Precigen Inc.
03/25/2026 | Press release | Distributed by Public on 03/25/2026 14:54
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of financial condition and results of operations is provided to enhance the understanding of, and should be read in conjunction with, Part I, Item 1, "Business" and Item 8, "Financial Statements and Supplementary Data." For information on risks and uncertainties related to our business that may make past performance not indicative of future results, or cause actual results to differ materially from any forward-looking statements, see "Special Note Regarding Forward-Looking Statements," and Part I, Item 1A, "Risk Factors." Refer to Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Annual Report on Form 10-K for management's discussion and analysis of financial condition and results of operations for the fiscal year 2024 compared to fiscal year 2023.
Overview
We are a biopharmaceutical company specializing in the advancement of innovative precision medicines to address difficult-to-treat diseases with high unmet patient need. Precigen is dedicated to advancing scientific breakthroughs from proof-of-concept through commercialization. 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 believe that our array of technology platforms uniquely positions us among other biotechnology companies to advance precision medicine. 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 AdenoVerse immunotherapy, UltraCAR-T, 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 have developed a proprietary electroporation device, UltraPorator, designed to further streamline and ensure the rapid and cost-effective manufacturing of UltraCAR-T therapies.
Our commercial product, Papzimeos (zopapogene imadenovec-drba, PRGN-2012), is the first and only US Food and Drug Administration ("FDA") approved therapy for the treatment of adults with recurrent respiratory papillomatosis ("RRP"). Papzimeos is a non-replicating adenoviral vector-based immunotherapy designed to express a fusion antigen comprising selected regions of human papillomavirus (HPV) types 6 and 11 proteins. Papzimeos is designed to generate an immune response directed against HPV 6 and HPV 11 proteins in patients with RRP. Discovered and designed in Precigen's labs using Precigen's proprietary AdenoVerse therapeutic platform, Papzimeos represents a new therapeutic paradigm for RRP.
Our clinical pipeline includes PRGN-2009, which are based on our AdenoVerse immunotherapy platform; and PRGN-3005, PRGN-3006 and PRGN-3007, which are built on our UltraCAR-T platform. We have completed enrollment in the Phase 1b clinical trial of PRGN-3006. As part of the strategic prioritization of our pipeline announced in August 2024, we paused enrollment in the PRGN-3005 and PRGN-3007 clinical trials, minimized UltraCAR-T spending and plan to focus on strategic
partnerships to further advance UltraCAR-T programs. In addition, we previously announced plans to continue PRGN-2009 Phase 2 clinical trials under a cooperative research and development agreement ("CRADA") with the National Cancer Institute ("NCI") in recurrent/metastatic cervical cancer and in newly diagnosed HPV-associated oropharyngeal cancer.
Fiscal Year 2025 Business Update
In August 2025, the U.S. Food and Drug Administration ("FDA") granted full approval of Papzimeos for the treatment of adults with RRP. RRP is a rare, debilitating, and potentially life-threatening disease caused by chronic human papillomavirus ("HPV") 6 or HPV 11 infection, which results in recurrent benign tumors in the respiratory tract. RRP can lead to severe voice disturbance, a compromised airway, and recurrent post-obstructive pneumonias. Management of RRP has primarily consisted of repeated surgeries, which do not address the root cause of the disease and can be associated with significant morbidity as well as significant patient and health system burden. The approval of Papzimeos marks a historic milestone for the RRP patient community as the first and only FDA-approved therapy for the treatment of adults with RRP. As a result of Papzimeos receiving full FDA approval, a confirmatory clinical trial is not required.
Papzimeos is a non-replicating adenoviral vector-based immunotherapy designed to express a fusion antigen comprising selected regions of HPV types 6 and 11 proteins-the root cause of RRP. Papzimeos is delivered via four subcutaneous injections over a 12-week interval. Papzimeos approval is supported by safety and efficacy data from the pivotal Phase 1/2 clinical trial published in the Lancet Respiratory Medicine. The pivotal study successfully met its primary safety and pre-specified primary efficacy endpoints. Papzimeos was well-tolerated with no dose-limiting toxicities and no treatment-related adverse events greater than Grade 2. Of the patients in our study, 51% (18 out of 35) achieved complete response, requiring no surgeries in the 12 months after treatment with Papzimeos. These complete responses have been durable after Papzimeos treatment with median follow-up of 36 months as of a September 19, 2025 data cutoff.
