Earnings Call Transcript - PGEN Q1 2026

Operator, Operator

Good afternoon, ladies and gentlemen, and welcome to the Precigen First Quarter 2026 Financial Results and Business Update Conference Call. Operator instructions were given. This call is being recorded on Wednesday, May 13, 2026. And I would now like to turn the conference over to Mr. Steven Harasym. Please go ahead, sir.

Steven Harasym, Head of Investor Relations

Thank you, operator, and thank you for all those joining us today for our Q1 2026 update call. Joining me today are Dr. Helen Sabzevari, our President and CEO; Phil Tennant, our Chief Commercial Officer; Harry Thomasian, our Chief Financial Officer; and Raul Shah, our Chief Operating Officer. Before we begin our prepared remarks, I remind everyone that we will be making certain forward-looking statements during this call. These statements are based on our current expectations and beliefs. We encourage you to review the slides in this presentation as well as 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.

Helen Sabzevari, President and CEO

Thank you, Steve, and thank you to all those joining us for our Q1 update call. The approval of PAPZIMEOS in August of 2025 has brought a novel first-line standard of care treatment for adults with RRP. In nine short months, we have witnessed tremendous progress with the first commercial therapeutic launch in the disease's history. Since last reporting in March, the launch has continued to show accelerating momentum. The early success and trajectory continues to build on this landmark achievement for the patients, families, health care providers, the RRP Foundation and all of those impacted by this devastating disease. I will begin by providing you with some general color around what we are seeing and then turn the call over to Phil, who will provide more specifics around commercialization. The accelerating trajectory we are seeing in revenue growth is robust. As reported in our quarterly report, PAPZIMEOS' net product revenue for Q1 2026, the first full quarter of availability, was $21.6 million as compared to $3.4 million in Q4 2025. Prescribers continue to add PAPZIMEOS to their practices at both major medical centers and community practices alike, which has been a strong tailwind as we are seeing this increasing momentum continue into Q2. This is a clear signal of the high level of enthusiasm among patients and physicians resulting in significant uptake of the therapy. Why we believe we are seeing such a significant launch trajectory. First, the full approval and broad label from the FDA. There are no restrictions on the number of surgeries a patient must undergo prior to treatment with PAPZIMEOS. We are seeing this as patients are being dosed across all severities and in the extensive payer coverage we have secured. Second, the transformative clinical data based on significant efficacy, durable and ongoing responses with a median duration of follow-up of three years. Importantly, we look forward to updating the ongoing durability data at ASCO next month. Third, the ease of administration of the drug has enabled broad and rapid uptake not just at major medical institutions, but increasingly at community practices. Specifically, the ease of dosing as well as the efficient distribution infrastructure we have in place across the country allow rapid and effective integration into routine clinical practices. Finally, the power of this therapy is strongly supported by a landmark expert position paper released earlier this year. The paper, sponsored by the RRP Foundation and authored by 16 leading U.S. physicians specializing in RRP, was published in The Laryngoscope, the premier peer-reviewed journal in otolaryngology. The paper recommends PAPZIMEOS as the new standard of care and the preferred first-line therapy. Collectively, these factors mean that PAPZIMEOS has set a new benchmark for this space, prioritizing medical therapy over repeated surgical interventions to improve patients' outcomes. As a reminder, this therapy directly addresses the root cause of RRP by eliciting a targeted immune response against HPV-6 and HPV-11. PAPZIMEOS also offers the potential for redosing due to its mechanism of action and favorable safety profile. We are evaluating this in an ongoing clinical trial, which is enrolling patients as we speak. I will now turn the call over to Phil for details around our commercial launch. Phil?

