UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 9, 2017
INTREXON CORPORATION
(Exact Name of Registrant as Specified in Charter)
Virginia | 001-36042 | 26-0084895 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
20374 Seneca Meadows Parkway, Germantown, Maryland 20876
(Address of Principal Executive Offices) (Zip Code)
(301) 556-9900
(Registrants telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. | Results of Operations and Financial Condition. |
Attached as Exhibit 99.1 is a copy of a press release of Intrexon Corporation, dated November 9, 2017, reporting its financial results for the quarter ended September 30, 2017.
Such information, including the Exhibit attached hereto, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Item 7.01. | Regulation FD Disclosure. |
On November 9, 2017, Intrexon Corporation provided slides to accompany its earnings presentation. A copy of the slides is furnished as Exhibit 99.2 hereto.
Such information, including the Exhibit attached hereto, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. | Financial Statements and Exhibits. |
(d) | Exhibits. |
99.1 | Press release dated November 9, 2017. | |
99.2 | Slide presentation of Intrexon Corporation, dated November 9, 2017. |
2
EXHIBIT INDEX
Exhibit |
Description | |
99.1 | Press release dated November 9, 2017. | |
99.2 | Slide presentation of Intrexon Corporation, dated November 9, 2017. |
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 9, 2017
INTREXON CORPORATION | ||
By: | /s/ Rick L. Sterling | |
Rick L. Sterling | ||
Chief Financial Officer |
4
Exhibit 99.1
Intrexon Announces Third Quarter 2017 Financial Results
Quarterly GAAP revenues of $46.0 million and net loss attributable to Intrexon of $39.7 million
including non-cash charges of $24.0 million
Adjusted EBITDA of $(16.4) million
GERMANTOWN, MD, November 9, 2017 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 third quarter financial results for 2017.
Business Highlights and Recent Developments:
| Xogenex, a majority-owned subsidiary of Intrexon, filed an Investigational New Drug application with the U.S. Food and Drug Administration for a Phase 1 trial of the gene therapy INXN-4001, the worlds first multigene therapeutic candidate expressing proteins from three cardiac effector genes for the treatment of heart disease; |
| Intrexons proprietary methanotroph bioconversion platform continued to increase yield across multiple products including 2,3 butanediol, which increased approximately 15% during the quarter, and isobutanol, which increased 78%; |
| Okanagan Specialty Fruits, a wholly-owned subsidiary of Intrexon, recently initiated the first commercial launch of its non-browning Arctic® Golden fresh sliced apples in stores across the mid-West and other regions; |
| Collaborator ZIOPHARM Oncology, Inc. (Nasdaq: ZIOP) announced that the first patient has been dosed in a new Phase 1 study of its gene therapy Ad-RTS-hIL-12 + veledimex for the treatment of pediatric brain tumors; |
| Collaborator Oragenics, Inc. (NYSE MKT: OGEN) dosed the first patient in its Phase 2 clinical trial of AG013, an ActoBiotics® therapeutic candidate, for the treatment of oral mucositis; |
| Collaborator Fibrocell Science, Inc. (NASDAQ: FCSC) reported interim results in its Phase 1/2 clinical trial of its gene therapy FCX-007 for the treatment of recessive dystrophic epidermolysis bullosa with encouraging safety and positive early trends noted in wound healing and pharmacology signals; |
| Intrexon Crop Protection announced the achievement of a key milestone in its collaboration with a leading agricultural company on the development of an eco-friendly fall armyworm solution utilizing Oxitecs self-limiting technology, the receipt of a milestone payment, and the continued advancement of the program. Native to the Americas, fall armyworm invaded Africa in 2016 and has rapidly spread to at least 28 countries causing an estimated $13.8 billion in losses of maize, sorghum, rice and sugarcane; |
| Oxitecs innovative solution to suppress the diamondback moth (DBM), a major pest of brassica crops that costs farmers over $4 billion yearly in crop losses and control management, began field trials in the U.S. following the Finding of No Significant Impact issued by the U.S. Department of Agriculture. DBM is considered one of the most difficult pests to control because it has become resistant to dozens of chemical insecticides and has also evolved resistance in the field to Bacillus thuringiensis (Bt) proteins; |
| Intrexon announced a collaboration with Arch Pharmalabs, Ltd. to develop microbial strains for fermentation-based production of an active pharmaceutical ingredient currently sourced from animals; and |
| Intrexon entered into a Preferred Stock Equity Facility with an affiliate of Third Security, LLC, a venture capital firm founded by Randal J. Kirk, Intrexons Chairman and Chief Executive Officer, under which Intrexon may, from time to time at its discretion, sell to the investor up to $100 million of newly issued Series A Redeemable Preferred Stock. |
Third Quarter 2017 Financial Highlights:
| Total revenues of $46.0 million, a decrease of 6% from the third quarter of 2016; |
| Net loss of $39.7 million attributable to Intrexon, or $(0.33) per basic share, including non-cash charges of $24.0 million; |
| Adjusted EBITDA of $(16.4) million, or $(0.14) 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 $8.6 million compared to a decrease of $1.8 million in the third quarter of 2016; and |
| Cash, cash equivalents, and short-term investments totaled $108.7 million, the value of preferred shares totaled $148.5 million, and the value of common equity securities totaled $26.6 million at September 30, 2017. |
Year-to-Date 2017 Financial Highlights:
| Total revenues of $154.0 million, an increase of 6% over the nine months ended September 30, 2016; |
| Net loss of $89.8 million attributable to Intrexon, or $(0.75) per basic share, including non-cash charges of $66.0 million; |
| Adjusted EBITDA of $(25.5) million, or $(0.21) 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 $28.2 million compared to a net increase of $127.8 million in the nine months ended September 30, 2016. |
I am proud of our team for its astonishing number of significant accomplishments. We continue our transition from a company with substantial potential to one that is realizing that promise scientifically and commercially, commented Randal J. Kirk, Chairman and Chief Executive Officer of Intrexon. Four years ago, we were focused almost exclusively on early stage programs but now are engaged in partnering efforts to capitalize on certain of our mature programs, including Methane Bioconversion Platform and Intrexon Crop Protection. We believe that these efforts will allow us to increase our investments in ground-breaking new programs while realizing, sometimes with partners, the available potential of our earlier work.
