Intrexon Announces Fourth Quarter and Full Year 2017 Financial Results
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 'coreIntrexon ' (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 ofIntrexon'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 theFDA 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 theFDA 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 theCanadian Food Inspection Agency andHealth 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 theAmericas , fall armyworm has become increasingly invasive in a range of geographies globally, spreading to at least 28 countries inAfrica 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 withDarling 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; andIntrexon entered into a collaboration withArch 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, andActoBio 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 theFDA 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; andIntrexon 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 toIntrexon from the offering were approximately$86.3 million before deducting the underwriting discount and other offering expenses payable byIntrexon .
Fourth Quarter 2017 Financial Highlights:
- Total revenues of
$77.0 million , an increase of 67% over the fourth quarter of 2016; - Net loss of
$27.3 million attributable toIntrexon , or$(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 atDecember 31, 2017 .
Full Year 2017 Financial Highlights:
- Total revenues of
$231.0 million , an increase of 21% over the full year endedDecember 31, 2016 ; - Net loss of
$117.0 million attributable toIntrexon , or$(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 endedDecember 31, 2016 .
"
"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
"In 2017 we began this transition. We were enabled in this by several events, among them being (1) the quality of the
Fourth Quarter 2017 Financial Results Compared to Prior Year Period
Total revenues increased
Research and development expenses increased
Total other expense, net, decreased
Full Year 2017 Financial Results Compared to Prior Year Period
Total revenues increased
Research and development expenses increased
Total other income (expense), net, increased
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
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About
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
Trademarks
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
For more information regarding
Investor Contact: Vice President, Communications & Strategy
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Corporate Contact: Director, Technical Communications Tel: +1 (301) 556-9850 |
Consolidated Balance Sheets (Unaudited) |
|||||||
(Amounts in thousands) |
|
|
|||||
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 |
|||||
|
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 |
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 |
Consolidated Statements of Operations (Unaudited) |
||||||||||||||
Three months ended |
Year ended |
|||||||||||||
(Amounts in thousands, except share and per share data) |
|
|
||||||||||||
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 |
(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 |
$ |
(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 |
||||||||||
Reconciliation of GAAP to Non-GAAP Measures
(Unaudited)
Adjusted EBITDA and Adjusted EBITDA per share. To supplement
In addition to the reasons stated above, which are generally applicable to each of the items
- 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 andIntrexon 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
The following table presents a reconciliation of net income (loss) attributable to
Three months ended |
Year ended |
||||||||||||
|
|
||||||||||||
2017 |
2016 |
2017 |
2016 |
||||||||||
(In thousands) |
|||||||||||||
Net loss attributable to |
$ |
(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 |
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 |
$ |
(39,118) |
$ |
(11,259) |
$ |
(67,336) |
$ |
116,536 |
|||||
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