Full Press Release Details
Intrexon Announces First Quarter 2016 Financial Results
Quarterly revenues of $43.4 million and GAAP net loss of $64.4 million
including non-cash charges of $50.6 million
Adjusted EBITDA of $1.9 million
Consideration received for technology access fees, reimbursement of R&D services and product and service revenues covered
92% of consolidated cash operating expenses
GERMANTOWN, MD, May 10, 2016 Intrexon Corporation (NYSE: XON), a leader
in synthetic biology, today announced its first quarter results for 2016.
Business Highlights and Recent Developments:
First Quarter Financial Highlights:
In addition, Intrexon s Board of Directors has authorized management to prepare a plan to distribute to the shareholders of Intrexon
certain shares of the Intrexon Crop Protection subsidiary. Any dividend will be subject to various conditions including the registration of the subsidiary pursuant to the Securities Exchange Act of 1934.
Your company is capably executing its plan to accomplish all of its goals for 2016 financially, programmatically and through its partnering
and I am very proud of the fine work being done by our team, commented Randal J. Kirk, Chairman and Chief Executive Officer of Intrexon. Our principal internal business objective, as always, is
the maximization of the value of our growing, diversified portfolio of commercial and financial interests across many products and industries. We seek to obtain this through minimal net
expenditure of our company s cash and this is for two reasons to maximize our ultimate cash-on-cash return and to allow the cash flows resulting from the products that we have enabled to flow to our bottom line on a relatively unburdened
basis. We made significant progress in this category during the first quarter and believe that we shall continue to extend our performance trajectory throughout the year and beyond.
Programmatic progress and this is where the vast majority of our 750 employees are engaged every day is largely tracking to our
expectations, and we look forward to detailing some of this during our upcoming conference call and to the announcement of further developments throughout the balance of the year. Our progress in partnering, especially around some of our mature
assets, keeps much of our executive team very busy, and we shall update you on this as well, but we would be remiss if we did not here especially acknowledge a new partner, the Cayman Islands and its exemplary government under the leadership of
Premier Hon. Alden McLaughlin, MBE, JP, MLA, which is the first government in the world to develop a comprehensive program across a territory to fight the Aedes aegypti mosquito, the principal disease vector for Zika, dengue and
Mr. Kirk concluded, Finally, under the heading of stewardship, our board of directors and management recognize a
fundamental desire to seek, identify and implement means of rewarding our shareholders that go beyond merely building a great business. As was the case with last year s $172M dividend of equity securities in ZIOPHARM Oncology, we
recognize an opportunity for our shareholders to participate directly in the ownership of Intrexon Crop Protection ( ICP ) which we believe will confer significant and direct value to our shareholders beyond that which could be realized in
the event that ICP had remained a wholly owned subsidiary of Intrexon. You should expect further information on this development in the near future.
First Quarter 2016 Financial Results Compared to Prior Year Period
Total revenues were $43.4 million for the quarter ended March 31, 2016 compared to $33.8 million for the quarter ended March 31, 2015, an increase of
$9.6 million, or 28%. Collaboration and licensing revenues increased $9.3 million over the quarter ended March 31, 2015 due to (i) the recognition of deferred revenue for upfront payments received from the Company s license and
collaboration agreements with the biopharmaceutical business of Merck KGaA, which became effective in May 2015, and from other collaborations signed by Intrexon between April 1, 2015 and March 31, 2016; and (ii) increased research and
development services for these collaborations and for the progression of programs or the addition of new programs with previously existing collaborators. Product revenues were $8.6 million for the quarter ended March 31, 2016 compared to $8.9
million for the quarter ended March 31, 2015, a decrease of $0.3 million, or 4%. The decrease primarily relates to a decrease in the quantities of livestock previously used in production and live calves sold due to lower customer demand for
these products. Gross margin on product revenues declined for the same period primarily due to a decline in the average sales prices of livestock previously used in production. Service revenues were $10.7 million for the quarter ended March 31,
2016 compared to $10.0 million for the quarter ended March 31, 2015, an increase of $0.7 million, or 7%. The increase relates to an increase in the number of in vitro fertilization cycles performed due to higher customer demand.
