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Why Is Intrexon (XON) Down 34% Since Last Earnings Report?

Zacks Equity Research

A month has gone by since the last earnings report for Intrexon (XON). Shares have lost about 34% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Intrexon due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Intrexon Reports Narrower-Than-Expected Loss in Q4

Intrexon incurred a loss of 22 cents per share (excluding non-cash charge of $311 million) in fourth-quarter 2018, narrower than 23 cents recorded in the year-ago period and the Zacks Consensus Estimate of 29 cents.

Total revenues came in at $43.2 million, reflecting a 44% decline from the year-ago quarter. The reported revenues also missed the Zacks Consensus Estimate of $62 million.

Recent Business Highlights

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

Collaboration and licensing revenues decreased 55% from the prior-year quarter to $25.2 million.

Product revenues came in at $4.9 million, down 36.2% from the year-ago period. Service revenues totaled $12 million, down 5.4% year over year.

Intrexon follows a business model, under which the company commercializes its technologies through exclusive channel collaborations (ECC), licensing agreements and joint ventures that have market and product development expertise, as well as sales and marketing capabilities to bring new and improved products and processes to the market. Such agreements provide the company with funds in the form of technology access fees, along with milestones and other payments.

Meanwhile, the company is developing several candidates in partnership with other companies.

Intrexon structured its principal healthcare assets into two separate wholly-owned subsidiaries — Precigen, Inc., which is a gene and cell therapy company developing precision medicines and ActoBio Therapeutics, Inc., a company focused on therapeutic delivery of biologics to the site of disease via its proprietary ActoBiotics platform. Effective Jan 1, 2018, Precigen and ActoBio Therapeutics began operating as standalone entities. Both the companies are now wholly-owned subsidiaries of Intrexon.

Precigen announced that the FDA has cleared the Investigational New Drug (IND) application for PRGN-3006, an investigational drug for patients with relapsed or refractory acute myeloid leukemia (AML) and higher risk myelodysplastic syndrome (MDS). 

Precigen also announced that the FDA has cleared the IND application for PRGN-3005 UltraCAR-T, an investigational drug using CAR-T cells to treat advanced-stage platinum-resistant ovarian cancer patients and the first UltraCAR-T candidate targeting solid tumors to enter the clinic.

Following the previously reported reacquisition of oncology rights from Ziopharm Oncology, Inc. in October 2018, Precigen and Intrexon entered into an agreement with Merck KGaA, Darmstadt, Germany, and its wholly-owned subsidiary Ares Trading, pursuant to which Intrexon assumed rights from Ares Trading under the existing agreement among Precigen, Ares Trading and Ziopharm relating to the development of CAR-T therapies.

2018 Results

Loss per share in 2018 was 69 cents, narrower than the year-ago figure of 98 cents and the Zacks Consensus Estimate of $1.59.

Total revenues came in at $160.6 million, reflecting a 31% year-over-year decline and missing the Zacks Consensus Estimate of $183.4 million.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.


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