Precigen, Inc. (PGEN) Earnings Call Transcript

Good afternoon, ladies and gentlemen, and welcome to the President's Second Quarter 2026 Financial Results and Business Updates Conference Call. At this time, online are in lesson only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, August 4, 2026. And I would now like to turn the conference over to Steve Harasim. Please go ahead.

Thank you, Operator, and thank you to everyone joining us for Prestigen'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 PEPs and MEOs. Joining me on today's call are Helen Salbzavary, our President and Chief Executive Officer, Phil Tennant, our Chief Commercial Officer, Harry Tomasian, our Chief Financial Officer, and Ritul Shah, our Chief Operating Officer. Helen will begin with an overview of the launch and key strategic updates. Phil will provide a additional details on the commercial execution. Harry will review our financial results, and Ritul 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. Sabzavari.

Thank you, Steve, and thank you to everyone joining us for our G2 2026 Business Update Call. As we approach the one-year anniversary of TAPSIMIUS approval in August 2025, it is worth reflecting on what a meaningful milestone this has been for adults with RRP. Maximius brought the first and only approved therapy and the new first line standard of care to the RRP community. Nearly one 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 details. Q2 represented exceptional growth from Q1. I'm proud to state that we generated $53.1 million in Paximius revenue compared to $21.6 million in Q1. presenting more than 145% revenue growth and marks a significant financial milestone for President. Topsimus Revenue in Q2 propelled the company to a quarterly net profit. even before we reach 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 continuing to 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, multi-purpose, and sustainable. growth for papzimias. 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 PAP-CMEA's 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 Pepsimia. As a result, physicians are able to consider papzimius 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 toxemius is being embedded earlier in the treatment paradigm. The clinical profile continues to resonate strongly with physicians and patients at the new standard of care. Tapsy-MERS is not another intervention in a cycle of repeated surgical interventions. It is designed to address the underlying HPV6 or 11 driver of the disease through a targeted immune response. Papsinius durability data continues to strengthen as the long-term follow-up matures. As we presented at ASCO, as of the April 30th cutoff, the ongoing durability of complete responses continues to increase with 83% of patients in ongoing complete response beyond three years, with the number of beyond 40 years of being surgery-free. I would like to emphasize that these durable, complete responders have not received any treatment for RRP after receiving PAP-SIMIUS. We believe this combination of transformative efficacy, durability, and ongoing responses, and a favorable safety profile remains highly differentiated. Finally, the FDA granted topsyneus seven-year market exclusivity for adult RRP patients. This exclusivity... to 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 details on our commercial launch. Phil?.

Thank you, Helen, and welcome to everyone joining us today. I'm pleased to provide an update on the continued progress of our commercial launch. Two represented a meaningful acceleration across the business with strong demand, expanding patient access, and increasing engagement from physicians and institutions as Pabst-Zimmias continues to establish itself as the new standard of care for adults with RRP. Importantly, the commercial indicators we are seeing support the view that this is the beginning of a durable growth story. As Helen mentioned in Q2, Papsimeus 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 PAP-SMEOS 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 Precision 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, Presagen Hub data did not capture all patients, so the 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 pap simios without necessarily requiring precision 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. 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 1st, 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 Pepsimius 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 Absymious 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 of Pepsimios revenue that we've reported today. That revenue has propelled Precision to profitability for both the quarter and the six months ended June 30th. 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 PEP-SIMEOs. Our Second quarter PEP CMEOS revenue grew from the first quarter by $31.5 million as we saw demand for PEP CMEOS 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 pre-launch inventory, which we anticipate to be in the third quarter of this year, we expect gross margins related to PAP-SIMEOs to stabilize between the high 80 percentages and low 90 percentages. The research and development cost for the quarter was $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 Pepsimios manufacturing costs were expensed as R&D costs prior to the FDA approval, 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's second quarter. This increase was significantly driven by increased commercial activities related to PAP-CMEDOS. 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 $4 million. $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 Patsy Meos. 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 four 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 Pepsimio's 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 pap smear's clinical and regulatory progress in the U.S. and abroad. Papsimeus 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 Capsinius this year. In addition, our marketing authorization application for Papsimeus is under review by the EMA. had been granted orphan drug designation from the European Commission. Now turning to PRGN 2009, which uses the same adenovirus platform backbone as our approved therapy, PAP-C-MEF. and underscores the broader potential of this technology. GRGN 2009 is an investigational immunotherapy designed to train the immune system to recognize and eliminate tumor cells associated with HPV 16 and HPV 18, which are the underlying drivers of several major related cancers, including certain head and neck and cervical cancers. Together, HPV-related malignancies represent nearly 5% of all cancer cases worldwide. CRGN 2009 is currently advancing in multiple phase two 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 Papzinius and the progress of PRG in 2009 has established proof of principle for the Ad Universe 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.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star four by the one on your telephone keypad. You will hear a prompt that your hand has been raised. And should you wish to cancel your request, please press star four by the two. I would like to advise everyone to have a limit of one question and one follow-up. If anyone have an additional question, you can put yourself back in the queue by pressing star 1. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Thank you. And your first question comes from the line of Jason Butler from Citizens.

Hi, thanks for taking the questions and congrats on an exceptional quarter. obvious first question, can you give us any color into, you know, 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 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. Thank you.

Hey 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. And physicians and so on. 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. 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 pre-work that was done by the commercial group in establishing all the fundamentals that is needed to sustain the growth and promote this as we go forward has paid off and continues to pay off. We are really looking forward as we move. 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-precision hubs, clearly this speaks to the uptake of of Pepsimus as a standard of care by physicians, the request of the patient, 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. Thank you, Helen. Thanks for taking questions.

Thanks, Chase. Thank you. And your next question comes from the line of Suayam Pakula from Ramakant from RainRide. Please go ahead. Thank you. Good afternoon, team. Excellent.

Congratulations from my end as well. So Pap Simios is... is a four injection course over 12 weeks. So what portion of the second quarter revenues these later cycle doses in these patients who initiated in the first quarter. 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. Okay. Hi. Thank you for the question. So in regard to the patients that we have up to this point had We have treated more than 200 patients, at least have received one dose of pap smear. And as you are seeing the number of the patients in the hubs, it continues to grow as well as in ex-hubs and patients that are coming in from a community center. So this is quite an increase. As far as the number of the patients that have completed, there are over 100 patients have gone through all the tests basically for treatment. And obviously, new patients are joining the hubs as we go. So we are very excited about this and fairly... Yes, okay, you're right, though. There is a sort of a mini annuity, right, with these patients, depending upon when they start during the quarter.

And, you know, 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. Thank you.

Okay. The couple 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, but this got expensed through the R&D line. What could be the real steady-state COGS once that inventory is consumed? Okay.

Hey, RK. It's Harry. How are you? The first question, remind me again the first question.

So the order 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, you know, what could be the steady-state COGS once you, you know, once you use up all your pre-approval manufacturing reserves?.

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