Precigen, Inc. f/k/a Intrexon Corporation

The Company develops technologies using synthetic biology, an evolving discipline that applies engineering principles to biological systems to enable design-based control of cellular function for a specific purpose. Its methane bioconversion platform (“MBP”) purports to convert natural gas into commercial end products, such as isobutanol for gasoline blending, 2,3 Butanediol (“2,3 BDO”) for conversion to synthetic rubber, and 1,4 Butanediol for polyester.

Between May and November 2017, the Company touted that its MBP achieved yields of 2,3 BDO at profitable levels using “current natural gas and product prices.” The Company then engaged in discussions with potential partners, including strategic and financial companies, to seize the purported $100 billion market opportunity. 

However, on February 28, 2019, the Company disclosed “that there is substantial doubt about its ability to continue as a going concern” because it lacked sufficient funding for operations beyond 12 months. 

On this news, the Company’s share price fell $2.91, or 36%, to close at $5.06 per share on March 1, 2019, on unusually heavy trading volume. The stock price continued to fall during the next trading session by $0.92, or 18%, to close at $4.14 per share on March 4, 2019, on unusually heavy trading volume.

Then, on August 8, 2019, after the market closed, the Company announced that it would contribute the MBP and all its associated technologies and facilities to a newly formed company called MBP Titan, LLC. Though the Company would begin with a supermajority equity stake, the Company expected “to be dilutive in this enterprise.”

On this news, the Company’s share price fell $0.67, or 8.8%, to close at $6.95 per share on August 9, 2019, on unusually heavy trading volume.

Then, on March 2, 2020, after the market closed, the Company disclosed that it had been under investigation by the SEC since October 2018 “concerning the Company’s disclosures regarding its methane bioconversion platform.”

On this news, the Company’s share price fell $0.67, or 17%, to close at $3.24 per share on March 3, 2020, on unusually heavy trading volume.

On August 10, 2020, after the market closed, the Company disclosed that it had “suspended MBP Titan’s operations” as it “assess[ed] potential next steps relating to this intellectual property and MBP Titan’s other long-lived assets.”

On this news, the Company’s share price fell $0.52, or 10%, to close at $4.60 per share on August 11, 2020, on unusually heavy trading volume.

On September 25, 2020, investors learned why the Company had not been able to capitalize the MBP, “the most valuable biotechnology ever created.” Specifically, the SEC issued a cease-and-desist order in connection with misleading statements the Company had issued in 2017: the yields from MBP had been achieved using pure methane as a feedstock, rather than natural gas as the Company had claimed. Because pure methane gas costs $650 per unit, whereas natural gas costs $3 per unit, the MBP was not producing results at commercially profitable rates.

The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that the Company used pure methane, rather than natural gas, as the feedstock to achieve the reported results from its methane bioconversion platform; (2) that yields from natural gas as a feedstock were substantially lower than yields using pure methane; (3) that, due to the substantial price difference between pure methane and natural gas, pure methane was not a commercially viable feedstock; (4) that, due to the high costs of pure methane, the Company could not sustain operations of the methane bioconversion platform without pursuing financial alternatives; (5) that, due to the reduced yields from natural gas and high costs of pure methane, the Company could not find a financial or strategic partner for its methane conversion platform; (6) that, as a result of the foregoing, the Company was forced to divest its methane bioconversion platform and associated intellectual property, allowing the Company to focus on its other strategic assets; (7) that the Company was under investigation by the SEC; and (8) that, as a result of the foregoing, Defendants’ public statements were materially false and misleading at all relevant times.