Today, for example, with earlier-developed therapeutic candidates moving into Phase 3 and Phase 2 clinical trials, we mark a historic technical achievement in the fight against heart failure with the filing of an IND for the worlds first multigenic gene therapy targeting the leading cause of human death. This candidate generated promising safety and efficacy data in large animal models, and we are hopeful that it will greatly improve the prospects for the many patients 5.7M adults in the U.S. alone with this grim diagnosis. We shall be introducing additional complex, multigenic therapies into the clinic, both through our partners and on behalf of Precigen, in the near future.
We see a similar pattern in our Energy and Food portfolios and look forward to developing this in Environment and Consumer as well and so believe that the balance of this year and 2018 will be validating for our strategy and ambition, concluded Mr. Kirk.
Third Quarter 2017 Financial Results Compared to Prior Year Period
Total revenues decreased $3.0 million, or 6%, from the quarter ended September 30, 2016. Collaboration and licensing revenues decreased $2.4 million from the quarter ended September 30, 2016 due to a decrease in research and development services for certain of the Companys collaborations as the Company temporarily redeployed certain resources towards supporting prospective new platforms and partnering opportunities. Product revenues decreased $1.6 million, or 17%, primarily due to lower customer demand for cows and live calves. Gross margin on products also decreased in the current period primarily due to customer demand. Service revenues increased $1.3 million, or 15%, due to an increase in the number of bovine in vitro fertilization cycles performed due to higher customer demand. Gross margin on these services was consistent period over period.
Research and development expenses increased $7.4 million, or 26%, due primarily to increases in (i) salaries, benefits and other personnel costs for research and development employees, (ii) depreciation and amortization, (iii) rent and utilities expenses, and (iv) lab supplies and consulting expenses. Salaries, benefits and other personnel costs increased $2.6 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 $2.0 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 $1.4 million primarily due to the expansion of certain facilities to support the Companys increased headcount. Lab supplies and consulting expenses increased $1.1 million as a result of (i) the progression of certain programs into the preclinical and clinical phases with certain of Intrexons collaborators and (ii) the expansion or improvement of certain of the Companys platform technologies. Selling, general and administrative (SG&A) expenses increased $5.5 million, or 16%. Salaries, benefits and other personnel costs increased $2.7 million primarily due to (i) increased headcount to support the Companys expanding operations and (ii) increased stock-based compensation expense resulting from grants to certain of the Companys officers in February 2017. Legal and professional fees increased $0.9 million primarily due to (i) increased legal fees to defend ongoing litigation and (ii) increased fees incurred for business development and prospective partnering efforts.
Total other income, net, increased $1.4 million, or 31%. This increase was primarily attributable to (i) increases in fair market value of the Companys equity securities portfolio and (ii) dividend income from the Companys investments in preferred stock.
Equity in net loss of affiliates, which includes the Companys pro-rata share of the net losses of its investments accounted for using the equity method of accounting, decreased $3.3 million, or 52%. This decrease was primarily due to the temporary redeployment of certain of the Companys resources away from these joint venture programs towards supporting prospective new platforms and additional collaborations.
Year-to-Date 2017 Financial Results Compared to Prior Year Period
Total revenues increased $9.0 million, or 6%, over the nine months ended September 30, 2016. Collaboration and licensing revenues increased $7.2 million, or 9%, over the nine months ended September 30, 2016, primarily due to the recognition of deferred revenue associated with the payment received in June 2016 from ZIOPHARM to amend the collaborations between the parties and increased revenues associated with collaborations entered into with the Harvest start-up entities in 2016. Product revenues decreased $2.9 million, or 10%, primarily due to lower customer demand for cows and live calves. Gross margin on products improved in the current period primarily due to a decline in the average cost of cows. Service revenues increased $4.6 million, or 14%, due to an increase in the number of bovine in vitro fertilization cycles performed due to higher customer demand. Gross margin on services decreased slightly in the current period primarily due to an increase in royalties and commissions due to vendors.
