Intrexon Announces Fourth Quarter And Full Year 2015 Financial Results

GERMANTOWN, Md., Feb. 29, 2016 /PRNewswire/ -- Intrexon Corporation (NYSE: XON), a leader in synthetic biology, today announced its fourth quarter and full year results for 2015.

Business Highlights and Recent Developments:

• Currently engaging with agencies of numerous governments and non-governmental organizations concerning the potential use of Oxitec’s OX513A to reduce or eradicate populations of the Aedes aegypti mosquito, the primary vector for dengue, chikungunya, and Zika virus;
• Announced expansion of Oxitec’s ‘Friendly Aedes aegypti Project’ in Piracicaba, Brazil to an area covering 35,000 to 60,000 residents following strong results demonstrating 82% reduction in wild Ae. aegypti larvae. In preparation of this growing program and to meet increasing demand for its proprietary vector control solution, Oxitec is initiating a new mosquito production facility in Piracicaba that will have capacity to protect over 300,000 people;
• Entered into research collaboration with Janssen Pharmaceutica NV, one of the Janssen Pharmaceutical Companies of Johnson & Johnson, to discover and develop ActoBiotics^® therapies directed against selected targets to treat Type 2 diabetes (T2D), obesity and/or metabolic disorders related to energy dysregulation. The ActoBiotics^® oral delivery system for biological effectors is well suited to tackle multiple aspects of T2D;
• In addition to Janssen, signed three additional health collaborations in 2015 utilizing the ActoBiotics^® platform: Oragenics (NYSE MKT: OGEN) for treatment of diseases of the oral cavity, Synthetic Biologics (NYSE MKT: SYN) for treatment of the metabolic disorder phenylketonuria, and ZIOPHARM Oncology (NASDAQ: ZIOP) for treatment of graft-versus-host-disease;
• Expanded relationship with Fibrocell Science via a new Exclusive Channel Collaboration (ECC) for the development of genetically-modified fibroblasts to treat chronic inflammatory and degenerative diseases of the joint, including arthritis and related conditions, with cell-based therapeutics that have been modified to express one or more proteins at sites of joint inflammation helping overcome the limitations of existing treatment approaches;
• Entered into a multi-year collaboration with the Harvest Intrexon Enterprise Fund, sponsored by Harvest Capital Strategies, LLC. The fund, which raised $245 million, is dedicated to the inventions and discoveries of Intrexon suitable for pursuit by a startup;
• Announced first ECC with a startup, Thrive Agrobiotics, Inc., backed by the Harvest Intrexon Enterprise Fund, utilizing the ActoBiotics^® platform for expression of nutritive proteins to improve the overall growth and feed efficiency in weaning piglets;
• Established Intrexon Energy Partners II, a joint venture with a select group of external investors employing the Company’s proprietary gas-to-liquids bioconversion platform utilizing methanotrophs to produce 1,4-butanediol (BDO), a key chemical intermediate with a global market value exceeding $5 billion used to manufacture spandex, polyurethane, plastics, as well as polyester;
• Announced exclusive agreement between Intrexon Energy Partners (IEP) and Dominion Energy a subsidiary of Dominion Resources (NYSE: D), to explore the potential for commercial-scale biological conversion of natural gas to isobutanol, a drop-in fuel with numerous advantages over other clean burning gasoline blendstocks. Dominion will be the exclusive partner to construct, own, operate, and maintain the production facilities in the Marcellus and Utica Shale Basins via potential long-term services agreements with IEP;
• Strengthened the Company’s immuno-oncology efforts via a collaboration with the biopharmaceutical business of Merck KGaA, Darmstadt, Germany including advancement of the first two chimeric antigen receptor (CAR) T-cell targets of interest, a Cooperative Research and Development Agreement with the National Cancer Institute, as well as through an exclusive licensing agreement with The University of Texas MD Anderson Cancer Center for pursuit of non-viral adoptive cellular therapies in conjunction with ZIOPHARM Oncology;
• Declared a special stock dividend of 17,830,305 shares of ZIOPHARM common stock owned by Intrexon to its shareholders;
• In the food sector where Intrexon’s strategy centers on responsibly harnessing the power of biology and technology to produce nutritious food that is more appetizing and convenient to consumers, two of its subsidiaries received landmark approvals in 2015 the AquAdvantage^® Salmon by the U.S. Food and Drug Administration and Arctic^® Apples by the U.S. Department of Agriculture Animal and Plant Health Inspection Service and Health Canada; and
• Completed the acquisitions of Oxitec Ltd., a company that has pioneered a targeted and innovative approach to control mosquitoes that spread disease and insect pests that damage crops; Okanagan Specialty Fruits, the pioneering agricultural company behind the Arctic^® apple; and ActoGeniX, the biopharmaceutical company forging a new frontier in cellular therapeutics.

