Full Press Release Details
Intrexon Announces First Quarter 2018 Financial Results
Quarterly GAAP revenues of $43.8 million and net loss attributable to Intrexon of $42.0 million
including non-cash charges of $26.3 million
Adjusted EBITDA of $(19.7) million
GERMANTOWN, MD, May 10, 2018 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 2018.
Business Highlights:
Recent Developments:
First Quarter 2018 Financial Highlights:
It was a solid quarter of execution throughout our company, commented Randal J. Kirk, Chairman and Chief
Executive Officer of Intrexon. Our partnering activities, now focusing on larger transactions with major players on our more mature programs and platforms, are gaining traction and momentum so the balance of the year is coming into focus for
us in a satisfying way. Simultaneously, we saw that the Arctic ApBitz snacks of Okanagan Specialty Fruits genuinely delight customers as we had hoped, while the future availability of AquaBounty s AquAdvantage salmon in U.S. markets took a major step forward.
Mr. Kirk concluded, While
getting products from our mature programs and platforms into commerce remains a great focus of our senior team, I must say that my gratitude and respect goes out especially to our scientific teams, several of which recently have been responsible for
a number of world first instance matters of true significance. This is especially so for our Energy team who seem to have solved a tremendously baffling technical issue that had been impeding further progress on isobutanol for several
First Quarter 2018 Financial Results Compared to Prior Year Period
Total revenues decreased $9.9 million, or 18%, from the quarter ended March 31, 2017. Collaboration and licensing revenues decreased
$9.0 million from the quarter ended March 31, 2017 primarily due to the decrease in research and development services for certain of the Company s exclusive channel collaborations, or ECCs, as the Company redeployed certain resources
towards supporting prospective new platforms and partnering opportunities and began to focus more on the further development of relationships and structures that provide the Company with more control and ownership over the development process and
commercialization path. This
decrease was partially offset by the accelerated recognition of the remaining balance of previously deferred revenue related to the Company s ECC with OvaScience, Inc., or OvaScience, which
was mutually terminated in March 2018. Product revenues decreased $1.0 million, or 12%, primarily due to lower customer demand for cows and live calves combined with lower sales prices on cows. Gross margin on products declined in the current
period as a result of increased operating costs associated with new product offerings.
Research and development expenses increased $3.1 million, or
9%, due primarily to increases in (i) salaries, benefits and other personnel costs for research and development employees and (ii) depreciation and amortization. Salaries, benefits and other personnel costs increased $1.5 million due
to an increase in research and development headcount necessary to invest in current or expanding platforms and increased compensation expenses related to performance and retention incentives for research and development employees. Depreciation and
amortization increased $1.2 million primarily as a result of (i) the amortization of developed technology acquired from GenVec, Inc., in June 2017, and (ii) additional research and development assets placed in service in 2017 at
Oxitec. Selling, general and administrative (SG&A) expenses increased $4.6 million, or 13%. Salaries, benefits and other personnel costs increased $6.2 million primarily due to (i) increased headcount to support the Company s
expanding operations, (ii) increased compensation expenses related to performance and retention incentives for SG&A employees, and (iii) higher stock-based compensation expense due to the inclusion in the quarter ended March 31,
2017, of the reversal of previously recognized stock-based compensation expense for stock options granted to the Company s former President who resigned in March 2017 as well as incremental stock-based compensation expenses associated with new
equity grants issued in 2018. Legal and professional fees decreased $2.3 million primarily due to (i) decreased legal fees associated with ongoing litigation and (ii) decreased fees incurred for regulatory and other consultants.
The decrease in equity in net loss of affiliates of $2.5 million, or 50%, was directly related to the decrease in collaboration revenues from
collaborators in which Intrexon owns an equity-method interest.
Conference Call and Webcast
The Company will host a conference call today Thursday, May 10th, at 5:30 PM ET to discuss the first
quarter 2018 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 3130312 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, ActoBio Therapeutics, ExeGen, Arctic, ApBitz, 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. Forward-looking statements made in this press release include, but are not limited to, statements regarding clinical and
pre-clinical development activities by Intrexon and its collaborators, commercial and business development plans and the submission of regulatory filings. 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 collaborations 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, 2018 | December 31, 2017 | ||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 119,930 | $ | 68,111 | ||||
| Restricted cash | 6,987 | 6,987 | ||||||
| Short-term investments | 275 | 6,273 | ||||||
| Equity securities | 3,298 | 5,285 | ||||||
| Receivables | ||||||||
| Trade, net | 17,697 | 19,775 | ||||||
| Related parties | 10,585 | 17,913 | ||||||
| Other | 2,437 | 2,153 | ||||||
| Inventory | 20,271 | 20,493 | ||||||
| Prepaid expenses and other | 6,065 | 7,057 | ||||||
| Total current assets | 187,545 | 154,047 | ||||||
| Equity securities, noncurrent | 10,745 | 9,815 | ||||||
| Investments in preferred stock | 166,069 | 161,225 | ||||||
| Property, plant and equipment, net | 119,244 | 112,674 | ||||||
| Intangible assets, net | 231,883 | 232,877 | ||||||
| Goodwill | 154,748 | 153,289 | ||||||
| Investments in affiliates | 21,406 | 18,870 | ||||||
| Other assets | 4,026 | 4,054 | ||||||
| Total assets | $ | 895,666 | $ | 846,851 | ||||
| Current liabilities | ||||||||
| Accounts payable | $ | 7,842 | $ | 8,701 | ||||
| Accrued compensation and benefits | 11,356 | 6,474 | ||||||
| Other accrued liabilities | 18,041 | 21,080 | ||||||
| Deferred revenue | 48,646 | 42,870 | ||||||
| Lines of credit | 321 | 233 | ||||||
| Current portion of long term debt | 501 | 502 | ||||||
| Related party payables | 147 | 313 | ||||||
| Total current liabilities | 86,854 | 80,173 | ||||||
| Long term debt, net of current portion | 7,425 | 7,535 | ||||||
| Deferred revenue, net of current portion | 214,744 | 193,527 | ||||||
| Deferred tax liabilities, net | 11,631 | 15,620 | ||||||
| Other long term liabilities | 3,586 | 3,451 | ||||||
| Total liabilities | 324,240 | 300,306 | ||||||
| Commitments and contingencies | ||||||||
| Total equity | ||||||||
| Common stock | ||||||||
| Additional paid-in capital | 1,492,916 | 1,397,005 | ||||||
| Accumulated deficit | (930,220 | ) | (847,820 | ) | ||||
| Accumulated other comprehensive loss | (9,587 | ) | (15,554 | ) | ||||
| Total Intrexon shareholders equity | 553,109 | 533,631 | ||||||
| Noncontrolling interests | 18,317 | 12,914 | ||||||
| Total equity | 571,426 | 546,545 | ||||||
| Total liabilities and total equity | $ | 895,666 | $ | 846,851 |
Intrexon Corporation and Subsidiaries
Consolidated Statements of Operations
| Three months ended | ||||||||
| March 31, | ||||||||
| (Amounts in thousands, except share and per share data) | 2018 | 2017 | ||||||
| Revenues | ||||||||
| Collaboration and licensing revenues | $ | 24,052 | $ | 33,065 | ||||
| Product revenues | 7,152 | 8,130 | ||||||
| Service revenues | 12,247 | 12,031 | ||||||
| Other revenues | 419 | 521 | ||||||
| Total revenues | 43,843 | 53,747 | ||||||
| Operating Expenses | ||||||||
| Cost of products | 8,530 | 9,006 | ||||||
| Cost of services | 6,783 | 6,804 | ||||||
| Research and development | 37,267 | 34,180 | ||||||
| Selling, general and administrative | 39,737 | 35,138 | ||||||
| Total operating expenses | 92,317 | 85,128 | ||||||
| Operating loss | (48,474 | ) | (31,381 | ) | ||||
| Other Income, Net | ||||||||
| Unrealized depreciation in fair value of equity securities and preferred stock | (1,096 | ) | (1,622 | ) | ||||
| Interest expense | (99 | ) | (179 | ) | ||||
| Interest and dividend income | 5,470 | 4,624 | ||||||
| Other income (expense), net | (659 | ) | 595 | |||||
| Total other income, net | 3,616 | 3,418 | ||||||
| Equity in net loss of affiliates | (2,460 | ) | (4,947 | ) | ||||
| Loss before income taxes | (47,318 | ) | (32,910 | ) | ||||
| Income tax benefit | 4,086 | 533 | ||||||
| Net loss | $ | (43,232 | ) | $ | (32,377 | ) | ||
| Net loss attributable to the noncontrolling interests | 1,244 | 978 | ||||||
| Net loss attributable to Intrexon | $ | (41,988 | ) | $ | (31,399 | ) | ||
| Net loss per share, basic and diluted | $ | (0.33 | ) | $ | (0.26 | ) | ||
| Weighted average shares outstanding, basic and diluted | 127,693,336 | 118,956,780 |
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, impairment loss, bad debt expense, litigation expense,
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. Intrexon s management and 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 supplemental in nature and not 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.
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 following reasons:
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 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: