Intrexon's shares have been beaten up following its disclosure that auditors are including language regarding its ability to remain a going concern in its annual 10-K filing with the Securities and Exchange Commission.
The doubt regarding Intrexon's future stems from decelerating revenue because of a drop-off in collaboration deals and an uptick in expenses. In 2018, Intrexon's revenue fell 31% year over year to $160.6 million. Its operating expenses were $429 million after adjusting for one-time expenses associated with in-process R&D reacquired from former collaboration partners.
Management says it's exploring options to bolster the $224 million in cash and investments on its balance sheet exiting December, and at least one high-profile investor thinks the company will find financing. On Monday, Bill Miller, founder of Miller Value Partners, a firm managing $2 billion, tweeted:
But I think the cause of the big decline, the "going concern" audit warn, will be cured in the next 6 months. XON has multiple sources of funding in my opinion.-- Bill Miller (@B3_MillerValue) March 5, 2019
Miller has been a supporter of Intrexon for a while, so his support shouldn't be surprising. Nevertheless, it's encouraging that he thinks the thesis is intact and that a pathway exists for the company to solidify its financial position.
His optimism may have sparked short-sellers to cover at least some of their bet against the company. The latest data shows roughly 45% of Intrexon's share float is held short, representing about 25 days of average daily trading volume. Given shares had lost about 50% of their value since late February, it's not a stretch to think at least some bears are booking their gain.
Nevertheless, a big question remains if management can sell off assets and cut expenses fast enough to reward investors. The jury is still out on that front. As Miller also tweeted, "So far I've been completely wrong" about the company.