Research and development expenses increased $21.4 million, or 26%, due primarily to increases in (i) salaries, benefits and other personnel costs for research and development employees, (ii) lab supplies and consulting expenses, (iii) depreciation and amortization, and (iv) rent and utilities expenses. Salaries, benefits and other personnel costs increased $7.4 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. Lab supplies and consulting expenses increased $6.3 million as a result of (i) the progression of certain programs into the preclinical and clinical phases with certain of Intrexons collaborators and (ii) the expansion or improvement of certain of the Companys platform technologies. Depreciation and amortization increased $4.3 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 $2.5 million due to the expansion of certain facilities to support the Companys increased headcount. SG&A expenses increased $6.3 million, or 6%. Salaries, benefits and other personnel costs increased $4.2 million primarily due to (i) increased headcount to support the Companys expanding operations and (ii) increased stock-based compensation expense resulting from grants to certain of the Companys officers in February 2017. Legal and professional fees increased $4.7 million primarily due to (i) increased legal fees to defend ongoing litigation, (ii) increased business development and public relations consulting expenses, and (iii) the Companys acquisition of GenVec that was completed in June 2017. These increases were offset by $4.2 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.
Total other income (expense), net, increased $66.8 million, or 171%. This increase was primarily attributable to (i) increases in fair market value of the Companys equity securities portfolio, investments in preferred stock and other convertible instruments and (ii) dividend income from the Companys investments in preferred stock.
Equity in net loss of affiliates, which includes the Companys pro-rata share of the net losses of its investments accounted for using the equity method of accounting, decreased $5.7 million, or 33%. This decrease was primarily due to the temporary redeployment of certain of the Companys resources away from these joint venture programs towards supporting prospective new platforms and additional collaborations.
Conference Call and Webcast
The Company will host a conference call today Thursday, November 9th, at 5:30 PM ET to discuss the third quarter 2017 financial results and provide a general business update. The conference call may be accessed by dialing 1-888-317-6003 (Domestic US), 1-866-284-3684 (Canada), and 1-412-317-6061 (International) and providing the number 7741944 to join the Intrexon Corporation Call. Participants may also access the live webcast through Intrexons website in the Investors section at http://investors.dna.com/events.
About Intrexon Corporation
Intrexon Corporation (NYSE: XON) is Powering the Bioindustrial Revolution with Better DNA to create biologically-based products that improve the quality of life and the health of the planet. Intrexons integrated technology suite provides its partners across diverse markets with industrial-scale design and development of complex biological systems delivering unprecedented control, quality, function, and performance of living cells. We call our synthetic biology approach Better DNA®, and we invite you to discover more at www.dna.com or follow us on Twitter at @Intrexon, on Facebook, and LinkedIn.
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 Securities and Exchange Commission (SEC). For a reconciliation of these measures to the most directly comparable financial measure calculated in accordance with generally accepted accounting principles and for a discussion of the reasons why the company
believes that these non-GAAP financial measures provide information that is useful to investors see the tables below under Reconciliation of GAAP to Non-GAAP Measures. Such information is provided as additional information, not as an alternative to Intrexons consolidated financial statements presented in accordance with GAAP, and is intended to enhance an overall understanding of the Intrexons current financial performance.
Trademarks
Intrexon, Arctic, ActoBiotics, RTS, Powering the Bioindustrial Revolution with Better DNA, and Better DNA are trademarks of Intrexon and/or its affiliates. Other names may be trademarks of their respective owners.
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. These forward-looking statements are based upon Intrexons current expectations and projections about future events and generally relate to Intrexons plans, objectives and expectations for the development of Intrexons business. Although management believes that the plans and objectives reflected in or suggested by these forward-looking statements are reasonable, all forward-looking statements involve risks and uncertainties and actual future results may be materially different from the plans, objectives and expectations expressed in this press release. These risks and uncertainties include, but are not limited to, (i) Intrexons current and future collaborations and joint ventures; (ii) Intrexons ability to successfully enter new markets or develop additional products, whether with its collaborators or independently; (iii) actual or anticipated variations in Intrexons operating results; (iv) actual or anticipated fluctuations in Intrexons competitors or its collaborators operating results or changes in their respective growth rates; (v) Intrexons cash position; (vi) market conditions in Intrexons industry; (vii) the volatility of Intrexons stock price; (viii) Intrexons ability, and the ability of its collaborators, to protect Intrexons intellectual property and other proprietary rights and technologies; (ix) Intrexons ability, and the ability of its collaborators, to adapt to changes in laws or regulations and policies; (x) the outcomes of pending or future litigation; (xi) the rate and degree of market acceptance of any products developed by a collaborator under an ECC or through a joint venture; (xii) Intrexons ability to retain and recruit key personnel; (xiii) Intrexons expectations related to the use of proceeds from its public offerings and other financing efforts; (xiv) Intrexons estimates regarding expenses, future revenue, capital requirements and needs for additional financing; and (xv) Intrexons expectations relating to its subsidiaries and other affiliates. For a discussion of other risks and uncertainties, and other important factors, any of which could cause Intrexons actual results to differ from those contained in the forward-looking statements, see the section entitled Risk Factors in Intrexons Annual Report on Form 10-K, as well as discussions of potential risks, uncertainties, and other important factors in Intrexons subsequent filings with the Securities and Exchange Commission. All information in this press release is as of the date of the release, and Intrexon undertakes no duty to update this information unless required by law.
