Precigen Announces $79.0 Million Private Placement Offering of Convertible Preferred Stock

Rhea-AI Summary

Precigen (PGEN) has announced a private placement offering of 8.00% Series A Convertible Perpetual Preferred Stock, expecting to raise $79.0 million in gross proceeds. The deal includes warrants to purchase 52,666,669 shares at $0.75 per share. The placement was led by Patient Capital Management affiliates, with participation from Bill Miller and Randal J. Kirk.

The Preferred Stock is convertible into common stock at $1.125 per share after six months and shareholder approval. Dividends will be paid annually, with the first two years paid in kind. The company expects this financing to extend its cash runway well into 2026, beyond the anticipated commercial launch of PRGN-2012 in the second half of 2025.

Positive

• Raises $79.0 million in gross proceeds through preferred stock offering
• Cash runway extended well into 2026
• Financing supports anticipated PRGN-2012 commercial launch in H2 2025
• Notable investors including Patient Capital Management, Bill Miller, and Randal J. Kirk participating

Negative

• 8% dividend rate on preferred stock indicates high cost of capital
• Potential dilution from conversion of preferred stock and exercise of warrants
• First two years of dividends paid in kind will increase future cash obligations

Insights

Financial Analyst

This $79.0 million private placement of convertible preferred stock represents a significant capital injection for Precigen, extending their cash runway into 2026. The deal structure is particularly noteworthy with its 8% dividend rate and unique PIK (payment-in-kind) feature for the first two years, preserving cash flow during a critical period. The $1.125 conversion price, representing a 50% premium to the warrant exercise price, indicates investor confidence in potential upside.

The participation of notable investors like Bill Miller and executive chairman Randal J. Kirk adds credibility to the financing. The warrant component (52.67 million shares at $0.75) provides additional upside potential for investors while offering future capital access for Precigen. This financing strategically aligns with their PRGN-2012 commercial launch timeline in H2 2025, providing important operational flexibility during the transition to commercialization.

Biotech Research Analyst

The timing and structure of this financing demonstrate strategic foresight, particularly regarding the anticipated PRGN-2012 commercial launch. By securing funding well ahead of the projected H2 2025 launch, Precigen has effectively de-risked their near-term operational needs. The extended cash runway into 2026 provides essential buffer for potential regulatory review timelines and initial commercialization efforts.

The convertible structure with warrants offers a balanced approach to capital raising, minimizing immediate dilution while providing upside participation for investors. The $79 million raise, relative to Precigen's $224.5 million market cap, represents substantial funding without overleveraging the company. This positions them well for executing their clinical and commercial strategies, particularly critical for a emerging biotech transitioning to commercial operations.

GERMANTOWN, Md., Dec. 27, 2024 /PRNewswire/ -- Precigen, Inc. (Nasdaq: PGEN), a biopharmaceutical company specializing in the development of innovative gene and cell therapies to improve the lives of patients, today announced that it has entered into a securities purchase agreement for the sale of its 8.00% Series A Convertible Perpetual Preferred Stock (Preferred Stock) in a private placement. Precigen anticipates gross proceeds from the private placement of $79.0 million before deducting offering expenses. In addition, the investors will have rights to exercise warrants to purchase 52,666,669 shares of Precigen's common stock at an exercise price of $0.75 per share (Warrants). The offering is expected to close on or before December 30, 2024, subject to customary closing conditions.

The private placement was led by affiliates of Patient Capital Management, with participation from Bill Miller, Randal J. Kirk, executive chairman of the board of directors of Precigen, and certain other investors.

The net proceeds of the offering shall be used for working capital and general corporate purposes. Based on its current operating assumptions, Precigen expects this financing, together with Precigen's cash on hand, will extend its cash runway well into 2026, beyond the anticipated commercial launch of PRGN-2012 in the second half of 2025, if approved.

Dividends on the Preferred Stock will be paid annually in cash when, as and if declared by the board of directors of Precigen, except that for the first two years following the issue date of the Preferred Stock, such dividends will be paid in kind in the form of an increase to the liquidation preference of the Preferred Stock by the amount of such dividends, together with warrants to acquire a number of additional shares of common stock equal to 50% of the amount of such dividends divided by the exercise price, subject to shareholder approval (as defined in the securities purchase agreement).

The Preferred Stock will be redeemable, in whole or in part, for cash at Precigen's option at any time on or after the issue date for an amount equal to the liquidation preference at such time, plus accumulated and unpaid dividends.

