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Why Intrexon Stock Dropped 34% in March

By Demitri Kalogeropoulos - Apr 8, 2019 at 8:28AM

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Investors weren't happy to learn about its worsening cash position.

What happened

Engineered biology specialist Intrexon ( PGEN -8.02% ) plunged 34% last month compared with a 1.8% uptick in the S&P 500, according to data provided by S&P Global Market Intelligence.

The drop left shares lower by nearly 70% in the past 12 months.

Two scientists performing biological research.

Image source: Getty Images.

So what

Intrexon announced fiscal fourth-quarter results on the last trading day of February in a report that included several unwelcome surprises for investors. For example, sales fell 44% to help spark an adjusted net loss for the period. Reported losses were much higher due to noncash charges of over $300 million.

Investors were far more concerned to see a financial warning indicating the company might not have sufficient operating cash flow to support the business over the next year. Its cash on hand totaled just $224 million at the end of 2018, while selling and administrative expenses alone were $140 million in the past year.

Now what

CEO Randal Kirk and his team believe their portfolio of intellectual property, especially the natural gas bioconversion platform, still has plenty of commercial value on the market. In early April, meanwhile, management stated that Intrexon should end 2019 with around $200 million in cash. Still, the serious questions around its ability to meet its ongoing financial obligations make this a stock only for investors with an appetite for high risk.

 

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