GERMANTOWN, Md., March 1, 2018 /PRNewswire/ -- 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 fourth quarter and full
year financial results for 2017.
2017 Business Highlights
- Intrexon's energy team achieved cash positive scalable yields
in two multibillion-dollar hydrocarbons from its Methane
Bioconversion Platform (MBP), along with increasing yields on other
targets;
- Precigen, a wholly owned subsidiary, commenced a therapeutic
vaccine program based on its AdenoVerse™ platform and established a
generalized system for Point of Care CAR-T cells that, based on
in vitro and in vivo studies, offers the promise of
outperforming currently available approaches, at considerably lower
COGS. Additionally, the team has developed numerous
therapeutic candidates targeting not only cancer but also
autoimmune and infectious targets, while preparing for the
commencement of multiple clinical trials in 2018;
- In connection with its planned evolution, Intrexon
decentralized its organization to consist of a 'core Intrexon'
(consisting of its purely scientific units) and a number of
enterprises with management structures designed to drive
shareholder value through commercialization, including through
partnering transactions or potential spin out transaction, shifting
the emphasis of Intrexon's business model away from partnering
early stage programs and focusing on the partnering of mature
programs and platforms;
- Partnering programs were commenced and are ongoing on four
mature programs or platforms, including MBP and Intrexon Crop
Protection;
- Collaborator Ziopharm Oncology, Inc. (Nasdaq: ZIOP) announced
the dosing of the first patient in a Phase 1 study of its gene
therapy Ad-RTS-hIL-12 + veledimex for the treatment of pediatric
brain tumors. Additionally, Ziopharm's Phase 1 trial of
CD33-specific chimeric antigen receptor T cell (CAR-T) therapy
targeting relapsed or refractory acute myeloid leukemia is
enrolling patients;
- Xogenex, a majority-owned subsidiary of Precigen, was
authorized by the U.S. Food and Drug Administration (FDA) to
commence its Phase 1 trial of the gene therapy INXN-4001, which we
believe is the world's first multigene cardiac therapeutic
candidate expressing proteins from three effector genes for the
treatment of heart disease;
- Collaborator Fibrocell Science, Inc. (NASDAQ: FCSC) obtained
allowance from the FDA to initiate enrollment of pediatric patients
in the Phase 2 portion of its Phase 1/2 clinical trial of FCX-007,
its gene therapy candidate for the treatment of recessive
dystrophic epidermolysis bullosa (RDEB) – a devastating, genetic
skin disease with high mortality. Fibrocell also announced
submission of an Investigational New Drug Application (IND) with
the FDA for FCX-013, its gene therapy candidate for the treatment
of moderate to severe localized scleroderma;
- Okanagan Specialty Fruits (OSF), a wholly owned subsidiary of
Intrexon, announced its non-browning Arctic® Fuji
apple has been approved by the Canadian Food Inspection Agency and
Health Canada. Arctic® Fuji trees will join the growing
commercial orchards of Arctic® Golden and
Arctic® Granny apples in spring 2018. OSF planted
266,000 apple trees in 2017 and anticipates the planting of over
600,000 trees in 2018;
- Intrexon Crop Protection achieved a key research milestone and
received a milestone payment in its collaboration with a leading
agricultural company developing an eco-friendly fall armyworm
solution utilizing Oxitec's self-limiting insect technology. Native
to the Americas, fall armyworm has become increasingly invasive in
a range of geographies globally, spreading to at least 28 countries
in Africa alone, causing an
estimated $13.8 billion in losses of
maize, sorghum, rice and sugarcane;
- During 2017, while exceeding all operational goals, Trans Ova
Genetics, a wholly owned subsidiary, initiated pregnancies that are
gestating its first genetically engineered bovine and porcine
livestock targeted for agricultural purposes. Trans Ova's
bioengineering focus is on improvements to animal health and animal
welfare that will provide benefits to both animals and
farmers;
- EnviroFlight, LLC, Intrexon's joint venture with Darling
Ingredients Inc. (NYSE: DAR), is underway with construction of the
largest domestic commercial-scale black soldier fly (BSF) larvae
production facility, which is expected to open in the second half
of 2018, expanding production of advanced BSF ingredients for
sustainable animal feed and nutrition; and
- Intrexon entered into a collaboration with Arch Pharmalabs,
Ltd. for development of microbial strains for fermentative
production of an active pharmaceutical ingredient that is currently
sourced from animals.
