Full Press Release Details
Intrexon Reports 2018 Fourth Quarter and Year End Financial Results
Quarterly GAAP revenues of $43.2 million and net loss attributable to Intrexon of $340.5 million including non-cash charges of $311.0 million
Previously Announced Reacquisition of
Oncology Rights Drives $280M Quarterly R&D Expense
Quarterly Adjusted EBITDA of $(27.2) million
GERMANTOWN, MD, February 28, 2019 Intrexon Corporation (NASDAQ: XON), a leader in the engineering and
industrialization of biology to improve the quality of life and health of the planet, today announced its fourth quarter and full year financial results for 2018.
Recent Business Highlights:
Fourth Quarter 2018 Financial Highlights:
Full Year 2018 Financial Highlights:
With several of the most ambitious stated objectives at the time of our IPO now achieved, most notably with our work in UltraCAR-T and in natural gas upgrading, our team is more energized than ever to establish its tangible value in the world, commented Randal J. Kirk, Chairman and Chief Executive Officer of Intrexon.
We expect to achieve this initially through independent equitization and/or monetization events at Precigen and from our Methane Bioconversion Platform, while other business units of our company may also find higher values independently of our
Mr. Kirk concluded, It has always been our purpose to be an enabler of enterprise that is built on engineered biology and not
to create an industrial conglomerate. In this we have succeeded greatly so we look forward to seeing some of our bold enterprises making their marks in the world. We are confident in our prospects to achieve this and that we have adequate cash
resources to fuel us to these realizations.
Fourth Quarter 2018 Financial Results Compared to Prior Year Period
Total revenues decreased $33.8 million, or 44%, from the quarter ended December 31, 2017. Collaboration and licensing revenues decreased
$30.9 million from the quarter ended December 31, 2017 due to (i) the mutual termination in 2017 of the Company s second exclusive channel collaboration (ECC) with Ziopharm for the treatment of graft-versus-host disease,
(ii) a decrease in research and development services for certain of the Company s 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 will provide the Company with more control and ownership over the development process and commercialization path, including programs where the Company reacquired the previously licensed
technology rights in 2018, and (iii) a decrease in research and development services performed by the Company for collaborators upon the transition of program execution to its collaborators. Product revenues decreased $2.8 million or 36%
primarily due to lower milk prices which resulted in lower customer demand for cows and cloned products. Gross margin on products declined in the current period as a result of decreased sales. Gross margin on services improved in the current period
as a result of pricing changes and an increase in the number of embryos produced per bovine in vitro fertilization cycle due to improved production results.
Research and development expenses increased $242.0 million, or 628%, and include $228.0 million of expenses related to in-process research and development reacquired from former collaborators. Selling, general and administrative (SG&A) expenses decreased $7.9 million, or 24%. This decrease was primarily due to lower
compensation expenses due to adjustments to previously accrued compensation expenses for performance and retention incentives for SG&A employees in 2018. The Company recorded an impairment charge of $60.5 million in the fourth quarter of
2018 due to a change in the Company s business strategy for commercializing the Oxitec technology targeting the Aedes aegypti mosquito.
Full Year 2018 Financial Results Compared to Prior Year Period
Total revenues decreased $70.4 million, or 31%, from the year ended December 31, 2017. Collaboration and licensing revenues decreased
$68.7 million from the year ended December 31, 2017 primarily due to (i) the mutual termination in 2017 of the Company s second ECC with Ziopharm for the treatment of graft-versus-host disease, (ii) a decrease in research
and development services for certain of the Company s 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, including programs where the Company reacquired the previously licensed technology rights in 2018, and (iii) a
decrease in research and development services performed by the Company for collaborators upon the transition of program execution to its collaborators. Product revenues decreased $5.1 million or 15% primarily due to lower milk prices which in
turn resulted in lower customer demand for live calves, cows previously used in production, and cloned products. Gross margin on products declined in the current period as a result of lower product sales and increased operating costs associated with
new product offerings and cloned products. The increase in service revenues of $1.8 million, or 4%, as well as the gross margin thereon relates to pricing changes and an increase in the number of embryos produced per bovine in vitro
fertilization cycle due to improved production results.