See further discussion of 2025 financing transactions below under the Liquidity and capital resources section of Item 7.
Financial operations overview
Sources of revenue
Exemplar 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 or service is transferred to the customer. In 2025, revenues generated by Exemplar became less significant to the Company, and we expect this significance to greatly diminish into the future.
During the fourth quarter of 2025, we began generating revenue from commercial sales of Papzimeos, our FDA-approved immunotherapy for RRP. While revenues from Papzimeos were limited in the year due to the timing of our commercial launch, we anticipate our future revenue to primarily be generated from Papzimeos product sales.
As we transition to a commercial-stage company, our future revenues will increasingly depend on our ability to successfully commercialize Papzimeos, advance our proprietary programs, and bring additional products enabled by our technology platforms to market.
We anticipate that collaboration revenue will remain minimal in the near term, except in cases of future strategic transactions involving our platforms or programs. Should new collaboration agreements or strategic transactions be executed, revenue could be positively impacted.
Accordingly, there can be no assurance as to the timing, magnitude, and predictability of revenues, if any, to which we might be entitled.
Cost of products and services and gross margin
Cost of products and services consists of manufacturing costs, transportation and freight-in, and indirect overhead costs (including salary and benefits related and stock-based compensation expenses) associated with the commercial manufacturing and distribution of Papzimeos, and costs related to our Exemplar business, which includes primarily labor, supplies, feed used in production, and facility charges. Approximately $4.4 million of our cost of products and services in 2025 relates to our Exemplar business.
For the year ended December 31, 2025, the cost of products and services includes the costs of Papzimeos sales. Prior to August 14, 2025, regulatory approval and subsequent commercialization of Papzimeos and thus the possibility of future economic benefits from Papzimeos sales were not considered probable and inventory-related costs were expensed as incurred. As such, the inventory recognized on the Consolidated Balance Sheet at December 31, 2025 does not include any costs incurred prior to August 14, 2025, which is referred to as pre-launch inventory. In addition, the cost of products related to Papzimeos on the Consolidated Statement of Operations for the year ended December 31, 2025 is comprised of the sale of pre-launch inventory, which only includes costs incurred subsequent to August 14, 2025, including period costs that were not absorbed into inventory. As of December 31, 2025, the amount of future estimated net revenues represented by existing physical pre-launch inventories is approximately $85 million based on our current pricing assumptions and projected demand for our recently approved commercial product. Due to the fact that commercialization began in late 2025, these estimates are inherently subject to significant uncertainty.
The Company expects that it will finish selling all of the pre-launch inventories in 2026. Projected sales derived from pre-launch inventories depend on several factors that could materially impact actual realized results, including the timing and scale of product adoption within our target patient population, and payer coverage. As a result, the cost of products sold related to Papzimeos will initially reflect a lower average per unit cost of materials (excluding period costs that are expensed as incurred), as pre-launch inventory is utilized for commercial production and sold to customers. As pre-launch inventory continues to absorb costs through the manufacturing process, we expect the current gross margins (exclusive of period costs expensed as incurred) will gradually decrease as pre-launch inventory is sold and will stabilize between high 80 percentages and low 90 percentages when pre-launch inventories are expected to be completely sold based on current forecasts, which include significant risks given that Papzimeos is the first therapy available to patients with RRP.
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, as well as severance costs related to personnel in research and development functions, if such costs exist;
•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;
•facility-related expenses, which include direct depreciation costs and unallocated expenses for rent and maintenance of facilities and other operating costs; and
•other manufacturing costs related to the manufacture of drug products that have not yet been approved by the FDA.
