GERMANTOWN, Md., May 11, 2015 /PRNewswire/ -- Intrexon Corporation (NYSE: XON), a leader in synthetic biology, today announced its first quarter results for 2015.
Business Highlights and Recent Developments:
- Entered into an exclusive collaboration and license agreement with the biopharmaceutical business of Merck KGaA, Darmstadt, Germany, to develop and commercialize chimeric antigen receptor T-cell (CAR-T) cancer therapies. Utilizing Intrexon’s cell engineering techniques and RheoSwitch® platform, the collaboration aims to develop leading-edge products that empower the immune system in a regulated manner. Under the terms of the agreement, Intrexon will receive an upfront payment of $115 million, and for the first two CAR-T targets of interest selected by Merck KGaA, Intrexon will receive certain research funding and is eligible to receive up to $826 million development, regulatory and commercial milestones, as well as tiered royalties on product sales. Intrexon will share the upfront payment, milestones and royalties, equally with ZIOPHARM Oncology. The agreement is expected to become effective in the second quarter following regulatory approval, and accordingly Intrexon’s first quarter financial results exclude any impact of this agreement;
- Signed a Cooperative Research and Development Agreement with the National Cancer Institute (NCI). The principal goal is to develop and evaluate improved adoptive cell transfer-based immunotherapies (ACT) using NCI proprietary methods for the identification of autologous peripheral blood lymphocytes with naturally occurring endogenous anti-tumor activity combined with the RheoSwitch Therapeutic System® for introducing spatially and temporally controlled interleukin-12 (IL-12) expression in ACT/PBL/IL-12 for the treatment of patients with solid tumor malignancies;
- Together with ZIOPHARM Oncology, executed an exclusive licensing agreement with The University of Texas MD Anderson Cancer Center for chimeric antigen receptor (CAR), T-cell receptor (TCR) and natural killer (NK) cell programs and associated technologies that includes the development of non-viral adoptive cellular therapies;
- Announced an exclusive collaboration with FuturaGene Group, a wholly owned subsidiary of Suzano Papel e Celulose S.A., the second largest producer of eucalyptus pulp in the world, to increase biomass in eucalyptus and poplar trees;
- Completed the acquisition of Okanagan Specialty Fruits (OSF), the pioneering agricultural company behind the Arctic® apple, the world’s first non-browning apple without the use of any flavor-altering chemical or antioxidant additives. OSF’s vision and groundbreaking effort in responsibly harnessing the power of technology to produce wholesome, nutritious food for consumers that is more appetizing and convenient with benefits across the entire supply chain are well aligned with Intrexon’s strategy in the Food sector;
- Completed the acquisition of ActoGeniX and subsequently established the Intrexon ActoBiotics Division to focus on the development and localized delivery of therapeutic molecules to the gastrointestinal tract through engineered microbes for the treatment of oral, gastrointestinal, metabolic, allergic and autoimmune diseases;
- Acquired the remaining stake in Exemplar Genetics, a company focused on developing custom miniature swine research models of human disease, including heart disease, cancer, cystic fibrosis, cardiac arrhythmia, neuromuscular and neurodegenerative disorders, to enable better predictive efficacy in the generation of new therapeutics and medical devices; and
- Completed a public offering of common stock resulting in net proceeds of approximately $110 million.
First Quarter Financial Highlights:
- Total revenues of $33.8 million, an increase of 331% over the first quarter of 2014;
- Net income of $27.1 million attributable to Intrexon, or $0.26 per basic share;
- Adjusted EBITDA of $(11.3 million), or $(0.11) per basic share; and
- Cash consideration received for research and development services covered 50% of cash operating expenses (exclusive of operating expenses of consolidated subsidiaries).
In addition, Intrexon’s Board of Directors declared a special stock dividend of 17,830,305 shares of ZIOPHARM common stock owned by Intrexon to its shareholders. The distribution of the special stock dividend will be made on the Distribution Date to all Intrexon shareholders of record on June 4, 2015 (the “Record Date”). The date of distribution by Intrexon of the special stock dividend (the “Distribution Date”) is contemplated to occur in mid-June 2015.
As part of its Exclusive Channel Collaboration model, the Company sometimes has received equity in lieu of cash for technology access fees and milestones and also has participated in capital raises to allow some of its earlier-stage collaborators to focus their resources on product development. However, when such a collaborator develops greater operational and financial resources, as ZIOPHARM has, its shares become a financial asset within Intrexon that is independent of our operational goals and collaborative purposes. The Company is therefore pleased to provide its shareholders the opportunity to participate directly in the value created by its collaboration with ZIOPHARM, and anticipates that shareholders may recognize further gains through the ongoing development of ZIOPHARM’s diversified pipeline and expanding collaboration opportunities.