###
For more information regarding Intrexon Corporation, contact:
Investor Contact: Christopher Basta Vice President, Investor Relations Tel: +1 (561) 410-7052 investors@intrexon.com |
Corporate Contact: Marie Rossi, Ph.D. Director, Technical Communications Tel: +1 (301) 556-9850 publicrelations@intrexon.com |
Intrexon Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands) |
September 30, 2017 | December 31, 2016 | ||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 64,216 | $ | 62,607 | ||||
Restricted cash |
6,987 | 6,987 | ||||||
Short-term investments |
44,502 | 174,602 | ||||||
Receivables |
||||||||
Trade, net |
18,134 | 21,637 | ||||||
Related parties |
17,866 | 16,793 | ||||||
Notes, net |
| 1,500 | ||||||
Other |
2,253 | 2,555 | ||||||
Inventory |
17,730 | 21,139 | ||||||
Prepaid expenses and other |
8,052 | 7,361 | ||||||
|
|
|
|
|||||
Total current assets |
179,740 | 315,181 | ||||||
Long-term investments |
| 5,993 | ||||||
Equity securities |
26,642 | 23,522 | ||||||
Investments in preferred stock |
148,499 | 129,545 | ||||||
Property, plant and equipment, net |
102,876 | 64,672 | ||||||
Intangible assets, net |
240,897 | 225,615 | ||||||
Goodwill |
166,821 | 157,175 | ||||||
Investments in affiliates |
22,942 | 23,655 | ||||||
Other assets |
9,844 | 3,710 | ||||||
|
|
|
|
|||||
Total assets |
$ | 898,261 | $ | 949,068 | ||||
|
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Current liabilities |
||||||||
Accounts payable |
$ | 7,852 | $ | 8,478 | ||||
Accrued compensation and benefits |
11,206 | 6,540 | ||||||
Other accrued liabilities |
18,960 | 15,776 | ||||||
Deferred revenue |
48,289 | 53,364 | ||||||
Lines of credit |
234 | 820 | ||||||
Current portion of long term debt |
439 | 386 | ||||||
Deferred consideration |
| 8,801 | ||||||
Related party payables |
816 | 440 | ||||||
|
|
|
|
|||||
Total current liabilities |
87,796 | 94,605 | ||||||
Long term debt, net of current portion |
7,673 | 7,562 | ||||||
Deferred revenue, net of current portion |
227,998 | 256,778 | ||||||
Deferred tax liabilities |
15,868 | 17,007 | ||||||
Other long term liabilities |
5,747 | 3,868 | ||||||
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|
|
|||||
Total liabilities |
345,082 | 379,820 | ||||||
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|
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Commitments and contingencies |
||||||||
Total equity |
||||||||
Common stock |
| | ||||||
Additional paid-in capital |
1,370,917 | 1,325,780 | ||||||
Accumulated deficit |
(820,554 | ) | (729,341 | ) | ||||
Accumulated other comprehensive loss |
(16,750 | ) | (36,202 | ) | ||||
|
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|
|
|||||
Total Intrexon shareholders equity |
533,613 | 560,237 | ||||||
Noncontrolling interests |
19,566 | 9,011 | ||||||
|
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|
|
|||||
Total equity |
553,179 | 569,248 | ||||||
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|||||
Total liabilities and total equity |
$ | 898,261 | $ | 949,068 | ||||
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Intrexon Corporation and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except share and per share data) |
Three months ended September 30, |
Nine months ended September 30, |
||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues |
||||||||||||||||
Collaboration and licensing revenues |
$ | 28,155 | $ | 30,590 | $ | 89,384 | $ | 82,144 | ||||||||
Product revenues |
7,670 | 9,260 | 25,780 | 28,699 | ||||||||||||
Service revenues |
9,975 | 8,706 | 37,890 | 33,298 | ||||||||||||
Other revenues |
216 | 429 | 899 | 783 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenues |
46,016 | 48,985 | 153,953 | 144,924 | ||||||||||||
|
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|
|
|
|
|
|||||||||
Operating Expenses |
||||||||||||||||
Cost of products |
8,001 | 9,156 | 25,625 | 29,471 | ||||||||||||
Cost of services |
7,013 | 5,803 | 21,805 | 17,807 | ||||||||||||
Research and development |
36,472 | 29,035 | 104,663 | 83,266 | ||||||||||||
Selling, general and administrative |
39,277 | 33,812 | 113,258 | 106,956 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
90,763 | 77,806 | 265,351 | 237,500 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating loss |
(44,747 | ) | (28,821 | ) | (111,398 | ) | (92,576 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Other Income (Expense), Net |
||||||||||||||||
Unrealized and realized appreciation (depreciation) in fair value of equity securities and preferred stock |
2,175 | 412 | 9,240 | (45,388 | ) | |||||||||||
Interest expense |
(138 | ) | (227 | ) | (498 | ) | (759 | ) | ||||||||
Interest and dividend income |
5,070 | 4,494 | 14,437 | 5,817 | ||||||||||||
Other income, net |
(1,021 | ) | (32 | ) | 4,453 | 1,205 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total other income (expense), net |
6,086 | 4,647 | 27,632 | (39,125 | ) | |||||||||||
Equity in net loss of affiliates |
(2,993 | ) | (6,255 | ) | (11,273 | ) | (16,951 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss before income taxes |
(41,654 | ) | (30,429 | ) | (95,039 | ) | (148,652 | ) | ||||||||
Income tax benefit |
818 | 418 | 2,164 | 3,290 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
$ | (40,836 | ) | $ | (30,011 | ) | $ | (92,875 | ) | $ | (145,362 | ) | ||||
Net loss attributable to the noncontrolling interests |
1,147 | 1,029 | 3,123 | 2,887 | ||||||||||||
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|
|
|
|
|
|
|
|||||||||
Net loss attributable to Intrexon |
$ | (39,689 | ) | $ | (28,982 | ) | $ | (89,752 | ) | $ | (142,475 | ) | ||||