Our research and development expenses primarily relate to either costs incurred to expand or otherwise improve our technologies or the costs incurred to develop our own products and services. Prior to August 2024, the Company was progressing preclinical and clinical programs that targeted urgent and intractable diseases in our core therapeutic areas of immuno-oncology, autoimmune disorders, and infectious diseases, including PRGN-3005, PRGN-3006, PRGN-3007, PRGN-2009, PRGN-2012 and AG019. As discussed in "Notes to the Consolidated Financial Statements - Note 1 " appearing elsewhere in this Annual Report, in August 2024, we announced a strategic prioritization of our clinical portfolio and streamlining of resources, to focus on potential commercialization of the PRGN-2012 AdenoVerse®immunotherapy for the treatment of RRP. We also continue to advance PRGN-2009, and we have completed enrollment in the Phase 1b clinical trial of PRGN-3006. Exemplar's research and development activities relate to new and improved pig research models. Following the FDA approval of Papzimeos in August 2025, we no longer expect to record research and development expenses related to PRGN-2012 for adults. Future costs associated with this product for adults are expected to be classified as costs of products or capitalized as inventory.
We currently track external research and development ("R&D") expenses by platform, although we do not accumulate or track R&D expenses by individual product candidate or program. Preparing such information solely for external reporting would not
reflect management's view of the business or how R&D activities are managed. A significant portion of our R&D spending supports the development, optimization, and operation of our core therapeutic platforms and shared technologies rather than any single drug candidate.
Management evaluates R&D activities and makes resource allocation decisions based on the nature of the underlying expenses, which align with how our R&D operations are structured and managed.The table below presents R&D expenses by nature of cost for the periods presented.
| 2025 | 2024 | ||||||||||
| External development expense: | |||||||||||
| AdenoVerse immunotherapy platform | $ | 11,550 | $ | 11,347 | |||||||
| UltraCAR-T therapeutics platform | 1,131 | 4,713 | |||||||||
| ActoBiotics Platform | - | 810 | |||||||||
| Other | 2,207 | 3,079 | |||||||||
| Total Direct external research and development expense | 14,888 | 19,949 | |||||||||
| R&D personnel expense | 19,859 | 25,493 | |||||||||
| R&D facility and depreciation expense | 5,888 | 7,254 | |||||||||
| Other R&D expense | 698 | 374 | |||||||||
| Total research and development expense | $ | 41,333 | $ | 53,070 | |||||||
In addition to the strategic prioritization in 2024, the amount of research and development expenses may be impacted by, among other things, the number and nature of our own proprietary programs.
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 expenses consist of salaries and related costs, including stock-based compensation expense and severance benefits, for employees in executive, commercial (including sales), operational, finance, information technology, legal, and corporate communications functions. Other significant SG&A expenses include rent and utilities, insurance, marketing and promotion activities, sales operations, 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, the strategic prioritization of assets, the build-up of our commercialization efforts and the outcomes of legal claims and assessments against us.
Other income (expense), net
Other income and expense, net consists primarily of changes in the fair value of warrant liabilities (until the warrants were classified into equity in 2025), interest expense related to the term loans entered into in 2025 that mature in 2030, and interest earned on our cash and cash equivalents and short-term and long-term investments, which may fluctuate based on amounts invested and changing interest rates. See "Notes to the Consolidated Financial Statements - Notes 10 and 12 " appearing elsewhere in this Annual Report for further discussion.
Results of operations
Comparison of the year ended December 31, 2025 to the year ended December 31, 2024
The following table summarizes our results of operations for the years ended December 31, 2025, and 2024, together with the changes in those items in dollars and as a percentage (dollar amounts in thousands):
|
Year Ended December 31, |
Dollar Change |
Percent Change |
|||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Collaboration and licensing revenues | $ | 1,818 | $ | - | $ | 1,818 | N/A | ||||||||||||||||
| Product revenues, net | 3,975 | 422 | 3,553 | >200% | |||||||||||||||||||
| Service revenues | 3,891 | 3,503 | 388 | 11.1 | % | ||||||||||||||||||
| Total revenues | 9,684 | 3,925 | 5,759 | 146.7 | % | ||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Cost of products and services | 4,823 | 4,267 | 556 | 13.0 | % | ||||||||||||||||||
| Research and development | 41,333 | 53,070 | (11,737) | (22.1) | % | ||||||||||||||||||
