Intrexon (XON) Reports In-Line Loss In Q3, Revenues Miss

Shares of Intrexon Corporation (NYSE:XON) have risen more than 4% since it announced its third quarter results.

Intrexon reported a loss of 24 cents per share in third-quarter 2016, which was in line with the Zacks Consensus Estimate.

However, adjusted loss per share was 17 cents compared to 4 cents in the prior year quarter. Adjusted loss excudes among other items, shares issued as compensation for services, bad debt expense and noncash research and development expenses related to the acquisition of Intrexon's license agreement with the University of Texas MD Anderson Cancer Center.

Total revenue came in at $48.9 million in the quarter, down 8.2% year over year. The decline was driven mostly by a drop in product and service sales from Trans Ova subsidiary. Reported revenues were, however, slightly below the Zacks Consensus Estimate of $50 million.

Quarter in Detail

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

Collaboration and licensing revenues declined 11.9% to $30.6 million.

Product revenues came in at $9.2 million, down 2% from the year-ago period. Service revenues came in at $8.7 million, down 2.8% year over year.

R&D expenses increased 34% to $29 million due to higher personnel costs, along with rise in lab supplies and consulting expenses. Selling, general and administrative expenses escalated 47% to $33.8 million.

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

Moreover, Intrexon has been very active on striking new ECCs and expanding its partnership with the existing ones. In Sep 2016, the company entered into an ECC with two startup companies – Genten Therapeutics, Inc. and CRS Bio, Inc.

Intrexon is also developing several candidates in partnership with other companies.

Meanwhile, the company is working with both governmental and non-governmental organizations for the potential use of Oxitec's OX513A to reduce or eradicate populations of the Aedes aegypti mosquito, the primary vector for dengue, chikungunya and the Zika virus.

We expect investor focus to remain on further developmental updates by the company.

Intrexon is a Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the healthcare sector include Arbutus Biopharma Corp. (NASDAQ:ABUS) , Heska Corp. (NASDAQ:HSKA) and Anika Therapeutics Inc. (NASDAQ:ANIK) . Each of the stocks sports a Zacks Rank #1(Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Arbutus’ loss estimates narrowed from $2.15 to $1.80 for 2016 and from $1.96 to $1.53 for 2017 over the last 60 days. The company posted positive surprises in three of the trailing four quarters with an average beat of 59.31%.

Heska’s earnings estimates increased from $1.13 to $1.35 for 2016 and from $1.38 to $1.53 for 2017 over the last 60 days. The company posted positive surprises in all of the four trailing quarters with an average beat of 301.64%.

Anika’s earnings estimates increased from $1.96 to $2.06 for 2016 and from $2.03 to $2.09 for 2017 over the last 60 days. The company posted positive surprises in all of the four trailing quarters with an average beat of 33.14%.

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