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|
|
|
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Net loss per share, basic and diluted |
$ | (0.33 | ) | $ | (0.24 | ) | $ | (0.75 | ) | $ | (1.21 | ) | ||||
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|
|
|
|
|
|
|
|||||||||
Weighted average shares outstanding, basic and diluted |
120,518,885 | 118,346,782 | 119,741,291 | 117,785,160 | ||||||||||||
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Intrexon Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures
(Unaudited)
Adjusted EBITDA and Adjusted EBITDA per share. To supplement Intrexons 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, 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 Intrexons management and Board of Directors for evaluating the Companys financial and operating performance, generating future operating plans and making strategic decisions about the allocation of capital. Management and the Board of Directors believe that Adjusted EBITDA and Adjusted EBITDA per share are useful to understand the long-term performance of Intrexons core business and facilitate comparisons of the Companys operating results over multiple reporting periods. Intrexon is providing this information to investors and others to assist them in understanding and evaluating the Companys 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 as supplemental in nature and is not meant 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 Companys GAAP results to provide a more complete understanding of the factors and trends affecting the Companys 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 Intrexons 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:
| Interest expense may be subject to changes in interest rates which are beyond Intrexons control; |
| Depreciation of Intrexons 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; |
| 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 Companys control in the short term and Intrexon intends to hold these securities over the long term, except as otherwise disclosed; |
| Equity in net loss of affiliate reflects Intrexons 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 Ovas 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 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 Companys collaborators, which Intrexon recognizes over the future performance period even though the Companys right to such consideration is neither contingent on the results of Intrexons 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 Intrexons operating performance as they believe it permits the quarterly and annual comparisons of the Companys 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 | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(In thousands) | ||||||||||||||||
Net loss attributable to Intrexon |
$ | (39,689 | ) | $ | (28,982 | ) | $ | (89,752 | ) | $ | (142,475 | ) | ||||
Interest expense |
122 | 159 | 451 | 615 | ||||||||||||
Income tax benefit |
(818 | ) | (418 | ) | (2,164 | ) | (3,290 | ) | ||||||||
Depreciation and amortization |
7,866 | 5,858 | 22,502 | 17,292 | ||||||||||||
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EBITDA |
$ | (32,519 | ) | $ | (23,383 | ) | (68,963 | ) | (127,858 | ) | ||||||
Stock-based compensation |
12,042 | 10,772 | 31,913 | 30,569 | ||||||||||||
Shares issued as payment for services |
2,730 | 2,595 | 8,440 | 8,284 | ||||||||||||
Bad debt expense |
511 | 426 | 1,093 | 1,609 | ||||||||||||
Litigation expense |
| | | 4,228 | ||||||||||||
Unrealized and realized (appreciation) depreciation in fair value of equity securities and preferred stock |
(2,175 | ) | (412 | ) | (9,240 | ) | 45,388 | |||||||||
Equity in net loss of affiliates |
2,993 | 6,255 | 11,273 | 16,951 | ||||||||||||
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Adjusted EBITDA |
$ | (16,418 | ) | $ | (3,747 | ) | $ | (25,484 | ) | (20,829 | ) | |||||
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Weighted average shares outstanding, basic and diluted |
120,518,885 | 118,346,782 | 119,741,291 | 117,785,160 | ||||||||||||
Adjusted EBITDA per share, basic and diluted |
$ | (0.14 | ) | $ | (0.03 | ) | $ | (0.21 | ) | $ | (0.18 | ) | ||||
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Supplemental information: |
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Impact of change in deferred revenue related to upfront and milestone payments |
$ | (8,613 | ) | $ | (1,811 | ) | $ | (28,218 | ) | $ | 127,795 | |||||
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November 9, 2017 Third Quarter 2017 Financial Results and Business Update Exhibit 99.2
Safe Harbor Statement Some of the statements made in this presentation 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. These forward-looking statements are based upon Intrexon’s current expectations and projections about future events and generally relate to Intrexon’s plans, objectives and expectations for the development of Intrexon’s business. Although management believes that the plans and objectives reflected in or suggested by these forward-looking statements are reasonable, all forward-looking statements involve risks and uncertainties and actual future results may be materially different from the plans, objectives and expectations expressed in this presentation. These risks and uncertainties include, but are not limited to, (i) Intrexon’s current and future collaborations and joint ventures; (ii) Intrexon’s ability to successfully enter new markets or develop additional products, whether with its collaborators or independently; (iii) actual or anticipated variations in