On November 12, 2019 Intrexon Corporation (NASDAQ: XON), a leader in the engineering and industrialization of biology to improve the quality of life and health of the planet, reported its third quarter financial results for 2019 (Press release, Intrexon, NOV 12, 2019, View Source [SID1234551028]).
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Recent Business Highlights:
In Intrexon Health:
Precigen, Inc., a wholly owned subsidiary of Intrexon, continues to advance its clinical and pre-clinical portfolios. Details about Precigen accomplishments will be highlighted during a conference call and webcast today at 11:00 AM ET;
Triple-Gene LLC, a majority owned subsidiary of Intrexon, completed patient enrollment and dosing for the second cohort in its Phase 1 clinical trial of INXN-4001, an investigational new drug which is the world’s first triple effector gene drug candidate being evaluated for the treatment of heart failure, and expects to present preliminary data at the American Heart Association Scientific Sessions November 16-18th in Philadelphia;
ActoBio Therapeutics, Inc., a wholly owned subsidiary of Intrexon, received a greenlight from the independent Data and Safety Monitoring Board to open the randomized part of the adult combination cohort and the open-label part of the adolescent combination cohort in its Phase Ib/IIa clinical trial of AG019 for the treatment of early onset type 1 diabetes. ActoBio’s collaboration partner Oragenics, Inc. (NYSE American: OGEN) continues patient recruitment in the Phase 2 trial of AG013 for the treatment of severe oral mucositis and anticipates completion of enrollment by the end of the fourth quarter 2019;
Exemplar Genetics, a wholly owned subsidiary of Intrexon, formed a collaboration with Lovelace Biomedical to continue development of Exemplar’s porcine animal model for sickle cell disease with support from the National Center for Advancing Translational Sciences;
Collaborator PTC Therapeutics, Inc. (NASDAQ: PTCT) announced its intention to file an Investigational New Drug submission for its gene therapy candidate for Friedreich ataxia in mid-2020; and
With two clinical stage collaboration product candidates, collaborator Fibrocell Science, Inc. (NASDAQ: FCSC) announced it is being acquired by Castle Creek Pharmaceutical Holdings, with the transaction expected to close in Q4, 2019. Proceeds to Intrexon are due upon the closing.
In Intrexon Bioengineering:
Intrexon appointed David H. Witte, formerly of IHS Markit, as Chief Executive Officer of MBP Titan LLC, a standalone subsidiary company of Intrexon comprising Intrexon’s Methane Bioconversion Platform (MBP) with its associated technologies, personnel, and facilities. Intrexon transferred substantially all of its proprietary assets related to MBP to this new entity and, under Mr. Witte’s leadership, MBP will seek investment to fund its capital needs. Intrexon and Governor David Dewhurst, Chairman Designate of MBP Titan, have agreed that Governor Dewhurst will participate in this financing in lieu of his previous commitment;
Okanagan Specialty Fruits, a wholly owned subsidiary of Intrexon, completed the 2019 harvest of Arctic Goldens and Arctic Grannies yielding an estimated 6,800 bins (6 million pounds) of apples, a 3.5-fold increase over 2018;
Oxitec, Ltd., a wholly owned subsidiary of Intrexon, initiated a pilot project for releases of its 2nd Generation Friendly Aedes aegypti technology in Indaiatuba, Brazil. Additionally, the US Environmental Protection Agency (EPA) closed the comment period on Oxitec’s Experimental Use Permit (EUP) application to conduct pilot projects on its 2nd generation Friendly Aedes aegypti technology in Florida and Texas. Oxitec is coordinating with EPA leadership on its application and contingent upon regulatory approval, anticipates mosquito releases would commence in 2020. Oxitec also received a cash payment from the Bill & Melinda Gates Foundation for completing certain developmental milestones;
Intrexon closed its Animal Sciences Division and Cell Engineering Unit; and
Effective October 29, 2019, Intrexon entered into a stock purchase agreement with TS AquaCulture, LLC, an affiliate of Third Security, LLC, for the sale of 8,239,199 shares of AquaBounty Technologies, Inc. (NASDAQ: AQB), representing all of Intrexon’s ownership interests in AquaBounty, for an aggregate purchase price of approximately $21.6 million.
Corporate Matters:
Intrexon continues its discussions and negotiations with multiple parties concerning the sale or disposition of numerous business units and assets;
Randal J. Kirk, Chairman and Chief Executive Officer of Intrexon, has also made a non-binding offer to purchase for cash all non-healthcare assets, including Intrexon Bioengineering, although there is no certainty that any transaction with Mr. Kirk will be entered into or consummated, and any such transaction would be subject to negotiation and approval by an independent committee of Intrexon’s Board of Directors; and
Intrexon believes that the Company has options available to allow it to achieve, without the sale of equity, binding commitments with respect to its yearend cash goal of $175 million, allowing it to begin 2020 with a tighter focus on Health and especially around Precigen.
