Full Press Release Details
Intrexon Announces Third Quarter 2016 Financial Results
Quarterly GAAP revenues of $49.0 million and net loss of $29.0 million including non-cash charges of $25.5 million
Adjusted EBITDA (as redefined) of $(3.7) million
Adjusted EBITDA (as previously defined) of $(5.6) million
GERMANTOWN, MD, November 9, 2016 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 third quarter financial results for 2016.
Changes to non-GAAP financial
Beginning this quarter, the Company has redefined its Adjusted EBITDA and Adjusted EBITDA per share measures, which will no longer include
an adjustment for the impact of the change in deferred revenue related to upfront and milestone payments, to comply with new interpretations on non-GAAP financial measures recently issued by the SEC staff. The prior period non-GAAP financial
measures have been revised to conform to the current presentation. Refer to the Appendix to this earnings release for a reconciliation of the revised and previously defined Adjusted EBITDA measures in the current and prior periods. Going forward,
the Company will no longer present Adjusted EBITDA based on the previous definition. However, supplemental information about the impact of the change in deferred revenue related to upfront and milestone payments will continue to be provided in
future periods. Adjusted EBITDA as previously defined can be calculated by adding the redefined Adjusted EBITDA measure and the impact of the change in deferred revenue related to upfront and milestone payments.
Business Highlights and Recent Developments:
Third Quarter Financial Highlights:
Year-to-Date Financial Highlights:
While maintaining our capital efficiency, our team has made good progress across multiple dimensions, commented Randal J. Kirk, Chairman and Chief
Executive Officer of Intrexon. We have devoted considerable resources toward bringing to market the more mature portion of our portfolio, while advancing a large number of developmental projects, both partnered and internal, and growing our
capabilities through the addition of personnel, now numbering approximately 900, improving our leadership team and expanding our technologic capabilities.
Mr. Kirk concluded, We anticipate a very strong finish for this excellent year of accomplishment. Our strategy, resources, team, plans, ongoing
projects and the engagement we currently enjoy give us great confidence that we truly can and should lead the bioindustrial revolution, a development that is becoming more obvious and more needed by the day.
Third Quarter 2016 Financial Results Compared to Prior Year Period
Total revenues were $49.0 million for the quarter ended September 30, 2016 compared to $53.4 million for the quarter ended September 30, 2015, a decrease of
$4.4 million, or 8%. Collaboration and licensing revenues decreased $4.1 million from the quarter ended September 30, 2015 due to the recognition in 2015 of previously deferred revenue related to collaboration agreements for which the Company
satisfied all of its obligations or which were terminated during the quarter ended September 30, 2015. This decrease was offset by (i) the recognition of deferred revenue for upfront payments received from collaborations signed by the Company
between October 1, 2015 and September 30, 2016 and the recognition of the payment received in June 2016 from ZIOPHARM to amend their collaborations; and (ii) increased research and development services for these collaborations and for the
progression or the addition of new programs with previously existing collaborators. Product revenues were $9.3 million for the quarter ended September 30, 2016 compared to $9.4 million for the quarter ended September 30, 2015, a decrease of $0.1
million, or 2%. Gross margin on products improved in the current period primarily due to a decline in the average cost of cows. Service revenues were $8.7 million for the quarter ended September 30, 2016 compared to $8.9 million for the quarter
ended September 30, 2015, a decrease of $0.2 million, or 3%. Gross margin on services decreased in the current period primarily due to an increase in service related costs in the current period driven by increased headcount to support future revenue
Total operating expenses were $77.8 million for the quarter ended September 30, 2016 compared to $61.3 million
for the quarter ended September 30, 2015, an increase of $16.5 million, or 27%. Research and development expenses increased $7.4 million, or 34%, 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 $2.1 million due to (i) an increase in research and development headcount to support
new and expanded collaborations and (ii) a full period of costs for research and development employees assumed in the Company s acquisition of Oxitec in September 2015. Lab supplies and consulting expenses increased $3.9 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 period of costs incurred as a
result of the Company s September 2015 acquisition of Oxitec. Depreciation and amortization increased $0.9 million primarily as a result of (i) the inclusion of a full period of depreciation and amortization on property, equipment and
intangible assets acquired in the Company s 2015 acquisitions, (ii) amortization of developed technology acquired from EnviroFlight in February 2016, and (iii) amortization related to AquaBounty s intangible assets upon regulatory approval
in November 2015. Selling, general and administrative (SG&A) expenses increased $10.8 million, or 47%, over the third quarter of 2015. Legal and professional expenses increased $4.5 million due to (i) consulting expenses payable in shares of
Intrexon s common stock pursuant to the Company s services agreement with Third Security, LLC, or Third Security, which the Company entered into in November 2015; (ii) expenses incurred to support domestic and international government
affairs for regulatory and other approvals necessary to commercialize the Company s products and services; (iii) increased legal fees to defend ongoing litigation; and (iv) incremental costs incurred to support the ongoing operations of the
Company s 2015 acquisitions. Salaries, benefits and other personnel costs for SG&A employees increased $5.3 million due to increased headcount, including the hiring of two new executive officers and additional business development
professionals, to support the Company s expanding operations, as well as its acquisition of Oxitec in September 2015.
