powering)the)bioindustrial)revolu4on) with)be5er)dna™) · powering)the)bioindustrial)revolu4on)...
TRANSCRIPT
Powering the Bioindustrial Revolu4on with Be5er DNA™
Corporate Presenta,on May 2015
© 2015 Intrexon Corp. All rights reserved. 2
Forward-‐Looking Statements
© 2015 Intrexon Corp. All rights reserved. Intrexon Corpora:on is sharing the following materials for informa:onal purposes only. Such materials do not cons:tute an offer to sell or the solicita:on of an offer to buy any securi:es of Intrexon. Any offer and sale of Intrexon’s securi:es will be made, if at all, only upon the registra:on and qualifica:on of such securi:es under all applicable federal and state securi:es laws or pursuant to an exemp:on from such requirements. The aIached informa:on has been prepared in good faith by Intrexon. However, Intrexon makes no representa:ons or warran:es as to the completeness or accuracy of any such informa:on. Any representa:ons or warran:es as to Intrexon shall be limited exclusively to any agreements that may be entered into by Intrexon and to such representa:ons and warran:es as may arise under law upon distribu:on of any prospectus or similar offering document by Intrexon.
Safe Harbor Statement Some of the statements made in this presenta:on are forward-‐looking statements that involve a number of risks and uncertain:es and are made pursuant to the Safe harbor Provisions of the Private Securi:es Li:ga:on Reform Act of 1995. These forward-‐looking statements are based upon Intrexon’s current expecta:ons and projec:ons about future events and generally relate to Intrexon’s plans, objec:ves and expecta:ons for the development of Intrexon’s business. Although management believes that the plans and objec:ves reflected in or suggested by these forward-‐looking statements are reasonable, all forward-‐looking statements involve risks and uncertain:es and actual future results may be materially different from the plans, objec:ves and expecta:ons expressed in this presenta:on. These risks and uncertain:es include, but are not limited to, (i) Intrexon’s current and future ECCs and joint ventures; (ii) Intrexon’s ability to successfully enter new markets or develop addi:onal products, whether with its collaborators or independently; (iii) actual or an:cipated varia:ons in Intrexon’s opera:ng results; (iv) actual or an:cipated fluctua:ons in Intrexon’s compe:tors’ or its collaborators’ opera:ng results or changes in their respec:ve growth rates; (v) Intrexon’s cash posi:on; (vi) market condi:ons in Intrexon’s industry; (vii) Intrexon’s ability, and the ability of its collaborators, to protect Intrexon’s intellectual property and other proprietary rights and technologies; (viii) Intrexon’s ability, and the ability of its collaborators, to adapt to changes in laws or regula:ons and policies; (ix) the rate and degree of market acceptance of any products developed by a collaborator under an ECC or through a joint venture; (x) Intrexon’s ability to retain and recruit key personnel; (xi) Intrexon’s expecta:ons related to the use of proceeds from its public offerings and other financing efforts; (xii) Intrexon’s es:mates regarding expenses, future revenue, capital requirements and needs for addi:onal financing; and (xiii) Intrexon’s expecta:ons rela:ng to its subsidiaries and other affiliates. For a discussion of other risks and uncertain:es, 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 sec:on en:tled ”Risk Factors“ in Intrexon’s Annual Report on Form 10-‐K, as well as discussions of poten:al risks, uncertain:es, and other important factors in Intrexon’s subsequent filings with the Securi:es and Exchange Commission. All informa:on in this presenta:on is as of the date of the release, and Intrexon undertakes no duty to update this informa:on unless required by law. 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 regula:ons of the Securi:es and Exchange Commission (SEC). For a reconcilia:on of Adjusted EBITDA to net loss aIributable to Intrexon in accordance with generally accepted accoun:ng principles and for a discussion of the reasons why the company believes that these non-‐GAAP financial measures provide informa:on that is useful to investors see the tables below under “Reconcilia:on of GAAP to Non-‐GAAP Measures.” Such informa:on is provided as addi:onal informa:on, not as an alterna:ve 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.
