Three points underpin our conviction.
1. Precigen’s Papzimeos Has Demonstrated Stronger Clinical Efficacy Than Inovio’s Product.
PAPZIMEOS demonstrated a 51% complete response rate at one year, with 43% of patients maintaining continuous complete response through two years. In contrast, the competitor’s VOCERYQ achieved a 27% complete response rate at one year in its FDA-defined efficacy population. Inovio is only allowed to reference this efficacy data in its marketing materials.
Inovio has highlighted a 50% complete response rate during Year 2, but this is not a sustained two-year response rate. Patients who required surgery during Year 1 could still be counted as responders in Year 2. Their retrospective analysis also excluded four original participants, used a different population from the FDA efficacy assessment, and included patients who received additional systemic treatment. Only seven patients remained surgery-free across both years, approximately 21% of the original cohort.
Using Inovio's 50% headline to imply durability comparable to PAPZIMEOS is scientifically unjustified. These are not head-to-head trials, but the burden of demonstrating equivalence belongs to the new competitor, and the available evidence falls well short.
PAPZIMEOS also benefits from traditional FDA approval, established physician and reimbursement relationships, and growing real-world experience. Its ability to deliver prolonged freedom from repeated surgeries is particularly valuable in RRP. Inovio's approval creates another treatment option, not a compelling reason for physicians to abandon a therapy already delivering durable results. Inovio’s approval is also conditional. It received accelerated approval which requires additional confirmatory trials. This stands in contrasts to PAPZIMEOS which was approved outright.
2. The business is telling a very different story from the stock price.
PAPZIMEOS is delivering one of the strongest rare disease launches we have reviewed. In just nine months, it has generated $147.6 million in revenue, more than 50% above Wall Street's original full-year expectation of $98 million.
Our initial full-year estimate of $215 million was more than twice consensus, yet even that has proven conservative. Revenue has increased from $21.6 million to $53.1 million and then $72.9 million, exceeding our expectations every quarter. Third-quarter revenue grew 37% sequentially, beating consensus by 7% and our estimate by 10%. We now expect approximately $240 million for the year.
Importantly, this success is translating into cash generation. Precigen generated $11.9 million of positive operating cash flow in the third quarter, one quarter ahead of guidance, while continuing to expand prescriber adoption and patient starts.
The contrast is striking: Precigen is demonstrating accelerating adoption and cash generation, while the market is discounting competitive disruption before Inovio has established a commercial track record. We have always expected competition and incorporated it into our valuation. Nothing in the recent approval fundamentally changes our assessment of PAPZIMEOS's long-term opportunity.
Inovio also faces significant commercial hurdles. Despite its recent capital raise, it still has limited financial runway, has yet to establish a sales force, and requires a proprietary device that uses electrical pulses to administer treatment. These challenges introduce meaningful execution risk and create additional uncertainty around the pace and success of its launch.
3. Our $11 per share RRP valuation excludes a pipeline with substantial potential.
We estimate the value of the RRP franchise at approximately $11 per share even after accounting for competition, without assigning value to Precigen's broader pipeline.
The next important catalyst is PRGN-2009, with new Phase 2 data in HPV-associated head and neck cancer expected in the next few months. We are optimistic about the program, which is also being studied in cervical cancer. HPV is responsible for approximately 5% of cancers worldwide, highlighting the significant potential opportunity.
More broadly, Precigen's AdenoVerse platform can be adapted to target additional cancers and infectious diseases. The FDA's recent Platform Technology Designation could further accelerate development by allowing the company to leverage manufacturing and regulatory knowledge from PAPZIMEOS across future programs. This platform could be as valuable as PAPZIMEOS.
Precigen has transformed from a clinical-stage biotechnology company into a rapidly growing, cash-generating commercial business, while retaining the upside of a potentially much broader therapeutic platform.
We take competition seriously, but we think the market has gotten this one wrong. With PAPZIMEOS substantially outperforming expectations, competition already reflected in our valuation, and meaningful pipeline catalysts ahead, we view the recent selloff as an attractive investment opportunity rather than a deterioration in our thesis.
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