The subsidiary of a German drugmaker just increased its stake in Montgomery County's Precigen Inc. — a move that sent the local company’s stock soaring.
Ares Trading S.A., a wholly owned subsidiary of Darmstadt, Germany-based Merck KGaA, took more equity in Precigen (NASDAQ: PGEN) by voluntarily converting a $25 million convertible note, the companies said Oct. 9. The action gave Ares nearly 6.76 million shares of common stock at about $3.70 per share on Oct. 7, Precigen disclosed in Securities and Exchange Commission filings.
It solidifies Ares’ position as the Germantown company’s second-largest shareholder now with 14.8% ownership, up from 11.6%. Precigen Executive Chairman Randal Kirk, its former longtime CEO, is the company’s largest shareholder. He owned 82.79 million shares — a 48.5% stake — as of April 29, according to SEC filings.
We have reached out to Precigen and will update this post as we hear back.
Ares’ move comes nearly two years after Merck KGaA reassigned to Precigen exclusive development rights to its CAR T-cell therapy, a cancer therapy that uses the body’s immune system, in exchange for the $25 million convertible note and $150 million in stock. Precigen and Merck KGaA — a different company from New Jersey pharmaceutical giant Merck (NYSE: MRK) — first teamed up in 2015 to develop cancer therapies using the local biotech’s proprietary technology.
“We welcome a strengthened relationship with Merck KGaA, Darmstadt, Germany, a recognized leader in oncology and patient care, as it increases its ownership position in Precigen,” Helen Sabzevari, president and CEO of Precigen, said in a statement. “We look forward to building value for all of our stakeholders through the clinical milestones we have planned over the next year and beyond.”
Precigen’s stock climbed to a high of $5.94 per share Friday, the day of the announcement, a 35% jump from its Thursday close of $4.41. It opened Monday at $5.60 per share and was trading down nearly 12% from Friday’s close to just over $5 per share by mid-afternoon.
The Montgomery County biopharmaceutical company, which specializes in gene and cell therapies, has a handful of candidates in phase 1 clinical trials including three immune-oncology candidates: for ovarian cancer, acute myeloid leukemia (cancer of the blood and bone marrow) and myelodysplastic syndrome (a group of blood cell disorders). The company also has a candidate for type-1 diabetes in phase 2 studies, among other candidates for solid tumors and infectious diseases in early state trials.
Precigen reported $60.3 million in revenue for the first half of 2020, a $4.8 million increase from $55.4 million in revenue during the first half of 2019. But it also made cuts, suspending some operations and reducing its headcount by 25% in the second quarter of 2020 “to support a more streamlined organization.” The company has more than 100 D.C.-area employees, it confirmed Monday.
Precigen, formerly Intrexon Corp., rebranded under its current name at the start of 2020. That came after Intrexon set out to position itself as a health care company, first initiated with a split of its business units in April 2019. Intrexon, founded in 1998, formed Precigen as a subsidiary in 2017. That entity opened a new 5,000-square-foot manufacturing facility in April 2019, where the new company is now based.