Research and development expenses increased $261.4 million, or 183%, and include
$236.7 million of expenses related to in-process research and development reacquired from former collaborators. SG&A expenses decreased $8.3 million, or 6%, from the prior period. Legal and
professional fees decreased $7.5 million primarily due to (i) decreased legal fees associated with ongoing litigation and (ii) decreased fees incurred for regulatory and other consultants. The Company recorded an impairment charge of
$60.5 million in the fourth quarter of 2018 due to a change in the Company s business strategy for commercializing the Oxitec technology targeting the Aedes aegypti mosquito.
Total other income (expense), net, decreased $41.5 million, or 185%. This decrease was primarily attributable to losses on the Company s investment
in Ziopharm preferred stock prior to returning this investment to Ziopharm in the fourth quarter of 2018, as well as an increase in interest expense related to the 3.5% convertible notes issued by the Company in the third quarter of 2018.
Based on Intrexon s financial position, including its cash, cash equivalents and short-term investments
of $224 million at December 31, 2018, in connection with issuing its financial statements Intrexon expects to include a conclusion in its Form 10-K that there is substantial doubt about its ability
to continue as a going concern.
Conference Call and Webcast
The Company will host a conference call today Thursday, February 28th, at 5:30 PM ET to discuss the fourth
quarter and full year 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 4443860 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.
Intrexon Corporation (NASDAQ: 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
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, Arctic, Botticelli, UltraCAR-T, Friendly, 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 strategy and overall approach to its business model, including its ability to successfully enter into optimal strategic
relationships with its subsidiaries and operating companies that Intrexon may form in the future, its ability to develop prospective new platforms
and partnering opportunities, and its ability to exercise more control and ownership over the development process and commercialization path; (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 SEC. 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) | December 31, 2018 | December 31, 2017 | ||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 102,768 | $ | 68,111 | ||||
| Restricted cash | 6,987 | 6,987 | ||||||
| Short-term investments | 119,688 | 6,273 | ||||||
| Equity securities | 384 | 5,285 | ||||||
| Receivables | ||||||||
| Trade, net | 21,195 | 19,775 | ||||||
| Related parties, net | 4,129 | 17,913 | ||||||
| Other, net | 2,754 | 2,153 | ||||||
| Inventory | 21,447 | 20,493 | ||||||
| Prepaid expenses and other | 6,131 | 7,057 | ||||||
| Total current assets | 285,483 | 154,047 | ||||||
| Equity securities, noncurrent | 1,798 | 9,815 | ||||||
| Investments in preferred stock | 191 | 161,225 | ||||||
| Property, plant and equipment, net | 128,874 | 112,674 | ||||||
| Intangible assets, net | 129,291 | 232,877 | ||||||
| Goodwill | 149,585 | 153,289 | ||||||
| Investments in affiliates | 18,859 | 18,870 | ||||||
| Other assets | 2,096 | 4,054 | ||||||
| Total assets | $ | 716,177 | $ | 846,851 | ||||
| Current liabilities | ||||||||
| Accounts payable | $ | 13,420 | $ | 8,701 | ||||
| Accrued compensation and benefits | 10,687 | 6,474 | ||||||
| Other accrued liabilities | 20,620 | 21,080 | ||||||
| Deferred revenue | 15,554 | 42,870 | ||||||
| Lines of credit | 466 | 233 | ||||||
| Current portion of long-term debt | 559 | 502 | ||||||