© 2015 Intrexon Corp. All rights reserved. 3
Intrexon Profile
• Leader in synthe:c biology
• Founded 1998
• Publicly traded (NYSE: XON)
• 579 employees*
• Mission: Industrial engineering of synthe:c biology
• Core technology: UltraVector® DNA design and fabrica:on
• World class board
• Senior team: RJ Kirk, CEO; Krish Krishnan, COO; Thomas Reed, PhD, CSO
• Business Model: Exclusive Channel Collabora:ons and Joint Ventures
* Count as of 4/15/2015
© 2015 Intrexon Corp. All rights reserved. 4
Synthe4c Biology Driving Bio-‐Based Economy
The combina4on of Biology knowledge, precise Engineering,
and robust Informa/cs leads
to…
Ra4onal design of novel DNA providing new instruc4ons for
powerful biological processes…
To create products and solu4ons impac4ng high
value applica4ons across large markets…
Health Energy Environment Consumer Food
Therapeutics, APIs, Fuels, Chemicals, Bioremediation, Agriculture, Textiles, Personal Biologics Lubricants Biosensors Aquaculture Care Products
© 2015 Intrexon Corp. All rights reserved. 5
Since its incep:on Intrexon’s understanding of DNA’s modular nature has provided the founda:on for its proprietary approach in the design and construc:on
of complex gene programs u:lizing the building blocks of gene:c code
Understanding and Designing DNA Code
© 2015 Intrexon Corp. All rights reserved. 6
Human
Animal
Plant
Algae
Fungal
Bacterial
Exper4se Across Mul4ple Host PlaVorms
Intrexon’s exper:se in DNA engineering navigates mul:ple hosts enabling the use of op:mal plaporms for various applica:ons, differen:a:ng it from other
organiza:ons u:lizing synthe:c biology Animal PlaVorm
Human PlaVorm
Plant PlaVorm
Bacterial PlaVorm
Fungal PlaVorm
Intrexon’s PlaVorm is Host Determinis4c
Algae PlaVorm
Hig
her
Euka
ryot
e Sy
stem
s M
icro
bial
Sys
tem
s
© 2015 Intrexon Corp. All rights reserved. 7
Well Posi4oned To Capitalize on SynBio Opportunity
Biologics
Chemicals
Fuels
Biopes/cides
Consumer Products
APIs
CAR-‐T
Gene Therapy
Cell Therapy
Agriculture
Aquaculture
Livestock
Fungal
Plant
Animal
Bacterial
Human
Algae
Synthe4c Biology Factories and Parts
Commercial Products and Solu4ons
Recombinase Platforms
Genetic Programs
DNA Code
MODs
Cellular Pathways
Gene Switches
© 2015 Intrexon Corp. All rights reserved. 8
Engineering of Biology -‐ Illustra4ve Applica4ons
Human Plant Bacterial Fungal
Cellular PlaVorms
Armed to target cancer and control gene expression to
minimize toxicity and off-‐target effects while maximizing
therapeu4c efficiency
Increased tolerance to nematode pest
helping protect plants and prevent against
harvest losses including those in soybean crops
Re-‐engineered cell pathways upgrade
carbon from methane into valuable fuels and chemicals like isobutanol and
farnesene
Before Engineering
A_er Intrexon Bioengineering
Non-‐targeted immune response
Typical plant growth suscep4ble to pests
Metabolizes methane and converts to lipids
Op4mized cell lines with significantly
improved produc4on of targeted APIs through increased
efficiency and yield
U4lized in Produc4on of APIs
T Cells Arabidopsis Methanotroph Yeast
Intrexon Selected Host System
© 2015 Intrexon Corp. All rights reserved. 9
Integrated Technology Suite
UltraVector® is a modular, object-‐oriented DNA design & manufacturing plaVorm enabling rapid construc4on of complex DNA RheoSwitch Therapeu4c System® provides inducible regula4on of level and 4ming of gene expression
DNA/RNA Engineering of gene4c components to regulate transcrip4on and modulate RNA persistence and transla4on Protein Engineering u4lizes bioinforma4cs to enhance stability, localiza4on, and cataly4c ac4vity of proteins
Cell Systems Informa4cs guide selec4on of op4mal pathways for genomic modifica4on
