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PI

PRECIGEN, INC. (PGEN)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 was dominated by strategic reprioritization to accelerate PRGN-2012 toward a rolling BLA in H2 2024 and a potential 2025 launch; confirmatory trial enrollment has begun, and a new CCO was appointed to build commercial readiness .
  • Financially, revenue declined and losses widened due to non‑cash ActoBio impairments and severance tied to portfolio streamlining; net loss was $58.8M ($0.23/sh) vs $20.3M ($0.08/sh) YoY, including ~$32.9M net non‑cash impairments and $2.1M severance in Q2 with $0.9M to follow in Q3 .
  • Liquidity: Cash and investments were ~$19.5M at 6/30; an August equity raise added ~$31.4M net, with management guiding cash runway into early 2025 as the company focuses spend on PRGN‑2012 .
  • Clinical catalyst: PRGN‑2012 pivotal data presented at ASCO showed 51% Complete Response and 86% reduction in surgeries with durable benefit (median follow‑up 20 months as of May 20, 2024), underpinning an accelerated approval filing; manufacturing is operational for a potential 2025 launch .

What Went Well and What Went Wrong

  • What Went Well

    • PRGN‑2012 clinical profile remained compelling: 51% (18/35) CR, 86% reduced surgeries; durable responses (median follow‑up 20 months) and favorable tolerability with no DLTs > Grade 2 .
    • Regulatory and execution momentum: rolling BLA in H2’24 on accelerated pathway; confirmatory trial initiated and enrolling; FDA agreed single‑arm confirmatory design without randomization/placebo .
    • Commercial readiness advanced: manufacturing facility operational; CCO onboard to build a targeted “tens” sized field footprint and integrated medical affairs for a rare‑disease launch .

  • What Went Wrong

    • Revenues declined 59% YoY (to $0.7M) on reduced Exemplar product/service activity; product revenue fell to $31k and service revenue to $673k in Q2 .
    • Bottom line deteriorated on restructuring/impairments: net loss increased to $58.8M vs $20.3M YoY; total operating expenses rose to $61.6M vs $22.9M YoY (impairments and severance) .
    • Workforce reduced >20% and multiple programs paused (PRGN‑3005/3007, all preclinical; non‑NCI enrollment paused for PRGN‑2009); ActoBio shutdown initiated—necessary focus, but execution risk if diversification is delayed .

Financial Results

Income statement comparatives

MetricQ2 2023Q1 2024Q2 2024
Total Revenues ($M)$1.77 $1.07 $0.72
R&D Expense ($M)$11.87 $14.25 $15.69
SG&A Expense ($M)$9.32 $10.15 $10.31
Total Operating Expenses ($M)$22.89 $25.48 $61.56
Operating Loss ($M)$(21.12) $(24.41) $(60.84)
Net Loss ($M)$(20.32) $(23.74) $(58.79)
EPS, basic & diluted$(0.08) $(0.10) $(0.23)

Revenue mix

Revenue Breakdown ($M)Q2 2023Q2 2024
Product Revenues$0.324 $0.031
Service Revenues$1.438 $0.673
Other Revenues$0.005 $0.013
Total Revenues$1.767 $0.717

Cash and investments

Balance Sheet Item ($M)Dec 31, 2023Mar 31, 2024Jun 30, 2024
Cash & Cash Equivalents$7.58 $17.48 $9.35
Short‑term Investments$55.28 $27.28 $10.19
Cash + ST Investments$62.86 $44.76 $19.54

KPIs (clinical efficacy – PRGN‑2012 pivotal dataset)

KPIValueNotes
Complete Response Rate51% (18/35) No surgeries post‑treatment; durable beyond 12 months
Reduction in Surgeries86% (30/35) Median surgeries reduced from 4 to 0 (pre vs post)
DurabilityMedian follow‑up 20 months (as of 5/20/24) CR durability beyond 12 months
SafetyNo DLTs; no treatment‑related AEs > Grade 2 Favorable tolerability

Drivers/variance vs prior year/quarter

  • YoY operating expense step‑up was driven by ~$34.5M impairments (goodwill/other assets) and severance tied to ActoBio shutdown and portfolio reprioritization; net of tax, impairments were ~$32.9M .
  • R&D increased (CRO fees for confirmatory trial start; manufacturing readiness) while SG&A reflected commercial readiness and severance .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
PRGN‑2012 rolling BLA submissionH2 2024H2 2024 (maintained from Q1) H2 2024; on track Maintained
Confirmatory Trial (PRGN‑2012)Pre‑BLA / 2024“Initiate prior to BLA submission” Initiated enrollment; active Raised (milestone achieved)
Commercial Launch Timing2025 (potential)2025 potential 2025 potential; CCO hired to spearhead launch Maintained / Execution advanced
Cash RunwayThrough early 2025Not disclosed in Q1 PRRunway into early 2025 post‑offering and reprioritization New disclosure
Workforce & OpEx2024n/a>20% workforce reduction; OpEx focused on PRGN‑2012 New
Pipeline2024PRGN‑3006 1b readout H2’24; 3005/3007 ongoing 3006 1b enrollment complete; 3005/3007 paused; all preclinical paused; PRGN‑2009 limited to NCI sites Reprioritized

