Full Press Release Details
Intrexon Announces Second Quarter and First Half 2017 Financial Results
Quarterly GAAP revenues of $54.4 million and net loss attributable to Intrexon of $18.7 million
including non-cash charges of $17.4 million
Adjusted EBITDA of $(2.0) million
GERMANTOWN, MD, August 9, 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 second quarter and first half financial results for 2017.
Business Highlights and Recent Developments:
Second Quarter 2017 Financial Highlights:
First Half 2017 Financial Highlights:
Through the first half of 2017, the Company has furthered its leadership position in engineered biology, and its efforts have translated into a stable
and persistent machine that draws from multiple, world-leading technology platforms to generate high-value solutions addressing significant needs across multiple sectors. That so much may be accomplished on a modest expenditure of our shareholder
capital is a testament to our unique business and organizational models and to the quality and dedication of our team, commented Randal J. Kirk, Chairman and Chief Executive Officer of Intrexon.
Looking to the remainder of this year, we expect to see accelerated rollout of our Friendly
Aedes solution, the commercial launch of Arctic apples, the initiation of additional innovative gene and cell therapy trials along with data from existing trials, and progress of several
types in our methane bioconversion platform, in crop protection, in AquAdvantage Salmon production as well as in numerous other areas in which our team is engaged. Moreover, while executing
on our existing programs always is our top priority, we are very pleased by the resurgence of interest in our space and the shifting away from the incrementalism that has until recently featured so strongly among many commercial-stage companies that
operate in the sectors in which we are active, concluded Mr. Kirk.
Second Quarter 2017 Financial Results Compared to Prior Year Period
Total revenues increased $1.9 million, or 4%, over the quarter ended June 30, 2016. Collaboration and licensing revenues increased $0.7 million
from the quarter ended June 30, 2016 due to the recognition of deferred revenue associated with the payment received in June 2016 from ZIOPHARM to amend the collaborations between the parties which was partially offset by a decrease in research
and development services as the Company temporarily redeployed certain resources towards supporting prospective new platforms and additional collaborations. Product revenues decreased $0.9 million, or 8%, primarily due to a decrease in the
quantities of pregnant cows and live calves sold due to lower customer demand for these products. Gross margin on products improved in the current period primarily due to a decline in the average cost of cows. Service revenues increased
$2.0 million, or 14%, 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 $5.6 million, or 20%, 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 $2.2 million due to
an increase in research and development headcount to support new, expanded and prospective collaborations, and to support additional platform technology development. Lab supplies and consulting expenses increased $1.7 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 expansion or improvement of certain of the Company s platform technologies. Depreciation and
amortization increased $1.0 million primarily as a result of the amortization of developed technology acquired from Oxitec. Selling, general and administrative (SG&A) expenses increased $8.6 million, or 28%. Salaries, benefits and
other personnel costs increased $6.4 million primarily due to (i) increased headcount to support the Company s expanding operations and (ii) the reversal of previously recognized stock-based compensation expense for departed
employees in the quarter ended June 30, 2016. Legal and professional fees increased $1.7 million primarily due to (i) increased legal fees to defend ongoing litigation and (ii) the Company s acquisition of GenVec that was
completed in June 2017.
Total other income (expense), net, increased $40.5 million, or 181%. This increase was primarily
attributable to (i) increases in fair market value of the Company s equity securities portfolio, investments in preferred stock and other convertible instruments and (ii) dividend income from the Company s investments in
First Half 2017 Financial Results Compared to Prior Year Period
Total revenues increased $12.0 million, or 13%, over the six months ended June 30, 2016. Collaboration and licensing revenues increased
$9.7 million from the six months ended June 30, 2016, due to the recognition of deferred revenue associated with the payment received in June 2016 from ZIOPHARM to amend the collaborations between the parties. Product revenues decreased
$1.3 million, or 7%, primarily due to a decrease in the quantities of pregnant cows and live calves sold due to lower customer demand for these products. Gross margin on products improved in the current period primarily due to a decline in the
average cost of cows. Service revenues increased $3.3 million, or 14%, 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 $14.0 million, or 26%,
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 $4.7 million due to an increase in research and development headcount to support new, expanded, and prospective collaborations, and to support additional platform technology development. Lab supplies and consulting
expenses increased $5.2 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 expansion or improvement of certain of the
Company s platform technologies. Depreciation and amortization increased $2.3 million primarily as a result of the amortization of developed technology acquired from Oxitec. SG&A expenses increased $0.8 million, or 1%. Salaries,
benefits and other personnel costs increased $1.5 million primarily due to increased headcount to support the Company s expanding operations. Legal and professional fees increased $3.9 million primarily due to (i) increased legal
fees to defend ongoing litigation and (ii) the Company s acquisition of GenVec that was completed in June 2017. These increases were offset by $4.2 million in litigation expenses recorded in the prior period arising from the entrance
of a court order in Trans Ova Genetics, L.C. s trial with XY, LLC.
Total other income (expense), net, increased $65.3 million, or 149%. This
increase was primarily attributable to (i) increases in fair market value of the Company s equity securities portfolio, investments in preferred stock and other convertible instruments and (ii) dividend income from the Company s
investments in preferred stock.
Conference Call and Webcast
The Company will host a conference call today Wednesday, August 9th, at 5:30 PM ET to discuss the second
quarter and first half 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 4558525 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) | June 30, 2017 | December 31, 2016 | ||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 64,360 | $ | 62,607 | ||||
| Restricted cash | 6,987 | 6,987 | ||||||
| Short-term investments | 92,804 | 174,602 | ||||||
| Receivables | ||||||||
| Trade, net | 22,833 | 21,637 | ||||||
| Related parties | 18,728 | 16,793 | ||||||
| Notes, net | 1,500 | |||||||
| Other | 2,076 | 2,555 | ||||||
| Inventory | 19,146 | 21,139 | ||||||
| Prepaid expenses and other | 7,183 | 7,361 | ||||||
| Total current assets | 234,117 | 315,181 | ||||||
| Long-term investments | 5,993 | |||||||
| Equity securities | 23,901 | 23,522 | ||||||
| Investments in preferred stock | 144,742 | 129,545 | ||||||
| Property, plant and equipment, net | 92,880 | 64,672 | ||||||
| Intangible assets, net | 240,360 | 225,615 | ||||||
| Goodwill | 164,931 | 157,175 | ||||||
| Investments in affiliates | 21,904 | 23,655 | ||||||
| Other assets | 11,151 | 3,710 | ||||||
| Total assets | $ | 933,986 | $ | 949,068 | ||||
| Liabilities and Total Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 8,221 | $ | 8,478 | ||||
| Accrued compensation and benefits | 9,098 | 6,540 | ||||||
| Other accrued liabilities | 22,275 | 15,776 | ||||||
| Deferred revenue | 47,662 | 53,364 | ||||||
| Lines of credit | 285 | 820 | ||||||
| Current portion of long term debt | 434 | 386 | ||||||
| Deferred consideration | 6,967 | 8,801 | ||||||
| Related party payables | 744 | 440 | ||||||
| Total current liabilities | 95,686 | 94,605 | ||||||
| Long term debt, net of current portion | 7,684 | 7,562 | ||||||
| Deferred revenue, net of current portion | 237,656 | 256,778 | ||||||
| Deferred tax liabilities | 16,266 | 17,007 | ||||||
| Other long term liabilities | 5,144 | 3,868 | ||||||
| Total liabilities | 362,436 | 379,820 | ||||||
| Commitments and contingencies | ||||||||
| Total equity | ||||||||
| Common stock | ||||||||
| Additional paid-in capital | 1,355,956 | 1,325,780 | ||||||
| Accumulated deficit | (780,865 | ) | (729,341 | ) | ||||
| Accumulated other comprehensive loss | (24,221 | ) | (36,202 | ) | ||||
| Total Intrexon shareholders equity | 550,870 | 560,237 | ||||||
| Noncontrolling interests | 20,680 | 9,011 | ||||||
| Total equity | 571,550 | 569,248 | ||||||
| Total liabilities and total equity | $ | 933,986 | $ | 949,068 |
Intrexon Corporation and Subsidiaries
Consolidated Statements of Operations
| (Amounts in thousands, except share and per share data) | Three months ended | Six months ended | ||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenues | ||||||||||||||||
| Collaboration and licensing revenues | $ | 28,164 | $ | 27,481 | $ | 61,229 | $ | 51,554 | ||||||||
| Product revenues | 9,980 | 10,884 | 18,110 | 19,439 | ||||||||||||
| Service revenues | 15,884 | 13,927 | 27,915 | 24,592 | ||||||||||||
| Other revenues | 405 | 209 | 683 | 354 | ||||||||||||
| Total revenues | 54,433 | 52,501 | 107,937 | 95,939 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Cost of products | 8,861 | 10,753 | 17,624 | 20,315 | ||||||||||||
| Cost of services | 7,988 | 6,332 | 14,792 | 12,004 | ||||||||||||
| Research and development | 34,011 | 28,375 | 68,191 | 54,231 | ||||||||||||
| Selling, general and administrative | 38,843 | 30,263 | 73,981 | 73,144 | ||||||||||||
| Total operating expenses | 89,703 | 75,723 | 174,588 | 159,694 | ||||||||||||
| Operating loss | (35,270 | ) | (23,222 | ) | (66,651 | ) | (63,755 | ) | ||||||||
| Other Income (Expense), Net | ||||||||||||||||
| Unrealized and realized appreciation (depreciation) in fair value of equity securities and preferred stock | 8,687 | (23,469 | ) | 7,065 | (45,800 | ) | ||||||||||
| Interest expense | (181 | ) | (267 | ) | (360 | ) | (532 | ) | ||||||||
| Interest and dividend income | 4,743 | 713 | 9,367 | 1,323 | ||||||||||||
| Other income, net | 4,879 | 676 | 5,474 | 1,237 | ||||||||||||
| Total other income (expense), net | 18,128 | (22,347 | ) | 21,546 | (43,772 | ) | ||||||||||
| Equity in net loss of affiliates | (3,333 | ) | (5,053 | ) | (8,280 | ) | (10,696 | ) | ||||||||
| Loss before income taxes | (20,475 | ) | (50,622 | ) | (53,385 | ) | (118,223 | ) | ||||||||
| Income tax benefit | 813 | 591 | 1,346 | 2,872 | ||||||||||||
| Net loss | $ | (19,662 | ) | $ | (50,031 | ) | $ | (52,039 | ) | $ | (115,351 | ) | ||||
| Net loss attributable to the noncontrolling interests | 998 | 967 | 1,976 | 1,858 | ||||||||||||
| Net loss attributable to Intrexon | $ | (18,664 | ) | $ | (49,064 | ) | $ | (50,063 | ) | $ | (113,493 | ) | ||||
| Net loss per share, basic and diluted | $ | (0.16 | ) | $ | (0.42 | ) | $ | (0.42 | ) | $ | (0.97 | ) | ||||
| Weighted average shares outstanding, basic and diluted | 119,731,042 | 118,141,377 | 119,346,050 | 117,501,264 |
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 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. 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