The Preferred Stock will be convertible into Precigen's common stock at the option of the holders thereof at any time on or after the later of the six month anniversary of the issue date and the date on which Precigen has, among other things, obtained shareholder approval. The Warrants are exercisable for shares of Precigen's common stock at any time after such shareholder approval.

The Preferred Stock is convertible into shares of Precigen's common stock at an initial conversion price of approximately $1.125, which is 150% of the exercise price of the warrants. The conversion price is subject to upward adjustment based on the valuation of the common stock from time to time.

Additional information regarding the Preferred Stock and Warrants will be included in a Current Report on Form 8-K to be filed with the U.S. Securities and Exchange Commission.

The securities being issued and sold in the private placement have not been registered under the Securities Act of 1933, as amended (the Securities Act), or any state's securities laws, and are being issued and sold in reliance on Section 4(a)(2) of the Securities Act. The securities may not be offered or sold in the United States, except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act.

The Preferred Stock and Warrants were offered directly to the Investors without a placement agent, underwriter, broker or dealer.

Precigen has agreed to grant the Investors certain registration rights with respect to the Preferred Stock, the common stock issuable upon conversion of the Preferred Stock and the common stock issuable upon exercise of the Warrants.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy the Preferred Stock, Warrants or Precigen's common stock, nor shall there be any sale of the Preferred Stock or Warrants in any state or jurisdiction in which such offer, solicitation or sale would be unlawful under the securities laws of any such state or jurisdiction.

About Precigen
Precigen (Nasdaq: PGEN) is a dedicated discovery and clinical stage biopharmaceutical company advancing the next generation of gene and cell therapies using precision technology to target the most urgent and intractable diseases in our core therapeutic areas of immuno-oncology, autoimmune disorders, and infectious diseases. Our technologies are designed to enable us to find innovative solutions for affordable biotherapeutics in a controlled manner. Precigen operates as an innovation engine progressing a preclinical and clinical pipeline of well-differentiated therapies toward clinical proof-of-concept and commercialization.

Cautionary Statement Regarding Forward-Looking Statements
Some of the statements made in this press release are forward-looking statements. These forward-looking statements are based upon Precigen's current expectations and projections about future events, including the closing of the private placement, and the intended use of proceeds of the private placement, anticipated timing of commercialization of PRGN 2012 and expected cash runway. Various factors may cause differences between Precigen's expectations and actual results. These risks and uncertainties include, without limitation, risks and uncertainties related to satisfaction of customary closing conditions related to the private placement, as well as that we have broad discretion in the use of proceeds. There can be no assurance that Precigen will be able to complete the private placement on the anticipated terms, or at all. For further information on potential risks and uncertainties, and other important factors, any of which could cause Precigen's actual results to differ from those contained in the forward-looking statements, see the section entitled "Risk Factors" in Precigen's most recent Annual Report on Form 10-K and subsequent reports filed with the Securities and Exchange Commission.

Investor Contact:
Steven M. Harasym
Vice President, Investor Relations
Tel: +1 (301) 556-9850
investors@precigen.com 

Media Contacts:
Donelle M. Gregory
press@precigen.com 

Glenn Silver
Lazar-FINN Partners
glenn.silver@finnpartners.com

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/precigen-announces-79-0-million-private-placement-offering-of-convertible-preferred-stock-302339619.html

SOURCE Precigen, Inc.

FAQ

What are the terms of Precigen's (PGEN) $79 million preferred stock offering?

Precigen's offering includes 8.00% Series A Convertible Perpetual Preferred Stock with warrants to purchase 52,666,669 shares at $0.75 per share. The preferred stock is convertible at $1.125 per share after six months and shareholder approval.

How will the $79 million private placement affect Precigen's (PGEN) cash runway?

The financing is expected to extend Precigen's cash runway well into 2026, beyond the anticipated commercial launch of PRGN-2012 in the second half of 2025.

What is the dividend structure for Precigen's (PGEN) new preferred stock?

Dividends will be paid annually at 8.00%, with the first two years paid in kind through an increase in liquidation preference, plus additional warrants subject to shareholder approval.

When can Precigen's (PGEN) new preferred stock be converted to common stock?

The preferred stock can be converted into common stock after six months from the issue date and after obtaining shareholder approval, at an initial conversion price of $1.125 per share.