Recent Developments:
- Intrexon structured its principal healthcare assets into two
separate wholly owned subsidiaries – Precigen, Inc., a gene and
cell therapy company developing precision medicines, and ActoBio
Therapeutics, Inc., a company focused, via its proprietary
ActoBiotics® platform, on therapeutic delivery of
biologics to the site of disease – reflecting their distinct
technological and market characteristics and aligning these
businesses with management structures to drive shareholder
value;
- Precigen partnered with a major medical center to employ a
point-of-care approach using non-viral-based CAR-T immunotherapy
for cancer, in which reduced manufacturing time (as short as two
days) combined with distributed production is intended to enable
faster time to treatment and lower therapeutic costs. First patient
dosing is expected in the second quarter of 2018, and Precigen
intends to partner with additional medical centers to employ this
approach;
- Collaborator Intrexon T1D Partners, LLC, filed an IND with the
FDA to clinically investigate a combination therapy of oral
ActoBiotics® therapeutic candidate AG019 with a mAb to
interrupt and reverse the onset of type 1 diabetes;
- Intrexon produced 2,3 Butanediol of 99%+ purity at pilot scale
utilizing its proprietary MBP technology platform, and the material
was sent to catalyst providers for test conversion to 1,3
Butadiene. Intrexon utilized the pilot plant data to complete the
FEL-2 engineering package detailing a production facility with an
annual capacity of approximately 40,000 tons; and
- Intrexon sold 6,900,000 shares of its common stock in an
underwritten public offering at a public offering price of
$12.50 per share, including the
exercise in full by the underwriters of their option to purchase an
additional 900,000 shares of common stock. Gross proceeds to
Intrexon from the offering were approximately $86.3 million before deducting the underwriting
discount and other offering expenses payable by Intrexon.
Fourth Quarter 2017 Financial Highlights:
- Total revenues of $77.0 million,
an increase of 67% over the fourth quarter of 2016;
- Net loss of $27.3 million
attributable to Intrexon, or $(0.23)
per basic share, including non-cash charges of $41.5 million;
- Adjusted EBITDA of $13.7 million,
or $0.11 per basic share;
- The net change in deferred revenue related to upfront and
milestone payments, which represents the cash and stock received
from collaborators less the amount of revenue recognized during the
period, was a decrease of $39.1
million compared to a decrease of $11.3 million in the fourth quarter of 2016;
and
- Cash, cash equivalents, and short-term investments totaled
$74.4 million, the value of preferred
shares totaled $161.2 million, and
the value of common equity securities totaled $15.1 million at December
31, 2017.
Full Year 2017 Financial Highlights:
- Total revenues of $231.0 million,
an increase of 21% over the full year ended December 31, 2016;
- Net loss of $117.0 million
attributable to Intrexon, or $(0.98)
per basic share, including non-cash charges of $107.5 million;
- Adjusted EBITDA of $(11.8)
million, or $(0.10) per basic
share; and
- The net change in deferred revenue related to upfront and
milestone payments, which represents the cash and stock received
from collaborators less the amount of revenue recognized during the
period, was a decrease of $67.3
million compared to a net increase of $116.5 million in the full year ended
December 31, 2016.
"Intrexon always has intended to be a leader in the field of
industrialized biotechnology, by focusing on technology solutions
that are more advanced than where most others are investing and
making these technologies and their benefits tangibly real,"
commented Randal J. Kirk, Chairman
and Chief Executive Officer of Intrexon. "We began with the
belief that rationally designed, complex transgenes will be
superior to tiny gene programs that can be constructed by almost
anyone who tries to do so. In our long-held view, the number
of high value problems that can be solved with a single gene, for
example, are very limited and, even if successful, then very easily
duplicated. Further, we realized years ago that gene programs
often will require real-time control features in order to regulate
their activity.