Intrexon’s strategic interest in ZIOPHARM remains strong, however, as the Company will continue to enjoy its significant interest in operating profits generated from commercialized products, as well as potential license fees from ZIOPHARM transactions, while continuing the planned growth and progress of the collaborative programs.
“We continue to track to our ambitious expectations,” commented Randal J. Kirk, Chairman and Chief Executive Officer of Intrexon. “As the benefits of our technology platforms and business model accumulate, we expect to continue to drive operating and financial performance in such a way as to produce excellent capital efficiency, which will allow us to grow both organically and by acquisition. Our transactions with MD Anderson Cancer Center and with Merck KGaA and our acquisitions of ActoGeniX and of Okanagan Specialty Fruits illustrate this logic, positioning our company to reap great advantages from each of these cases, while moving forward adroitly to seize additional opportunity.”
Mr. Kirk continued, “With regard to the dividend of our ZIOPHARM shares, we think this further demonstrates the successful operation of our business model. That our first ECC did involve our taking equity in lieu of cash technology access fees and milestones, as well as our purchasing some equity over time, and now has resulted in a company of such excellence and standing as ZIOPHARM is a celebratory matter to us and to all involved with ZIOPHARM. At this point, given our very strong economic interest in ZIOPHARM’s operations, our holding these shares serves no purpose that cannot be better realized by our shareholders directly. Speaking only as a shareholder, I can say that I have no current intention of selling any of the ZIOPHARM shares that I shall receive through this dividend.”
First Quarter 2015 Financial Results Compared to Prior Year Period
Total revenues were $33.8 million for the quarter ended March 31, 2015 compared to $7.9 million for the quarter ended March 31, 2014, an increase of $25.9 million, or 331%. Collaboration revenues increased $6.9 million due to (i) the recognition of deferred revenue for upfront payments related to collaborations or expansions thereof signed between April 1, 2014 and March 31, 2015, (ii) the recognition of research and development services performed by us pursuant to these new collaborations, and (iii) increased research and development services performed by us related to new existing programs for collaborations in effect prior to April 1, 2014. Product revenue includes $7.5 million from the sale of pregnant cows, live calves and the sale of livestock used in production by Trans Ova. Service revenue totaling $8.3 million relates to the provision of in vitro fertilization and embryo transfer services by Trans Ova.
Total operating expenses were $121.0 million for the quarter ended March 31, 2015 compared to $25.7 million for the quarter ended March 31, 2014, an increase of $95.3 million, or 370%. Research and development expenses were $79.3 million for the quarter ended March 31, 2015 compared to $12.1 million for the quarter ended March 31, 2014, an increase of $67.2 million, or 558%. In January 2015, we issued 2,100,085 shares of our common stock valued at $59.6 million to MD Anderson in exchange for an exclusive license to certain technologies owned by MD Anderson. Salaries, benefits and other personnel costs increased $3.3 million due to (i) increases in research and development headcount to support new collaborations and (ii) compensation expenses related to performance and retention incentives for research and development employees. Lab supplies and consultants increased $2.0 million due to the increased level of third party research and development services provided to our collaborators. Selling, general and administrative expenses were $27.6 million for the quarter ended March 31, 2015 compared to $13.6 million for the quarter ended March 31, 2014, an increase of $14.0 million, or 103%. Salaries, benefits and other personnel costs increased $7.9 million due to (i) the inclusion of selling, general and administrative employees of companies we have acquired since April 1, 2014, including Trans Ova and ActoGeniX, and (ii) compensation expenses related to performance and retention incentives for general and administrative employees. Stock-based compensation expenses for options granted to our non-employee directors pursuant to our non-employee director compensation policy increased $1.2 million due to higher grant-date fair value in March 2015 compared to March 2014. Legal and professional expenses increased $2.4 million primarily due to costs associated with the acquisitions of ActoGeniX, OSF and Exemplar, the licensing agreement with MD Anderson, the public securities offering and other business development activity. Total operating expenses for the quarter ended March 31, 2015 also include $13.9 million of products and services costs which primarily consist of employee compensation costs, livestock, feed, drug supplies and facility charges related to the production of such products and services.
Total other income, net, was $115.7 million for the quarter ended March 31, 2015 compared to $22.0 million for the three months ended March 31, 2014, an increase of $93.7 million, or 427%. This increase was primarily related to the increase in fair value of our equity securities portfolio, including our holdings in ZIOPHARM.
Conference Call and Webcast
The Company will host a conference call on May 11, 2015, at 5:30 PM ET to discuss the first quarter 2015 financial results and provide a general business update. The conference call may be accessed by dialing 1-888-346-3959 (Domestic US) and 1-412-902-4262 (International) and asking to join the “Intrexon Conference Call.” Participants may also access the live webcast through Intrexon’s website in the Investors section under Calendar of 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. The Company’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.
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 Adjusted EBITDA to net loss attributable to Intrexon 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 Company’s current financial performance.
Trademarks
Intrexon, UltraVector, LEAP 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.
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