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Intrexon (XON) Q1 Loss Wider than Expected, Revenues Miss

Intrexon Corporation XON reported a first-quarter 2016 loss of 32 cents per share, much wider than the Zacks Consensus Estimate of a loss of 29 cents. The company had reported earnings of 25 cents per share in the year-ago period.

Total revenue was $43.4 million in the quarter, up 28.3% year over year. Revenues were below the Zacks Consensus Estimate of $44.5 million.

Quarter in Detail

Intrexon’s revenues primarily consist of collaboration and licensing revenues, product revenues and service revenues.

Collaboration and licensing revenues surged 62.8% to $24.1 million. The increase was primarily attributable to the recognition of deferred revenue from upfront payments received under the company's May 2015 license and collaboration agreement with Merck KGaA MKGAF and from other collaborations signed by Intrexon between Apr 1, 2015 and Mar 31, 2016. The upside was also due to increased research and development (R&D) services for these collaborations and for the progression of programs or the addition of new programs with previously existing collaborators.

Product revenues came in at $8.6 million, down 4.2% from the year-ago period, primarily due to a decline in the quantity of livestock previously used in production and live calves sold due to lower demand from customers for these products.

Service revenues came in at $10.7 million, up 7.1% year over year, primarily due to an increase in the number of in vitro fertilization cycles performed on higher demand.

R&D expenses decreased 67.4% to $25.9 million while selling, general and administrative expenses escalated 55.2% to $42.9 million due to an increase in salaries, benefits and other personnel costs.

In the reported quarter, the company continued to enter into new exclusive channel collaborations (ECC) and expanded partnership with existing ones. Earlier this year, the company announced that it has expanded its existing partnership with Fibrocell Science, Inc. FCSC by means of a new ECC for the development of genetically modified fibroblasts to treat chronic inflammatory and degenerative diseases of the joint, including arthritis and related conditions.

Several candidates are under development not only in partnership with Fibrocell but with other companies as well. In addition to the three studies that are currently underway, Intrexon anticipates that up to seven investigational new drugs and clinical study initiations with the company’s existing ECC partners utilizing its technologies will take place in 2016, subject to FDA approval.

Meanwhile, the company is currently working with both governmental and non-governmental organizations for the potential use of Oxitec's OX513A to reduce or eradicate populations of the Aedes aegypti mosquito, the primary vector for dengue, chikungunya, and the Zika virus.

We expect investor focus to remain on updates from the company.

Intrexon is a Zacks Rank #3 (Hold) stock. ANI Pharmaceuticals, Inc. ANIP is a better-ranked stock in the health care sector, sporting a Zacks Rank #1 (Strong Buy).

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