Quarterly GAAP revenues of $77.0 million and net loss attributable to Intrexon of $27.3 million including non-cash charges of $41.5 million
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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
Recent Developments:
Fourth Quarter 2017 Financial Highlights:
Full Year 2017 Financial Highlights:
"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 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 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 About Intrexon Corporation Non-GAAP Financial Measures Trademarks Safe Harbor Statement For more information regarding Intrexon Corporation, contact: Investor Contact: Corporate Contact:
Thomas Shrader, PhD Marie Rossi, PhD
Vice President, Communications & Strategy Director, Technical Communications
investors@intrexon.com Tel: +1 (301) 556-9850
publicrelations@intrexon.com
Intrexon Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands) December 31, December 31,
2017 2016
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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
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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
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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
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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
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Total liabilities 300,306 379,820
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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)
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Total Intrexon shareholders' equity 533,631 560,237
Noncontrolling interests 12,914 9,011
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Total equity 546,545 569,248
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Total liabilities and total equity $846,851 $949,068
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Intrexon Corporation and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three months ended Year ended
(Amounts in thousands, except December 31, December 31,
share and per share data)
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2017 2016 2017 2016
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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
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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
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Operating loss (26,492) (32,590) (137,890) (125,116)
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Other Income (Expense), Net
Unrealized and realized appreciation (depreciation) in fair (6,654) (13,506) 2,586 (58,894)
value of equity securities and preferred stock
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
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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)
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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
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Net loss attributable to Intrexon $(27,266) $(44,137) $(117,018) $(186,612)
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Net loss per share, basic and diluted $(0.23) $(0.37) $(0.98) $(1.58)
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Weighted average shares outstanding, basic and diluted 120,763,034 118,575,544 119,998,826 117,983,836
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Intrexon Corporation and Subsidiaries 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:
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
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(In thousands)
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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
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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 6,654 13,506 (2,586) 58,894
in fair value of equity
securities and preferred
stock
Equity in net loss of
affiliates 3,010 4,169 14,283 21,120
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Adjusted EBITDA $13,656 $(5,790) $(11,828) (26,619)
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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)
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Supplemental information:
Impact of change in deferred
revenue related to $(39,118) $(11,259) $(67,336) $116,536
upfront and milestone
payments
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Company Codes: NYSE:XON |