| Related party payables | 256 | 313 | ||||||
| Total current liabilities | 61,562 | 80,173 | ||||||
| Long-term debt, net of current portion | 211,235 | 7,535 | ||||||
| Deferred revenue, net of current portion | 54,210 | 193,527 | ||||||
| Deferred tax liabilities, net | 7,213 | 15,620 | ||||||
| Other long-term liabilities | 3,235 | 3,451 | ||||||
| Total liabilities | 337,455 | 300,306 | ||||||
| Commitments and contingencies | ||||||||
| Total equity | ||||||||
| Common stock | ||||||||
| Additional paid-in capital | 1,722,012 | 1,397,005 | ||||||
| Accumulated deficit | (1,330,545 | ) | (847,820 | ) | ||||
| Accumulated other comprehensive loss | (28,612 | ) | (15,554 | ) | ||||
| Total Intrexon shareholders equity | 362,855 | 533,631 | ||||||
| Noncontrolling interests | 15,867 | 12,914 | ||||||
| Total equity | 378,722 | 546,545 | ||||||
| Total liabilities and total equity | $ | 716,177 | $ | 846,851 |
Intrexon Corporation and Subsidiaries
Consolidated Statements of Operations
| Three months ended December 31, | Year ended December 31, | |||||||||||||||
| (Amounts in thousands, except share and per share data) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Revenues | ||||||||||||||||
| Collaboration and licensing revenues | $ | 25,247 | $ | 56,195 | $ | 76,869 | $ | 145,579 | ||||||||
| Product revenues | 4,979 | 7,809 | 28,528 | 33,589 | ||||||||||||
| Service revenues | 12,040 | 12,721 | 52,419 | 50,611 | ||||||||||||
| Other revenues | 919 | 303 | 2,758 | 1,202 | ||||||||||||
| Total revenues | 43,185 | 77,028 | 160,574 | 230,981 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Cost of products | 7,652 | 7,638 | 35,698 | 33,263 | ||||||||||||
| Cost of services | 6,462 | 7,720 | 27,589 | 29,525 | ||||||||||||
| Research and development | 280,514 | 38,544 | 404,586 | 143,207 | ||||||||||||
| Selling, general and administrative | 24,935 | 32,845 | 137,807 | 146,103 | ||||||||||||
| Impairment loss | 60,504 | 16,773 | 60,504 | 16,773 | ||||||||||||
| Total operating expenses | 380,067 | 103,520 | 666,184 | 368,871 | ||||||||||||
| Operating loss | (336,882 | ) | (26,492 | ) | (505,610 | ) | (137,890 | ) | ||||||||
| Other Income (Expense), Net | ||||||||||||||||
| Unrealized and realized appreciation (depreciation) in fair value of equity securities and preferred stock, net | (2,635 | ) | (6,654 | ) | (30,200 | ) | 2,586 | |||||||||
| Interest expense | (4,290 | ) | (113 | ) | (8,530 | ) | (611 | ) | ||||||||
| Interest and dividend income | 1,761 | 5,048 | 19,084 | 19,485 | ||||||||||||
| Other income (expense), net | 59 | (3,440 | ) | 630 | 1,013 | |||||||||||
| Total other income (expense), net | (5,105 | ) | (5,159 | ) | (19,016 | ) | 22,473 | |||||||||
| Equity in net loss of affiliates | (1,728 | ) | (3,010 | ) | (11,608 | ) | (14,283 | ) | ||||||||
| Loss before income taxes | (343,715 | ) | (34,661 | ) | (536,234 | ) | (129,700 | ) | ||||||||
| Income tax benefit | 1,993 | 716 | 21,528 | 2,880 | ||||||||||||
| Net loss | $ | (341,722 | ) | $ | (33,945 | ) | $ | (514,706 | ) | $ | (126,820 | ) | ||||
| Net loss attributable to the noncontrolling interests | 1,257 | 6,679 | 5,370 | 9,802 | ||||||||||||
| Net loss attributable to Intrexon | $ | (340,465 | ) | $ | (27,266 | ) | $ | (509,336 | ) | $ | (117,018 | ) | ||||
| Net loss attributable to Intrexon per share, basic and diluted | $ | (2.59 | ) | $ | (0.23 | ) | $ | (3.93 | ) | $ | (0.98 | ) | ||||
| Weighted average shares outstanding, basic and diluted | 131,532,851 | 120,763,034 | 129,521,731 | 119,998,826 |
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, expense for
in-process research and development reacquired from former collaborators, 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