| Selling, general and administrative | 70,128 | 41,293 | 28,835 | 69.8 | % | ||||||||||||||||||
| Impairment of goodwill | 3,907 | 7,409 | (3,502) | (47.3) | % | ||||||||||||||||||
| Impairment of other noncurrent assets | - | 32,915 | (32,915) | (100.0) | % | ||||||||||||||||||
| Total operating expenses | 120,191 | 138,954 | (18,763) | (13.5) | % | ||||||||||||||||||
| Operating loss | (110,507) | (135,029) | 24,522 | (18.2) | % | ||||||||||||||||||
| Total other income (expense), net | (140,132) | 7,001 | (147,133) | >(200)% | |||||||||||||||||||
|
Loss before income taxes
|
(250,639) | (128,028) | (122,611) | 95.8 | % | ||||||||||||||||||
| Income tax benefit (expense) | (3) | 1,793 | (1,796) | (100.2) | % | ||||||||||||||||||
| Net Loss | (250,642) | (126,235) | (124,407) | 98.6 | % | ||||||||||||||||||
|
Deemed dividend on preferred stock
|
(179,000) | - | (179,000) | N/A | |||||||||||||||||||
| Net loss attributable to common shareholders | $ | (429,642) | $ | (126,235) | $ | (303,407) | >200% | ||||||||||||||||
| Net loss per share attributable to common shareholders, basic and diluted | $ | (1.37) | $ | (0.47) | $ | (0.90) | 192 | % | |||||||||||||||
Collaboration and licensing revenues
Collaboration and licensing revenues increased by $1.8 million, compared to the year ended December 31, 2024. In September 2025, the Company and PTC Therapeutics mutually agreed to terminate their existing exclusive channel collaboration ("ECC") agreement. As a result, the Company recognized the remaining deferred revenue associated with the agreement, totaling $1.8 million. There was no comparable revenue recognized in the prior year period.
Product and services revenues
Product and service revenues increased $3.9 million or 100.4%, compared to the year ended December 31, 2024. The increase was primarily driven by the commencement of Papzimeos product revenue, which totaled $3.4 million in 2025 following its commercial launch, and no such revenue existed in 2024. Exemplar service revenue increased by $0.5 million, reflecting growth in service activity.
Cost of products and services
Cost of products and services increased $0.6 million or 13.0%, compared to the year ended December 31, 2024. The increase was primarily as a result of higher service revenues at our Exemplar subsidiary compared to the prior year and Papzimeos cost of products, which approximated $0.4 million, and was not present in the prior year. Papzimeos cost of products recognized in the period relates to inventory manufactured prior to FDA approval and includes 2025 fourth quarter period costs that were not included in inventory
Research and development expenses
Research and development expenses decreased by $11.7 million, or 22.1%, compared to the year ended December 31, 2024. The decrease was primarily driven by a $5.4 million reduction in costs associated with ActoBio, including depreciation, amortization, personnel and other research and development costs after its operations were closed in 2024. External services also declined by approximately $4.0 million, due to reduced activity for contract research organizations as a result of the strategic prioritization of our pipeline announced in the third quarter of 2024. In addition, in August 2025, manufacturing related costs began to be classified as inventory with the FDA approval of Papzimeos. These costs were classified as research research and development expenses prior to the FDA approval.
Selling, general and administrative expenses
SG&A expenses increased by $28.8 million, or 69.8%, compared to the year ended December 31, 2024. This increase was primarily driven by a $27.3 million increase in costs incurred related to Papzimeos commercial readiness, including sales force expansion, marketing and advertising as well as professional and other fees associated with the commercial launch of Papzimeos.
Impairment of goodwill and other noncurrent assets
In connection with the suspension of ActoBio's operations, we recorded $34.5 million of impairment charges related to goodwill and long-lived assets in the second quarter of 2024. Additionally, in the second quarter of 2025, we recorded $3.9 million of impairment charge related to the Exemplar reporting unit, compared to $5.8 million of impairment charge related to the Exemplar reporting unit in the prior year. See "Notes to the Consolidated Financial Statements - Note 9" appearing elsewhere in this Annual Report for further discussion of ActoBio long-lived assets and goodwill impairment and Exemplar goodwill impairment.
Total other income (expense), net
Total other income (expense) net, changed from income of $7.0 million to expense of $140.1 million, resulting in a decrease of $147.1 million, or >(200)% compared to the year ended December 31, 2024. This decrease was primarily driven by a $139.5 million increase in the fair value of warrant liabilities prior to their reclassification into permanent equity in the third quarter of 2025. Substantially all of the increase in the fair value of warrant liabilities was as a result of an increase in our common stock price at the valuation date compared to December 31, 2024.