A5Site® Recombinases enable genome engineering and delivery technologies for targeted gene integra4on plus expression
LEAP® Cell Processing provides imaging and laser-‐based purifica4on of high value cells
Intrexon has built, acquired and integrated a suite of technologies crea:ng a one-‐stop-‐shop for start-‐to-‐finish conceptualiza:on, engineering and produc:on of bio-‐based solu:ons
ActoBio4cs™ provide for in situ expression and secre4on of novel biotherapeu4c proteins and pep4des through microbes
© 2015 Intrexon Corp. All rights reserved. 10
Power of the UltraVector® PlaVorm
A5 Site® RheoSwitch® Enzyme
Inhibitor LS CP Single Gene or Mul4-‐genic Program
Growth Factor UE TL IP
Vector Backbone
Design Build
Test Learn
• Soqware-‐driven opera:ng system for DNA design and fabrica:on with extensive physical library of modular DNA components
• Itera:ve design-‐build-‐test-‐learn™ process enables op:mal designs and con:nuous advancement of cellular systems knowledge
• Provides rapid, scalable manufacturing assembly line to construct simple single or complex mul:-‐genic programs for targeted bio-‐func:on
© 2015 Intrexon Corp. All rights reserved. 11
Proprietary Database Enabling Predictable Biological Discovery
Samples Screened (Time)
% Im
provem
ent
Random Sampling
Intrexon Approach
Quan4ta4ve Expression
Intrexon’s proprietary database maintains performance data on DNA parts providing beIer designs and faster build :mes Database
Inventory
Predic:ve ability removes :me, cost and risk inherent with standard experimenta:on
Data mining, modeling, and sta:s:cal analysis of the component library enables op:miza:on and predic:ve biological experimenta:on
© 2015 Intrexon Corp. All rights reserved. 12
Controlling Gene Expression with RheoSwitch® PlaVorm
RheoSwitch® gene regula:on delivers precise control in mul:ple biological systems for a diverse range of applica:ons including gene therapy, agriculture, and bio-‐therapeu:cs. Key aIributes of RTS® plaporm: • Transcrip:onal control of a broad range of therapeu:c genes • Modulates protein expression and allows for repeated inducibility • Provides spa:al and temporal control for genes of interest • Dose-‐dependent gene expression demonstrated both ex vivo and in vivo • Clinically validated with excellent safety profile • Allows for independent regula:on of mul:ple genes in a single cell
RheoSwitch Therapeu4c System ® (RTS®) Ac4vator Ligand Administered Orally
© 2015 Intrexon Corp. All rights reserved. 13
Intrexon Empowering Broad Gene and Cell Therapy Applica4ons
Applica4ons U4lizing Intrexon
Technology
Rare Disease: Friedreich’s
Ataxia
Oncology: CAR T &
Immunotherapy
Ocular Disease: Age-‐related Macular
Degenera/on
Car4lage Repair: Allogeneic Chondrocyte
Cells
Rare Skin Disorders: RDEB
Human Infer4lity: In Vitro Egg Matura/on
GM Cell Delivery
RTS® Based Expression Control
Cell Therapy
© 2015 Intrexon Corp. All rights reserved. 14
Adop4ve T Cell Therapies
Our integrated technology plaporms posi:on our collaborators to realize the poten:al of adop:ve T cell therapies through regula:on of mul:ple bio-‐effectors to improve safety, efficacy and manufacturing. Recent developments:
• January 2015 -‐ Licensing agreement with The University of Texas MD Anderson Cancer Center for development of non-‐viral adop:ve cellular therapies
• March 2015 -‐ Strategic collabora:on and license agreement to develop and commercialize CAR-‐T therapies with biopharmaceu:cal business of Merck KGaA
• April 2015 -‐ CRADA with the Na:onal Cancer Ins:tute for RheoSwitch® controlled IL-‐12 cancer therapies using autologous peripheral blood cells
Adop/ve T Cell Therapy Approach
MULTIGENIC ATTSITE
RECOMBINASES FULLY HUMAN CAR
DISCOVERY COMBI-‐CAR DEV.