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2023, Q1 2024)Current Period (Q2 2024)Trend
Regulatory path (BLA/accelerated approval)Plan to submit BLA H2’24; FDA agreed pivotal single‑arm design Rolling BLA H2’24; confirmatory trial initiated/enrolling; single‑arm confirmatory acceptable Positive execution momentum
PRGN‑2012 clinical profilePhase 1: 50% CR; durable >2 years Pivotal data: 51% CR; 86% reduced surgeries; durable; well‑tolerated Consistent/strengthened
Commercial readiness & org buildManufacturing capacity for thousands of doses at launch; specialty sales focus Manufacturing operational; CCO hired; precise field footprint (“tens”) + medical affairs build Accelerating
Financing/liquidityEvaluating financing options; cash $62.9M at YE23 ~$19.5M at 6/30; raised ~$31.4M; runway into early 2025 De‑risked near‑term runway
Portfolio reprioritizationMultiple programs active across AdenoVerse and UltraCAR‑T >20% workforce reduction; pause 3005/3007 & preclinical; 3006 1b complete; PRGN‑2009 limited to NCI Focused on lead asset
Ex‑US strategyNot detailedGlobal ambitions; 2025 supply readiness; exploring EU strategy Broader scope emerging

Management Commentary

  • “We are all in on PRGN‑2012… rolling biologics license application under an accelerated approval pathway… initiated enrollment in the confirmatory clinical trial… potential launch in 2025” .
  • “51% (18/35) of patients achieved Complete Response… 86% decreased surgical interventions… well‑tolerated with no dose‑limiting toxicities” .
  • “Our facility is operational, and we are quite confident that we can adequately provide the doses for both U.S. and ex U.S. on a potential launch” .
  • On prioritization: “Reduction of over 20% of our workforce… pause PRGN‑3005 and PRGN‑3007… shutdown in ActoBio” .
  • Liquidity: “Equity issuance netting $31.4 million, plus our cash and investments… $19.5 million at June 30, will provide a runway into early 2025” .

Q&A Highlights

  • BLA timeline: Management reaffirmed rolling BLA by end of 2024; focus remains on positioning for a 2025 launch .
  • AdCom: Decision rests with FDA; management emphasized consistent Phase 1 (50% CR) and Phase 2 (52% CR) results reducing the need, but acknowledged FDA discretion .
  • UltraCAR‑T: 3006 Phase 1b enrollment complete; plan for end‑of‑Phase 1b FDA meeting to discuss next steps; other UltraCAR‑T trials paused to prioritize PRGN‑2012 .
  • Confirmatory trial: Same design/single‑arm; initiation required at BLA submission but not completion for approval; enrollment already underway with strong interest .
  • Commercial footprint: Rare disease approach with a small, precise sales team (“tens”), integrated with medical affairs to support multidisciplinary care; global opportunity being assessed .

Estimates Context

  • We attempted to retrieve S&P Global consensus for Q2 2024 EPS and Revenue (and counts) but the S&P Global service was unavailable at the time (request limit exceeded). As a result, we cannot assess beats/misses versus Street for this quarter. If you’d like, we can refresh and add consensus once access resumes.
  • Given de minimis revenue and a development‑stage profile, formal consensus coverage may be limited; our comparison focuses on company‑reported results and execution milestones .

Key Takeaways for Investors

  • PRGN‑2012 filing momentum is intact with confirmatory trial initiated, de‑risking the accelerated approval path; near‑term catalyst is the rolling BLA submission by year‑end 2024 .
  • Clinical efficacy and durability (51% CR; 86% reduced surgeries; median follow‑up 20 months) plus ease of SC administration support a best‑in‑class profile and potential rapid adoption among a concentrated prescriber base post‑approval .
  • Portfolio and cost actions (impairments, >20% workforce reduction, program pauses) concentrate capital on the lead asset; while reducing diversification, they extend runway and sharpen execution toward launch .
  • Liquidity improved post‑raise with runway into early 2025, bridging the BLA process and commercial build; management flagged pursuit of non‑dilutive financing options .
  • Execution watch items: on‑time BLA filing, clarity on confirmatory trial cadence, commercial infrastructure build, and any ex‑US regulatory steps to expand TAM .
  • Trading setup: stock likely to be catalyst‑driven into BLA submission and subsequent regulatory milestones; magnitude of upside/downside will hinge on FDA review dynamics (including any AdCom) and visibility on launch preparedness .

Appendix: Additional Quantitative Details

Operating drivers – Q2 2024 vs prior year

  • R&D +32% YoY driven by CRO fees tied to confirmatory trial start and manufacturing readiness; SG&A +11% YoY with commercial readiness and severance; total revenues down 59% on reduced Exemplar activity .
  • Q2 2024 impairment charges: $34.5M (goodwill/other assets) with $1.7M tax benefit; net ~$32.9M .
  • Offering pricing: $0.85/share for gross proceeds ~$30.0M; net ~$31.4M; runway into early 2025 .

Sources:

  • Q2 2024 press release and financials
  • Q2 2024 earnings call transcript
  • Strategic reprioritization 8‑K and press releases
  • Offering pricing press release
  • Q1 2024 press release and financials
  • FY 2023 8‑K and Q4 2023 call for prior context