In addition, the prior year included an $8.5 million gain on the sale of intellectual property and royalty rights related to FCX-007 in December 2024, which did not recur in the current year. See "Notes to the Consolidated Financial Statements - Note 2" appearing elsewhere in this Annual Report for further discussion on gain on transfers of nonfinancial assets.
Deemed dividend on preferred stock
On September 15, 2025, all Series A Preferred Stockholders converted their 79,000 shares (stated value of $79.0 million) into 54,937,411 shares of common stock at the then-current conversion rate of 695.4103 shares per $1,000. Because the conversion feature resulted in a variable number of common shares to be issued, the conversion was accounted for as a redemption under Accounting Standards Codification ("ASC") 260, resulting in the recording of a $179.0 million non-cash deemed dividend as a reduction to additional paid-in capital (and an increase in net loss attributable to common shareholders when computing net loss per share).
Net loss per share attributable to common shareholders
Net loss per share attributable to common shareholders (basic and diluted) increased to $1.37 for the year ended December 31, 2025 , compared to $0.47 for the year ended December 31, 2024. The increase was primarily driven by the changes noted above (including the $139.5 million change in fair value of warrant liabilities, representing $0.45 per basic and diluted share) plus the deemed dividend, as discussed above (representing $0.57 per basic and diluted share), partially offset by a higher weighted-average number of shares outstanding, primarily due to the conversion of preferred shares into common shares during the third quarter of 2025.
Liquidity and capital resources
Sources of liquidity
We have incurred losses from operations since our inception, and as of December 31, 2025, we had an accumulated deficit of $2.3 billion. From our inception through December 31, 2025, 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, and sales of non-core businesses. As of December 31, 2025, we had cash and cash equivalents of $30.2 million and short-term and long-term investments of $70.1 million. Cash in excess of immediate requirements is typically invested primarily in money market funds, United States government debt securities, and certificates of deposit in order to maintain liquidity and preserve capital.
In January 2023, we closed a public offering of 43,962,640 shares of our common stock, resulting in net proceeds to us of $72.8 million, after deducting underwriting discounts, fees, and other offering expenses.
In August 2024, we closed a public offering of 39,878,939 shares of our common stock, resulting in net proceeds to us of $30.9 million, after deducting underwriting discounts, fees, and an estimate of other offering expenses.
In December 2024, we issued 79,000 shares of 8.00% Series A Convertible Perpetual Preferred Stock with an initial liquidation preference and stated value of $1,000 per share, together with warrants to purchase 52,666,669 shares of common stock for net proceeds of approximately $78.5 million, after deducting offering expenses, which expenses had not been paid as of December 31, 2025.
In September 2025, the Company entered into a loan agreement with investment entities managed by Pharmakon Advisors, LP. The Company received net proceeds of $92,818 after deducting fees and expenses of $7,182. See "Notes to the Consolidated Financial Statements - Note 10" appearing elsewhere in this Annual Report for further discussion on this loan agreement.
Cash Flows
The following table sets forth the significant sources and uses of cash for the periods set forth below (dollar amounts in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Net cash provided by (used in): | |||||||||||||||||
| Operating activities | $ | (87,831) | $ | (68,173) | $ | (66,930) | |||||||||||
| Investing activities | (1,535) | (20,714) | (3,087) | ||||||||||||||
| Financing activities | 90,048 | 110,583 | 29,589 | ||||||||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 35 | (27) | (320) | ||||||||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | $ | 717 | $ | 21,669 | $ | (40,748) | |||||||||||
Cash flows from operating activities:
In 2025, our net loss was $250.6 million, which includes the following significant noncash expenses and benefits totaling $156.2 million: (i) $139.5 million of appreciation in the fair value of warrant liabilities prior to their reclassification to permanent equity in the third quarter of 2025, (ii) $3.9 million impairment losses, (iii) $10.9 million of stock-based compensation expense, (iii) $3.2 million of depreciation and amortization expense, (iv) $0.5 million of shares issued as payment for services, and (v) $0.4 million of accretion of debt discount and amortization of deferred financing costs, partially offset by non-cash benefits of $2.2 million due to amortization of discounts on investments. In addition, changes in operating assets and liabilities provided $6.6 million of cash for operating activities.