Intrexon’s operating results; (iv) actual or anticipated fluctuations in Intrexon’s competitors’ or its collaborators’ operating results or changes in their respective growth rates; (v) Intrexon’s cash position; (vi) market conditions in Intrexon’s industry; (vii) the volatility of Intrexon’s stock price; (viii) Intrexon’s ability, and the ability of its collaborators, to protect Intrexon’s intellectual property and other proprietary rights and technologies; (ix) Intrexon’s ability, and the ability of its collaborators, to adapt to changes in laws or regulations and policies; (x) the outcomes of pending and future litigation; (xi) the rate and degree of market acceptance of any products developed by Intrexon or its collaborators; (xii) Intrexon’s ability to retain and recruit key personnel; (xiii) Intrexon’s expectations related to the use of proceeds from its public offerings and other financing efforts; (xiv) Intrexon’s estimates regarding expenses, future revenue, capital requirements and needs for additional financing; and (xv) Intrexon’s expectations relating to its subsidiaries and other affiliates. For a discussion of other risks and uncertainties, and other important factors, any of which could cause Intrexon’s actual results to differ from those contained in the forward-looking statements, see the section entitled ”Risk Factors“ in Intrexon’s Annual Report on Form 10-K, as well as discussions of potential risks, uncertainties, and other important factors in Intrexon’s subsequent filings with the Securities and Exchange Commission. All information in this presentation is as of the date of the release, and Intrexon undertakes no duty to update this information unless required by law. Non-GAAP Financial Measures This presentation presents Adjusted EBITDA, which is a non-GAAP financial measure within the meaning of applicable rules and regulations of the Securities and Exchange Commission (SEC). For a reconciliation of Adjusted EBITDA to net loss attributable to Intrexon in accordance with generally accepted accounting principles and for a discussion of the reasons why the company believes that these non-GAAP financial measures provide information that is useful to investors see the tables below under “Reconciliation of GAAP to Non-GAAP Measures.” Such information is provided as additional information, not as an alternative to Intrexon’s consolidated financial statements presented in accordance with GAAP, and is intended to enhance an overall understanding of the Company’s current financial performance. © 2017 Intrexon Corp. All rights reserved. Intrexon Corporation is sharing the following materials for informational purposes only. Such materials do not constitute an offer to sell or the solicitation of an offer to buy any securities of Intrexon. Any offer and sale of Intrexon’s securities will be made, if at all, only upon the registration and qualification of such securities under all applicable federal and state securities laws or pursuant to an exemption from such requirements. The attached information has been prepared in good faith by Intrexon. However, Intrexon makes no representations or warranties as to the completeness or accuracy of any such information. Any representations or warranties as to Intrexon shall be limited exclusively to any agreements that may be entered into by Intrexon and to such representations and warranties as may arise under law upon distribution of any prospectus or similar offering document by Intrexon. Forward-Looking Statements
Business Update Andrew Last, Ph.D. – Chief Operating Officer
Expanding Biotechnology’s Reach and Impact Health Gene and cell therapies targeting numerous disease indications including cancer, cardiac disease, rare disorders, among others Bio-effectors for human/animal health APIs and enzymes Environment Insect control Crop protection Flowering control Food Non-browning fruits and vegetables High-throughput plant regeneration Bovine reproduction Aquaculture Energy Fuels & chemicals Lubricants Consumer Skincare Biotech 2.0 Representative list of target markets for collaborations/subsidiaries; not complete list
Changing the Treatment Paradigm in CAR-T Therapy CAR-T integration/delivery into patients using time-consuming and costly method CAR-T integration/delivery into patients using fast and cost effective method Apheresis Infusion of CAR-T cells into patient Viral CART Non-Viral CART Transportation of T cells Transportation of CAR-T cells CAR-T Therapy completed onsite Time to treat patients 16 to 29 days Time to treat patients less than 2 days GMP manufacturing centers engineer T cells with viral-based methods that rely on activating and propagating the genetically modified T cells
Advancing Point-of-Care CAR-T *ASH 2016, Publication 2807 - POC CAR generated with SB and administered in <2 days against CD19+ leukemia in mouse models Advancing Point-of-Care (POC) Sleeping Beauty (SB) CAR+ mbIL15+ Switch+ T cells administered in less than 2 days into patients POC solutions will help lower cost and expand access to innovative CAR T-cell therapies Anticipate entering clinic in 2018 Sleeping Beauty CAR Sleeping Beauty POC-mbIL15-CAR T Cell CAR Ton Signals 1+2 Signals 1+2+3 SB11 Tase mbIL15 Ton CAR Ton SB11 Tase Electroporation Electroporation CAR engagement provides T-cell activation and co-stimulation signals while mbIL15 provides a 3rd stimulatory signal Potent anti-tumor activity of P-O-C mbIL15 CAR+ T cells* T Cell
