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Intrexon Announces First Quarter 2016 Financial Results

- Adjusted EBITDA of $1.9 million -

- Consideration received for technology access fees, reimbursement of R&D services and product and service revenues covered 92% of consolidated cash operating expenses -

PR Newswire

GERMANTOWN, Md., May 10, 2016 /PRNewswire/ -- Intrexon Corporation (NYSE (NYX): XON), a leader in synthetic biology, today announced its first quarter results for 2016.

Business Highlights and Recent Developments:

  • National Health Surveillance Agency of Brazil (Anvisa) announced that Oxitec, a wholly-owned subsidiary of Intrexon (XON), would receive a special temporary registration to deploy its genetically engineered mosquito, OX513A, known as 'Friendly Aedes aegypti', throughout the country;
  • The World Health Organization's Vector Control Advisory Group issued a positive recommendation for planned pilot deployment of Oxitec's self-limiting mosquito (OX513A) under operational conditions. Additionally the Pan American Health Organization has offered to provide technical support for pilot studies of OX513A as part of its response to the Zika epidemic;
  • The U.S. Food and Drug Administration (FDA) Center for Veterinary Medicine published a preliminary finding of no significant impact (FONSI) on Oxitec's self-limiting OX513A Ae. aegypti mosquito for an investigational trial in the Florida Keys;
  • Announced the Cayman Islands Mosquito Research and Control Unit (MRCU) plans to utilize Oxitec's solution for suppression of wild populations of Ae. aegypti to help reclaim the island from this disease-carrying pest. The program follows a successful trial of Oxitec's mosquito in the Cayman Islands that reduced Ae. aegypti by 96%;
  • Acquired the business of EnviroFlight LLC and formed a joint venture with Darling Ingredients Inc. (DAR) (NYSE: DAR), the world's largest publicly traded developer and producer of sustainable natural ingredients from bio-nutrients. Through collaboration between Intrexon and Darling, EnviroFlight's scalable approach utilizing black soldier fly larvae will be used in the generation of high-nutrition, low environmental impact animal and fish feed as well as fertilizer products;
  • Announced the pilot plant for Intrexon's proprietary gas-to-liquids bioconversion platform is operational. The plant is dedicated to the production of isobutanol, a drop-in fuel with numerous advantages over other clean burning gasoline blendstocks;
  • With collaborator Fibrocell Science, Inc. (FCSC) (NASDAQ (NBI): FCSC) announced allowance from the U.S. FDA to initiate a Phase I/II clinical trial for FCX-007 in adults. FCX-007 is Fibrocell's lead gene-therapy product candidate developed in collaboration with Intrexon for the treatment of the orphan indication of recessive dystrophic epidermolysis bullosa. Additionally Fibrocell received orphan drug designation from the FDA for FCX-013, its second gene-therapy product candidate developed in conjunction with Intrexon, for the treatment of localized scleroderma;
  • Collaborator ZIOPHARM Oncology (ZIOP) (NASD: ZIOP) announced the first patient was treated in the dose escalation portion of the Phase I study of Ad-RTS-hIL-12 for advanced glioma, and additionally the first patient was enrolled in the Phase I study of second generation non-viral CD-19-specific CAR T-cell therapy for advanced lymphoid malignancies;
  • Announced the formation of Intrexon T1D Partners, LLC, a joint venture to develop ActoBiotics® based antigen-specific immunotherapy to treat type 1 diabetes (T1D) in humans. The objective of the program is to create an easy-to-take pill for people afflicted with T1D to halt autoimmune-induced damage, both for early stage patients before they become insulin dependent and also for certain advanced stage patients to potentially prevent the requirement for insulin to be administered externally;
  • Entered into ECCs with two startups backed by the Harvest Intrexon Enterprise Fund, sponsored by Harvest Capital Strategies, LLC. Through the proprietary technologies of Intrexon, these companies will pursue new approaches for unmet needs in human health: Relieve Genetics, Inc. will focus on a breakthrough, non-opioid gene therapy approach for neuropathic pain and Exotech Bio, Inc. will utilize a novel exosome-based platform for delivering therapeutic RNA to treat select cancer indications; and
  • Announced the formation of Intrexon Crop Protection (ICP), a wholly-owned subsidiary dedicated to the biological control of agricultural pests and diseases. Through the utilization of Oxitec's diverse self-limiting gene platform for insect control as well as the ActoBiotics® system for the expression of targeted biologicals, ICP will precisely target single pest species thereby avoiding off-target effects of conventional pesticide applications on the broader ecosystem.

First Quarter Financial Highlights:

  • Total revenues of $43.4 million, an increase of 28% over the first quarter of 2015;
  • Net loss of $64.4 million attributable to Intrexon, or $(0.55) per basic share, including non-cash charges of $50.6 million;
  • Adjusted EBITDA of $1.9 million, or $0.02 per basic share;
  • Cash consideration received for reimbursement of research and development services covered 56% of cash operating expenses (exclusive of operating expenses of consolidated subsidiaries);
  • Total consideration received for technology access fees, reimbursement of research and development services and products and services revenues covered 92% of consolidated cash operating expenses; and
  • Cash, cash equivalents, and short-term and long-term investments totaled $336.0 million, and the value of equity securities totaled $61.3 million at March 31, 2016.

In addition, Intrexon's Board of Directors has authorized management to prepare a plan to distribute to the shareholders of Intrexon certain shares of the Intrexon Crop Protection subsidiary. Any dividend will be subject to various conditions including the registration of the subsidiary pursuant to the Securities Exchange Act of 1934.

"Your company is capably executing its plan to accomplish all of its goals for 2016 – financially, programmatically and through its partnering – and I am very proud of the fine work being done by our team," commented Randal J. Kirk, Chairman and Chief Executive Officer of Intrexon. "Our principal internal business objective, as always, is the maximization of the value of our growing, diversified portfolio of commercial and financial interests across many products and industries. We seek to obtain this through minimal net expenditure of our company's cash and this is for two reasons – to maximize our ultimate cash-on-cash return and to allow the cash flows resulting from the products that we have enabled to flow to our bottom line on a relatively unburdened basis. We made significant progress in this category during the first quarter and believe that we shall continue to extend our performance trajectory throughout the year and beyond.

"Programmatic progress – and this is where the vast majority of our 750 employees are engaged every day – is largely tracking to our expectations, and we look forward to detailing some of this during our upcoming conference call and to the announcement of further developments throughout the balance of the year. Our progress in partnering, especially around some of our mature assets, keeps much of our executive team very busy, and we shall update you on this as well, but we would be remiss if we did not here especially acknowledge a new partner, the Cayman Islands and its exemplary government under the leadership of Premier Hon. Alden McLaughlin, MBE, JP, MLA, which is the first government in the world to develop a comprehensive program across a territory to fight the Aedes aegypti mosquito, the principal disease vector for Zika, dengue and chikungunya."

Mr. Kirk concluded, "Finally, under the heading of stewardship, our board of directors and management recognize a fundamental desire to seek, identify and implement means of rewarding our shareholders that go beyond 'merely' building a great business. As was the case with last year's $172M dividend of equity securities in ZIOPHARM Oncology, we recognize an opportunity for our shareholders to participate directly in the ownership of Intrexon Crop Protection ("ICP") which we believe will confer significant and direct value to our shareholders beyond that which could be realized in the event that ICP had remained a wholly owned subsidiary of Intrexon. You should expect further information on this development in the near future."

First Quarter 2016 Financial Results Compared to Prior Year Period

Total revenues were $43.4 million for the quarter ended March 31, 2016 compared to $33.8 million for the quarter ended March 31, 2015, an increase of $9.6 million, or 28%. Collaboration and licensing revenues increased $9.3 million over the quarter ended March 31, 2015 due to (i) the recognition of deferred revenue for upfront payments received from the Company's license and collaboration agreements with the biopharmaceutical business of Merck KGaA, which became effective in May 2015, and from other collaborations signed by Intrexon between April 1, 2015 and March 31, 2016; and (ii) increased research and development services for these collaborations and for the progression of programs or the addition of new programs with previously existing collaborators. Product revenues were $8.6 million for the quarter ended March 31, 2016 compared to $8.9 million for the quarter ended March 31, 2015, a decrease of $0.3 million, or 4%. The decrease primarily relates to a decrease in the quantities of livestock previously used in production and live calves sold due to lower...