Precigen, Inc. (PGEN) Q2 2026 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen, and welcome to the Precigen's Second Quarter 2026 Financial Results and Business Update Conference Call. [Operator Instructions] This call is being recorded on Tuesday, August 4, 2026. And I would now like to turn the conference over to Steve Harasym. Please go ahead.

Thank you, operator, and thank you to everyone joining us for Precigen's Second Quarter 2026 Update Call. We are pleased to be speaking with you today as we continue to see strong momentum across the commercial launch of PAPZIMEOS. Joining me on today's call are Helen Sabzevari, our President and Chief Executive Officer; Phil Tennant, our Chief Commercial Officer; Harry Thomasian, our Chief Financial Officer; and Rutul Shah, our Chief Operating Officer. Helen will begin with an overview of the launch and key strategic updates. Phil will provide additional details on the commercial execution. Harry will review our financial results, and Rutul will be available for the Q&A section. Before we begin our prepared remarks, I remind everyone that we will be making various forward-looking statements. These statements are based on our current expectations and beliefs. We encourage you to review the slide in this presentation and our SEC filings, which include risks and uncertainties that could cause actual results to differ materially from today's forward-looking statements. With that, I will now turn the call over to Dr. Sabzevari.

Thank you, Steve, and thank you to everyone joining us for our Q2 2026 business update call. As we approach the 1-year anniversary of PAPZIMEOS approval in August 2025, it is worth reflecting on what a meaningful milestone this has been for adults with RRP. PAPZIMEOS brought the first and the only approved therapy and the new first-line standard of care to the RRP community. Nearly 1 year after approval, we continue to see a strong commercial momentum with broadening patient access, growing physician adoption and increasing utilization across both major medical centers and community practices. I'll begin with a high-level overview of what we are seeing across the launch before turning the call over to Phil for additional commercial detail. Q2 represented exceptional growth from Q1. I'm proud to state that we generated $53.1 million in PAPZIMEOS revenue compared to $21.6 million in Q1, representing more than 145% revenue growth and marks a significant financial milestone for Precigen. PAPZIMEOS revenue in Q2 propelled the company to a quarterly net profit even before we reached the first anniversary of FDA approval. These results reinforce the significant enthusiasm we continue to see among patients, physicians and institutions. What is particularly encouraging as we move through Q2 and continue into Q3 is that momentum is building across several dimensions of the launch at the same time. We believe we now have the commercial foundation for durable multiyear growth for PAPZIMEOS. We are seeing a strong demand, broader access, expanding use across care settings and continued physician adoption. These indicators give us increased confidence in the breadth and durability of PAPZIMEOS' early commercial trajectory. We are seeing the benefit of launching with full approval and a broad FDA label translate into a real-world prescribing behavior. Importantly, the label does not impose a minimum number of prior surgeries before a patient can be treated with PAPZIMEOS. As a result, physicians are able to consider PAPZIMEOS based on the individual patient's clinical need. We are seeing use across a broad range of RRP patients, not just the severe cases. This supports our view that PAPZIMEOS is being embedded earlier in the treatment paradigm. The clinical profile continues to resonate strongly with physicians and patients as the new standard of care. PAPZIMEOS is not another intervention in a cycle of repeated surgical interventions. It is designed to address the underlying HPV-6 or 11 driver of the disease through a targeted immune response. PAPZIMEOS durability data continues to strengthen as the long-term follow-up matures. As we presented at ASCO, as of the April 30 cutoff, the ongoing durability of complete responses continues to increase with 83% of patients in ongoing complete response beyond 3 years with a number of them beyond 4 years of being surgery-free. I would like to emphasize that these durable complete responders have not received any treatment for RRP after receiving PAPZIMEOS. We believe this combination of transformative efficacy, durability and ongoing responses and a favorable safety profile remains highly differentiated. Finally, the FDA granted PAPZIMEOS 7-year market exclusivity for adult RRP patients. This exclusivity into August 2032 adds an important layer of protection against prospective competition and supports the value of the commercial opportunity as we continue to expand access and adoption. Collectively, these factors have helped build a strong commercial foundation, leading to a strong performance in Q2 and momentum for what we anticipate to be a continued growth. As we have said before, we believe the RRP indication has a blockbuster potential. With that, I will now turn the call over to Phil for more detail on our commercial launch. Phil?