Total operating expenses were $84.0 million for the quarter ended March 31, 2016 compared to $121.0 million for the quarter ended March 31, 2015, a
decrease of $37.0 million, or 31%. Research and development expenses declined $53.4 million, or 67%, due primarily to the inclusion in 2015 of a $59.6 million payment in common stock for an exclusive license to certain technologies owned by the
University of Texas MD Anderson Cancer Center (MD Anderson). This decrease was partially offset by increases in (i) salaries, benefits and other personnel costs for research and development employees (ii) lab supplies and consultant
expenses, and (iii) depreciation and amortization. Salaries, benefits and other personnel costs increased $2.3 million due to (i) an increase in research and development headcount to support new and expanded collaborations and (ii) a
full quarter of costs for research and development employees assumed in the Company s various 2015 acquisitions. Lab supplies and consultant expenses increased $2.8 million as a result of (i) the progression into the preclinical phase with
certain of Intrexon s collaborators; (ii) the increased level of research and development services provided to the Company s collaborators; and (iii) a full quarter of costs incurred as a result of the Company s various 2015
acquisitions. Depreciation and amortization increased $1.9 million primarily as a result of (i) incurring a full quarter of depreciation and amortization on property and equipment and intangible assets acquired in the Company s 2015
acquisitions, and (ii) amortization related to AquaBounty s intangible assets upon regulatory approval in November 2015. Selling, general and administrative (SG&A) expenses
increased $15.3 million, or 55%, over the first quarter of 2015. Salaries, benefits and other personnel costs for SG&A employees increased $6.0 million due to (i) increased headcount to support Intrexon s corporate operations and
increased stock compensation expense due to higher grant date fair values for stock options granted; (ii) a full quarter of stock compensation expense for a company-wide option grant to employees in March 2015 and (iii) a full quarter of
salaries, benefits and other personnel costs for employees assumed in the Company s 2015 acquisitions. Legal and professional expenses increased $3.7 million primarily due to (i) noncash expenses due pursuant to Intrexon s services
agreement with Third Security, LLC which the Company entered into in November 2015; (ii) legal fees for trial and post-trial activities for the Company s litigation with XY, LLC; (iii) expenses incurred to support domestic and
international government affairs for regulatory approvals necessary to commercialize the Company s products and services; (iv) incremental costs incurred to support the ongoing operations of the Company s 2015 acquisitions; and
(v) other business development activities. For the quarter ended March 31, 2016, the Company also recorded $4.2 million in litigation settlement expenses arising from the final court order in the Company s trial with XY, LLC.
Total other income (expense), net, was $(21.4) million for the quarter ended March 31, 2016 compared to $115.7 million for the quarter ended
March 31, 2015, a decrease of $137.1 million, or 119%. This decrease was attributable to market changes in Intrexon s current equity securities portfolio; in 2016, this portfolio no longer included shares of ZIOPHARM Oncology, Inc. since
the Company distributed such shares, including all realized gains thereon, to the Company s shareholders as a dividend in June 2015.
The Company will host a conference call today Tuesday, May 10th, at 5:30 PM
EDT to discuss the first quarter 2016 financial results and provide a general business update. The conference call may be accessed by dialing 1-888-317-6003 (Domestic US), 1-866-284-3684 (Canada), and
1-412-317-6061 (International) and providing the Elite Entry number 1828030 to join the Intrexon Corporation Call. Participants may also access the live webcast through Intrexon s website in the Investors section at
About Intrexon Corporation
Intrexon Corporation (NYSE: XON) is Powering the Bioindustrial Revolution with Better DNA to create biologically-based products that improve the quality
of life and the health of the planet. Intrexon s integrated technology suite provides its partners across diverse markets with industrial-scale design and development of complex biological systems delivering unprecedented control, quality,
Non-GAAP Financial Measures
press release presents Adjusted EBITDA and Adjusted EBITDA per share, which are non-GAAP financial measures within the meaning of applicable rules and regulations of the Securities and Exchange Commission (SEC). For a reconciliation of these
measures to the most directly comparable financial measure calculated in accordance with generally accepted accounting principles and for a discussion of the reasons why the company believes that these non-GAAP financial measures provide information
that is useful to investors see the tables below under Reconciliation of GAAP to Non-GAAP Measures. Such information is provided as additional information, not as an alternative to Intrexon s consolidated financial statements
presented in accordance with GAAP, and is intended to enhance an overall understanding of the Intrexon s current financial performance.
Intrexon, ActoBiotics, Powering the Bioindustrial Revolution with Better DNA, and Better DNA are trademarks of Intrexon and/or its affiliates. Other names may
be trademarks of their respective owners.