"As we developed those capabilities, we learned that host cell
and organism expertise is a necessary requirement in order to know
how to construct and test complex gene programs – and realize their
advantages -- in real-world situations. One may analogize
this to a programming language (the gene program) and an operating
system (that of the host cell). Deep expertise in both is
essential if one will succeed in advancing functional solutions to
complex biological problems. Today, we believe that we are
the world leaders in the design and construction of multigenic,
controllable gene programs and that we have achieved host expertise
in 51 expression host species with additional expertise in diverse
cell types across organisms, from the methanotroph to any of
several human cells. Importantly, we observe that our
original view is becoming more widely recognized as examples of
simple gene programming have become appreciated, along with their
limitations.
"Because we believed the opportunity space for our technology
was vast and the fact that we did not have infinite capital, we
went into business in 2011 with a model we refer to as the
Exclusive Channel Collaboration. In essence, we formed
collaborations with parties in which they paid Intrexon upfront
fees, milestone payments and participating economics, as well as
fees for our work on behalf of the collaborative product.
This model allowed us, in a manner that was capital-sparing for
Intrexon, to investigate a multitude of opportunities, many of
which have proven out very well thus far both for Intrexon and our
collaborators. It always was our intention, however, once we had
them, to partner late stage products and platforms rather than
early stage work. Indeed, late stage assets are worth much
more than the promise of an interesting early stage program and we
would rather work on early stage programs in-house and out of the
limelight.
"In 2017 we began this transition. We were enabled in this
by several events, among them being (1) the quality of the Intrexon
scientific leadership and our fine scientists in labs in the
Americas and Europe, (2) our
achievement of technical success in several projects that had been
the labor of years of effort, (3) the interest being shown in these
mature programs by large incumbent companies and (4) the maturation
of several of our target marketplaces so that our offerings can be
better comprehended in context."
Mr. Kirk concluded, "We realize that it has been painful for
many who have invested in Intrexon's shares but we are determined
that 2018 will be a year of vindication for those who have made
this journey with us. We lead in several categories that
others did not realize would even be categories when we began our
work, and we intend to make the most of our advantages."
Fourth Quarter 2017 Financial Results Compared to Prior Year
Period
Total revenues increased $31.0
million, or 67%, from the quarter ended December 31, 2016. Collaboration and licensing
revenues increased $28.5 million from
the quarter ended December 31, 2016
primarily due to the recognition of previously deferred revenue
totaling $28.9 million related to the
Company's collaboration with ZIOPHARM for the treatment of
graft-versus-host disease, which was mutually terminated in
December 2017. Product revenues were
comparable to the quarter ended December 31,
2016. Gross margin on products increased slightly in the
current period primarily due to lower cost of cows. Service
revenues increased $2.4 million, or
23%, 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 $9.5 million, or 33%, due primarily to increases
in (i) lab supplies and consulting expenses and (ii) depreciation
and amortization. Lab supplies and consulting expenses increased
$4.9 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 $1.5 million primarily as a result of (i) the
amortization of developed technology acquired from Oxitec, which
began in November 2016 upon the
completion of certain operational and regulatory events, and (ii)
the amortization of developed technology acquired from GenVec in
June 2017. As a result of the
Company's assessment of the recoverability of goodwill and
intangible assets acquired in previous acquisitions, the Company
recorded an impairment charge of $16.8
million in the fourth quarter of 2017. Of this amount,
$13.0 million was attributable to the
write off of goodwill related to the AquaBounty subsidiary, which
was based primarily on the fair value of the Company's holdings in
AquaBounty after consideration of the closing of a public financing
by AquaBounty in January 2018.
Total other expense, net, decreased $3.6
million, or 41%. This change was primarily attributable to
changes in the fair value of the Company's equity securities and
preferred stock portfolio for the period.