PROGRAM ALLOGENEIC T-‐CELL PLATFORM
IMPLEMENTATION TOWARD MULTIPLE PRODUCTS ENABLING APPLICATIONS (IN DEVELOPMENT)
IMPROVED EFFICACY
IMPROVED MANUFACTURING
RHEOSWITCH
IMPROVED SAFETY
© 2015 Intrexon Corp. All rights reserved. 15
Cell-‐based Treatments for Rare Skin Diseases
• Collabora:on with Fibrocell Science to develop gene:cally-‐modified human dermal fibroblasts expressing collagen VII for treatment of Recessive Dystrophic Epidermolysis Bullosa (RDEB)
• RDEB is a debilita:ng disease with no approved treatment and is oqen lethal before the age of 30
• Plan to file an IND applica:on with the U.S. FDA in 1H of 2015 for drug candidate, GM-‐HDF-‐COL7
• Also pursuing Linear scleroderma, a skin-‐hardening disease affec:ng movement and development
© 2015 Intrexon Corp. All rights reserved. 16
GOI
GOI
GOI
Ac4vator Ligand Delivery via Pill or
Eye Drops Gene of Interest
Ac4vator Ligand
Protein of Interest
RTS® PlaVorm For Controlled Ocular Expression
Gene-‐based Therapies for Ocular Diseases U4lizing RTS®
• Current approaches to chronic ocular diseases require intraocular delivery with repeated injec:ons for sustained therapeu:c distribu:on
• JV with Sun Pharma developing gene therapies for treatment of ocular diseases causing par:al or total blindness
• Use of RTS® plaporm with ac:vator ligand will enable pa:ents to receive a targeted biologic therapy without having to endure frequent injec:ons
• Ini:al target is age-‐related macular degenera:on
GOI
© 2015 Intrexon Corp. All rights reserved. 17
Field / Collaborators Indica4ons Pre-‐Clinical Phase I Phase II
Oncology (ZIOPHARM, NCI)
Ad-‐RTS-‐IL-‐12: • Breast cancer • Malignant Glioma CAR/Cytokine Products: • B-‐Cell Malignancies • Myeloid Malignancies • RTS-‐Controlled T Cell • Solid Tumors • Universal Donor Adop4ve T Cell Immunotherapy: • RTS-‐Controlled IL-‐12 in PBL
Gastrointes4nal & Oral Diseases (Intrexon ActoBio,cs™)
• Oral Mucosi:s – AG013 • Inflammatory Bowel Disease – AG014 • Autoimmune, Allergy & Microbiome
Allergic Diseases (STALLERGENES) • ActoBio:cs™ Expressing Allergens
Ocular Diseases (Sun Pharma)
• Age-‐related Macular Degenera:on • Orphan Ocular Diseases
Rare Skin Disorders (Fibrocell)
• Recessive Dystrophic Epidermolysis Bullosa • Linear Scleroderma
Rare Disease (Agilis) • Friedreich’s Ataxia
Infer4lity (OvaScience) • Egg Cell Matura:on
Car4lage Repair (Histogenics) • Allogeneic Chondrocyte Cells
Health Pipeline
© 2015 Intrexon Corp. All rights reserved. 18
Developing Op4mal Biological Produc4on Methods for API
UltraVector® DNA
Screening Op4mized Process Design Specifica4on
• High yield • High produc:vity • Scalable process • Low COGS
Tradi4onal Methods to Produce Ac4ve Pharmaceu4cal Ingredients (API): • Chemical synthesis to produce API is a high capex, mul:-‐step process with rela:vely
expensive inputs of raw materials & intermediates • Isola:on of API from animal and plant sources is resource-‐intensive and may lead to
variability in quality, purity, and prices
Intrexon’s Approach U4lizing Biological Produc4on of API: • Biological produc:on of API via a single fermenta:on process is scalable, provides
consistency, and has poten:al to drive substan:al cost savings versus tradi:onal methods • Inputs of sugar, glycerol, etc. are rela:vely inexpensive • Engineering biological pathways in microbes helps to drive maximum output from
constructed cell lines
© 2015 Intrexon Corp. All rights reserved. 19
Methane CH3OH Pyruvate Isobutanol
Organic acids
FaIy acids Amino acids
Growth
Intrexon has designed a proprietary approach for bioconversion of natural gas to valuable fuels, chemicals and lubricants u:lizing a methanotroph biocatalyst plaporm: • Methanotroph is an organism that naturally consumes methane • We developed novel tools to facilitate library genera:on and screening in the
methanotroph, and incorporated complex metabolic pathways / gene:c programs • Through bio-‐engineering we have achieved produc:on of isobutanol, a drop-‐in fuel,
from methane and also farnesene, a key building block chemical in diesel • Given low rela:ve input cost and higher yield, Intrexon’s bioconversion plaporm has
poten:al to generate solid gross margins
Bioengineering Methanotrophs For Isobutanol Produc4on
© 2015 Intrexon Corp. All rights reserved. 20
Trans Ova Gene4cs -‐ Leading Bovine Reproduc4ve Technologies
• Trans Ova is a wholly owned subsidiary of Intrexon and the largest producer and supplier of bovine embryos in the U.S.
