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Intrexon Corp., a provider of synthetic biology, announced its 2013 annual and fourth quarter results for 2013.
In a release on March 31, the company noted earnings details:
Highlights for 2013 included:
Completion of Intrexon's initial public offering which, after taking into effect the exercise of the underwriters' over-allotment option, resulted in net proceeds to the company of approximately $168.3 million; the initial public offering closed less than four months after the completion of a Series F preferred financing round which resulted in gross proceeds of $150 million;
Amounts received or due from Intrexon's collaborators for upfront and milestone payments and reimbursement of research and development services approximated 58 percent of the Company's operating expenses (exclusive of operating expenses of consolidated subsidiaries) for 2013;
Organization of Intrexon's commercial efforts around specific industry market sectors and the formation of the Company's first five such sectors: Health, Food, Environment, Energy, and Consumer;
Execution of nine new, and fifteen total, collaborations in the Health sector and the formation of joint ventures with a subsidiary of Sun Pharmaceutical Industries Ltd. to develop controllable gene- based therapies for the treatment of ocular diseases that cause total or partial blindness and with OvaScience, a life sciences company focused on the discovery, development, and commercialization of new treatments for infertility, to create new applications for improving human and animal health;
Execution of Intrexon's first collaborations in the Environment, Consumer, and Food sectors. The Environment collaboration with Rentokil Initial PLC targets the development of specific pest control products; the Consumer collaboration with Johnson and Johnson Innovation and its affiliate Johnson and Johnson Consumer & Personal Products Worldwide targets the advancement of new skin and hair care products; and the Food collaboration with AquaBounty Technologies, Inc. targets genetically modified finfish for human consumption;
Acquisition of a controlling interest in AquaBounty Technologies, Inc., a biotechnology company focused on enhancing productivity in the aquaculture market, which has developed AquAdvantage Salmon ("AAS"), Atlantic salmon that grows to market size faster than the conventionally farmed variety. AAS is awaiting FDA approval and suggests proof-of-concept for use of synthetic biology to advance sustainability in finfish aquaculture;
Execution of a definitive agreement to acquire Medistem, Inc., a pioneer in the development of Endometrial Regenerative Cells ("ERCs"), universal adult-derived stem cells. Intrexon intends to deploy its integrated synthetic biology platforms to engineer a diverse array of cell-based therapeutic candidates using Medistem's ERCs to deliver controlled therapies for variety of conditions such as cancer, inflammation, and a number of orphan diseases.
"We had three objectives in becoming a public company via our August 2013 IPO," commented Randal J. Kirk, Chairman and CEO of Intrexon. "These were to position ourselves to (1) attract the very best talent, (2) interest large companies around the globe in partnering with us through our Exclusive Channel Collaboration (ECC) structure, and (3) publicly demonstrate a level of performance and capital efficiency that would enable us to acquire at attractive valuations complementary technology assets when we find them. I am pleased to report that we have demonstrably achieved all three of these objectives.
"Our new talent, including scientists and executives, have on- boarded rapidly and already are making significant contributions, alongside our veteran team. Our deal queue has never been more fulsome and today almost all of our collaborative talks are with leading companies around the globe. Although focusing on larger transactions with larger companies naturally came at a cost of pushing new ECC's into later time periods, we believe that the wisdom of this shift in our partnering programs will soon become self-evident. Finally, our recent acquisition of the stem cell company, Medistem, illustrates the sort of combinatorial synergy that we always would wish to find in any acquisition."
Kirk concluded, "Looking forward, we are highly optimistic about the progress being made in our ECC's and joint ventures, based on their scientific, technical and regulatory progress. Ultimately we shall rest our case on the contributions that we shall have made to our partners as we expect significant returns to our shareholders as these programs become commercialized products."
In the start of 2014, Intrexon has made multiple leadership appointments to advance efforts in Health, Environment, and Consumer Sectors and augment communications development across all sectors. Completion of the Medistem, Inc. acquisition and integration of the ERC platform into Intrexon's suite of technologies supports the Company's ongoing commitment to advancing controlled cell-based therapeutics. Additionally, acquisition of laboratory operations in Budapest, Hungary expands Intrexon's strain and protein development capabilities, as well as strengthens fermentation process optimization and scale-up for current and future collaborators. The acquisition of the Budapest operations supports the research program for the newly announced ECCs with Amneal Pharmaceuticals LLC and Johnson and Johnson and also continues increasing Intrexon's interests abroad. Intrexon has also increased its controlling interest in AquaBounty Technologies, Inc. to approximately 60 percent through an additional subscription of 19,040,366 new common shares. Most recently, Intrexon established Intrexon Energy Partners, its first partnered endeavor in the Energy Sector, to leverage the Company's synthetic biology expertise to generate high- value oil products from low-cost natural gas.
Fourth Quarter 2013 Financial Results Compared to Prior Year Period
Total revenues were $7.1 million for the three months ended December 31, 2013 compared to $6.6 million for the three months ended December 31, 2012, an increase of $0.5 million, or 9 percent. The increase was primarily the result of deferred revenue arising from additional collaborations signed during 2013 as well as revenues generated from research and development services provided by us pursuant to all of Intrexon's collaborations. During the three months ended December 31, 2012, the Company recognized $3.6 million in collaboration revenue associated with the one-time receipt of a milestone payment from one of the Company's collaborators. Exclusive of operating expenses of Intrexon's majority-owned consolidated subsidiaries, research and development services revenue covered 24 percent and 10 percent of total operating expenses for the three months ended December 31, 2013 and 2012, respectively.
Research and development expenses were $12.6 million for the three months ended December 31, 2013 compared to $13.1 million for the three months ended December 31, 2012, a decrease of $0.5 million or 4 percent. The decrease is primarily the result of a net decline in personnel expenses due to the elimination of certain positions made possible by improvements in Intrexon's production processes and also the centralization of certain research and development functions.
General and administrative expenses increased $6.5 million, or 113 percent, to $12.3 million for the three months ended December 31, 2013 compared to $5.8 million for the three months ended December 31, 2012. The increase in general and administrative expenses was primarily attributable to the following items:
Personnel expenses increased $2.9 million due primarily to (i) performance bonuses awarded to certain of Intrexon's executive officers and key employees primarily for their efforts in executing the Company's successful initial public offering and (ii) increased stock compensation expenses arising from the increase in the Company's share price for options granted to key new hires and external consultants;
Legal fees increased $1.5 million due primarily to costs associated with operating as a public company, maintaining Intrexon's intellectual property portfolio, and merger and acquisition activity, including the formation of new joint ventures; and
Other external administrative costs, including accounting, insurance, exchange listing and other professional fees associated with the requirements of a public company increased $1.3 million period over period.
Total other income, net, is primarily composed of unrealized appreciation (depreciation) in fair value of equity securities which Intrexon holds in certain of its collaborators and which was $4.7 million for the three months ended December 31, 2013 compared to $(18.3) million for the three months ended December 31, 2012, an increase of $23.0 million.
Intrexon Corp. is a provider of synthetic biology focused on collaborating with companies in Health, Food, Energy, Environment, and Consumer Sectors to create biologically-based products that improve the quality of life and the health of the planet. Through the company's proprietary UltraVector platform, Intrexon provides its partners with industrial-scale design and development of complex biological systems.
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