Thank you, Helen, and welcome to everyone joining us today. I am pleased to provide an update on the continued progress of our commercial launch. Q2 represented a meaningful acceleration across the business with strong demand, expanding patient access and increasing engagement from physicians and institutions as PAPZIMEOS continues to establish itself as the new standard of care for adults with RRP. Importantly, the commercial indicators we are seeing that this is the beginning of a durable growth story. As Helen mentioned, in Q2, PAPZIMEOS generated $53.1 million in revenue compared with $21.6 million in Q1, reflecting continued strong launch performance since the first full quarter of sales in Q1. Launch-to-date PAPZIMEOS revenue exceeded $78 million at the end of Q2, underscoring the continued strong momentum we are seeing across all aspects of our launch effort. As per my commentary in previous quarters, there are a number of factors and leading indicators continuing to support the impressive launch performance. Patient engagement through the Precigen Hub continues to grow. As of today, the total hub number is well over 500 patients. This reflects steady patient identification and continued interest from both major academic centers and community settings. Importantly, Precigen Hub data do not capture all patients as a meaningful proportion of treated patients are coming through non-hub using institutions. Sites are becoming increasingly confident in their own processes for securing patient access, which could mean more patients in the future receiving PAPZIMEOS without necessarily requiring Precigen Hub intervention. We believe the current picture reinforces the breadth of demand for the brand, irrespective of our hub utilization. Payer coverage remains exceptional and continues to provide a strong foundation for access. With the addition of approximately 18 million covered lives in Q2, total commercial and government coverage is now approximately 315 million lives, representing nearly all potential covered lives in the U.S. market. In my experience, this compares extremely favorably to the typical speed and breadth of coverage for newly approved treatments in the U.S. As expected, we also continue to see activation across both major medical centers and community practices. We feel the permanent J-code, which became effective April 1, has been particularly important as accounts move from initial engagement to routine use. It provides a standard pathway for reimbursement, it helps institutions process claims more efficiently and it reduces uncertainty for sites that are still building PAPZIMEOS into their workflows. Together with our field reimbursement support and favorable payer coverage, this has helped bring forward additional accounts and supported continued adoption across both academic centers and community practices. Taken together, the Q2 numbers show clear and continued acceleration across leading indicators, including hub registrations, new patient starts, payer coverage and account activation on top of the FDA granted market exclusivity and robust quarter-over-quarter revenue growth. We are extremely pleased with the launch performance to date and believe these trends provide a strong foundation for continued growth. The key point is that PAPZIMEOS remains early in its launch curve with a substantial continued opportunity in RRP. I'll now turn the call over to Harry for an overview of our Q2 financials. Harry?

Thank you, Phil, and good afternoon to all of you participating in our call today. You've heard Helen and Phil talk about the exciting second quarter PAPZIMEOS revenue that we've reported today. That revenue has propelled Precigen for profitability for both the quarter and the 6 months ended June 30. This is a significant milestone and somewhat rare for a company to have achieved this prior to the first anniversary of an FDA-approved drug. With that said, let me provide some further color on our overall financial results for the quarter. Total revenues were $55 million, which included $53.1 million related to PAPZIMEOS. Our second quarter PAPZIMEOS revenue grew from the first quarter by $31.5 million as we saw demand for PAPZIMEOS continue to build as the second quarter progressed. Cost of products and services for the second quarter totaled $2.8 million, resulting in a gross margin of $52.2 million or 95%. After the sale of our remaining prelaunch inventory, which we anticipate to be in the third quarter of this year, we expect gross margins related to PAPZIMEOS to stabilize between the high 80 percentages and low 90 percentages. Research and development costs for the quarter were $7.3 million, which compared to the prior year second quarter decreased by $4.2 million. The majority of this change is explained by the fact that PAPZIMEOS manufacturing costs were expensed as R&D costs prior to the FDA approval, and that amount was $5.7 million in the prior year quarter. We expect that R&D expenses will increase as the year progresses, and we continue to advance our pipeline. Selling, general and administrative expenses for the quarter were $22.2 million, having increased by $6.1 million from the prior year second quarter. This increase was significantly driven by increased commercial activities related to PAPZIMEOS. Moving down the statement of operations. Operating income for the quarter was $22.6 million. Other expense net totaled $2.6 million for the second quarter, representing interest expense of $3 million on our $100 million outstanding debt, offset by interest income on investments of approximately $400,000. Net income for the quarter was $20.1 million or $0.05 per diluted share. Turning to the balance sheet. We ended the quarter with $38.7 million in cash, cash equivalents and investments. Q2 represented the first quarter where we saw cash proceeds from the collection of accounts receivable related to PAPZIMEOS. We ended the quarter with $71.9 million in trade accounts receivable on the balance sheet, which based on customer payment terms, we expect to collect over the 4 months following the quarter end. We continue to reiterate that based on our current financial forecast, our cash, cash equivalents and investments, along with the collection of PAPZIMEOS receivables will fund operations through cash flow breakeven by the end of 2026. Thank you again for participating in today's call. I'd like to now turn it back to Helen for some closing remarks. Helen?

Thank you, Harry. I will now provide an update on our broader portfolio, beginning with Thank you, Harry. I will now provide an update on our broader portfolio, beginning with PAPZIMEOS clinical and regulatory progress in the U.S. and abroad. PAPZIMEOS has the potential for redosing, supported by its mechanism of action and favorable safety profile. We are currently evaluating this in an ongoing clinical trial, which is actively enrolling patients. We remain on track to initiate a pediatric clinical trial of PAPZIMEOS this year. In addition, our marketing authorization application for PAPZIMEOS is under review by the EMA. PAPZIMEOS has been granted orphan drug designation from the European Commission. Now turning to PRGN-2009, which uses the same AdenoVerse platform backbone as our approved therapy, PAPZIMEOS, and underscores the broader potential of this technology. PRGN-2009 is an investigational immunotherapy designed to train the immune system to recognize and eliminate tumor cells associated with HPV16 and HPV18, which are the underlying drivers of several major HPV-related cancers, including certain head and neck and cervical cancers. Together, HPV-related malignancies represents nearly 5% of all cancer cases worldwide. PRGN-2009 is currently advancing in multiple Phase II clinical trials in combination with pembro in both head and neck cancer and cervical cancer. We remain very enthusiastic about the potential of this program, particularly given the scale of HPV-related cancers globally. We look forward to providing updated data on head and neck cancer later this year. More broadly, the success of PAPZIMEOS and the progress of PRGN-2009 has established proof of principle for the AdenoVerse platform. As commercial and clinical evidence continues to build, we believe the platform has a strategic value across various indications, and we are extremely excited to advance the platform to maximize its potential. We expect to continue evaluating opportunities to advance this platform. With that, I will now turn the call over to the operator for Q&A. Operator?

[Operator Instructions] And your first question comes from the line of Jason Butler from Citizens.

Congrats on an exceptional quarter. Obvious first question, can you give us any color into -- or insight into the growth rate we should expect from 2Q to 3Q? Can you maintain the growth rate you saw from 1Q to 2Q? Or at least just in broad level, help us understand the trajectory we should expect here? And then the follow-up is, can you give us a sense of the number of physicians and institutions that have used the drug so far? And if the majority of patients are coming from your hub or outside of the hub?

Jason, thank you for the question. It's Phil here. Let me address the first one first. Obviously, the growth rate is critical. We definitely have a very exciting growth story on our hands. And as you've seen, we've grown significantly from Q1 into Q2. The growth story will continue. The level at which we continue to grow will be determined when we get to the end of Q3. But all of the things that we've spoken about in terms of the leading indicators, the payer coverage, the account activation, the patients that are coming into play, the permanent J-code, all of these things are leading to a continued growth story. Now mathematically, obviously, when you launch, the growth rate tends to diminish over time, but it's still a growth story, and we're very encouraged by what we're seeing as we head into Q3. Physicians and so on, I mean we're seeing activations of accounts consistently. So it's a high proportion of our targeted accounts and others that are actually using. And importantly, that's both at the IDN level and in the community setting. So we expect that to continue to grow as we go forward.

And maybe, Jason, this is Helen, and thank you for your question. Maybe we can also add further. Obviously, a tremendous growth rate from Q1 to Q2, which we expect to continue. As Phil mentioned, I think the prework that was done by the commercial group in establishing all the fundamentals that is needed to sustain the growth and promote it as we go forward has paid off and continue to pay off. We are really looking forward as we move. As we have mentioned previously, with 27,000 patients at hand in the United States alone and as you are seeing with the continuous increase in the number of the patients in our hub and also ex-Precigen hubs, clearly, this speaks to the uptake of PAPZIMEOS as a standard of care by physicians, the request of the patients. And what we are seeing, which is also extremely exciting, it's not just on a severe patient population. We see this across a broad label that we have. And all of that are indicators for us that we are looking at really a very, very exciting trajectory.

