20,703 $ (19,980) (96.5) %
Exemplar 9,860 7,230 2,630 36.4 %
Trans Ova 69,069 55,858 13,211 23.7 %

~~Biopharmaceuticals~~

The decrease in revenues for Biopharmaceuticals was primarily due to the accelerated recognition of previously deferred revenue in the prior period upon the mutual terminations of collaborations with Castle Creek and Oragenics in 2020. Segment Adjusted EBITDA declined as we had increased costs associated with the advancement of our clinical and preclinical programs.

~~Exemplar~~

Revenues for Exemplar increased due to an increase in services performed resulting from a higher demand from existing and new customers. Revenues also increased due to price increases as well as a change in the pricing structure with certain customers. The improvement in Segment Adjusted EBITDA was primarily due to the increased ~~revenues and reduced costs as a result of operational efficiencies gained through reductions in workforce and improved inventory management.~~

~~Trans Ova~~

Revenues for Trans Ova increased primarily due to higher customer demand for pregnant cows and more procedures performed as a result of stronger beef and dairy industries in the current year. Revenues also increased due to a change in the pricing structure with certain customers. The improvement in Segment Adjusted EBITDA was primarily due to the increased revenues, as well as reduced costs as a result of operational efficiencies gained through reductions in workforce and improved inventory management.revenues.

Unallocated Corporate Costs

Unallocated corporate costs ~~decreased~~increased primarily due to ~~decreased~~increased professional fees including legal fees associated with certain litigation matters, including our settlement with the SEC in the prior period, and due to a reduction of corporate employees as we scaled down our corporate functions to support our more streamlined organization.matters.

Liquidity and capital resources

Sources of liquidity

We have incurred losses from operations since our inception, and as of ~~September~~June 30, ~~2021,~~2022, we had an accumulated deficit of $1.9 billion. From our inception through ~~September~~June 30, ~~2021,~~2022, we have funded our operations principally with proceeds received from private and public equity and debt offerings, cash received from our collaborators, and through product and service sales made directly to customers. As of ~~September~~June 30, ~~2021,~~2022, we had cash and cash equivalents of ~~$41.7~~$49.5 million and short-term and long-term investments of ~~$139.6~~$83.3 million. 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 sales of products and services and from strategic transactions.

Trans Ova is subject to certain restrictive covenants under its line of credit which is discussed in "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 11" appearing elsewhere in this Quarterly Report. As of September 30, 2021, Trans Ova was in compliance with these debt covenants or had obtained appropriate waivers from the bank.

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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,
		2021		2020			2022		2021
		(In thousands)					(In thousands)
Net cash provided by (used in):	Net cash provided by (used in):					Net cash provided by (used in):
Operating activities	Operating activities	$	(41,182)	$	(60,552)	Operating activities	$	(25,836)	$	(24,160)
Investing activities	Investing activities	(90,469)		(12,405)		Investing activities	33,141		(112,482)
Financing activities	Financing activities	121,297		32,777		Financing activities	(276)		121,063
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	Effect of exchange rate changes on cash, cash equivalents, and restricted cash	264		(77)		Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(471)		184
Net decrease in cash, cash equivalents, and restricted cash		$	(10,090)	$	(40,257)
Net increase (decrease) in cash, cash equivalents, and restricted cash						Net increase (decrease) in cash, cash equivalents, and restricted cash	$	6,558	$	(15,395)

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Cash flows from operating activities:

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, our net loss was ~~$67.1~~$36.9 million, which includes the following significant noncash expenses totaling ~~$30.5~~$12.4 million from continuing operations: (i) $6.5 million of depreciation and amortization expense and (ii) $5.9 million of stock-based compensation expense.

During the six months ended June 30, 2021, our net loss was $37.4 million, which includes the following significant noncash expenses totaling $21.6 million from both continuing and discontinued operations: (i) ~~$11.5~~$9.0 million of stock-based compensation expense, (ii) ~~$10.4~~$7.0 million of depreciation and amortization expense, and (iii) ~~$8.6~~$5.6 million accretion of debt discount and amortization of deferred financing costs. These expenses were partially offset by a $4.6 million noncash gain recognized upon the termination of our MBP Titan facility lease in January 2021.

During the nine months ended September 30, 2020, our net loss was $128.9 million, which includes the following significant noncash expenses totaling $85.4 million from both continuing and discontinued operations: (i) $27.0 million of accumulated foreign currency translation losses that were realized upon the closing of the Transactions, (ii) $23.0 million of impairment losses related to goodwill and long-lived assets, (iii) $13.9 million of stock-based compensation expense, (iv) $13.7 million of depreciation and amortization expense, and (v) $7.8 million accretion of debt discount and amortization of deferred financing costs. These expenses were partially offset by the recognition of $12.8 million of previously deferred revenue upon the mutual terminations of collaboration agreements with Castle Creek and Oragenics in 2020.

Our cash outflows from operations during the ~~nine~~six months ended ~~September~~June 30, ~~2021 decreased $19.4~~2022 increased $1.7 million from the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 primarily due to ~~(i) increased~~decreased cash inflows provided by Trans Ova and Exemplar due to increased revenues and gross margins thereon, (ii) the reduction in cash requirements for MBP Titan as we suspended those operations in the second quarter of 2020, and (iii) reductions in operating expenses for our corporate operations as we streamlined operations in order to further prioritize the use of our capital.Exemplar.

Cash flows from investing activities:

During the ~~nine~~six months ended ~~September~~June 30, 2022, we received $36.0 million of proceeds from maturities of investments.

During the six months ended June 30, 2021, we purchased ~~$92.2~~$116.2 million of investments, net of maturities, ~~and sales,~~ primarily using the proceeds received from the underwritten public offering discussed below.

During the nine months ended September 30, 2020, we purchased $75.4 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.

Cash flows from financing activities:

During the ~~nine~~six months ended ~~September~~June 30, 2022, we made payments of long-term debt of $0.2 million.

During the six months ended June 30, 2021, we received $121.0 million ~~net~~ proceeds from the sale of our common stock in an underwritten public offering.

~~During the nine months ended September 30, 2020, we received $35.0 million proceeds from the sale of our common stock in a private placement to TS Biotechnology Holdings, LLC.~~

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Future capital requirements

We believe our existing liquid assets will enable us to fund our operating expenses and capital requirements for at least the next 12 months. 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;~~transactions, including the sale of Trans Ova;

•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 product candidates;

•the timing and capital requirements to scale up our various product candidates and service offerings and customer acceptance thereof;

•our ability to maintain and establish additional collaborative arrangements and/or new strategic initiatives;

•the resources, time, and cost required for the preparation, filing, prosecution, maintenance, and enforcement of our intellectual property portfolio;

•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;

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•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; 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 plan to finance our cash needs through a combination of equity offerings, debt financings, government, or other third-party 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 strategic transactions, collaborations, 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, adequately satisfy or renegotiate long-term debt obligations, obtain regulatory approval of our products, successfully commercialize our products, generate revenue, meet our obligations, and, ultimately, attain profitable operations. Our ability to achieve what is necessary for our success may be negatively impacted by the uncertainty caused by the COVID-19 pandemic.

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See the section entitled "Risk Factors" in our Annual Report for additional risks associated with our substantial capital requirements.

Contractual obligations and commitments

The following table summarizes our significant contractual obligations and commitments from continuing operations as of ~~September~~June 30, ~~2021~~2022 and the effects such obligations are expected to have on our liquidity and cash flows in future periods:


		Total		Less Than 1 Year		1 - 3 Years		3 - 5 Years		More Than 5 Years			Total		Less Than 1 Year		1 - 3 Years		3 - 5 Years		More Than 5 Years
		(In thousands)											(In thousands)
Operating leases	Operating leases	$	18,794	$	3,303	$	6,035	$	4,483	$	4,973	Operating leases	$	13,174	$	1,977	$	4,157	$	3,317	$	3,723

Convertible debt (1)	Convertible debt (1)	200,000		—		200,000		—		—		Convertible debt (1)	200,000		—		200,000		—		—
Cash interest payable on convertible debt	Cash interest payable on convertible debt	14,000		7,000		7,000		—		—		Cash interest payable on convertible debt	10,500		7,000		3,500		—		—
Long-term debt, excluding convertible debt		3,384		355		780		794		1,455

Total	Total	$	236,178	$	10,658	$	213,815	$	5,277	$	6,428	Total	$	223,674	$	8,977	$	207,657	$	3,317	$	3,723

(1)See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Notes 11" appearing elsewhere in this Quarterly Report for further discussion of our convertible debt.

In addition to the obligations in the table above, as of ~~September~~June 30, ~~2021~~2022 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 subject to certain conditions and limitations. As of ~~September~~June 30, ~~2021,~~2022, our remaining capital contribution commitments to our JVs were $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.

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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 that incorporate their technologies. These agreements are generally subject to termination by us and therefore no amounts are included in the tables above. As of ~~September~~June 30, ~~2021,~~2022, we also had research and development commitments with third parties totaling ~~$15.7~~$19.5 million that had not yet been incurred.

Net operating losses

As of ~~September~~June 30, ~~2021,~~2022, we had net operating loss carryforwards of approximately ~~$836.6~~$862.0 million for U.S. federal income tax purposes available to offset future taxable income, including ~~$583.9~~$610.0 million generated after 2017, U.S. capital loss carryforwards of $212.5 million, and U.S. federal and state research and development tax credits of approximately ~~$10.9~~$11.5 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. Net operating loss carryforwards generated prior to 2018 ~~begin~~have begun to expire in 2022, and capital loss carryforwards will expire if unutilized beginning in 2024. Our foreign subsidiaries included in continuing operations have foreign loss carryforwards of approximately ~~$76.8~~$68.6 million, most of which do not expire. Excluding certain deferred tax liabilities totaling ~~$2.6~~$2.3 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.

As a result of our past issuances of stock, as well as due to prior mergers and acquisitions, certain of our net operating losses have been subject to limitations pursuant to Section 382. As of ~~September~~June 30, ~~2021,~~2022, Precigen has utilized all net operating losses subject to Section 382 limitations, other than those losses inherited via acquisitions. As of ~~September~~June 30, ~~2021,~~2022, approximately ~~$42.1~~$41.4 million of available domestic net operating losses were inherited via acquisitions and are limited based on the value of the target at the time of the transaction. Future changes in stock ownership may also trigger an ownership change and, consequently, a Section 382 limitation.

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Off-balance sheet arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements as defined under 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. 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.

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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The following sections provide quantitative information on our exposure to interest rate risk. We make use of sensitivity analyses that 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 ~~$181.3~~$132.8 million and ~~$100.1~~$157.2 million as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. Our cash and cash equivalents and short-term and long-term investments consist of cash, money market funds, U.S. government debt securities, and certificates of deposit. The primary objectives of our investment activities are to preserve principal, maintain liquidity, and maximize income without significantly increasing risk. Our investments consist of U.S. government debt securities 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.

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 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 at the reasonable assurance level 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 ~~September~~June 30, ~~2021,~~2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

In the course of our business, we are involved in litigation or legal matters, including governmental investigations. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. We accrue liabilities for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. As of ~~September~~June 30, ~~2021,~~2022, we do not believe that any such matters, individually or in the aggregate, will have a material adverse effect on our business, financial condition, results of operations, or cash flows.

See "Notes to the Condensed Consolidated Financial Statements (Unaudited) - Note 16" appearing elsewhere in this Quarterly Report for further discussion of ongoing legal matters.

Item 1A. Risk Factors

As disclosed in "Summary of Risk Factors" and "Item 1A. Risk Factors" in our Annual Report, 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.~~Report, except as discussed below.

In evaluating our risks, readers also should carefully consider the risk factors discussed in our Annual Report and the risk factor included in this Quarterly Report on Form 10-Q, 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.

We are subject to a number of risks associated with the sale of Trans Ova, and these risks could adversely impact our operations, financial condition and business. The proceeds we receive from the sale, together with certain additional funds, will be placed in a segregated account upon the closing of the Transaction and must be used for certain permitted purposes, including resolution of our outstanding convertible bonds, and therefore we have limited discretion in the use of proceeds and the additional funds we put in.

On July 1, 2022, we entered into an agreement (the “Purchase Agreement”) to sell 100% of the outstanding membership interests of Trans Ova Genetics, L.C., an Iowa limited liability company (“Trans Ova”), our wholly-owned subsidiary, to Spring Bidco LLC, a Delaware limited liability company (the “Buyer”) in exchange for $170 million in cash payable at the closing of the transaction (subject to a working capital adjustment mechanism) and up to $10 million in cash in earn-out payments over two years (the “Transaction”). We are subject to a number of risks in connection with the Transaction, including risks associated with:

•the failure to satisfy on the expected timeline, or at all, the closing conditions set forth in the Purchase Agreement, whether due to a failure to receive, or delay in the receipt of, clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 or other third party consents required for the transaction or our inability to satisfy other conditions to the consummation of the Transaction;

•the need to incur significant transaction costs in connection with the Transaction, regardless of whether it is completed;

•the diversion of our management’s attention from the operation of the business we are retaining;

•the share price of our common stock falling if the Transaction is not consummated, to the extent that the current market price of our common stock reflects an assumption that the Transaction will be completed;

•a negative impact on our liquidity and our ability to meet our obligations when due, including the outstanding convertible bonds, if the Transaction is not consummated;

•our failure to realize the full purchase price anticipated under the Purchase Agreement, including due to the inability of Trans Ova to generate sufficient EBITDA following the closing during the relevant periods to result in payment of the targeted earn-out payments;

•the inability of the Buyer to pay the purchase price;

•becoming the target of litigation, including securities class action lawsuits and derivative lawsuits, that could result in substantial costs and may delay or prevent the consummation of the Transaction;

•business uncertainties and contractual restrictions while the Transaction is pending;

•any disruptions to our business resulting from the announcement and pendency of the Transaction, which may continue or intensify in the event the Transaction is not consummated or is significantly delayed; and

•other developments beyond our control that may affect the timing or success of the Transaction.

In connection with the closing of the Transaction, we will hold a total of $200 million, comprising the purchase price and certain additional funds, in a segregated account and will use such funds for certain permitted purposes, including resolution of our outstanding convertible bonds. Therefore, we have limited discretion in the use of proceeds and the additional funds we put in to the segregated account, which may have a negative impact on our liquidity and ability to satisfy our capital requirements and we may be prevented from using the cash opportunistically for other purposes.

As a result of these risks, we may be unable to realize the anticipated benefits of the Transaction, including the total amount of cash we expect to realize. Our failure to realize the anticipated benefits of the Transaction would adversely impact our operations, financial condition and business and could limit our ability to pursue additional strategic transactions.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults on Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits


Exhibit No.						Description
2.1						Membership Interest Purchase Agreement dated July 1, 2022 by and among Precigen, Inc., Trans Ova Genetics, L.C. and Spring Bidco LLC, originally filed as Exhibit 2.1 to Precigen’s Form 8-K filed with the SEC on July 5, 2022, which is incorporated by reference herein

2.2						Guarantee by and among Precigen, Inc., Trans Ova Genetics, L.C., Spring Bidco LLC and Houdstermaatschappij Wilg B.V., dated as of July 1, 2022, originally filed as Exhibit 2.2 to Precigen’s Form 8-K filed with the SEC on July 5, 2022, which is incorporated by reference herein

31.1						Certification of Helen Sabzevari, Chief Executive Officer (Principal Executive Officer) of 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						Certification of Harry Thomasian Jr., Chief Financial Officer (Principal Financial Officer) of 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.

32.1**						Certification of Helen Sabzevari, Chief Executive Officer (Principal Executive Officer) of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**						Certification of Harry Thomasian Jr., Chief Financial Officer (Principal Financial Officer) of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101**						Interactive Data File (Quarterly Report on Form 10-Q, for the quarterly period ended ~~September~~June 30, ~~2021,~~2022, 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 as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, (ii) the Condensed Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, (iii) the Condensed Consolidated Statements of Comprehensive Loss for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, (iv) the Condensed Consolidated Statements of Shareholders' Equity for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, (v) the Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, and (vi) the Notes to the Condensed Consolidated Financial Statements.

104**						Cover Page Interactive Data File (embedded within the Inline XBRL document).

** Furnished herewith.

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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: ~~November~~August 8, ~~2021~~2022

By:

/s/ HARRY THOMASIAN JR.

Harry Thomasian Jr.

Chief Financial Officer

(Principal Financial and Accounting Officer)

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	Nine Months Ended September 30, 2020
	TS Biotechnology Sale		EnviroFlight Sale		Total
Revenues (1)	$	1,294	$	—	$	1,294
Operating expenses	896		—		896
Operating income	398		—		398
Gain on sale of discontinued operations	633		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)


	September 30,
	2021	2020
Convertible debt	11,732,440	17,843,715
Options	12,249,109	11,379,605
Restricted stock units	468,481	1,813,043
Warrants	121,888	133,264
Total	24,571,918	31,169,627


	Three Months Ended September 30, 2020
	Biopharmaceuticals		Exemplar		Trans Ova		Total
Revenues from external customers	$	5,381	$	2,974	$	15,228	$	23,583
Intersegment revenues	1,919		—		55		1,974
Total segment revenues	$	7,300	$	2,974	$	15,283	$	25,557


	Nine Months Ended September 30, 2021
	Biopharmaceuticals		Exemplar		Trans Ova		Total
Revenues from external customers	$	723	$	9,860	$	69,069	$	79,652
Intersegment revenues	1,469		—		324		1,793
Total segment revenues	$	2,192	$	9,860	$	69,393	$	81,445