Full Year 2017 Financial Results Compared to Prior Year
Period
Total revenues increased $40.1
million, or 21%, over the year ended December 31, 2016. Collaboration and licensing
revenues increased $35.7 million, or
33%, over the year ended December 31,
2016, primarily due to (i) the recognition of previously
deferred revenue totaling $28.9
million related to the Company's collaboration with ZIOPHARM
for the treatment of graft-versus-host disease, which was mutually
terminated in December 2017 and (ii)
a full year of recognition of deferred revenue associated with the
payment received in June 2016 from
ZIOPHARM to amend the collaborations between the parties. Product
revenues decreased $3.4 million, or
9%, primarily due to lower customer demand for cows and live
calves. Gross margin on products improved slightly in the current
period primarily due to a decline in the average cost of cows.
Service revenues increased $7.6
million, or 18%, 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 $31.1 million, or 28%, due primarily to increases
in (i) lab supplies and consulting expenses, (ii) salaries,
benefits and other personnel costs for research and development
employees, (iii) depreciation and amortization, and (iv) rent and
utilities expenses. Lab supplies and consulting expenses increased
$11.3 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. Salaries, benefits and other personnel costs
increased $8.0 million due to an
increase in research and development headcount necessary to invest
in current or expanding platforms and to develop new prospective
collaborations and other partnering opportunities. Depreciation and
amortization increased $5.8 million
primarily as a result of (i) the amortization of developed
technology acquired from Oxitec, which began in November 2016 upon the completion of certain
operational and regulatory events, and (ii) the amortization of
developed technology acquired from GenVec in June 2017. Rent and utilities expenses increased
$3.3 million due to the expansion of
certain facilities to support the Company's increased headcount.
Selling general and administrative expenses increased $3.8 million, or 3%. Salaries, benefits and other
personnel costs increased $4.2
million primarily due to increased headcount to support the
Company's expanding operations. Legal and professional fees
increased $4.2 million primarily due
to (i) increased legal fees to defend ongoing litigation and to
support our evolving corporate strategy and (ii) consulting fees
related to potential business opportunities and public relations.
These increases were partially offset by $4.3 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. As a result of the
Company's assessment of the recoverability of goodwill and
intangible assets acquired in previous acquisitions, the Company
recorded an impairment charge of $16.8
million in the fourth quarter of 2017. Of this amount,
$13.0 million was attributable to the
write off of goodwill related to the AquaBounty subsidiary which
was based primarily on the fair value of the Company's holdings in
AquaBounty after consideration of the closing of a public financing
by AquaBounty in January 2018.
Total other income (expense), net, increased $70.3 million, or 147%. This increase was
primarily attributable to (i) the change in fair market value of
the Company's equity securities portfolio, investments in preferred
stock and other convertible instruments and (ii) a full year of
dividend income from the Company's investment in preferred stock of
ZIOPHARM.
Equity in net loss of affiliates, which includes the Company's
pro-rata share of the net losses of its investments accounted for
using the equity method of accounting, decreased $6.8 million, or 32%. This decrease was primarily
due to the temporary redeployment of certain of the Company's
resources away from joint venture programs towards supporting
prospective new platforms and additional collaborations.
Conference Call and Webcast
The Company will host a
conference call today Thursday, March
1st, at 5:30 PM ET
to discuss the fourth quarter and full year 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 1163462 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 at www.dna.com or follow us on Twitter at
@Intrexon, on Facebook, and LinkedIn.
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.