Year-to-Date 2016 Financial
Results Compared to Prior Year Period
Total revenues were $144.9 million for the nine months ended September 30, 2016 compared to $132.1 million for
the nine months ended September 30, 2015, an increase of $12.8 million, or 10%. Collaboration and licensing revenues increased $15.5 million over the nine months ended September 30, 2015 primarily due to (i) the recognition of deferred revenue for
upfront payments received from collaborations signed by the Company between October 1, 2015 and September 30, 2016, including the payment received in June 2016 from ZIOPHARM to amend their collaborations; 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. This increase is partially offset by the recognition in 2015 of previously deferred revenue related to
collaboration agreements for which the Company satisfied all of its obligations of which were terminated during 2015. Product revenues were $28.7 million for the nine months ended September 30, 2016 compared to $32.6 million for the nine months
ended September 30, 2015, a decrease of $3.9 million, or 12%. The decrease in product revenues primarily relates to a decrease in quantities sold of livestock previously used in production and live calves sold due to lower customer demand. These
decreases were partially offset by an increase in the quantity of weaned calves sold due to higher customer demand. Gross margin on products decreased due to a decline in the average sales prices of livestock previously used in production and also
of live calves, and is partially offset by an increase in gross margin on sales of pregnant cows due to a decline in the average cost of cows. Service revenues were $33.3 million for the nine months ended September 30, 2016 compared to $32.2 million
for the nine months ended September 30, 2015, an increase of $1.1 million, or 4%. The increase relates to an increase in the number of in vitro fertilization cycles performed due to higher customer demand. Gross margin on services was
consistent period over period.
Total operating expenses were $237.5 million for the nine months ended September 30, 2016 compared to $244.6
million for the nine months ended September 30, 2015, a decrease of $7.1 million, or 3%. Research and development expenses declined $38.0 million, or 31%, 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. This decrease was partially offset by 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 $6.7 million due to (i) an increase in research and development headcount to support new and expanded
collaborations and (ii) costs for research and development employees assumed in the Company s acquisition of Oxitec in September 2015. Lab supplies and consulting expenses increased $10.1 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) costs incurred as a result of the Company s September 2015
acquisition of Oxitec. Depreciation and amortization increased $4.7 million primarily as a result of (i) the inclusion of a full period of depreciation and amortization on property, 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. SG&A expenses increased $32.6 million, or 44%, over the nine months ended September 30, 2015. Salaries, benefits and
other personnel costs for SG&A employees increased $9.2 million due to (i) increased headcount, including the hiring of two new executive officers and additional business development professionals, to support the Company s expanding
operations; (ii) noncash compensation paid to the Company s CEO pursuant to the compensation agreement entered into in November 2015; (iii) a full period of stock compensation expense for officers hired in 2015; and (iv) salaries, benefits and
other personnel costs for employees assumed in the Company s acquisition of Oxitec in September 2015. These increases were partially offset by a decrease in stock compensation and other compensation expenses resulting primarily from the
departure of certain officers of the Company in 2016. Legal and professional expenses increased $13.9 million primarily due to (i) consulting expenses payable in shares of Intrexon s common stock pursuant to the Company s services
agreement with Third Security which the Company entered into in November 2015; (ii) expenses incurred to support domestic and international government affairs for regulatory and other approvals necessary to commercialize the Company s products
and services; (iii) increased legal fees for trial and post-trial activities in Trans Ova Genetics, L.C. s, or Trans Ova, litigation with XY, LLC, and to defend ongoing litigation; and (iv) incremental costs incurred to support the ongoing
operations of the Company s 2015 acquisitions and other business development activities. In 2016, the Company also recorded $4.2 million in litigation expenses arising from the entrance of a court order in Trans Ova s trial with XY, LLC.
Total other income (expense), net, was $(39.1) million for the nine months ended September 30, 2016 compared to $65.1 million for the nine months ended
September 30, 2015, a decrease of $104.2 million, or 160%. This decrease was attributable to the $81.4 million realized gain recognized upon the special stock dividend of all of Intrexon s shares of ZIOPHARM to the Company s shareholders
in June 2015 and the decrease in fair value of the Company s equity securities portfolio.
Conference Call and Webcast
The Company will host a conference call today Wednesday, November 9th, at 5:30 PM ET to discuss the third
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 number 9503836 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
Non-GAAP Financial Measures
This press release presents Adjusted EBITDA (as redefined), Adjusted EBITDA (as previously defined), 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.