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Intrexon Announces Second Quarter Financial Results

             Intrexon Announces Second Quarter Financial Results

PR Newswire

GERMANTOWN, Md., Sept. 19, 2013

GERMANTOWN, Md., Sept. 19, 2013 /PRNewswire/ -- Intrexon Corporation (NYSE:
XON), a leader in synthetic biology, today announced financial results for the
second quarter of 2013.

(Logo: http://photos.prnewswire.com/prnh/20130919/NY83283LOGO )

Second Quarter Highlights

Highlights for the second quarter of 2013 include:

  oNet loss decreased $10 million, or 60%, to $6.5 million for the quarter
    ended June 30, 2013 from $16.5 million for the quarter ended June 30,
    2012;
  oExecution of a collaboration with Soligenix, Inc., to develop and
    commercialize human monoclonal antibody therapies for the treatment of
    melioidosis;
  oClosing of a Series F Preferred Stock investment round which, together
    with the previous sale of Series F Preferred Stock in March 2013, resulted
    in receipt of aggregate proceeds of $150 million before expenses;
  oExpansion of the collaboration with Fibrocell Science, Inc., incorporating
    additional potential treatments based on engineered autologous fibroblast
    cells for the localized treatment of autoimmune and inflammatory disorders
    including morphea (localized scleroderma), cutaneous eosinophilias and
    moderate to severe psoriasis;
  oDemonstration of in vitro ability to regulate/control the expression of
    micro-RNA (miRNA) under control of the Company's RheoSwitch Therapeutic
    System^®;
  oDemonstration of gene programs for the expression of traits that enhance
    the growth of plants exposed to experimental drought or temperature
    stress.

Recent Developments

On August 13, 2013, Intrexon completed an initial public offering which, after
taking into effect the exercise of the underwriter's over-allotment option,
resulted in aggregate proceeds to the company of approximately $168.3 million,
net of underwriting discounts and commissions and estimated offering expenses.

Second Quarter 2013 Financial Results Compared to Prior Year Period

Total revenues were $6.8 million for the three months ended June 30, 2013
compared to $2.7 million for the three months ended June 30, 2012, an increase
of $4.1 million, or 148.8%. The $4.0 million increase in collaboration revenue
resulted primarily from the recognition of deferred revenue for upfront
payments received from four collaborations signed by the Company between July
1, 2012 and June 30, 2013, as well as one milestone payment received in
October 2012. Revenues also increased as a result of research and development
services the Company performed under these new agreements. Finally, during
the second quarter of 2013, the Company immediately recognized $1.5 million in
previously deferred revenue related to an upfront payment the Company received
pursuant to a collaboration where both the Company and the counterparty agreed
to terminate the agreement.

Research and development expenses were $13.6 million for the three months
ended June 30, 2013 compared to $17.6 million for the three months ended June
30, 2012, a decrease of $4.0 million or 23%. The decrease is primarily the
result of decreases in personnel expenses of $2.5 million and lab supplies of
$1.4 million because of the elimination of certain positions due to
improvements in production processes and also the Company's centralization of
certain research and development functions to eliminate redundancies.

General and administrative expenses increased $1.1 million, or 17%, to $7.4
million for the three months ended June 30, 2013 compared to $6.3 million for
the three months ended June 30, 2012 primarily due to increases in personnel
expenses for new employees as the Company prepared to become a public company.
The Company also incurred $0.3 million of personnel expenses related to
AquaBounty Technologies, Inc. ("AquaBounty"), an investment the Company was
required to consolidate effective March 15, 2013.

Total other income, net, is primarily comprised of unrealized appreciation in
fair value of equity securities which the Company holds in certain of its
collaborators which was $7.7 million for the three months ended June 30, 2013
compared to $4.8 million for the three months ended June 30, 2012, an increase
of $2.9 million, or 60%.