In 2024, our net loss was $126.2 million, which includes the following significant noncash expenses and benefits totaling $55.1 million: (i) $40.3 million impairment losses, (ii) $9.5 million of stock-based compensation expense, (iii) $4.5 million of depreciation and amortization expense, (iv) $2.9 million due to reclassification of cumulative translation losses, and (v) $0.6 million of shares issued as payment for services, partially offset by non-cash benefits of $1.8 million due to deferred income
taxes and $0.9 million due to amortization of discounts on investments. In addition, changes in operating assets and liabilities provided $2.7 million of cash for operating activities.
In 2023, our net loss was $95.9 million, which includes the following significant noncash expenses: (i) $9.9 million of stock-based compensation expense, (ii) $10.8 million impairment losses, (iii) $6.7 million of depreciation and amortization expense, offset by (iv) $1.8 million due to amortization of discounts on investments. In addition, changes in operating assets and liabilities increased cash from operating activities by $3.4 million.
Our 2025 cash used in operations increased by $19.7 million from the year ended December 31, 2024, primarily due to increased cash outflows associated with commercialization expenses for Papzimeos.
Our 2024 cash used in operations increased by $1.2 million from the year ended December 31, 2023, primarily due to increase in cash outflows related to ActoBio during 2024 as we ceased operations and paid severance costs.
Cash flows from investing activities:
During 2025, we purchased $0.5 million of investments, net, and invested $2 million in property plant and equipment, primarily related to the completion of our cGMP manufacturing facility.
During 2024, we purchased $12.2 million of investments, net, and invested $8.6 million in property plant and equipment, primarily related to the build-out of our cGMP manufacturing facility.
During 2023, we purchased $185.0 million of investments, using both the proceeds received from the underwritten public offering discussed below under cash flows from financing activities, as well as reinvesting a portion of the proceeds received from the $183.4 million sales and maturities of investments. The Company also purchased $1.5 million of property plant and equipment during 2023.
Cash flows from financing activities:
During 2025, we received $92.8 million under the term loan with entities managed by Pharmakon Advisors, LP, and $1.2 million from the exercises of stock options, and made the following financing activity payments: $0.4 million for costs related to a prior year equity issuance, $0.5 million for costs related to the prior year preferred stock issuance, $1.8 million to taxing authorities related to vesting of equity awards, and $1.3 million for performance share units settled in cash.
During 2024, we received $31.2 million of proceeds, net of certain issuance costs, from the sale of our common stock in an underwritten public offering, $79.0 million of gross proceeds from the issuance of the Series A Preferred Stock and the Warrants and $0.3 million of proceeds from stock option exercises.
During 2023, we received $72.8 million of proceeds from the sale of our common stock in an underwritten public offering and retired $43.2 million of our Convertible Notes using restricted cash.
Future capital requirements
Our future capital requirements will depend on many factors, including:
•the successful commercialization of Papzimeos and the level of revenue generated from its sales;
•progress in our research and development programs, as well as the magnitude and speed of development of these programs;
•capital expenditures to expand our manufacturing capabilities, including the potential manufacturing of other product candidates;
•the speed and scale of continuing to build our commercial operations;
•adequate third-party coverage and reimbursement for Papzimeos;
•selling and marketing activities undertaken in connection with the commercialization of Papzimeos, potential
commercialization of any future product candidates, if approved, and costs involved in creating and maintaining an effective sales and marketing organization;
•the timing of regulatory approval of our product candidates;
•the timing, receipt, and amount of any payments received in connection with strategic transactions;
•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;
•the timing of and amount of payments under our indemnification accrual;
•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; and
•the costs associated with legal activities, including litigation, arising in the course of our business activities and our ability to prevail in any such legal disputes.
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 collection of accounts receivables from the sale of Papzimeos, debt and/or royalty financings, equity offerings, government, or other third-party funding, strategic alliances, sales of assets, and licensing arrangements. 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, convertible debt, warrants or preferred 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 launching their first FDA approved drug, while conducting high-risk, early-stage research and development of product candidates. Principal among these risks are market demand for Papzimeos, 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 generate and/or raise additional capital in order to fund ongoing research and development, obtain regulatory approval of our products, successfully commercialize our products, generate revenue, meet our obligations, and, ultimately, attain profitable operations.
