Full Press Release Details
Intrexon Announces First Quarter 2017 Financial Results
Quarterly GAAP revenues of $53.7 million and net loss attributable to Intrexon of $31.4 million
including non-cash charges of $24.7 million
Adjusted EBITDA of $(7.1) million
GERMANTOWN, MD, May 10, 2017 Intrexon Corporation (NYSE: XON), a leader in the engineering and industrialization of
biology to improve the quality of life and health of the planet, today announced its first quarter financial results for 2017.
Business Highlights and
Recent Developments:
Financial Highlights:
Considering the company s progress in the first quarter and year to date, commented Randal J. Kirk,
Chairman and Chief Executive Officer of Intrexon, I am gratified by the vision that underlies this company, by the business plan that has made it possible to do so much relative to such a modest expenditure of our shareholder s cash, by
the confidence of our shareholders, our board and our team in that plan s ultimate feasibility and by the patience of all while our brilliant team would mature the company s technical assets and human capital into realizations that will
make a great difference in the world.
Mr. Kirk concluded, We believe that we quite clearly have before us a number of significant
realizations in health, in energy, in food, in environment and in consumer industries and we are fully engaged upon them.
Quarter 2017 Financial Results Compared to Prior Year Period
Total revenues increased $10.3 million, or 24%, over the quarter ended
March 31, 2016. Collaboration and licensing revenues increased $9.0 million from the quarter ended March 31, 2016 due to (i) the recognition of deferred revenue for upfront payments received from collaborations signed by the
Company between April 1, 2016 and March 31, 2017 and the recognition of the payment received in June 2016 from ZIOPHARM to amend the collaborations between us; 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 decreased $0.4 million, or 5% primarily due to a decrease in the quantities of pregnant cows sold due to
lower customer demand for these products. Gross margin on products was consistent period over period. Service revenues increased $1.4 million, or 13%, due to an increase in the number of bovine in vitro fertilization cycles performed due to
higher customer demand. Gross margin on services decreased slightly in the current period primarily due to an increase in royalties and commissions due to vendors.
Research and development expenses increased $8.3 million, or 32%, due primarily to increases in (i) salaries, benefits and other personnel costs for
research and development employees, (ii) lab supplies and consulting expenses, and (iii) depreciation and amortization. Salaries, benefits and other personnel costs increased $2.6 million due to an increase in research and development
headcount to support new and expanded collaborations. Lab supplies and consulting expenses increased $3.4 million as a result of (i) the progression of certain programs into the preclinical and clinical phases with certain of
Intrexon s collaborators, and (ii) the increased level of research and development services provided to Intrexon s collaborators. Depreciation and amortization increased $1.3 million primarily as a result of amortization of
developed technology acquired from Oxitec Limited which began in November 2016 upon the completion of certain operational and regulatory events. Selling, general and administrative (SG&A) expenses decreased $7.7 million, or 18%. Salaries,
benefits and other personnel costs decreased $4.9 million primarily due to the reversal of previously recognized stock-based compensation expense for stock options granted to a former employee. In 2016, the Company recorded $4.2 million in
litigation expenses arising from the entrance of a court order in the Company s trial with XY, LLC. These SG&A decreases were offset by an increase of $2.1 million of legal and professional fees due to (i) expenses incurred to
support domestic and international government affairs for regulatory and other approvals necessary to commercialize the Company s products and services; and (ii) increased legal fees to defend ongoing litigation.
Total other income (expense), net, increased $24.8 million, or 116%, from the quarter ended March 31, 2016. This increase was primarily attributable
to (i) a decline in unrealized depreciation in the Company s equity securities portfolio of $20.3 million, and (ii) dividend income of $3.9 million from the Company s investments in preferred stock.
Conference Call and Webcast
The Company will host a
conference call today Wednesday, May 10th, at 4:30 PM ET to discuss the first quarter 2017 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 number 0126057 to join the Intrexon Corporation Call. Participants may also
access the live webcast through Intrexon s website in the Investors section at http://investors.dna.com/events.