There are risks and uncertainties inherent in forecasts of this nature, including with respect to the challenges in identifying and negotiating with counterparties, transactions taking longer or generating lower proceeds than expected, changes in strategic directions, general market developments, costs and expenses being higher than anticipated, developments in clinical, market or competitive data, and other factors of the type generally applicable to the Company’s business, including those discussed under the Safe Harbor Statement below.
Third Quarter 2019 Financial Highlights:
Total revenues of $23.0 million;
Net loss of $53.6 million attributable to Intrexon, or $(0.35) per basic share, including non-cash charges of $19.5 million; and
Cash, cash equivalents, and short-term investments totaled $89.7 million and the value of common equity securities totaled $22.8 million at September 30, 2019.
Year-to-Date 2019 Financial Highlights:
Total revenues of $82.4 million;
Net loss of $153.1 million attributable to Intrexon, or $(1.00) per basic share, including non-cash charges of $47.7 million.
"Intrexon’s longstanding focus on Health and, in particular, in cancer therapeutics may be vindicated as Precigen’s clinical programs further develop," commented Mr. Kirk.
Mr. Kirk concluded, "When I became CEO in 2009, when the company entered into its first collaboration in 2011, when it IPO’d in 2013 and through last year’s reacquisition of the vast majority of its commercial rights pertaining to its cancer therapeutics programs, healthcare has been our greatest area of investment and potential. When Helen Sabzevari joined us in 2017 as President of Precigen, truly the repository of the original Intrexon technology as well as its most substantial technology acquisitions, we saw great potential if these technologies could be unlocked by a great drug development team. Today we begin to share with the world what Helen and her team have accomplished and, equally importantly, to let you hear this formidable pharmaceutical executive tell you this in her own words."
Third Quarter 2019 Financial Results Compared to Prior Year Period
Total revenues decreased $9.4 million from the quarter ended September 30, 2018. Collaboration and licensing revenues decreased $8.1 million, or 57%, from the quarter ended September 30, 2018 primarily due to the reacquisition of rights previously licensed to some of Intrexon’s most significant collaborators in the second half of 2018 and the result of which eliminated or substantially reduced revenues previously generated from those collaborations. Additionally, collaboration and licensing revenues from collaborations with other collaborators decreased due to lower demand for research and development services in the current year period.
Research and development expenses decreased $13.4 million, or 30%. The 2018 amounts include an $8.7 million expense related to in-process research and development reacquired as part of an asset acquisition in September 2018. Additionally, depreciation and amortization decreased $2.2 million primarily due to intangible assets that were impaired or abandoned in 2018. Selling, general and administrative (SG&A) expenses decreased $14.0 million, or 36%, and of this amount, $11.2 million was primarily attributable to (i) decreased compensation expenses related to performance and retention incentives for SG&A employees and (ii) decreased share-based compensation expense which arose primarily from the departure of former employees during the first half of the current year.
Year-to-Date 2019 Financial Results Compared to Prior Year Period
Total revenues decreased $35.0 million from the nine months ended September 30, 2018. Collaboration and licensing revenues decreased $30.4 million, or 59%, from the nine months ended September 30, 2018 primarily due to the reacquisition of rights previously licensed to some of Intrexon’s most significant collaborators in the second half of 2018 and the result of which eliminated or substantially reduced revenues previously generated from those collaborations. Product revenues decreased $5.0 million, or 21%, primarily due to lower customer demand. Gross margin on products also declined in the current period for the same reason.
Research and development expenses decreased $25.0 million, or 20%. The 2018 amounts include (i) an $8.7 million expense related to in-process research and development reacquired as part of an asset acquisition in September 2018 and (ii) $5.3 million of one-time costs associated with closing one of Oxitec’s research and development facilities as the Company decentralized operations previously conducted in this facility. Additionally, depreciation and amortization decreased $6.5 million primarily due to intangible assets that were impaired or abandoned in 2018. SG&A expenses decreased $33.1 million, or 29%, and of this amount, $26.7 million was primarily attributable to (i) decreased share-based compensation expense which arose primarily from the departure of former employees as well as a result of certain stock option grants becoming fully vested in 2018 and (ii) decreased compensation expenses related to performance and retention incentives for SG&A employees.
Conference Call and Webcast
Precigen, Inc., a biopharmaceutical company specializing in the development of innovative gene and cellular therapies to improve the lives of patients and a wholly owned subsidiary of Intrexon, will host a conference call today Tuesday, November 12th at 11:00 AM ET to provide Precigen business and pipeline updates. 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 4454504 to join the Precigen Business and Pipeline Update Call. Participants may also access the live webcast through Intrexon’s website in the Investors section at View Source or Precigen’s website in the Presentations section at View Source