About Intrexon Corporation

Intrexon Corporation (NYSE: XON) is a leader in synthetic biology focused on
collaborating with companies in Health, Food, Energy and the Environment to
create biologically-based products that improve the quality of life and the
health of the planet. Through the company's proprietary UltraVector^®
platform, Intrexon provides its partners with industrial-scale design and
development of complex biological systems. The UltraVector^® platform
delivers unprecedented control over the quality, function, and performance of
living cells. We call our synthetic biology approach and integrated
technologies Better DNA®, and we invite you to discover more at www.dna.com.

Non-GAAP Financial Measures

This press release presents Adjusted EBITDA and Pro Forma Adjusted EBITDA
earnings 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 Adjusted EBITDA to net loss 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 our consolidated financial
statements presented in accordance with GAAP, and is intended to enhance an
overall understanding of our current financial performance.

Trademarks

Intrexon, UltraVector, RheoSwitch Therapeutic System, mAbLogix, LEAP 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 our
current expectations and projections about future events and generally relate
to our plans, objectives and expectations for the development of our
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) our current and future ECCs; (ii)
developments concerning our collaborators; (iii) our ability to successfully
enter new markets or develop additional products, whether with our
collaborators or independently; (iv) competition from existing technologies
and products or new technologies and products that may emerge; (v) actual or
anticipated variations in our operating results; (vi) actual or anticipated
fluctuations in our competitors' or our collaborators' operating results or
changes in their respective growth rates; (vii) our cash position; (viii)
market conditions in our industry; (ix) our ability, and the ability of our
collaborators, to protect our intellectual property and other proprietary
rights and technologies; (x) our ability, and the ability of our
collaborators, to adapt to changes in laws or regulations and policies; (xi)
the ability of our collaborators to secure any necessary regulatory approvals
to commercialize any products developed under the ECCs; (xii) the rate and
degree of market acceptance of any products developed by a collaborator under
an ECC; (xiii) our ability to retain and recruit key personnel; (xiv) our
expectations related to the use of proceeds from our initial public offering;
(xv) our estimates regarding expenses, future revenue, capital requirements
and needs for additional financing; and (xvi) our expectations relating to
AquaBounty. For a discussion of other risks and uncertainties, and other
important factors, any of which could cause our actual results to differ from
those contained in the forward-looking statements, see the section entitled
"Risk Factors" in our Quarterly Report on Form 10-Q, as well as discussions of
potential risks, uncertainties, and other important factors in our subsequent
filings with the Securities and Exchange Commission. All information in this
press release is as of the date of the release, and we undertake no duty to
update this information unless required by law.

Intrexon Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)
(Amounts in thousands, except share and per   June 30, 2013  December 31, 2012
share data)
Assets
Current assets
Cash and cash equivalents                     $  34,461      $    10,403
Short-term investments                           95,454           260
Receivables
 Trade                                        258              141
 Related parties                              820              531
 Other                                        227              35
Prepaid expenses and other                       3,098            2,163
 Total current assets                         134,318          13,533
Equity securities                                65,213           83,116
Property, plant and equipment, net               18,410           18,687
Intangible assets, net                           42,972           29,506
Goodwill                                         13,846           —
Investment in affiliate                          —                5,726
Other assets                                     8,692            1,078
 Total assets                              $  283,451     $    151,646
Liabilities, Redeemable Convertible Preferred
Stock and Total Deficit
Current liabilities
Accounts payable                              $  1,486       $    632
Accrued compensation and benefits                3,324            3,766
Other accrued liabilities                        4,166            2,208
Deferred revenue                                 8,270            9,963
Capital lease obligations, current               32               49
Current portion of long term debt                223              —
Related party payables                           10               99
 Total current liabilities                    17,511           16,717
Capital lease obligations, net of current        25               42
portion
Long term debt, net of current portion           2,074            —
Deferred revenue                                 56,409           48,673
Other long term liabilities                      1,098            1,108
 Total liabilities                            77,117           66,540
Commitments and contingencies
Redeemable convertible preferred stock          567,858          406,659
Total deficit
Common stock                                     —                —
Additional paid-in capital                       —                —
Accumulated deficit                              (376,163)        (321,553)
Accumulated other comprehensive income           14               –
 Total Intrexon shareholders' deficit         (376,149)        (321,553)
Noncontrolling interest                          14,625           —
 Total deficit                                (361,524)        (321,553)
 Total liabilities, redeemable convertible $  283,451     $    151,646
preferred stock and total deficit





Intrexon Corporation and Subsidiaries

Consolidated Statements of Operations

(Unaudited)
(Amounts in thousands,   Three months ended          Six months ended
except share and         June 30,
                                                     June 30,
per share data)          2013          2012          2013          2012
Revenues
Collaboration revenues   $ 6,674       $ 2,705       $ 10,538      $ 4,259
Other revenues             107           21            219           85
Total revenues             6,781         2,726         10,757        4,344
Operating Expenses
Research and               13,602        17,641        25,104        36,620
development
General and                7,433         6,333         13,913        14,093
administrative
Total operating            21,035        23,974        39,017        50,713
expenses
Operating loss             (14,254)      (21,248)      (28,260)      (46,369)
Other Income (Expense)
Unrealized appreciation
(depreciation) in fair     7,734         4,756         (21,635)      15,971
value of equity
securities
Gain on previously held    —             —             7,415         —
equity investment
Interest expense           (11)          (18)          (25)          (25)
Investment income          66            1             71            2
Other expense              (54)          (26)          (57)          (26)
Total other income         7,735         4,713         (14,231)      15,922
(expense)
Equity in net loss of      —             —             (390)         —
affiliate
Net loss                 $ (6,519)     $ (16,535)    $ (42,881)    $ (30,447)
Net loss attributable
to the noncontrolling      507           —             558           —
interest
Net loss attributable    $ (6,012)     $ (16,535)    $ (42,323)    $ (30,447)
to Intrexon
Accretion of dividends
on redeemable              (7,942)       (5,362)       (14,347)      (10,822)
convertible preferred
stock, not declared
Net loss attributable    $ (13,954)    $ (21,897)    $ (56,670)    $ (41,269)
to common shareholders
Net loss attributable
to common shareholders   $ (2.46)      $ (3.99)      $ (10.00)     $ (7.54)
per share, basic and
diluted
Weighted average shares
outstanding, basic and     5,667,557     5,484,572     5,664,665     5,470,415
diluted





Intrexon Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures
(Unaudited)

Adjusted EBITDA. To supplement our financial information presented in
accordance with U.S. generally accepted accounting principles ("GAAP"), we
present Adjusted EBITDA. A reconciliation of Adjusted EBITDA to our net
income or loss under GAAP appears below. Adjusted EBITDA is a non-GAAP
financial measure that we calculate as net income or loss adjusted for income
tax expense or benefit, interest expense, depreciation and amortization,
stock-based compensation, contribution of services by shareholder, unrealized
appreciation or depreciation in the fair value of equity securities, gain on
previously held equity investment, equity in net loss of affiliate and the
change in deferred revenue related to upfront and milestone payments.
Adjusted EBITDA is a key metric for our management and Board of Directors for
evaluating our 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
is useful to understand the long-term performance of our core business and
facilitates comparisons of our operating results over multiple reporting
periods. We are providing this information to investors and others to assist
them in understanding and evaluating our operating results in the same manner
as our management and board of directors. While we believe that this non-GAAP
financial measure is useful in evaluating our 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, this non-GAAP financial measure may not be
the same as non-GAAP financial measures presented by other companies.
Adjusted EBITDA is not a measure of financial performance under GAAP, and is
not intended to represent cash flows from operations 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. We compensate for the limitations of
Adjusted EBITDA by using it only to supplement our GAAP results to provide a
more complete understanding of the factors and trends affecting our business.
Adjusted EBITDA has its limitations as an analytical tool and you should not
consider it in isolation or as a substitute for analysis of our results as
reported under GAAP.