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, function, and performance of living cells. We call our synthetic biology approach Better DNA , and we invite you to discover more
Non-GAAP Financial Measures
This 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, Friendly, RheoSwitch Therapeutic System, RTS, 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:
Intrexon Corporation and Subsidiaries
Consolidated Balance Sheets
| (Amounts in thousands) | March 31, 2017 | December 31, 2016 | ||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 69,852 | $ | 62,607 | ||||
| Restricted cash | 6,987 | 6,987 | ||||||
| Short-term investments | 135,377 | 174,602 | ||||||
| Receivables | ||||||||
| Trade, net | 19,698 | 21,637 | ||||||
| Related parties | 21,787 | 16,793 | ||||||
| Notes, net | 1,500 | |||||||
| Other | 1,716 | 2,555 | ||||||
| Inventory | 19,083 | 21,139 | ||||||
| Prepaid expenses and other | 7,170 | 7,361 | ||||||
| Total current assets | 281,670 | 315,181 | ||||||
| Long-term investments | 5,993 | |||||||
| Equity securities | 21,476 | 23,522 | ||||||
| Investments in preferred stock | 134,661 | 129,545 | ||||||
| Property, plant and equipment, net | 68,328 | 64,672 | ||||||
| Intangible assets, net | 223,074 | 225,615 | ||||||
| Goodwill | 157,825 | 157,175 | ||||||
| Investments in affiliates | 23,951 | 23,655 | ||||||
| Other assets | 4,943 | 3,710 | ||||||
| Total assets | $ | 915,928 | $ | 949,068 | ||||
| Liabilities and Total Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 7,950 | $ | 8,478 | ||||
| Accrued compensation and benefits | 7,480 | 6,540 | ||||||
| Other accrued liabilities | 16,581 | 15,776 | ||||||
| Deferred revenue | 50,333 | 53,364 | ||||||
| Lines of credit | 410 | 820 | ||||||
| Current portion of long term debt | 388 | 386 | ||||||
| Deferred consideration | 6,887 | 8,801 | ||||||
| Related party payables | 621 | 440 | ||||||
| Total current liabilities | 90,650 | 94,605 | ||||||
| Long term debt, net of current portion | 7,608 | 7,562 | ||||||
| Deferred revenue, net of current portion | 246,958 | 256,778 | ||||||
| Deferred tax liabilities | 16,504 | 17,007 | ||||||
| Other long term liabilities | 4,047 | 3,868 | ||||||
| Total liabilities | 365,767 | 379,820 | ||||||
| Commitments and contingencies | ||||||||
| Total equity | ||||||||
| Common stock | ||||||||
| Additional paid-in capital | 1,323,706 | 1,325,780 | ||||||
| Accumulated deficit | (762,201 | ) | (729,341 | ) | ||||
| Accumulated other comprehensive loss | (32,967 | ) | (36,202 | ) | ||||
| Total Intrexon shareholders equity | 528,538 | 560,237 | ||||||
| Noncontrolling interests | 21,623 | 9,011 | ||||||
| Total equity | 550,161 | 569,248 | ||||||
| Total liabilities and total equity | $ | 915,928 | $ | 949,068 |
Intrexon Corporation and Subsidiaries
Consolidated Statements of Operations
| Three months ended | ||||||||
| March 31, | ||||||||
| (Amounts in thousands, except share and per share data) | 2017 | 2016 | ||||||
| Revenues | ||||||||
| Collaboration and licensing revenues | $ | 33,065 | 24,073 | |||||
| Product revenues | 8,130 | 8,555 | ||||||
| Service revenues | 12,031 | 10,665 | ||||||
| Other revenues | 521 | 145 | ||||||
| Total revenues | 53,747 | 43,438 | ||||||
| Operating Expenses | ||||||||
| Cost of products | 9,006 | 9,562 | ||||||
| Cost of services | 6,804 | 5,672 | ||||||
| Research and development | 34,180 | 25,856 | ||||||
| Selling, general and administrative | 35,138 | 42,881 | ||||||
| Total operating expenses | 85,128 | 83,971 | ||||||
| Operating loss | (31,381 | ) | (40,533 | ) | ||||
| Other Income (Expense), Net | ||||||||
| Unrealized depreciation in fair value of equity securities and preferred stock | (1,622 | ) | (22,331 | ) | ||||
| Interest expense | (179 | ) | (265 | ) | ||||
| Interest and dividend income | 4,624 | 610 | ||||||
| Other income, net | 595 | 561 | ||||||
| Total other income (expense), net | 3,418 | (21,425 | ) | |||||
| Equity in net loss of affiliates | (4,947 | ) | (5,643 | ) | ||||
| Loss before income taxes | (32,910 | ) | (67,601 | ) | ||||
| Income tax benefit | 533 | 2,281 | ||||||
| Net loss | $ | (32,377 | ) | (65,320 | ) | |||
| Net loss attributable to the noncontrolling interests | 978 | 891 | ||||||
| Net loss attributable to Intrexon | $ | (31,399 | ) | (64,429 | ) | |||
| Net loss per share, basic and diluted | $ | (0.26 | ) | (0.55 | ) | |||
| Weighted average shares outstanding, basic and diluted | 118,956,780 | 116,861,151 |
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, litigation expenses, realized and
unrealized appreciation or depreciation in the fair value of equity securities and preferred stock, and equity in net loss of affiliates. 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 Company s operating results in a manner similar to how its management and Board of Directors evaluate operating results (except for the impact of the change in deferred
revenue related to upfront and milestone payments, which is adjusted in the measures evaluated by management and the Board of Directors as discussed below). While Intrexon believes that its non-GAAP financial
measures are useful in evaluating its business, and may be of use to investors, this information should be considered as supplemental in nature and is not meant as a substitute for the related financial information prepared in accordance with GAAP.
In addition, these non-GAAP financial measures may not be the same as non-GAAP financial measures presented by other companies. Adjusted EBITDA and Adjusted EBITDA per
share are not measures of financial performance under GAAP, and are not intended to represent cash flows from operations nor earnings per share under GAAP and should not be used as an alternative to net income or loss as an indicator of operating
performance or to represent cash flows from operating, investing or financing activities as a measure of liquidity. Intrexon compensates for the limitations of Adjusted EBITDA and Adjusted EBITDA per share by using them only to supplement the
Company s GAAP results to provide a more complete understanding of the factors and trends affecting the Company s business. Adjusted EBITDA and Adjusted EBITDA per share have limitations as an analytical tool and you should not consider
them in isolation or as a substitute for analysis of Intrexon s results as reported under GAAP.
In addition to the reasons stated above, which are
generally applicable to each of the items Intrexon excludes from its non-GAAP financial measure, Intrexon believes it is appropriate to exclude certain items from the definition of Adjusted EBITDA for the
Furthermore, supplemental information about the impact of the change in deferred revenue related to upfront and
milestone payments is provided below. GAAP requires Intrexon to account for its collaborations as multiple-element arrangements. As a result, the Company initially defers certain collaboration revenues because certain of its performance obligations
cannot be separated and must be accounted for as one unit of accounting. The collaboration revenues that Intrexon so defers arise from upfront and milestone payments received from the Company s collaborators, which Intrexon recognizes over the
future performance period even though the Company s right to such consideration is neither contingent on the results of Intrexon s future performance nor refundable in the event of nonperformance. The supplemental information about the
change in deferred revenue removes the noncash revenue recognized during the period and includes the cash and stock received from collaborators for upfront and milestone payments during the period. Management and the Board of Directors consider this
information in evaluating Intrexon s operating performance as they believe it permits the quarterly and annual comparisons of the Company s ability to consummate new collaborations or to achieve significant milestones with existing
The following table presents a reconciliation of net income (loss) attributable to Intrexon to EBITDA and also to Adjusted EBITDA, as well
as the calculation of Adjusted EBITDA per share, for each of the periods indicated:
| Three months ended | ||||||||
| March 31, | ||||||||
| 2017 | 2016 | |||||||
| (In thousands) | ||||||||
| Net loss attributable to Intrexon | $ | (31,399 | ) | $ | (64,429 | ) | ||
| Interest expense | 164 | 239 | ||||||
| Income tax benefit | (533 | ) | (2,281 | ) | ||||
| Depreciation and amortization | 7,270 | 5,529 | ||||||
| EBITDA | $ | (24,498 | ) | $ | (60,942 | ) | ||
| Stock-based compensation | 7,889 | 13,166 | ||||||
| Shares issued as payment for services | 2,915 | 3,083 | ||||||
| Bad debt expense | 9 | 840 | ||||||
| Litigation expense | 4,228 | |||||||
| Unrealized depreciation in fair value of equity securities and preferred stock | 1,622 | 22,331 | ||||||
| Equity in net loss of affiliates | 4,947 | 5,643 | ||||||
| Adjusted EBITDA | $ | (7,116 | ) | $ | (11,651 | ) | ||
| Weighted average shares outstanding, basic and diluted | 118,956,780 | 116,861,151 | ||||||
| Adjusted EBITDA per share, basic and diluted | $ | (0.06 | ) | $ | (0.10 | ) | ||
| Supplemental information: | ||||||||
| Impact of change in deferred revenue related to upfront and milestone payments | $ | (10,190 | ) | $ | 13,518 |