Phil Tennant, Chief Commercial Officer

Thank you, Helen, and a warm welcome to all those listening. I'm delighted to share the most recent progress of our launch efforts with details around the completion of Q1 and the sharp momentum we continue to see with PAPZIMEOS launch in Q2 of this year. As seen in our filings, we showed strong quarter-over-quarter product revenue growth in Q1 2026, clearly demonstrating the expected acceleration of product uptake from $3.4 million to $21.6 million. As we report today, we continue to see comprehensive payer coverage and further activation of accounts across the country. I will now present some of the leading indicators we are observing as of today, translating to the launch acceleration. Registrations in the PAPZIMEOS patient hub continue to grow. As of today, we have approximately 400 patients registered, of which 25% are in the community setting, underscoring the broad reach of PAPZIMEOS beyond academic and major centers and reinforcing that PAPZIMEOS can be effectively integrated into routine clinical practice beyond major centers. As previously mentioned, this does not account for non-hub patients directly enrolled by institutions. This continues to support the fact that there is expected pent-up demand for the new standard of care for adults with RRP. Payer coverage has been exceptional and provides a solid platform for patient access to PAPZIMEOS. Total lives covered through commercial, Medicare and Medicaid stands at an estimated 297 million. All inclusive, this equates to more than 90% of insured lives covered in the U.S. As expected, we continue to see activation of accounts who are prescribing and ordering PAPZIMEOS across both major medical centers and community practices. We are seeing this trend continue into Q2, further fueled by the permanent J-code and the dedicated field reimbursement resources we have implemented. As Helen mentioned earlier, the expert position paper continues to solidify PAPZIMEOS as the first choice for adult patients and treating physicians. We continue to have a significant presence at major scientific congresses in the U.S. and beyond, both through publications and presentations and interactions with thought leaders and the broader treatment community. This again reinforces the strong receptivity to PAPZIMEOS that we are seeing from the market. These congresses will continue to be a significant part of our commercial and scientific strategy moving forward. The assignment of the permanent J-code on April 1, coupled with the durability of response that we are seeing in patients, is helping this impetus continue. The permanent J-code designation will further simplify claims processing and facilitate broader patient access through both medical centers and community practices. The significant quarter-over-quarter revenue growth is a clear sign that the health care community is embracing PAPZIMEOS. We are thrilled with launch performance in Q1 and expect these positive trends to continue into Q2 and beyond. I look forward to sharing those Q2 results in August. I'll now turn the call over to Harry for an overview of our Q1 financials. Harry?

Harry Thomasian, Chief Financial Officer

Thank you, Phil, and good afternoon to all of the participants on today's call. As you've already heard, we are extremely pleased with our top line financial results for the first quarter. I also want to add that not only do we surpass $21 million in PAPZIMEOS revenue, but our operating loss for the quarter was only $6 million. Let me provide some further color on our overall financial results for the quarter. Total revenue was $23.3 million, which included $21.6 million related to PAPZIMEOS sales. We saw demand for PAPZIMEOS continue to build as the first quarter progressed, and we're continuing to see that demand increase as we enter the second quarter. Research and development costs for the quarter were $5.6 million, which compared to the prior year first quarter decreased by $4.8 million. The majority of this change is explained by the fact that PAPZIMEOS manufacturing costs were expensed prior to the FDA approval. As we look forward, we anticipate R&D expense will increase as the year progresses. Selling, general and administrative expenses for the quarter were $21 million, having increased by $8.7 million from the prior year's first quarter. The increase was significantly driven by increased commercial activities related to PAPZIMEOS. Moving down the statement of operations. As I noted earlier, our operating loss for the quarter was $6 million. Our net loss for the quarter was $7.9 million or $0.02 per basic and diluted share. Turning to the balance sheet. We ended the quarter with $56.7 million in cash, cash equivalents and investments. I do want to point out that our cash used in operations for the quarter was $43.8 million and included $13 million of cash outflows that we do not expect to recur in future quarters this year. The first quarter cash used also did not include any cash receipts from PAPZIMEOS sales based on customer payment terms. With that said, we expect cash used in operations in the second quarter to be significantly lower than what we saw in Q1. 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, and we currently do not see a need to access capital markets for additional funding. I'd like to now turn it back to Helen for some closing remarks. Helen?

Helen Sabzevari, President and CEO

Thank you, Harry. I will now provide updates on the portfolio, starting with PAPZIMEOS clinical and regulatory updates. We intend on initiating a pediatric trial of PAPZIMEOS in Q4 of this year, as previously mentioned. In addition, our marketing authorization application continues under review by EMA for PAPZIMEOS. We are also pleased to announce our sponsorship of a third annual RRP Awareness Day in June. This event provides another excellent platform to raise global awareness of RRP and the new standard of care for its treatment in the U.S. Now turning to PRGN-2009. This is the same backbone as our approved therapy PAPZIMEOS, expanding the proven AdenoVerse platform. Our PRGN-2009 immunotherapy is designed to train the immune system to recognize and eliminate tumor cells infected with HPV-16 and HPV-18, the root cause of major HPV-driven cancers such as head and neck and cervical cancers. These malignancies together represent nearly 5% of all cancer cases worldwide. PRGN-2009 is advancing in multiple Phase II clinical trials in combination with pembrolizumab in both head and neck and cervical cancers. I am very enthusiastic about the prospects of this program. We plan to provide updates on the program later in the year. With that, I will now turn the call over to the operator for Q&A.