Trademarks
Intrexon, AdenoVerse, Arctic, ActoBio
Therapeutics, ActoBiotics, 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. 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:
Investor
Contact:
Thomas Shrader,
PhD
Vice President,
Communications & Strategy
investors@intrexon.com
|
Corporate
Contact:
Marie Rossi,
PhD
Director, Technical
Communications
Tel: +1 (301)
556-9850
publicrelations@intrexon.com
|
Intrexon
Corporation and Subsidiaries
Consolidated
Balance Sheets
(Unaudited)
|
|
|
|
|
|
|
(Amounts in
thousands)
|
|
December 31,
2017
|
|
|
December 31,
2016
|
Assets
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
68,111
|
|
|
$
|
62,607
|
Restricted
cash
|
|
|
6,987
|
|
|
|
6,987
|
Short-term
investments
|
|
|
6,273
|
|
|
|
174,602
|
Equity
securities
|
|
|
5,285
|
|
|
|
—
|
Receivables
|
|
|
|
|
|
|
|
Trade, net
|
|
|
19,775
|
|
|
|
21,637
|
Related
parties
|
|
|
17,913
|
|
|
|
16,793
|
Notes, net
|
|
|
—
|
|
|
|
1,500
|
Other
|
|
|
2,153
|
|
|
|
2,555
|
Inventory
|
|
|
20,493
|
|
|
|
21,139
|
Prepaid expenses and
other
|
|
|
7,057
|
|
|
|
7,361
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
|
154,047
|
|
|
|
315,181
|
Long-term
investments
|
|
|
—
|
|
|
|
5,993
|
Equity securities,
noncurrent
|
|
|
9,815
|
|
|
|
23,522
|
Investments in
preferred stock
|
|
|
161,225
|
|
|
|
129,545
|
Property, plant and
equipment, net
|
|
|
112,674
|
|
|
|
64,672
|
Intangible assets,
net
|
|
|
232,877
|
|
|
|
225,615
|
Goodwill
|
|
|
153,289
|
|
|
|
157,175
|
Investments in
affiliates
|
|
|
18,870
|
|
|
|
23,655
|
Other
assets
|
|
|
4,054
|
|
|
|
3,710
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
846,851
|
|
|
$
|
949,068
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
8,701
|
|
|
$
|
8,478
|
Accrued compensation
and benefits
|
|
|
6,474
|
|
|
|
6,540
|
Other accrued
liabilities
|
|
|
21,080
|
|
|
|
15,776
|
Deferred
revenue
|
|
|
42,870
|
|
|
|
53,364
|
Lines of
credit
|
|
|
233
|
|
|
|
820
|
Current portion of
long term debt
|
|
|
502
|
|
|
|
386
|
Deferred
consideration
|
|
|
—
|
|
|
|
8,801
|
Related party
payables
|
|
|
313
|
|
|
|
440
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
|
80,173
|
|
|
|
94,605
|
Long term debt, net
of current portion
|
|
|
7,535
|
|
|
|
7,562
|
Deferred revenue, net
of current portion
|
|
|
193,527
|
|
|
|
256,778
|
Deferred tax
liabilities, net
|
|
|
15,620
|
|
|
|
17,007
|
Other long term
liabilities
|
|
|
3,451
|
|
|
|
3,868
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
300,306
|
|
|
|
379,820
|
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Total
equity
|
|
|
|
|
|
|
|
Common
stock
|
|
|
—
|
|
|
|
—
|
Additional paid-in
capital
|
|
|
1,397,005
|
|
|
|
1,325,780
|
Accumulated
deficit
|
|
|
(847,820)
|
|
|
|
(729,341)
|
Accumulated other
comprehensive loss
|
|
(15,554)
|
|
|
|
(36,202)
|
|
|
|
|
|
|
|
|
Total Intrexon
shareholders' equity
|
|
533,631
|
|
|
|
560,237
|
Noncontrolling
interests
|
|
|
12,914
|
|
|
|