And your next question comes from the line of Swayampakula Ramakanth from Wainwright.

Excellent quarter. Congratulations from my end as well. So PAPZIMEOS is a 4 injection course over 12 weeks. So what portion of the second quarter revenues is later cycle doses in these patients who initiated in the first quarter? And how should we think about that as a tailwind as we go into third quarter? That's the first question. I have a couple more. Can I go one by one?

Sure, thank you for the question. So in regards to the patients that we have, up to this point, have treated more than 200 patients at least have received 1 dose of PAPZIMEOS. And as you are seeing, the number of the patients in the hubs has continued to grow as well as in ex-hubs and patients that are coming in from a community center. So this is quite exciting. As far as the number of the patients that have completed, they are over 100 patients have gone through all the basically for treatment. And obviously, new patients are joining the hubs as we go. So we are very excited about this. And Phil...

Yes. RK, you're right, though, there is a sort of a mini annuity, right, with these patients depending on when they start during the quarter. And some of those doses are carried over into the following quarter. But I would say that certainly for the next few quarters, the bulk of the revenue that we will win is going to be new demand. There's definitely a carryover factor quarter-over-quarter, but it's new demand that is driving the business.

Okay. A couple of more questions that I have is one is of the $53.1 million that you recorded in the second quarter, is there any true-up from prior period revenue reserves? And the third question is on the gross margin, you recorded 95%. Obviously, quite a bit of that is from your pre-approval manufacturing costs that got expensed through the R&D line. What could be the real steady-state COGS once that inventory is consumed?

RK, it's Harry. The first question, remind me again the first question?

So out of that $53.1 million that you recorded in the second quarter, is there any true-up from the prior quarter?

Yes. Any true-up that would have been recorded as part of reserves would have been very insignificant. So the answer is no.

Okay. And then on the COGS, what could be the steady-state COGS once you use up all your pre-approval manufacturing reserves?

Yes. We've guided that we anticipate the gross margin will be in the high 80 percentages to low 90 percentages. So in the 10% range for COGS.

And your next question comes from the line of Brian Cheng from JPMorgan Chase.

Maybe just 2 from us. First, can you talk about the trajectory that we're seeing here just based on the patients at your own patient hub. Are you seeing more patients onboarding from the center of excellence versus your own patient hub in the recent quarter? And the second question is just looking into the update later this year, what will you be looking for from the head and neck and cervical update?

Brian, it's Phil here. I'll take the first question. So I think the revenue speaks to a very exciting trajectory in terms of patient identification and treatment regardless of whether it's patients in our hub or patients that have come from outside of our hub. And there's a significant contribution of treated patients from institutions who don't use our hub, who haven't used our hub. So I think what we're seeing, and you can -- we reported the hub numbers, which are now well over 500, you see that steady and ongoing patient identification, but that is not the only source of patient identification, and we're excited by both trends.

Yes. Brian, in regard to PRGN-2009 and head and neck, as we had mentioned previously, our head and neck trial is an open-label trial. So clearly, we have the -- we are seeing the data as we move, and we will be presenting not only all of the science-based data that will be there, but also the clinical efficacy as well as safety. And especially it's quite interesting as obviously, the arms of the trial are continuing, and we are following those. But definitely, the clinical data as well as the scientific data of the mechanism of action and everything else will be presented. And we are very excited about this in the coming -- very near future by the end of the year, we will be presenting.

Great. And maybe just a quick follow-up here. Can you talk about just the cadence of patients are incoming? I mean, you've seen your permanent J-code in place in April. Has that changed in a meaningful way in terms of patients that are onboarding? Just curious if you can provide a little bit more color since the J-code in place.

Yes. Thanks, Brian. I mean we've seen from other launch analogs that the J-code can have an impact. And I think it's safe to say that it definitely has helped us since April 1. Tangibly, we've seen some institutions that we knew were holding back and waiting for the permanent J-code. And as you would imagine, they've now come on board and are starting to identify patients. And just in general, across the board, this J-code, which does give more certainty for providers of being reimbursed by payers is quite an important factor. And I think across the board, that has sort of lifted all boats in terms of identification of patients and their treatment. So yes, it's -- the momentum is definitely with us, particularly after the J-code.

And your next question comes from the line of Michael DiFiore from Evercore ISI.

Congrats on the stellar quarter. A few for me. You frequently referenced that the, I guess, prevalent patient pool in the U.S. is 27,000. So I guess my question is how many of those patients are actively managed, identifiable and realistically addressable by your commercial infrastructure at this point? And I have a follow-up.