• In the April 2014 Top Young Genomic Bull List, 87% of the top 100 bulls were produced by Trans Ova and its clients
• With Intrexon’s technologies, Trans Ova is posi:oned to enable unparalleled produc:vity advancements for efficient, high-‐quality food produc:on
© 2015 Intrexon Corp. All rights reserved. 21
AquaBounty Technologies -‐ Majority Owned Subsidiary
Source: AquaBounty Technologies
• AquaBounty is a pioneer u:lizing molecular biology to improve aquaculture produc:vity in a safe and environmentally sustainable manner
• AquAdvantage® Salmon (AAS) is endowed with advantageous traits from other fish, growing to market weight in half the :me of its farmed Atlan:c salmon counterparts to enhance efficiency and sustainability of seafood
• Aquaculture is a $144 billion market and the fastest growing segment in the global food industry
• AAS is awai:ng FDA approval
Seafood Supply and Demand
195
0 1
960
197
0 1
980
199
0 2
000
201
0 2
020
203
0 2
040
205
0
Capture Supply Aquaculture Supply Demand Gap
© 2015 Intrexon Corp. All rights reserved. 22
Okanagan Specialty Fruits (OSF)
• OSF is a wholly owned subsidiary of Intrexon and the pioneering agricultural company behind the Arc:c® apple, the world's first non-‐browning apple without use of any flavor-‐altering chemical or an:oxidant addi:ves
• Arc:c® Golden and Arc:c® Granny apples completed review processes with the USDA, FDA, CFIA and Health Canada, who concluded they’re as safe and nutri:ous as tradi:onal apple varie:es
• OSF also developing beneficial traits in peaches, cherries and pears
• Small quan::es of Arc:c® apples expected to at market in late 2016, with increasing amounts of fruit becoming available each successive year
Conven4onal Apple Variety
Arc4c® Apple Variety
© 2015 Intrexon Corp. All rights reserved. 23
Scalable and Capital Efficient Model
An Exclusive Channel Collabora:on (ECC) is an agreement with a collaborator to develop and market products in its field of exper:se,
enabling a capital efficient, scalable business model to address the broad applicability of our technology across many diverse end markets
Exclusive License in a
Field
Strategic Access to All of Intrexon’s Technology
Commercialize Valuable
Products
Technology Access
Fees
Cost recovery
Milestones
Backend Economics
Partner Intrexon
© 2015 Intrexon Corp. All rights reserved. 24
0%
50%
100%
150%
FY2012 FY2013 FY2014 FY2015 YTD*
Cost Recovery & Deal Money as % of Cash OpEx#
FY2012, FY2013, FY2014
$0
$10
$20
$30
$40
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015
Revenues (in millions)
0%
20%
40%
60%
80%
Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q12015
Cost Recovery as % of Cash OpEx#
Increasing Capital Efficiency to Unburden Product Economics
Lead the Second Genera4on of Biotech
Increase PorJolio of Backend Economics
Increase Deal Money
Increase Cost Recovery
* The agreement with the biopharmaceu:cal business of Merck KGaA, Darmstadt, Germany, to develop and commercialize chimeric an:gen receptor T-‐cell (CAR-‐T) cancer therapies is expected to become effec:ve in the second quarter of FY2015 following regulatory approval, and accordingly Intrexon’s financial results exclude any impact of this agreement. # Cash opera:ng expenses exclusive of opera:ng expenses of consolidated subsidiaries.
