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Table of Contents
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 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     .
Commission File Number: 001-36042
 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 31, 2021, 206,738,499 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. Page
1.
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3.
4.
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1A.
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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.
2

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Special Note Regarding Forward-Looking Statements
This Quarterly Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this Quarterly Report, including statements regarding our strategy; future events, including their outcome or timing; future operations; future financial position; future revenue; projected costs; prospects; plans; objectives of management; and expected market growth, are forward-looking statements. The words "aim", "anticipate", "assume", "believe", "continue", "could", "due", "estimate", "expect", "intend", "may", "plan", "positioned", "potential", "predict", "project", "seek", "should", "target", "will", "would", and the negatives of these terms or similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These statements may relate to, among other things: (i) the 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.
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, the other reports we have filed with the Securities and Exchange Commission, or SEC, and the documents that we have filed as exhibits to our filings with the SEC completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
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PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Precigen, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands, except share data)September 30,
2021
December 31,
2020
Assets
Current assets
Cash and cash equivalents$41,728 $51,792 
Short-term investments72,684 48,325 
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 
Other848 232 
Inventory9,936 11,359 
Prepaid expenses and other7,661 7,192 
Current assets held for sale or abandonment 9,853 
Total current assets153,092 148,948 
Long-term investments66,926  
Property, plant and equipment, net32,757 34,924 
Intangible assets, net56,914 65,396 
Goodwill54,206 54,363 
Right-of-use assets11,765 9,353 
Other assets1,239 1,603 
Total assets$376,899 $314,587 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Precigen, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited) 
(Amounts in thousands, except share data)September 30,
2021
December 31,
2020
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable$3,624 $4,598 
Accrued compensation and benefits8,077 8,097 
Other accrued liabilities11,258 9,549 
Deferred revenue3,693 2,800 
Current portion of long-term debt355 360 
Current portion of lease liabilities1,959 2,657 
Related party payables23 19 
Current liabilities held for sale or abandonment 14,047 
Total current liabilities28,989 42,127 
Long-term debt, net of current portion179,817 171,522 
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 
Lease liabilities, net of current portion11,199 7,744 
Deferred tax liabilities2,574 2,897 
Other long-term liabilities50 100 
Total liabilities245,652 247,413 
Commitments and contingencies (Note 16)
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
  
Additional paid-in capital2,020,254 1,886,567 
Accumulated deficit(1,890,522)(1,823,390)
Accumulated other comprehensive income1,515 3,997 
Total shareholders' equity131,247 67,174 
Total liabilities and shareholders' equity$376,899 $314,587 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Precigen, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)

(Amounts in thousands, except share and per share data)Three Months Ended 
 September 30,
Nine Months Ended 
 September 30,
2021202020212020
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 $20,259 
Product revenues7,297 6,896 22,013 20,397 
Service revenues14,117 11,288 56,851 42,615 
Other revenues125 176 399 574 
Total revenues21,561 23,583 79,652 83,845 
Operating Expenses
Cost of products7,492 7,296 19,201 21,526 
Cost of services7,958 5,891 24,258 20,197 
Research and development12,920 10,172 37,122 30,973 
Selling, general and administrative18,660 22,310 57,359 61,665 
Impairment of other noncurrent assets 920 543 920 
Total operating expenses47,030 46,589 138,483 135,281 
Operating loss(25,469)(23,006)(58,831)(51,436)
Other Expense, Net
Interest expense(4,799)(4,646)(14,005)(13,830)
Interest income503 579 1,305 2,025 
Other income (expense), net(120)10 (370)145 
Total other expense, net(4,416)(4,057)(13,070)(11,660)
Equity in net loss of affiliates (523)(3)(1,125)
Loss from continuing operations before income taxes(29,885)(27,586)(71,904)(64,221)
Income tax benefit61 50 173 130 
Loss from continuing operations(29,824)(27,536)(71,731)(64,091)
Income (loss) from discontinued operations, net of income taxes60 (1,972)4,599 (64,769)
Net loss$(29,764)$(29,508)$(67,132)$(128,860)
Net Loss per Share
Net loss from continuing operations per share, basic and diluted$(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)
Weighted average shares outstanding, basic and diluted199,179,963 165,527,024 197,254,438 163,318,375 
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,
(Amounts in thousands)2021202020212020
Net loss$(29,764)$(29,508)$(67,132)$(128,860)
Other comprehensive income (loss):
Unrealized gain (loss) on investments42 (186)(43)86 
Income (loss) on foreign currency translation adjustments(1,068)2,198 (2,439)1,787 
Release of cumulative foreign currency translation adjustments to loss from discontinued operations   26,957 
Comprehensive loss$(30,790)$(27,496)$(69,614)$(100,030)
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Precigen, Inc. and Subsidiaries
Condensed Consolidated Statements of Shareholders' Equity
(Unaudited)
 
(Amounts in thousands, except share data)Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income
Accumulated
Deficit
Total
Shareholders'
Equity
SharesAmount
Balances at June 30, 2021206,580,928 $ $2,017,413 $2,541 $(1,860,758)$159,196 
Stock-based compensation expense— — 2,490 — — 2,490 
Shares issued upon vesting of restricted stock units and for exercises of stock options157,571 — 351 — — 351 
Net loss— — — — (29,764)(29,764)
Other comprehensive loss— — — (1,026)— (1,026)
Balances at September 30, 2021206,738,499 $ $2,020,254 $1,515 $(1,890,522)$131,247 
(Amounts in thousands, except share data)Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Shareholders'
Equity
SharesAmount
Balances at June 30, 2020172,285,932 $ $1,802,413 $(650)$(1,752,221)$49,542 
Stock-based compensation expense— — 4,600 — — 4,600 
Shares issued upon vesting of restricted stock units and for exercises of stock options28,389 — 3 — — 3 
Shares issued for accrued compensation75,000 — — — —  
Shares issued as payment for services21,428 — 76 — — 76 
Shares issued upon conversion of long-term debt6,293,402 — 31,827 — — 31,827 
Net loss— — — — (29,508)(29,508)
Other comprehensive income— — — 2,012 — 2,012 
Balances at September 30, 2020178,704,151 $ $1,838,919 $1,362 $(1,781,729)$58,552 
The accompanying notes are an integral part of these condensed consolidated financial statements.

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Precigen, Inc. and Subsidiaries
Condensed Consolidated Statements of Shareholders' Equity
(Unaudited)
 
(Amounts in thousands, except share data)Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income
Accumulated
Deficit
Total
Shareholders'
Equity
SharesAmount
Balances at December 31, 2020187,663,207 $ $1,886,567 $3,997 $(1,823,390)$67,174 
Stock-based compensation expense— — 11,462 — — 11,462 
Shares issued upon vesting of restricted stock units and for exercises of stock options1,750,521 — 603 — — 603 
Shares issued as payment for services74,771 — 577 — — 577 
Shares issued in public offering, net of issuance costs17,250,000 — 121,045 — — 121,045 
Net loss— — — — (67,132)(67,132)
Other comprehensive loss— — — (2,482)— (2,482)
Balances at September 30, 2021206,738,499 $ $2,020,254 $1,515 $(1,890,522)$131,247 
(Amounts in thousands, except share data)Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Shareholders'
Equity
SharesAmount
Balances at December 31, 2019163,274,880 $ $1,752,048 $(27,468)$(1,652,869)$71,711 
Stock-based compensation expense— — 13,869 — — 13,869 
Shares issued upon vesting of restricted stock units and for exercises of stock options868,857 — 69 — — 69 
Shares issued for accrued compensation1,880,405 — 5,100 — — 5,100 
Shares issued as payment for services413,911 — 1,006 — — 1,006 
Shares issued in private placement5,972,696 — 35,000 — — 35,000 
Shares issued upon conversion of long-term debt6,293,402 — 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, 2020178,704,151 $ $1,838,919 $1,362 $(1,781,729)$58,552 
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,
(Amounts in thousands)20212020
Cash flows from operating activities
Net loss$(67,132)$(128,860)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization10,442 13,701 
Loss on disposals of assets, net89 1,606 
Impairment of goodwill 9,635 
Impairment of other noncurrent assets543 13,326 
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, net893 (652)
Equity in net loss of affiliates3 1,163 
Stock-based compensation expense11,462 13,869 
Shares issued as payment for services577 1,006 
Provision for credit losses1,219 759 
Accretion of debt discount and amortization of deferred financing costs8,641 7,807 
Deferred income taxes(180)(204)
Other noncash items(4,600)108 
Changes in operating assets and liabilities:
Receivables:
Trade(5,285)952 
Related parties(47)265 
Other(610)1,807 
Inventory1,422 5,411 
Prepaid expenses and other(388)(1,777)
Other assets282 (125)
Accounts payable(678)(1,556)
Accrued compensation and benefits(304)(1,605)
Other accrued liabilities1,505 (3,072)
Deferred revenue903 (20,304)
Lease liabilities107 (508)
Related party payables4 305 
Other long-term liabilities(50) 
Net cash used in operating activities(41,182)(60,552)
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,
(Amounts in thousands)20212020
Cash flows from investing activities
Purchases of investments$(174,221)$(171,360)
Sales and maturities of investments82,000 96,000 
Purchases of property, plant and equipment(4,474)(6,058)
Proceeds from sale of assets2,537 1,831 
Proceeds from sale of discontinued operations, net of cash sold 64,240 
Proceeds from repayment of notes receivable3,689 2,942 
Net cash used in investing activities(90,469)(12,405)
Cash flows from financing activities
Proceeds from issuance of shares, net of issuance costs121,045 35,000 
Advances from lines of credit 10,005 
Repayments of advances from lines of credit (11,927)
Payments of long-term debt(351)(370)
Proceeds from stock option exercises603 69 
Net cash provided by financing activities121,297 32,777 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash264 (77)
Net decrease in cash, cash equivalents, and restricted cash(10,090)(40,257)
Cash, cash equivalents, and restricted cash
Beginning of period52,250 68,434 
End of period$42,160 $28,177 
Supplemental disclosure of cash flow information
Cash paid during the period for interest$7,116 $7,155 
Cash paid during the period for income taxes4 48 
Significant noncash activities
Stock issued upon conversion of long-term debt$ $31,827 
Accrued compensation paid in equity awards 5,100 
Purchases of property and equipment included in accounts payable and other accrued liabilities108 461 
Proceeds from sale of assets included in accounts receivable124 435 
The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of September 30, 2021 and December 31, 2020 as shown above:
September 30,
2021
December 31,
2020
Cash and cash equivalents$41,728 $51,792 
Restricted cash included in other assets432 458 
Cash, cash equivalents, and restricted cash$42,160 $52,250 
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.
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, Precigen completed the sale of the majority of its non-healthcare assets and operations to an affiliate of Third Security, LLC ("Third Security"), a related party, which are presented as discontinued operations for the nine months ended September 30, 2020. See Notes 3 and 13 for further discussion.
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 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 30, 2021 and results of operations and cash flows for the interim periods ended September 30, 2021 and 2020. The year-end condensed consolidated balance sheet data was derived from the Company's audited financial statements but does not include all disclosures required by U.S. GAAP. These interim financial results are not necessarily indicative of the results to be expected for the year ending December 31, 2021, or for any other future annual or interim period. The accompanying interim unaudited condensed consolidated financial statements should be read in
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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.
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 30, 2021 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 months ended September 30, 2021, the Company incurred a net loss of $67,132 and, as of September 30, 2021, had an accumulated deficit of $1,890,522. 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, 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 aspects of its business, including Trans Ova and Exemplar. 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.
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Variable Interest Entities
As of September 30, 2021 and December 31, 2020, 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 30, 2021 and December 31, 2020, 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.
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 financial information regularly reviewed by the CODM was revised and the operating segments, which were determined to be operating and reportable segments, were (i) Biopharmaceuticals, (ii) Exemplar, and (iii) Trans Ova. The legal entities of PGEN Therapeutics and ActoBio, as well as the Company's majority-owned subsidiary Triple-Gene LLC 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 a group. See Note 1 for a description of PGEN Therapeutics, ActoBio, Exemplar, and Trans Ova. 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, 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 the revision of the reportable segments, the Company has restated its historical segment presentation to conform to the revised segment determination. See Note 19 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, 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 ASU 2020-06 simplify accounting for convertible instruments by removing major separation models required under current U.S. GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exception. 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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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.
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. 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 months ended September 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 $4,602, which is included in income from discontinued operations in the accompanying condensed consolidated statement of operations for the nine months ended September 30, 2021.
After the wind down of MBP Titan, certain assets and contractual obligations which were previously managed by MBP Titan continue to be managed at the Precigen corporate level. These remaining assets and contractual obligations include the Company's equity interest in and collaboration agreements with Intrexon Energy Partners, LLC ("Intrexon Energy Partners"), and Intrexon Energy Partners II, LLC ("Intrexon Energy Partners II"), including the associated deferred revenue remaining under each collaboration agreement (Notes 4 and 5), as well as the associated intellectual property developed by MBP Titan to date. These assets, liabilities, and related historical revenue and equity losses are included in the Company's operating results from continuing operations in the accompanying condensed consolidated financial statements for all periods presented as a result of the Company's continuing involvement.
The carrying values of the major classes of assets and liabilities included in assets and liabilities held for sale or abandonment related to MBP Titan as of September 30, 2021 and December 31, 2020, are as follows:
September 30,
2021
December 31,
2020
Assets
Property, plant and equipment, net$ $586 
Right-of-use assets 9,131 
Other assets 136 
Total assets held for sale or abandonment$ $9,853 
Liabilities
Lease liabilities, current$ $1,890 
Other current liabilities 619 
Lease liabilities, net of current portion 11,538 
Total liabilities held for sale or abandonment$ $14,047 
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The following table presents the financial results of discontinued operations related to MBP Titan:
Three Months Ended 
 September 30,
Nine Months Ended 
 September 30,
2021202020212020
Operating (gains) expenses (1)$(60)$1,972 $(4,599)$38,713 
Operating income (loss)60 (1,972)4,599 (38,713)
Income (loss) before income taxes60 (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 and an impairment charge on property, plant and equipment and right-of-use assets of $12,406 in the nine months ended September 30, 2020 in conjunction with the suspension of MBP Titan's operations discussed above.
The following table presents the significant noncash items, purchases of property, plant and equipment, and proceeds from sales of assets for the discontinued operations related to MBP Titan that are included in the accompanying condensed consolidated statements of cash flows.
Nine Months Ended 
 September 30,
20212020
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization$ $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 assets1,083  
(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.