Operator, Operator

Operator instructions were given. And your first question comes from the line of Jason Butler from Citizens.

Jason Butler, Analyst

Congratulations on the quarter and the progress with PAPZIMEOS. A couple of questions. First, can you tell us how many patients have now received at least the first dose and whether you are seeing patients complete the full course of therapy? Second, on the redosing trial, could you highlight a couple of the design features and indicate when we might see initial data cuts? Finally, regarding PRGN-2009, for the update you plan to give later this year, can we expect to see any results from the ongoing Phase II trials?

Helen Sabzevari, President and CEO

Thank you, Jason, for the question. So in regards to the first question, I'm going to hand it over to Phil, and then I will take the last two questions.

Phil Tennant, Chief Commercial Officer

Jason, thanks for the question. Yes, we're not commenting on the specific number of patients who have actually been initiated on treatment. But as you can see from the revenue number, we're obviously making some very good progress there. And yes, given that we started our dosing in November and it's a 12-week regimen, then yes, absolutely, we are starting to see patients who have completed treatment.

Helen Sabzevari, President and CEO

Yes. And maybe I can also add that very clearly, as patients are being dosed and finishing all of the patients have received their doses. So, this is, again, going back to the original data that we have presented on the safety and efficacy and durability of PAPZIMEOS, which again points to that factor and ease of administration. In regards to the second question on redosing, we have currently started the redosing of the patients, especially the patients that had partial responses in our previous trials, in our pivotal trial, and we have started that. And clearly, our patients that are being dosed commercially right now are being followed, and we are very much excited. From what we are hearing from the field, the physicians are extremely excited about some of the results that they are seeing currently. So, for now, we are focusing on the partial responders that were in our original trials, and we are gathering the information on that, and we will be reporting from that perspective. In regards to PRGN-2009, the answer is absolutely. We will be reporting data. We are looking forward to that. This is, as we have mentioned, in our Phase II trials, especially in head and neck cancer in combination with pembrolizumab. These are open-label trials, so we have a continuous opportunity to follow the data, and we are looking forward to sharing this in the second half of this year.

Operator, Operator

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

Brian Cheng, Analyst

Congrats on the quarter. Maybe just first, out of the 400 patients that you're currently in the hub, can you talk about the pace of conversion that you're seeing to commercial products? And just curious if you can talk a little bit about the pace of recruitment into the hub. Are you seeing any uptick since you launch? Just curious if you can talk about the pace there. And then we have a follow-up.

Phil Tennant, Chief Commercial Officer

Sure. Brian, thanks for the question. So, I think the revenue is probably the first thing that speaks to the pace of conversion of the patients. It's a little early to go into definitive details on that. We are looking at that, of course. And I think with the advent of the J-code, the permanent J-code, that's something that over the next couple of quarters we'll do a deep dive on to understand exactly how quickly and how many of these patients are being converted and how we can help. We've implemented dedicated field resources to assist in that conversion. And the momentum that we're seeing coming into Q2 suggests that we're making great progress there. In terms of the pace of recruitment into the hub, you've seen the numbers steadily increase as we started to report on hub numbers. And remember, this is only the Precigen hub that we are commenting on. There's a significant number of patients who are not using our hub who are being identified and treated. So that's another dynamic that is important.

Helen Sabzevari, President and CEO

Yes. And perhaps Brian, I can also add, this is Helen. I think what is very important and Phil pointed that out is also the number of patients that are coming through the community centers because this is extremely important. And as we reported, now we have 25% of the patients coming from community. So, this really points out not only the expanded efforts in major medical centers, but now the community doctors and centers are participating. And again, a lot of those are not necessarily in the hubs, and they are treating the patients as we speak. Also, another important point is this does not depend on severity of the patient, which is very, very important. So we are very excited about the reach and the way that PAPZIMEOS has been embraced by physicians and patients.

Brian Cheng, Analyst

Maybe just a follow-up here. As we think about how to model the second quarter and, obviously, as we move through the rest of the year, are there any specific considerations we should keep in mind as we model Q2, Q3 and beyond? And, as you did for the first-quarter number, are you able to provide some guardrails for what we could see numerically for the second quarter?