Safe Harbor Statement
Some of the statements made in this press release are forward-looking statements that involve a number of risks and uncertainties and are made pursuant to the
Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon Intrexon s current expectations and projections about future events and generally relate to Intrexon s
plans, objectives and expectations for the development of Intrexon s business. Although management believes that the plans and objectives reflected in or suggested by these forward-looking statements are reasonable, all forward-looking
statements involve risks and uncertainties and actual future results may be materially different from the plans, objectives and expectations expressed in this press release. These risks and uncertainties include, but are not limited to, (i)
Intrexon s current and future ECCs and joint ventures; (ii) Intrexon s ability to successfully enter new markets or develop additional products, whether with its collaborators or independently; (iii) actual or anticipated variations in
Intrexon s operating results; (iv) actual or anticipated fluctuations in Intrexon s competitors or its collaborators operating results or changes in their respective growth rates; (v) Intrexon s cash position; (vi) market
conditions in Intrexon s industry; (vii) the volatility of Intrexon s stock price; (viii) Intrexon s ability, and the ability of its collaborators, to protect Intrexon s intellectual property and other proprietary rights and
technologies; (ix) Intrexon s ability, and the ability of its collaborators, to adapt to changes in laws or regulations and policies; (x) the outcomes of pending or future litigation; (xi) the rate and degree of market acceptance of any
products developed by a collaborator under an ECC or through a joint venture; (xii) Intrexon s ability to retain and recruit key personnel; (xiii) Intrexon s expectations related to the use of proceeds from its public offerings and other
financing efforts; (xiv) Intrexon s estimates regarding expenses, future revenue, capital requirements and needs for additional financing; and (xv) Intrexon s expectations relating to its subsidiaries and other affiliates. For a discussion
of other risks and uncertainties, and other important factors, any of which could cause Intrexon s actual results to differ from those contained in the forward-looking statements, see the section entitled Risk Factors in
Intrexon s Annual Report on Form 10-K, as well as discussions of potential risks, uncertainties, and other important factors in Intrexon s subsequent filings with the Securities and Exchange Commission. All information in this press
release is as of the date of the release, and Intrexon undertakes no duty to update this information unless required by law.
For more information regarding Intrexon Corporation, contact:
Vice President, Investor Relations
Tel: +1 (561) 410-7052
Senior Manager, Technical
Tel: +1 (301) 556-9850
Intrexon Corporation and Subsidiaries
Consolidated Balance Sheets
| (Amounts in thousands) | March 31, 2016 | December 31, 2015 | ||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 145,733 | $ | 135,782 | ||||
| Short-term investments | 114,659 | 102,528 | ||||||
| Receivables | ||||||||
| Trade, net | 21,874 | 25,101 | ||||||
| Related parties | 16,019 | 23,597 | ||||||
| Note, net | 601 | |||||||
| Other | 6,707 | 2,995 | ||||||
| Inventory | 25,078 | 26,563 | ||||||
| Prepaid expenses and other | 6,469 | 6,634 | ||||||
| Total current assets | 336,539 | 323,801 | ||||||
| Long-term investments | 75,584 | 105,447 | ||||||
| Equity securities | 61,322 | 83,653 | ||||||
| Property, plant and equipment, net | 44,673 | 42,739 | ||||||
| Intangible assets, net | 255,460 | 247,535 | ||||||
| Goodwill | 164,575 | 165,169 | ||||||
| Investments in affiliates | 21,385 | 9,977 | ||||||
| Other assets | 2,890 | 3,725 | ||||||
| Total assets | $ | 962,428 | $ | 982,046 | ||||
| Liabilities and Total Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 7,537 | $ | 4,967 | ||||
| Accrued compensation and benefits | 8,281 | 19,050 | ||||||
| Other accrued liabilities | 13,548 | 7,949 | ||||||
| Deferred revenue | 37,695 | 35,366 | ||||||
| Lines of credit | 536 | 561 | ||||||
| Current portion of long term debt | 893 | 930 | ||||||
| Current portion of deferred consideration | 9,089 | 6,931 | ||||||
| Related party payables | 358 | 150 | ||||||
| Total current liabilities | 77,937 | 75,904 | ||||||
| Long term debt, net of current portion | 7,613 | 7,598 | ||||||
| Deferred consideration, net of current portion | 6,696 | 8,698 | ||||||
| Deferred revenue, net of current portion | 172,543 | 162,363 | ||||||
| Deferred tax liabilities | 19,777 | 21,802 | ||||||
| Other long term liabilities | 3,030 | 795 | ||||||
| Total liabilities | 287,596 | 277,160 | ||||||
| Commitments and contingencies | ||||||||
| Total equity | ||||||||
| Common stock | ||||||||
| Additional paid-in capital | 1,283,525 | 1,249,559 | ||||||
| Accumulated deficit | (607,158 | ) | (542,729 | ) | ||||
| Accumulated other comprehensive loss | (11,435 | ) | (12,752 | ) | ||||
| Total Intrexon shareholders equity | 664,932 | 694,078 | ||||||
| Noncontrolling interests | 9,900 | 10,808 | ||||||
| Total equity | 674,832 | 704,886 | ||||||
| Total liabilities and total equity | $ | 962,428 | $ | 982,046 |
Intrexon Corporation and Subsidiaries
Consolidated Statements of Operations
| Three months ended | ||||||||
| (Amounts in thousands, except share and per share data) | March 31, | |||||||
| 2016 | 2015 | |||||||
| Revenues | ||||||||
| Collaboration and licensing revenues | $ | 24,073 | $ | 14,783 | ||||
| Product revenues | 8,555 | 8,933 | ||||||
| Service revenues | 10,665 | 9,957 | ||||||
| Other revenues | 145 | 176 | ||||||
| Total revenues | 43,438 | 33,849 | ||||||
| Operating Expenses | ||||||||
| Cost of products | 9,562 | 8,675 | ||||||
| Cost of services | 5,672 | 5,362 | ||||||
| Research and development | 25,856 | 79,307 | ||||||
| Selling, general and administrative | 42,881 | 27,628 | ||||||
| Total operating expenses | 83,971 | 120,972 | ||||||
| Operating loss | (40,533 | ) | (87,123 | ) | ||||
| Other Income (Expense), Net | ||||||||
| Unrealized appreciation (depreciation) in fair value of equity securities | (22,331 | ) | 115,454 | |||||
| Interest expense | (265 | ) | (343 | ) | ||||
| Interest income | 610 | 300 | ||||||
| Other income, net | 561 | 267 | ||||||
| Total other income (expense), net | (21,425 | ) | 115,678 | |||||
| Equity in net loss of affiliates | (5,643 | ) | (1,956 | ) | ||||
| Income (loss) before income taxes | (67,601 | ) | 26,599 | |||||
| Income tax benefit (expense) | 2,281 | (795 | ) | |||||
| Net income (loss) | $ | (65,320 | ) | $ | 25,804 | |||
| Net loss attributable to the noncontrolling interests | 891 | 1,293 | ||||||
| Net income (loss) attributable to Intrexon | $ | (64,429 | ) | $ | 27,097 | |||
| Net income (loss) per share, basic | $ | (0.55 | ) | $ | 0.26 | |||
| Net income (loss) per share, diluted | $ | (0.55 | ) | $ | 0.25 | |||
| Weighted average shares outstanding, basic | 116,861,151 | 106,103,848 | ||||||
| Weighted average shares outstanding, diluted | 116,861,151 | 108,141,734 |
Intrexon Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures
Adjusted EBITDA per share. To supplement Intrexon s financial information presented in accordance with U.S. generally accepted accounting principles ( GAAP ), Intrexon presents Adjusted EBITDA and Adjusted EBITDA per share. A
reconciliation of Adjusted EBITDA to net income or loss attributable to Intrexon under GAAP appears below. Adjusted EBITDA is a non-GAAP financial measure that Intrexon calculates as net income or loss attributable to Intrexon adjusted for income
tax expense or benefit, interest expense, depreciation and amortization, stock-based compensation, shares issued as compensation for services, bad debt expense, noncash research and development expenses related to the acquisition of Intrexon s
license agreement with the University of Texas MD Anderson Cancer Center, litigation settlement expenses, realized and unrealized appreciation or depreciation in the fair value of equity securities, equity in net loss of affiliates and the change in
deferred revenue related to upfront and milestone payments. Adjusted EBITDA and Adjusted EBITDA per share are key metrics for Intrexon s management and Board of Directors for evaluating the Company s financial and operating performance,
generating future operating plans and making strategic decisions about the allocation of capital. Management and the Board of Directors believe that Adjusted EBITDA and Adjusted EBITDA per share are useful to understand the long-term performance of
Intrexon s core business and facilitate comparisons of the Company s operating results over multiple reporting periods. Intrexon is providing this information to investors and others to assist them in understanding and evaluating the