In addition to the reasons stated above, which are generally applicable to
each of the items we exclude from our non-GAAP financial measure, we believe
it is appropriate to exclude certain items for the following reasons:

  oInterest expense may be subject to changes in interest rates which are
    beyond our control;
  oDepreciation of our property and equipment and amortization of acquired
    identifiable intangibles can be affected by the timing and magnitude of
    business combinations and capital asset purchases;
  oStock-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;
  oContribution of services by shareholder is a noncash expense which we
    exclude in evaluating our financial and operating performance;
  oUnrealized appreciation or depreciation in the fair value of securities
    which we hold in our collaborators may be significantly impacted by market
    volatility and other factors which are outside of our control in the short
    term and we intend to hold these securities over the long term;
  oEquity in net loss of affiliate and the gain on such equity investment
    occurred as a result of our initial investment in AquaBounty in the fourth
    quarter of 2012 and the subsequent additional investment in the first
    quarter of 2013 which resulted in a controlling interest by us and the
    consolidation of the investment. We believe excluding the impact of such
    losses or gains on these types of strategic investments from our operating
    results is important to facilitate comparisons between periods; and
  oGAAP requires us to account for our collaborations as multiple-element
    arrangements. As a result, we defer certain collaboration revenues
    because certain of our performance obligations cannot be separated and
    must be accounted for as one unit of accounting. The collaboration
    revenues that we so defer arise from upfront and milestone payments
    received from our collaborators, which we recognize over the future
    performance period even though our right to such consideration is neither
    contingent on the results of our future performance nor refundable in the
    event of nonperformance. In order to evaluate our operating performance,
    our management adjusts for the impact of the change in deferred revenue
    for these upfront and milestone payments in order to include them as a
    part of adjusted EBITDA when the transaction is initially recorded. The
    adjustment for 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. We
    believe that adjusting for the impact of the change in deferred revenue in
    this manner is important since it permits us to make quarterly and annual
    comparisons of our ability to consummate new collaborations or to achieve
    significant milestones with existing collaborators. Further, we believe
    it is useful when evaluating our financial and operating performance,
    generating future operating plans and making strategic decisions about the
    allocation of capital.

Pro forma adjusted EBITDA per share. Our calculations for pro forma adjusted
EBITDA per share, basic and diluted, assumes, as of the end of the respective
period, the conversion of all outstanding shares of our redeemable convertible
preferred stock plus all cumulative dividends payable thereon into shares of
common stock as if such conversion had occurred as of the later of (i) the
beginning of the period or (ii) the issuance date of those shares. Because
all of our shares of redeemable convertible preferred stock and all accrued
and cumulative dividends thereon automatically converted into common shares
upon the closing of our initial public offering on August 13, 2013, we believe
that the inclusion of such shares on an as-converted basis results in a useful
metric for our investors, analysts and others when evaluating our results on a
comparable basis with other periods. While our management and board of
directors believe that this non-GAAP per share metric is useful in evaluating
our past adjusted EBITDA results, and may be of use to investors, analysts and
others, this information should be considered supplemental in nature and is
not meant as a substitute for the per share information prepared in accordance
with GAAP. In addition, this non-GAAP per share metric may not be the same as
non-GAAP per share metrics presented by other companies. Pro forma adjusted
EBITDA per share is not a measure of financial performance under GAAP, and is
not intended to represent cash flows per share from operations under GAAP and
should not be used as an alternative to net income or loss per share as an
indicator of operating performance or to represent cash flows from operating,
investing or financing activities as a measure of liquidity. We compensate for
the limitations of pro forma adjusted EBITDA per share by using it only to
supplement our GAAP results to provide a more complete understanding of the
factors and trends affecting our business. Pro forma adjusted EBITDA per share
has its limitations as an analytical tool and you should not consider it in
isolation or as a substitute for analysis of our results as reported under
GAAP.