Helen Sabzevari, President and CEO

Okay. Yes. Thank you, Brian, for the question. So clearly, we have said we are not, at this moment, providing guidance. However, as you saw from Q4 to Q1, we went to over $21.5 million. We have continued acceleration in treatment and expansion of the treatment both at medical centers and community centers. I think we are looking forward definitely to our Q2 and the results that we will be sharing as far as revenue is concerned. As Phil said, the revenue will speak for itself as it gets presented, which really shows the bringing in the number of the patients continuously and treatment as we are expanding. One of the good indicators you can see is from our hub, which is limited because it's only our hub and doesn't include patients from other sources, you can see a continuous expansion in the number of the patients, which speaks to the fact that this therapy is being taken up in an accelerated fashion by the field. And one other thing I can speak to, and Phil can add, is what we are seeing at the conferences and in how physicians are speaking and bringing patients onto this treatment. It is quite encouraging.

Phil Tennant, Chief Commercial Officer

Yes. I would just add, Brian, that there's a few things that we're very confident about and looking forward to reporting on more. Obviously, the strong payer position we cemented quite early gives us a firm foundation for what's to come. I would say, as Helen mentioned, we expect the continued activation of accounts who are ordering and using PAPZIMEOS not only in IDNs, but in the community, and we would expect that community trend to continue to strengthen. Ultimately, all of that is laying the firm foundation for the long-term success of the product over multiple quarters and years and not just over a single quarter.

Operator, Operator

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

Swayampakula Ramakanth, Analyst

Obviously, a fantastic quarter with $21.6 million in revenues. Phil, if you can help us understand that number a little bit more in terms of what portion of that was either part of pent-up demand or flow from Q4 to Q1 in terms of getting the payer policies and processes set up versus patients who were treated. In the same vein, you disclosed 400 patients in the hub with 25% coming from the community. So how many of these 400 or so patients that you have in the hub have been infused at this point? And also, what's the average time somebody takes from enrollment to getting dosed? And the last question for me is on the data itself that's expected at the ASCO conference in terms of the durability data. How should we think about the data? Would that be helpful and supportive of any label expansions? And also, how should we think about that in terms of the current studies, whether it is pediatric or redosing? Will that give us some sort of feel for how these studies should eventually read out?

Helen Sabzevari, President and CEO

Thank you very much, RK, for the questions. This is Helen. Maybe I'll take the last question first, and then I will give the rest to Phil. In regards to the ASCO presentation, we are actually very excited about the durability response and the data that is going to be presented at ASCO. Clearly, we are continuing to see momentum. As far as both safety, durability of response and the efficacy that we have reported, we are now building further on that at ASCO. This will be exciting for us. That data will help further add to the durability of the response and support potential indication expansion. We are looking forward to that. That data further adds to the robustness of the platform, which demonstrates the AdenoVerse platform's potential to be used across a number of indications, specifically HPV-related indications both in rare diseases and in oncology. We think that data is another demonstration of the AdenoVerse platform, which we are advancing toward platform designation. With that, I'm going to hand it to Phil to answer the other questions.

Phil Tennant, Chief Commercial Officer

RK, thanks for the question. Let me tackle your hub question first. I did refer to this a little earlier. I think we'd like to see another couple of quarters before we communicate details of exactly the hub conversion and time to conversion and so on. I would say it's pretty much as expected at the moment, but we do need another quarter or two to really understand the meaningful trends there. Your first question was about carryover revenue. Yes, absolutely, given that we've got a 12-week regimen at the end of each quarter, you will see some revenue spillover into the next quarter. From Q4 into Q1, that was pretty minimal given the level of revenue that we had in Q4, but you would expect that to be more as we go forward. The key thing there is that it's new patients that is fueling the business opportunity that we've seen in Q1.

Helen Sabzevari, President and CEO

Yes. Maybe I can add to that. The achievement with the J-code has been extremely helpful in enabling institutions to process patients more rapidly. We are seeing that trajectory increase, and we are seeing the same thing in Q2. So we are very excited about that.

Operator, Operator

There are no further questions at this time. I will now hand the call back to Dr. Helen Sabzevari for any closing remarks.

Helen Sabzevari, President and CEO

Thank you, operator, and thank you for all of the thoughtful questions. We appreciate the opportunity to provide you with this update on this historic product launch. I believe we are building the foundation of a meaningful full portfolio for Precigen and for the community of our patients. We look forward to updating you as the launch continues and specifically also further on our portfolio progress. With that, I wish everyone a wonderful evening. Thank you.

Operator, Operator

Thank you. And this concludes today's call. Thank you for participating. You may all disconnect.