Fourth Quarter Financial Highlights:

• Total revenues of $41.5 million, an increase of 34% over the fourth quarter of 2014;
• Net loss of $32.7 million attributable to Intrexon, or $(0.28) per basic share, including non-cash charges of $19.4 million;
• Adjusted EBITDA of $9.4 million, or $0.08 per basic share;
• Cash consideration received for reimbursement of research and development services covered 64% of cash operating expenses (exclusive of operating expenses of consolidated subsidiaries); and
• Cash, cash equivalents, and short-term and long-term investments totaled $343.8 million, and the value of equity securities totaled $83.7 million at December 31, 2015.

Full Year Financial Highlights:

• Total revenues of $173.6 million, an increase of 141% over the year ended December 31, 2014;
• Net loss of $84.5 million attributable to Intrexon, or $(0.76) per basic share, including non-cash charges of $61.6 million;
• Adjusted EBITDA of $53.4 million, or $0.48 per basic share;
• Distributed as a dividend to Intrexon’s shareholders equity securities having a market value of $172.4 million at the time of distribution;
• Total consideration received for technology access fees and reimbursement of research and development services covered 167% of cash operating expenses (exclusive of operating expenses of consolidated subsidiaries); and
• Total consideration received for technology access fees, reimbursement of research and development services and products and services revenues covered 133% of consolidated cash operating expenses.

“Our essential strategy is accomplished when our team executes well, and in 2015 our team executed beautifully its mission to advance its leadership position in the rapidly emergent field of engineered biology,” commented Randal J. Kirk, Chairman and Chief Executive Officer of Intrexon. “Our model has as its chief objective the attainment of a large portfolio of significant economic interests in products across multiple industries while maintaining the discipline of living within our means, those being provided chiefly from our partners with whom we are working to develop world-changing products.”

Mr. Kirk concluded, “We are well positioned and excited as we look forward to the remainder of 2016, a year in which we intend to make progress along three principal axes. First, extending the trend that we showed in 2015 over 2014, we expect to continue our financial growth trajectory. Second, we expect to deliver to the world in this year several examples of projects that were initiated within our company, and these may include specimens from our methanotrophic bioconversion platform and clinical stage therapeutic candidates. Finally, we expect to partner some of our mature stage assets with companies that add real value toward their maximized commercial realizations.”

Fourth Quarter 2015 Financial Results Compared to Prior Year Period

Total revenues were $41.5 million for the quarter ended December 31, 2015 compared to $31.1 million for the quarter ended December 31, 2014, an increase of $10.4 million, or 34%. Collaboration and licensing revenues increased $8.2 million over the three months ended December 31, 2014 due to (i) the recognition of deferred revenue for upfront payments received from the Company’s license and collaboration agreement with the biopharmaceutical business of Merck KGaA, which became effective in May 2015, and from other collaborations signed by Intrexon in 2015 and (ii) increased research and development services for both new collaborations and for the expansion or addition of new programs with previously existing collaborators, including ZIOPHARM Oncology, Inc. (ZIOPHARM) and Intrexon’s joint venture with Intrexon Energy Partners, LLC (Intrexon Energy Partners). Product revenues were $9.2 million for the three months ended December 31, 2015 compared to $7.4 million for the three months ended December 31, 2014, an increase of $1.8 million, or 25%. The increase in product revenues during the three months ended December 31, 2015 primarily relates to an increase in the quantity of pregnant cows and weaned calves sold due to higher customer demand. Gross margin on product revenues declined for the period due to a decline in the average sales price and gross margins for sales of livestock previously used in production. Service revenues and gross margins remained consistent period over period.

Total operating expenses were $75.9 million for the quarter ended December 31, 2015 compared to $50.1 million for the quarter ended December 31, 2014, an increase of $25.8 million, or 51%. Research and development expenses were $26.2 million for the three months ended December 31, 2015 compared to $17.6 million for the three months ended December 31, 2014, an increase of $8.6 million, or 49 percent. Salaries, benefits and other personnel costs increased $3.6 million due to (i) an increase in research and development employees necessary to support new and expanded collaborations, (ii) the additional costs of stock options and performance-based bonus awards for all research and development employees and (iii) the cost of new employees assumed as a result of Intrexon’s various acquisitions. Lab supplies and contract research organizations expenses increased $2.7 million as a result of (i) the progression of programs 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 various acquisitions. Depreciation and amortization increased $1.8 million primarily from the acquisition of property and equipment and intangible assets assumed as a result of Intrexon’s various acquisitions. Selling, general and administrative expenses were $34.7 million for the three months ended December 31, 2015 compared to $19.8 million for the three months ended December 31, 2014, an increase of $14.9 million, or 75 percent. Salaries, benefits and other personnel costs increased $10.5 million due to (i) an increase in selling, general and administrative employees necessary to support Intrexon’s expanding operations, (ii) the additional costs of stock options and performance-based bonus awards, including those paid under the 2015 annual executive bonus plan, for all selling, general and administrative employees; (iii) the cost of new employees assumed as a result of the Company’s various acquisitions. Legal and professional expenses increased $2.9 million primarily due to (i) incremental legal and professional fees related to the ongoing operations of acquired subsidiaries; and (ii) increased professional and business development expenses related to certain collaborations entered into during the three months ended December 31, 2015.

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