9,011
|
|
|
|
|
|
|
|
|
Total
equity
|
|
|
546,545
|
|
|
|
569,248
|
|
|
|
|
|
|
|
|
Total liabilities and
total equity
|
|
$
|
846,851
|
|
|
$
|
949,068
|
Intrexon
Corporation and Subsidiaries
Consolidated
Statements of Operations
(Unaudited)
|
|
|
|
|
Three months
ended
|
|
|
Year
ended
|
(Amounts in
thousands, except
share and per
share data)
|
|
December
31,
|
|
|
December
31,
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Collaboration and
licensing revenues
|
|
$
|
56,195
|
|
$
|
27,727
|
|
$
|
145,579
|
$
|
|
109,871
|
Product
revenues
|
|
|
7,809
|
|
|
7,692
|
|
|
33,589
|
|
|
36,958
|
Service
revenues
|
|
|
12,721
|
|
|
10,318
|
|
|
50,611
|
|
|
43,049
|
Other
revenues
|
|
|
303
|
|
|
265
|
|
|
1,202
|
|
|
1,048
|
Total
revenues
|
|
|
77,028
|
|
|
46,002
|
|
|
230,981
|
|
|
190,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
products
|
|
|
7,638
|
|
|
8,212
|
|
|
33,263
|
|
|
37,709
|
Cost of
services
|
|
|
7,720
|
|
|
5,998
|
|
|
29,525
|
|
|
23,930
|
Research and
development
|
|
|
38,544
|
|
|
29,020
|
|
|
143,207
|
|
|
112,135
|
Selling, general and
administrative
|
|
|
32,845
|
|
|
35,362
|
|
|
146,103
|
|
|
142,318
|
Impairment
loss
|
|
|
16,773
|
|
|
—
|
|
|
16,773
|
|
|
—
|
Total operating
expenses
|
|
|
103,520
|
|
|
78,592
|
|
|
368,871
|
|
|
316,092
|
Operating
loss
|
|
|
(26,492)
|
|
|
(32,590)
|
|
|
(137,890)
|
|
|
(125,116)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
(Expense), Net
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized and
realized appreciation (depreciation) in fair
value of equity securities and preferred stock
|
|
(6,654)
|
|
|
(13,506)
|
|
|
2,586
|
|
|
(58,894)
|
Interest
expense
|
|
|
(113)
|
|
|
(102)
|
|
|
(611)
|
|
|
(861)
|
Interest and dividend
income
|
|
|
5,048
|
|
|
4,373
|
|
|
19,485
|
|
|
10,190
|
Other income,
net
|
|
|
(3,440)
|
|
|
495
|
|
|
1,013
|
|
|
1,700
|
Total other income
(expense), net
|
|
|
(5,159)
|
|
|
(8,740)
|
|
|
22,473
|
|
|
(47,865)
|
Equity in net loss of
affiliates
|
|
|
(3,010)
|
|
|
(4,169)
|
|
|
(14,283)
|
|
|
(21,120)
|
Loss before income
taxes
|
|
|
(34,661)
|
|
|
(45,499)
|
|
|
(129,700)
|
|
|
(194,151)
|
Income tax
benefit
|
|
|
716
|
|
|
587
|
|
|
2,880
|
|
|
3,877
|
Net loss
|
|
$
|
(33,945)
|
|
$
|
(44,912)
|
|
$
|
(126,820)
|
|
$
|
(190,274)
|
Net loss attributable
to the noncontrolling interests
|
|
|
6,679
|
|
|
775
|
|
|
9,802
|
|
|
3,662
|
Net loss attributable
to Intrexon
|
|
$
|
(27,266)
|
|
$
|
(44,137)
|
|
$
|
(117,018)
|
|
$
|
(186,612)
|
Net loss per share,
basic and diluted
|
|
$
|
(0.23)
|
|
$
|
(0.37)
|
|
$
|
(0.98)
|
|
$
|
(1.58)
|
Weighted average
shares outstanding, basic and diluted
|
|
|
120,763,034
|
|
|
118,575,544
|
|
|
119,998,826
|
|
|
117,983,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intrexon Corporation and
Subsidiaries
Reconciliation of GAAP to Non-GAAP
Measures
(Unaudited)
Adjusted EBITDA and 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.