The following table presents a reconciliation of net loss to EBITDA and also
to adjusted EBITDA for each of the periods indicated:
                   Threemonthsended             Six months ended
                   June 30,                       June 30,
                   2013            2012           2013           2012
                   (Inthousands)
Net loss           $  (6,519)      $ (16,535)     $ (42,881)     $ (30,447)
Interest expense      11             18             25             25
Depreciation and      1,823          2,021          3,694          3,912
amortization
EBITDA             $  (4,685)      $ (14,496)     $ (39,162)     $ (25,510)
Stock-based
compensation          809            367            1,196          520
expense
Contribution of
services by           387            387            775            775
shareholder
Unrealized
(appreciation)
depreciation in       (7,734)        (4,756)        21,635         (15,971)
fair value of
equity
securities
Gain on
previously held       —              —              (7,415)        —
equity
investment
Equity in net
loss of               —              —              390            —
affiliate
Impact of change
in deferred
revenue related       6,193          6,193          10,455         5,844
to upfront and
milestone
payments
Adjusted EBITDA    $  (5,030)      $ (12,305)     $ (12,126)     $ (35,342)
The following table presents the calculation of pro forma adjusted EBITDA per
share, basic and diluted, for each of the periods indicated:
                   Threemonthsended             Six months ended
                   June 30,                       June 30,
                   2013            2012           2013           2012
Pro forma
adjusted EBITDA
per share:
Numerator:
Adjusted EBITDA    $  (5,030)      $ (12,305)     $ (12,126)     $ (35,342)
(in thousands)
Denominator (1)
(2):
Weighted average
common shares
outstanding,          5,667,557      5,484,572      5,664,665      5,470,415
basic and
diluted
Add: Common
shares issued
upon conversion       73,423,111     61,467,967     69,795,611     60,094,266
of all series
preferred shares
Add: Common
shares issued
upon conversion
of cumulative         4,050,161      2,455,878      4,050,161      2,455,878
dividends on all
series preferred
shares
Pro forma
weighted average
common shares
used in
computing pro         83,140,829     69,408,417     79,510,437     68,020,559
forma adjusted
EBITDA per
share, basic and
diluted
Pro forma
adjusted EBITDA    $  (0.06)       $ (0.18)       $ (0.15)       $ (0.52)
per share, basic
and diluted
(1) Pro forma adjusted EBITDA per share, basic and diluted have been
calculated for the three and six month periods ended June 30, 2013 after
giving effect to (i) the conversion of 112,906,464 shares of our preferred
stock outstanding on January 1, 2013 into 64,517,977 shares of common stock
upon the completion of our IPO; (ii) the issuance of 19,047,619 shares of
Series F preferred stock issued between January 1, 2013 and April 30, 2013
and the conversion of those shares into 10,884,353 shares of our common stock
upon the completion of our IPO; and (iii) upon the completion of our IPO the
conversion of aggregate cumulative dividends on our preferred stock of $64.8
million into 4,050,161 shares of our common stock, assuming the IPO closed on
June 30, 2013 at the IPO price of $16.00 per share.



(2) Pro forma adjusted EBITDA per share, basic and diluted have been
calculated for the three and six month periods ended June 30, 2012 after
giving effect to (i) the conversion of 97,096,941 shares of our preferred
stock outstanding on January 1, 2012 into 55,483,966 shares of our common
stock upon the completion of our IPO; (ii) the issuance of 11,047,618 shares
of Series E preferred stock issued between January 1, 2012 and April 12, 2012
and the conversion of those shares into 6,312,924 shares of our common stock
upon the completion of our IPO; and (iii) upon completion of our IPO the
conversion of aggregate cumulative dividends on our preferred stock of $39.3
million into 2,455,878 shares of our common stock, assuming the IPO closed on
June 30, 2012 at the IPO price of $16.00 per share.





SOURCE Intrexon Corporation

Website: http://www.dna.com
Contact: Corporate Contact, Peter McLaughlin, Vice President, Corporate
Communications, Intrexon Corporation, Tel: +1 (323) 842-7779,
pmclaughlin@intrexon.com or Investor Contact, The Ruth Group, Nick Laudico,
Tel: 646-536-7030, nlaudico@theruthgroup.com
 
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