Collaborations for Non-viral CARs & TCRs CARs: Utilizing Sleeping Beauty non-viral gene integration and RTS® platform to regulate expression of mbIL15 co-expressed with CARs Two selected CAR targets are expressed on a wide range of cancers Anticipate entering clinic in 2018 TCRs: CRADA with NCI and Dr. Steven Rosenberg for the development of ACT-based immunotherapies genetically modified using Sleeping Beauty system Express neoantigen-specific TCRs to develop immunotherapies for patients with solid tumors Anticipate IND filing in Q1 2018
Rare Diseases Precigen: Biotech 2.0 Platform for Human Health Precigen will utilize Intrexon’s world leading platform to build next-gen therapeutic products faster and cost effectively Broad pipeline of clinical and pre-clinical programs, both partnered and un-partnered Expansion of internal portfolio into various therapeutic areas with initial focus on combinatorial approaches Leading position in single and multigene programming with limited off-target effects Oncology Vaccines Infectious Diseases Diabetes Cardiac Disease Autoimmune Disorders Representative list of areas; not complete list
Heart Disease – High Unmet Need Heart Disease is #1 cause of death in the US. 610,000 People in the US die of heart disease each year 1 in every 6 health care dollars is spent on cardiovascular disease $317 billion Health care costs and lost productivity in 2011 Xogenex* has developed a multigene cardiac disease therapy expressing proteins from three cardiac effector genes involved in heart failure IND filed November 2017 25 Million Patients with heart failure worldwide 5 Million Patients in U.S. *Xogenex is a majority-owned subsidiary of Intrexon; Stats: Ambrosy et al. J Am Coll Cardiol (2014) 63:1123–1133; CDC; Million Hearts
Innovative Multigene Approach to Cardiac Disease Favorable Pre-clinical Data: Demonstrated reversal of established cardiac disease in rat model after a single pXoX treatment (** P<0.001) Mitotic marker confirmed regeneration of cardiomyocytes
T1D Partners – ActoBiotics® Therapeutics for Type 1 Diabetes *Takiishi et al. Diabetes (2017) 66: 448-459.Stats - http://www.diabetes.org; Market Research reports ActoBiotics® based antigen-specific immunotherapy to treat type 1 diabetes Pre-clinical animal models show remission rates of 80-90% in new onset diabetic mice* Therapy for early-stage patients before becoming insulin-dependent; also applicable in late-stage patients 1.25 million children + adults affected in the U.S. alone Estimated treatment market by 2023 $ billion $14 Expect to file IND in early 2018
Clinical Development Outlook Patient population # based on US only; * Estimated new cases per year; **ZIOPHARM plans to initiate pivotal trial in Q4 2017 Indication Gene/Cell Therapy Patient # Phase Recurrent Glioblastoma Ad-RTS-IL12 >10,000* Phase 3** Oral Mucositis ActoBiotics AG013 ~500,000 Phase 2 Recessive Dystrophic EB FCX-007 2,500 Phase 1/2 Adv. Lymphoid Malignancies Sleeping Beauty CD19+ CAR T >80,000* Phase 1 Relapsed/Refractory AML Viral CD33+ CAR T <8,000* Phase 1 Pediatric Brain Tumors Ad-RTS-IL12 >3,000 Phase 1 Recurrent Glioblastoma Ad-RTS-IL12 & Checkpoint >10,000* Phase 1** Indication Gene/Cell Therapy Patient # IND Cardiac Disease pXoX Multi-Gene >20 million IND Filed in November 2017 Linear Scleroderma FCX-013 ~40,000 Q4 2017 T1 Diabetes ActoBiotics >1.25 million Q1 2018 Solid Tumors Sleeping Beauty TCR n/a Q1 2018 Friedreich’s ataxia Adeno-associated Virus ~5,000-10,000 Q1 2018 Adv. Lymphoid Malignancies Sleeping Beauty CD19+ POC CAR T >80,000* 2018 Liquid and/or Solid Tumors Sleeping Beauty CAR T n/a 2018
Broad Application of Innovative Arctic® Solution Almost half of all fruits and vegetables are wasted Unique Arctic Advantage™ solution creates benefits for commercial tree fruit varieties & vegetables across the entire supply chain – from growers to consumers – reducing food waste First target is apples, 40% of which are wasted - much from superficial bruising & browning FAO - http://www.fao.org/save-food/resources/keyfindings/infographics/fruit/en/ 3.7 Trillion Apples Conventional Golden Arctic® Golden Conventional Granny Arctic® Granny
Commercial Launch Underway US Commercial launch of fresh sliced Arctic® apples underway in Q4’2017 Non-chemical, preservative-free approach to non-browning No change to apple taste/texture Fresh sliced apple market in US estimated at ~$500 million in sales
Large Market Opportunity in Fruits & Vegetables Arctic® fresh sliced apples represent Intrexon’s initial non-browning product launch into the commercial marketplace: Projected outlook for Arctic® fresh apple slices Non-browning fruits & vegetables under development at Intrexon: Cherries Pears Lettuce Avocados 2020 $20 million sales 2022 $100 million sales >50% GMs 2026 $500 million sales >50% GMs $200 million EBITDA
ICP: Targeted Biological Control of Ag Pests Intrexon Crop Protection Achieves Milestone in Development of Pioneering Self-Limiting Fall Armyworm Solution October 2017 Oxitec's Innovative Solution to Tackle Growing Diamondback Moth Pest Issue Begins Field Trials September 2017 Diamondback moth damage on cauliflower in India Diamondback moth damage on cabbage in NY State Destructive march of fall armyworm across Africa since arrival in 2016 Confirmed presence of FAW Suspected presence/awaiting confirmation Animal and Plant Health Inspection Service Finding of No Significant Impact 28 COUNTRIES Confirmed presence $14 BILLION Estimated loss of maize, sorghum, rice, and sugarcane as of Apr 2017 67% CROP LOSS Due to fall armyworm in Ghana alone UP TO DBM is highly invasive pest resistant to many insecticides and Bt crops. DBM costs farmers over $4 billion annually CABI Fall Armyworm Statistics - 2017; Zalucki et al. Journal of Economic Entomology (2012) 105: 1115-1129.
Rising Resistance - Enormous Challenge in Crop Protection When Pesticides Run Out, Borel, 2017; EPA, Pesticides Industry Sales and Usage 2008-2012 Over $16 Billion spent annually on insecticides 10% - 16% global food production lost in major crops to insect crop damage Over $15 Billion spent annually on fungicides 13% - 15% global food production lost in major crops to fungal pathogens
Strong Suppression Results with Our Eco-Friendly Solution *J Econ Entomol 105: 1115-1129; J Appl Entomol 137: 1–15; PLOS ONE 10: e0126702; https://www.nimss.org/projects/view/mrp/outline/18372; ICP estimates; Harvey-Samuel et al. BMC Biology (2015) 13: 49; Ant et al. (2012) BMC Biology; Trials conducted in collaboration with Universities of Oxford & Crete. Medfly Population size (number of eggs) Olive fly Diamondback Moth ICP’s Ag-Pest Pipeline & Costs/Economic Losses* Fall Armyworm >$14 Billion Drosophila suzukii >$1 Billion Diamondback Moth >$4 Billion Medfly >$1 Billion Olive Fly >$1 Billion Pink Bollworm >$250 Million Suppression Results from Trials Weeks
Friendly™ Aedes – A Biopesticide for Mosquitoes Regulatory designation as a biopesticide in Oct 2017 Jurisdiction transferred to Environmental Protection Agency (EPA) based on new guidance issued by the U.S. Food and Drug Administration’s Center for Veterinary Medicine Preparing to submit application to the EPA Ongoing geographic expansion in 2017 Brazil – Second Brazil contract announced in Juiz de Fora; first contract in the Minas Gerais state India – Outdoor caged trials to demonstrate efficacy of Friendly™ mosquitoes on schedule to be completed in Q4’2017 Expect to initiate new deployments in existing & new regions Technology recognized for innovation and impact Received the Empreendetec award recognizing results of Oxitec’s technology and its contribution to the Piracicaba community and Brazil Our Friendly™ Aedes solution shows superior control of wild Aedes aegypti, an invasive species found in over 125 countries and a primary vector for transmitting dangerous arboviruses including dengue, Zika, yellow fever and chikungunya, which presents numerous challenges for current control methods
Intrexon’s Methane Bioconversion Platform (MBP) Intrexon has developed disruptive MBP technology enabling profitable use of natural gas to produce high value industrial products via fermentation MBP has achieved six different high value chemicals with a total addressable market that exceeds $100 billion Commercially relevant yields for 2,3 Butanediol and isobutyraldehyde attained Moelis & Co engaged to advise on strategic/financial options for MBP and its products Offsets negative eco-impact from gas flaring Fulfills demand for cleaner burning fuels Replaces costly, energy-intensive processes
2,3 Butanediol (BDO) and Isobutanol Progress Update 2,3 BDO Yield increased by 15% during Q3 reaching over 60% of first commercial scale plant target Commercial robustness of strain demonstrated with continuous production runs >400 hours Purity >99% for 2,3 BDO produced in 500 liter pilot plant Site selection for small scale 2,3 BDO plant underway and expect construction to begin in 2018 Isobutanol Increased yield by 78% during 3Q Market Size: c.$80bn ISOBUTANOL Market Size: c.$22bn 2,3 BDO (BUTADIENE) Intrexon’s on-purpose 2,3 BDO process anticipated to have COGS sub $1,000 per metric ton ICIS, HIS Reports
Financial Overview Joel Liffmann – Senior Vice President, Finance
Third Quarter Financial Performance * Non-GAAP financial measure. Select Financial Highlights 3Q 2017 3Q 2016 Revenues $46.0 M $49.0 M Collaboration and Licensing Revenues $28.1 M $30.6 M Product & Services and Other Revenues $17.9 M $18.4 M Adjusted EBITDA $(16.4) M* $(3.7) M* Impact of change in deferred revenue related to upfront and milestone payments $(8.6) M $(1.8) M Basic EPS $(0.33) $(0.24) Total Equity & Preferred Stock Securities In Connection With ECCs $175.1 M $163.1 M Cash, Cash Equivalents, and Short- and Long-Term Investments $108.7 M $280.7 M
Q&A Session