What happened

Shares of Precigen (PGEN -2.07%) had skyrocketed by 26.3% as of 11:30 a.m. EDT on Friday. That jump came after Precigen announced that German drugmaker Merck KGaA (MKKGY -0.45%) (not to be confused with the U.S.-based Merck) is increasing its stake in the biopharmaceutical company.

So what

Merck KGaA already owned around 11.6% of Precigen. That stake will increase to 14.8% because its wholly owned subsidiary, Ares Trading, is converting a convertible note into stock. Merck KGaA will remain the second-largest shareholder in Precigen.

Scientist holding dropper over test tubes

Image source: Getty Images.

This move is a major vote of confidence in Precigen's clinical program. Its lead candidate, AG09, is being evaluated in a phase 2 clinical study for treating type 1 diabetes. The company has four early-stage candidates, two of which are chimeric antigen receptor T-cell (CAR-T) programs targeting ovarian cancer and a pair of blood cancers, acute myeloid leukemia and myelodysplastic syndrome (MDS).

Merck KGaA is especially interested in those CAR-T programs: It reassigned development rights for then to Precigen in late 2018.

Now what

The primary potential catalysts for the biotech company moving forward will be its clinical updates. Precigen announced encouraging results from a phase 1b study of AG019 and from a phase 1 study of INXN-4001 in treating chronic heart failure earlier this year. The company expects to report further clinical trial results for these and other programs over the next several months.