Our consolidated financial statements as of and for the year ended December 31, 2025 have been prepared on the basis that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
Based on current projections, management believes that its existing cash, cash equivalents and short and long-term investments, combined with anticipated potential revenue from the commercialization of Papzimeos, will enable us to continue our operations for at least one year from the date of this filing. We are subject to all of the risks inherent in the development of new products (including manufacturing and commercialization of Papzimeos), and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.
Contractual obligations and commitments
The following table summarizes our significant contractual obligations and commitments from operations as of December 31, 2025 and the effects such obligations are expected to have on our liquidity and cash flow in future periods:
| Total | Less Than 1 Year | 1-3 Years | 3-5 Years | More Than 5 Years | |||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||
| Operating leases | $ | 6,512 | $ | 1,680 | $ | 2,891 | $ | 1,941 | $ | - | |||||||||||||||||||
| Cash interest payable on long term debt (*) | 40,177 | 10,392 | 20,813 | 8,972 | - | ||||||||||||||||||||||||
| Long-term debt | 100,000 | - | 12,500 | 87,500 | - | ||||||||||||||||||||||||
| Purchase Commitments | 249 | 115 | 134 | - | - | ||||||||||||||||||||||||
| Total | $ | 146,938 | $ | 12,187 | $ | 36,338 | $ | 98,413 | $ | - | |||||||||||||||||||
(*) Interest is calculated using static annual rate of 10.25%, although our long-term debt carries a variable interest rate (see "Notes to the Consolidated Financial Statements - Note 10" appearing elsewhere in this Annual Report on Form 10-K).
In addition to the obligations in the table above, as of December 31, 2025, 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 December 31, 2025, we also had research and development commitments with third parties totaling $6.2 million that had not yet been incurred.
Net operating losses
As of December 31, 2025, we had net operating loss carryforwards of approximately $1,120.4 million for United States federal income tax purposes available to offset future taxable income, including $911.9 million generated after 2017, United States capital loss carryforwards of $1.4 million, and United States federal and state research and development tax credits of approximately $17.9 million, prior to consideration of annual limitations that may be imposed under Section 382 of the Internal Revenue Code of 1986, as amended, ("Section 382"). Net operating loss carryforwards generated prior to 2018 will expire if unutilized from 2026 to 2037, and capital loss carryforwards will expire if unutilized from 2027 to 2029. As a result of our past stock issuances, as well as due to prior mergers and acquisitions, certain of our net operating losses have been subject to limitations pursuant to Section 382. Future changes in stock ownership may also trigger an ownership change and, consequently, a Section 382 limitation. As of December 31, 2025, our direct foreign subsidiaries included in continuing operations had foreign loss carryforwards of approximately $80.1 million, most of which do not expire.
Our net deferred tax assets, which primarily relate to these loss carryforwards, are offset by a valuation allowance due to our history of net losses.
Critical accounting Policies and Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of these 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.
While our significant accounting policies are more fully described in "Notes to the Consolidated Financial Statements - Note 2" appearing elsewhere in this Annual Report, we believe that the following accounting policies are the most critical for fully understanding and evaluating our financial condition and results of operations.
Revenue recognition
We recognize revenue when our customer obtains control of the promised goods or services, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements that are within the scope of Accounting Standards Codification ("ASC") 606, we perform the following five steps: (i) identify the contract(s) with a customer, (ii) identify the promises and distinct performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) we satisfy the performance obligations.
Product and service revenues
Product and service revenues are generated through both Papzimeos, our newly commercialized biopharmaceutical product (Papzimeos), and Exemplar, which provides genetically engineered miniature swine models and related services. Although our underlying revenue recognition policies are described in Note 2 to the Consolidated Financial Statements appearing elsewhere in this Annual Report, the application of those policies requires management to make significant estimates and judgments as described below.
Papzimeos Commercial Product Revenue
We began commercial sales of Papzimeos in the fourth quarter of 2025 following FDA approval. Revenue from Papzimeos is recognized when the performance obligation to provide units of Papzimeos is satisfied, which occurs upon delivery to the site of care or specialty pharmacy. Because Papzimeos is in its first commercial year, revenue recognition involves significant estimation uncertainty, specifically relating to variable consideration, which includes:
◦Chargebacks and contractual commitments requiring us to provide products at discounted prices compared with wholesale acquisition cost
◦Government and payer rebates associated with Medicaid, Medicare, managed care programs, and commercial payers
◦Product returns, which are estimated based on historical data, expected prescription demand, distribution channel inventory, and benchmarking for newly launched specialty products
These estimates require judgment due to limited historical experience, evolving payer and provider utilization, and the inherent uncertainty of a new product launch. Changes in these assumptions could materially affect net revenue recognized in future periods.
Exemplar Product and Service Revenues
We recognize product and service revenue at a point in time when control of the promised product is transferred to the customer or over time when the promised service is rendered. We typically recognize revenue using an out-based measure, generally time elapsed or days of service, to measure progress and transfer of the control of the performance obligation to the customer. When recognizing revenue, we utilize judgments in determining whether individual products and services in a contract are distinct, the appropriate measure of progress for services performed over time, and any adjustments for expected discounts or price concessions, when applicable.
Valuation of goodwill and long-lived assets
We evaluate long-lived assets to be held and used, which include property, plant and equipment and intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable.
Goodwill is tested for impairment annually at December 31, or more frequently if events or circumstances between annual tests indicate that the assets may be impaired. We perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount prior to performing the quantitative goodwill impairment test. If this is the case, the quantitative goodwill impairment test is required. If the quantitative goodwill impairment test is
required or elected to be performed, first, the fair value of the reporting unit is compared with its carrying amount (including goodwill). Impairment losses on goodwill are recognized based solely on a comparison of their fair value to carrying value, without consideration of any recoverability test.
When we perform quantitative evaluations, the fair value of the reporting units is primarily determined based on the income approach. The income approach is a valuation technique in which fair value is based on forecasted future cash flows, discounted at the appropriate rate of return commensurate with the risk as well as current rates of return for equity and debt capital as of the valuation date. The forecast used in our estimation of fair value was developed by management based on historical operating results, incorporating adjustments to reflect management's planned changes in operations and market considerations.
During the years ended December 31, 2025 and 2024, we recorded $3.9 million and $40.3 million, respectively, of impairment charges from continuing operations to write down the values of goodwill and other long-lived assets. See additional discussion regarding these impairments in "Notes to the Consolidated Financial Statements - Note 8 and 9" appearing elsewhere in this Annual Report.
Research and Development Expense, Including Clinical Trial Accruals/Expenses
We consider that regulatory requirements inherent in the research and development of new products preclude us from capitalizing such costs. Research and development costs consist of salaries and related costs of research and development personnel, including stock-based compensation expense, costs to acquire technology rights, contract research organizations and consultants, facilities, materials and supplies associated with research and development projects as well as various laboratory studies.
Clinical trial expenses are a significant component of research and development expenses, and we outsource a significant portion of these costs to third parties. Third party clinical trial expenses include investigator fees, site and patient costs, CRO costs, costs for central laboratory testing, and data management costs. The accrual for site and patient costs includes inputs such as estimates of patient enrollment, patient cycles incurred, clinical site activations, and other pass-through costs. These inputs are required to be estimated due to a lag in receiving the actual clinical information from third parties. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected on the consolidated balance sheets as prepaid expenses and other or other accrued liabilities. These third-party agreements are generally cancellable, and related costs are recorded as research and development expenses as incurred. Non-refundable advance clinical payments for goods or services that will be used or rendered for future research and development activities are recorded as a prepaid asset and recognized as expense as the related goods are delivered or the related services are performed. When evaluating the adequacy of the accrued expenses, we analyze the progress of the studies, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates may be made in determining the accrued balances at the end of any reporting period. Actual results could differ from the estimates made. The historical clinical accrual estimates have not been materially different from the actual costs.
Recent accounting pronouncements
See "Notes to the Consolidated Financial Statements - Note 2" appearing elsewhere in this Annual Report for a description of recent accounting pronouncements applicable to our business.
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