No, great question. Thanks for that. Yes, there are a lot of patients out there, 27,000. And in any 1 year, you would expect a number of -- several thousand of those are actually very evident to the health care system because they're they have multiple surgeries, and they're using a lot of resources of the health care system. So there are thousands of what you might call severe patients. But then beyond that, particularly as you then go into the community setting, there are many patients who are earlier in their journey. And so the good thing from our perspective is that we have a very broad label and patients right from the beginning of that journey can be treated with PAPZIMEOS, and that's obviously our goal. We are seeing patients across all severities, as Helen mentioned, starting to be treated. But as we also said, we feel we're at the beginning of our journey, and there are a lot more patients, and there's a lot more runway ahead for us.

I'm sorry. I was going to say a related question is regarding if there's any bolus or pent-up demand/warehouse patients, how big is that? And how long might it take you to work through?

Yes. Well, I'd refer you to my previous answer really because there are several thousand in any 1 year, and that's just say count over the past 12 months. But in any 1 year, you're going to have, from our numbers, several thousand patients who fall into that more severe category, which is an obvious place to start for some physicians as they get experience with the drug. But we haven't worked our way through that, and there are more -- many more patients consistent with our broad label. So again, we reiterate there's an ongoing growth story here.

And maybe I can also add, Michael. From a perspective of the patient population for RRP, unfortunately, patients that are diagnosed with RRP or they have been diagnosed over the years, the tendency of this disease is just -- it becomes worse. As we have mentioned, these patients just by doing a surgery, this disease does not go away because surgeries never address the underlying issues, which is infection by HPV, basically 611, whereas PAPZIMEOS does that and addresses exactly the underlying issue. So for that reason, as Phil mentioned, not only we have the severe patient populations that exist, we have a patient population that they -- unfortunately, they are infected and start and then eventually, as the year go by, it becomes worse. But also what is very -- for us, is very important and what we are seeing across is the uptake of PAPZIMEOS by physicians and also patients that -- because the physician at this point, based on the broad label, the safety, the efficacy and especially the durability that we see and we reported at ASCO that now we have not only passed 3 years and some of our patients in 4 years post receiving PAPZIMEOS have not required any treatment for RRP. This has added to the excitement for treating the patients as early as possible, so they do not receive irreversible damages. So as you can see, not only we have the thousands of patients that are at the severe position, but also patients that are in their journey with RRP with the less severe and definitely, the physicians do not want them to become more severe and therefore, prescribing the PAPZIMEOS.

And your last question comes from the line of Yuan Zhi from B. Riley.

Congrats for a strong quarter. Since you had in-person engagement with initial target accounts, can you remind us how many accounts were on the initial list and how many have actually ordered your drug so far? And then maybe a quick follow-up there. What is the second wave expansion plan now you have 500 registrations in the hub?

Great. Thanks for the question. So just going back to the initial footprint and target number of institutions we identified, there were about 500 institutions that we identified that looked at over 90% or covered 90% of the patient population. And within that, it was about 100 large hospital systems that were responsible for over 80%. So obviously, we've targeted accordingly. But as I also mentioned before, we've seen the community come on board quickly. And so that's -- we've embraced the community side of things into our targeting as well. I won't give a specific number on the number that are using. But as you can see from our revenue and all of the leading indicators that we've spoken about, we're making great progress on activating those accounts. And the accounts that are activated are becoming repeat users. So in terms of the outlook, I mean, all of the things that we've spoken about, the continued account activation with the support of the permanent J-code, our broad label, the continued durability results that we have, the safety profile of the drug and the early experience of treating patients with PAPZIMEOS and the user-friendliness of that experience is all going to drive the continued wave of growth that we expect.

Thank you. And that concludes our question-and-answer session. I will now hand the call back to Helen Sabzevari for any closing remarks.

Thank you, operator, and thank you to everyone who joined us today. We are very pleased with the strong results we delivered in the second quarter, particularly the continued momentum behind PAPZIMEOS and the important foundation we are building for a long-term growth. As we approach the 1-year anniversary of approval, we remain focused on expanding access, supporting adoption, advancing our clinical and regulatory priorities and continuing to execute across the business. On behalf of the entire Precigen team, thank you for joining us today and for your continued support. We look forward to keeping you updated as the year progresses.

That concludes our call for today. Thank you for participating. You may all disconnect.