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
following reasons:
- Interest expense may be subject to changes in interest rates
which are beyond Intrexon's control;
- Depreciation of Intrexon's property and equipment and
amortization of acquired identifiable intangibles can be affected
by the timing and magnitude of business combinations and capital
asset purchases;
- Stock-based compensation expense is a noncash expense and may
vary significantly based on the timing, size and nature of awards
granted and also because the value is determined using formulas
which incorporate variables, such as market volatility;
- Shares issued as compensation for services and bad debt expense
are noncash expenses which Intrexon excludes in evaluating its
financial and operating performance;
- Impairment loss is a noncash expense which represents the write
down of the book value of acquired goodwill and intangible assets
when fair value is determined to be less than book value. These
charges are nonrecurring and may vary significantly based on
economic, regulatory, political and other circumstances;
- Unrealized and realized appreciation or depreciation in the
fair value of securities which Intrexon holds in its collaborators
may be significantly impacted by market volatility and other
factors which are outside of the Company's control in the short
term and Intrexon intends to hold these securities over the long
term, except as otherwise disclosed;
- Equity in net loss of affiliate reflects Intrexon's
proportionate share of the income or loss of entities over which
the Company has significant influence, but not control, and
accounts for using the equity method of accounting. Intrexon
believes excluding the impact of such losses or gains on these
types of strategic investments from its operating results is
important to facilitate comparisons between periods; and
- Litigation expense is an estimate of the net amount due,
including prejudgment interest, as a result of the final court
order from Trans Ova's trial with XY, LLC. Intrexon believes it has
compelling grounds to overturn the adverse rulings of the court
order through appellate action and that, as a result, the amount of
the damages could be reduced or eliminated.
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 collaborators.
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
|
|
|
Year
ended
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
(In
thousands)
|
|
|
|
|
|
|
Net loss attributable
to Intrexon
|
|
$
|
(27,266)
|
|
$
|
(44,137)
|
|
$
|
(117,018)
|
|
$
|
(186,612)
|
Interest
expense
|
|
|
95
|
|
|
66
|
|
|
546
|
|
|
681
|
Income tax
benefit
|
|
|
(716)
|
|
|
(587)
|
|
|
(2,880)
|
|
|
(3,877)
|
Depreciation and
amortization
|
|
|
8,139
|
|
|
6,793
|
|
|
30,641
|
|
|
24,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
$
|
(19,748)
|
|
$
|
(37,865)
|
|
|
(88,711)
|
|
|
(165,723)
|
Stock-based
compensation
|
|
|
9,612
|
|
|
11,553
|
|
|
41,525
|
|
|
42,122
|
Shares issued as
payment for services
|
|
|
2,678
|
|
|
2,493
|
|
|
11,118
|
|
|
10,777
|
Impairment
loss
|
|
|
11,326
|
|
|
—
|
|
|
11,326
|
|
|
—
|
Bad debt
expense
|
|
|
124
|
|
|
354
|
|
|
1,217
|
|
|
1,963
|
Litigation
expense
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,228
|
Unrealized and
realized (appreciation) depreciation
in fair value of equity securities and preferred
stock
|
|
6,654
|
|
|
13,506
|
|
|
(2,586)
|
|
|
58,894
|
Equity in net loss of
affiliates
|
|
|
3,010
|
|
|
4,169
|
|
|
14,283
|
|
|
21,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
13,656
|
|
$
|
(5,790)
|
|
$
|
(11,828)
|
|
|
(26,619)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding, basic
|
|
|
120,763,034
|
|
|
118,575,544
|
|
|
119,998,826
|
|
|
117,983,836
|
Weighted average
shares outstanding, diluted
|
|
|
121,139,803
|
|
|
118,575,544
|
|
|
119,998,826
|
|
|
117,983,836
|
Adjusted EBITDA per
share, basic
|
|
$
|
0.11
|
|
$
|
(0.05)
|
|
$
|
(0.10)
|
|
$
|
(0.23)
|
Adjusted EBITDA per
share, diluted
|
|
$
|
0.11
|
|
$
|
(0.05)
|
|
$
|
(0.10)
|
|
$
|
(0.23)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of change in
deferred revenue related to
upfront and milestone payments
|
|
$
|
(39,118)
|
|
$
|
(11,259)
|
|
$
|
(67,336)
|
|
$
|
116,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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SOURCE Intrexon Corporation