© 2015 Intrexon Corp. All rights reserved. 25
Financial Snapshot
First Quarter Fiscal Year 2015
Total Cash and Investments (excluding equity securi:es) $191 million
Total Equity Securi:es In Connec:on With ECCs $295 million#
Net income aIributable to Intrexon $27.1 million
Basic EPS $0.26
Adjusted EBITDA $(11.3) million*
Basic and diluted adjusted EBITDA per share $(0.11)*
YTD Cost Recovery revenues & Deal Money as % total cash opex 50%**
Basic weighted average shares outstanding 106.1 million
* Non-‐GAAP financial measure ** Excludes opera:ng expenses of majority-‐owned consolidated subsidiaries. The agreement with the biopharmaceu:cal business of Merck KGaA, Darmstadt, Germany, to develop and commercialize chimeric an:gen receptor T-‐cell (CAR-‐T) cancer therapies is expected to become effec:ve in the second quarter of FY2015 following regulatory approval, and accordingly Intrexon’s financial results exclude any impact of this agreement. # Includes 17,830,305 shares of ZIOPHARM Oncology (NASDAQ: ZIOP) which will be distributed to Intrexon shareholders via a special stock dividend in June 2015.
© 2015 Intrexon Corp. All rights reserved. 26
Driving Scale & Efficiency Through BeyondBio™ Portal
BeyondBio™ portal will facilitate more efficient collabora:on providing partners increased flexibility to tap into our knowledge base remotely and develop customizable bio-‐based
solu:ons from their own facili:es with an integrated end-‐to-‐end capability
© 2015 Intrexon Corp. All rights reserved. 27
Royal4es
ECCs
Mul4ple Paths To Drive Shareholder Value
Intrexon Value Drivers
Equity Ownership in Various ECCs
Company Symbol Shares Owned
AquaBounty ABTX.LN 86.4 Million
AmpliPhi Bio APHB (OTC) 37.9 Million
Ziopharm ZIOP (NASD) 17.8 Million
Oragenics OGEN (NYSE) 8.8 Million
Synthe4c Bio SYN (NYSE) 8.7 Million
Fibrocell FCSC (NYSE) 6.0 Million
Histogenics HSGX (OTC) 2.7 Million
Soligenix SNGX (OTC) 1.0 Million
OvaScience OVAS (NASD) 273 Thousand
Joint Ventures in Large Markets Growing PorVolio of Backend Economics
Subsidiaries
Joint Venture Targets Ownership
S & I Ophthalmic Ocular Diseases 50% of JV
Intrexon Energy Partners Fuels and Lubricants 50% of JV
OvaXon Animal Health & Inherited Diseases 50% of JV
Subsidiary Industry Ownership
Trans Ova Gene4cs Bovine reproduc4ve technologies Wholly-‐owned
Okanagan SF Specialty Crops Wholly-‐owned
ViaGen Gene4c preserva4on Wholly-‐owned
Exemplar Gene4cs Large research animal models Wholly-‐owned
AquaBounty Technologies Aquaculture Majority-‐owned
0 4 8 12
Undisclosed
Mid-‐single to lower-‐double digit Net Sales
10-‐20% Gross Profits
>25% Net Profits
© 2015 Intrexon Corp. All rights reserved. 28
Intrexon Summary
We apply engineering principles to ar4sanal biological
systems in large and established markets with built-‐in
demand using a scalable capital efficient business
model to develop impera4ve high value applica4ons
for present and future genera:ons while delivering
meaningful returns to our shareholders.
© 2015 Intrexon Corp. All rights reserved. 29
Appendix A Intrexon Corpora4on and Subsidiaries Reconcilia4on of GAAP to Non-‐GAAP Measures (Unaudited) Adjusted EBITDA and Adjusted EBITDA per share. To supplement Intrexon’s financial informa:on presented in accordance with U.S. generally accepted accoun:ng principles (“GAAP”), Intrexon presents Adjusted EBITDA and Adjusted EBITDA per share. A reconcilia:on of Adjusted EBITDA to Intrexon’s net income or loss aIributable to Intrexon under GAAP appears below. Adjusted EBITDA is a non-‐GAAP financial measure that Intrexon calculates as net income or loss aIributable to Intrexon adjusted for income tax expense or benefit, interest expense, deprecia:on and amor:za:on, stock-‐based and execu:ve incen:ve compensa:on, contribu:on of services by shareholder, noncash research and development expenses related to the acquisi:on of our license agreement with the University of Texas MD Anderson Cancer Center, unrealized apprecia:on or deprecia:on in the fair value of equity securi:es, equity in net loss of affiliate and the change in deferred revenue related to upfront and milestone payments. Adjusted EBITDA and Adjusted EBITDA per share are key metrics for Intrexon’s management and Board of Directors for evalua:ng the Company’s financial and opera:ng performance, genera:ng future opera:ng plans and making strategic decisions about the alloca:on 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 Intrexon’s core business and facilitates comparisons of the Company’s opera:ng results over mul:ple repor:ng periods. Intrexon is providing this informa:on to investors and others to assist them in understanding and evalua:ng the Company’s opera:ng results in the same manner as its management and board of directors. While Intrexon believes that these non-‐GAAP financial measures are useful in evalua:ng its business, and may be of use to investors, this informa:on should be considered as supplemental in nature and is not meant as a subs:tute for the related financial informa:on prepared in accordance with GAAP. In addi:on, 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 opera:ons nor earnings per share under GAAP and should not be used as an alterna:ve to net income or loss as an indicator of opera:ng performance or to represent cash flows from opera:ng, inves:ng or financing ac:vi:es as a measure of liquidity. Intrexon compensates for the limita:ons of Adjusted EBITDA and Adjusted EBITDA per share by using them only to supplement the Company’s GAAP results to provide a more complete understanding of the factors and trends affec:ng the Company’s business. Adjusted EBITDA and Adjusted EBITDA per share have limita:ons as an analy:cal tool and you should not consider them in isola:on or as a subs:tute for analysis of Intrexon’s results as reported under GAAP. In addi:on 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 defini:on of Adjusted EBITDA for the following reasons: Interest expense may be subject to changes in interest rates which are beyond Intrexon’s control; Deprecia:on of Intrexon’s property and equipment and amor:za:on of acquired iden:fiable intangibles can be affected by the :ming and magnitude of business combina:ons and capital asset purchases; Stock-‐based compensa:on expense is a noncash expense and may vary significantly based on the :ming, size and nature of awards granted and also because the value is determined using formulas which incorporate variables, such as market vola:lity. Execu:ve incen:ve compensa:on expenses are determined by the compensa:on commiIee of the Board of Directors at the end of the year and may be based on, among other items, the results of Adjusted EBITDA, exclusive of such expenses. Contribu:on of services by shareholder is a noncash expense which Intrexon excludes in evalua:ng its financial and opera:ng performance; Unrealized apprecia:on or deprecia:on in the fair value of securi:es which Intrexon holds in its collaborators may be significantly impacted by market vola:lity and other factors which are outside of the Company’s control in the short term and Intrexon intends to hold these securi:es over the long term except as provided above; Equity in net loss of affiliate reflects Intrexon’s propor:onate share of the income or loss of en::es over which the Company has significant influence, but not control, and accounts for using the equity method of accoun:ng. Our acquisi:on of the license agreement with the University of Texas MD Anderson Cancer Center was a noncash expense we incurred to obtain access to specific technologies which are strategic to us. Intrexon believes excluding the impact of such losses or gains on these types of strategic investments from its opera:ng results is important to facilitate comparisons between periods; and GAAP requires Intrexon to account for its collabora:ons as mul:ple-‐element arrangements. As a result, the Company defers certain collabora:on revenues because certain of its performance obliga:ons cannot be separated and must be accounted for as one unit of accoun:ng. The collabora:on revenues that Intrexon so defers arise from upfront and milestone payments received from the Company’s collaborators, which Intrexon recognizes over the future performance period even though the Company’s right to such considera:on is neither con:ngent on the results of Intrexon’s future performance nor refundable in the event of nonperformance. In order to evaluate Intrexon’s opera:ng performance, its 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 transac:on is ini:ally 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. Intrexon believes that adjus:ng for the impact of the change in deferred revenue in this manner is important since it permits the Company to make quarterly and annual comparisons of the Company’s ability to consummate new collabora:ons or to achieve significant milestones with exis:ng collaborators. Further, Intrexon believes it is useful when evalua:ng its financial and opera:ng performance, genera:ng future opera:ng plans and making strategic decisions about the alloca:on of capital. Con:nued on next slide…
© 2015 Intrexon Corp. All rights reserved. 30
Appendix A con4nued The following table presents a reconcilia:on of net income aIributable to Intrexon to EBITDA and also to Adjusted EBITDA, as well as the calcula:on of Adjusted EBITDA per share, for each of the periods indicated: