Lines of Credit and Long-Term Debt

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Lines of Credit and Long-Term Debt

Lines of Credit and Long-Term Debt

Lines of Credit

Exemplar has a $2,500 revolving line of credit with American State Bank that matures on October 31, 2023. As of December 31, 2022, the line of credit bore interest at 7.00% per annum. As of December 31, 2022 and December 31, 2021, there was no outstanding balance.

Long-Term Debt

Long-term debt consists of the following:

	December 31,
	2022		2021
Convertible debt	$	43,219	$	179,882
Other	—		52
Long-term debt	43,219		179,934
Less current portion	43,219		52
Long-term debt, less current portion	$	—	$	179,882

Convertible Debt

Precigen Convertible Notes

In July 2018, Precigen completed a registered underwritten public offering of $200,000 aggregate principal amount of Convertible Notes and issued the Convertible Notes under an indenture (the "Base Indenture") between Precigen and The Bank of New York Mellon Trust Company, N.A., as trustee, as supplemented by the First Supplemental Indenture (together with the Base Indenture, the "Indenture"). Precigen received net proceeds of $193,958 after deducting underwriting discounts and offering expenses of $6,042.

The Convertible Notes are senior unsecured obligations of Precigen and bear interest at a rate of 3.50% per year, payable semiannually in arrears on January 1 and July 1 of each year beginning on January 1, 2019. The Convertible Notes mature on July 1, 2023 and are repayable in cash, unless earlier repurchased or converted. Upon conversion by the holders, the Convertible Notes are convertible into cash, shares of Precigen's common stock or a combination of cash and shares, at

Precigen's election. The initial conversion rate of the Convertible Notes is 58.6622 shares of Precigen common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $17.05 per share of common stock). The conversion rate is subject to adjustment upon the occurrence of certain events, but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date as defined in the Indenture, Precigen will increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such a corporate event in certain circumstances. Prior to April 1, 2023, the holders may convert the Convertible Notes at their option only upon the satisfaction of the following circumstances:

•During any calendar quarter commencing after the calendar quarter ended on September 30, 2018, if the last reported sales price of Precigen's common stock for at least 20 trading days (whether or not consecutive) during the last 30 consecutive trading days of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

•During the five business day period after any five consecutive trading day period in which the trading price, as defined in the Indenture, for the Convertible Notes is less than 98% of the product of the last reported sales price of Precigen's common stock and the conversion rate for the Convertible Notes on each such trading day; or

•Upon the occurrence of specified corporate events as defined in the Indenture.

None of the above events allowing for conversion prior to April 1, 2023 occurred during the year ended December 31, 2022. On or after April 1, 2023 until June 30, 2023, holders may convert their Convertible Notes at any time. The Convertible Notes do not allow Precigen to call the debt prior to the maturity date.

If Precigen undergoes a fundamental change, as defined in the Indenture, holders of the Convertible Notes may require Precigen to repurchase for cash all or any portion of their Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The Indenture contains customary events of default, as defined in the agreement, and, if any of the events occur, could require repayment of a portion or all of the Convertible Notes, including accrued and unpaid interest. Additionally, the Indenture provides that Precigen shall not consolidate with or merge with or into, or sell, convey, transfer or lease all or substantially all of its properties and assets to, another entity, unless (i) the surviving entity is organized under the laws of the United States and such entity expressly assumes all of Precigen's obligations under the Convertible Notes and the Indenture; and (ii) immediately after such transaction, no default or event of default has occurred and is continuing under the Indenture.

The net proceeds received from the issuance of the Convertible Notes were initially allocated between long-term debt, the liability component, in the amount of $143,723, and additional paid-in capital, the equity component, in the amount of $50,235. Additional paid-in capital was further reduced by $13,367 of deferred taxes resulting from the difference between the carrying amount and the tax basis of the Convertible Notes that is created by the equity component, which also resulted in deferred tax benefit recognized from the reversal of valuation allowances on the then current year domestic operating losses in the same amount.

As described in Note 2, the Company adopted ASU 2020-06 on January 1, 2022. Pursuant to ASU 2020-06, the equity components of the Convertible Notes separated from the debt components as required under the cash conversion model is required to be recombined into the Convertible Notes as a single instrument upon the adoption of ASU 2020-06. The Convertible Notes shall be accounted for as if the conversion option had not been separated. As the Company elected the modified retrospective approach, the difference between the accounting under the cash conversion model and new model after the adoption of ASU 2020-06 (i.e., the single debt instrument with no separation) was recorded as an adjustment on the adoption date (i.e., January 1, 2022) through accumulated deficit. Tax accounting consequences of the adoption also required the reversal of the previously reported deferred tax benefit on the date of adoption through accumulated deficit.

Adoption of ASU 2020-06 resulted in an increase to long-term debt outstanding, net of current portion, of $18,196, a decrease to additional paid-in capital of $36,868, and a decrease to accumulated deficit of $18,672. Interest expense recognized on the convertible notes in future periods was expected to be reduced as a result of accounting for the convertible debt instrument as a single liability measured at its amortized cost.

As discussed in Note 3, in connection with the sale of Trans Ova in 2022, the Company transferred a total of $200,000 into a segregated account to be used for certain permitted purposes, including resolution of the Company's outstanding Convertibles Notes. During the year December 31, 2022 and subsequently, the Company executed open market purchases of a portion of the outstanding Convertible Notes. During the year ended December 31, 2022, the Company retired $156,660 of principal balance

from these purchases and recorded a gain on extinguishment of debt of approximately $961, which was recorded within Other income (expense), net, within the consolidated statements of operations. As of December 31, 2022, $43,339 of restricted cash remained in the segregated account noted above for permitted purposes including the resolution of the Company's outstanding Convertible Notes.

As of December 31, 2022, the outstanding principal balance on the Convertible Notes was $43,340 and their carrying value was $43,219. The effective interest rate on the Convertible Notes, including amortization of the long-term debt discount and debt issuance costs, is 4.25%. As of December 31, 2022, the unamortized debt discount and debt issuance costs related to the Convertible Notes totaled $121.

Subsequent to year-end, the Company repurchased an additional $15,460 of principal balance of Convertible Notes at a price of $15,305, using restricted cash for the purchase.

The components of interest expense related to the Convertible Notes were as follows:

	Year Ended December 31,
	2022		2021		2020
Cash interest expense	$	5,727	$	7,000	$	7,000
Non-cash interest expense	1,042		11,735		10,587
Total interest expense	$	6,769	$	18,735	$	17,587

Accrued interest of $759 is included in other accrued liabilities on the accompanying consolidated balance sheet as of December 31, 2022.

See Note 2 for additional discussion regarding the Convertible Notes.

ActoBio Convertible Notes

In September 2018, ActoBio issued $30,000 of convertible promissory notes (the "ActoBio Notes") to a related party in conjunction with an asset acquisition with Harvest. The ActoBio Notes, which accrued interest at 3.0% compounded annually ("accrued PIK interest"), matured in September 2020. The Company issued 6,293,402 shares of Precigen common stock upon conversion of the outstanding principal balance and accrued PIK interest at maturity. Interest expense was $616 for the year ended December 31, 2020.

Future Maturities

Future maturities of long-term debt as of December 31, 2022 are as follows:

2023	$	43,340
2024	—
2025	—
2026	—
2027	—
Thereafter	—
Total	$	43,340