© 2014 Intrexon Corp. All rights reserved. 18 Appendix (continued) In addition to the reasons stated above, which are generally applicable to each of the items we exclude from our non-GAAP financial measure, we believe it is appropriate to exclude certain items for the following reasons: Interest expense may be subject to changes in interest rates which are beyond our control; Depreciation of our property and equipment and amortization of acquired identifiable intangibles can be affected by the timing and magnitude of business combinations and capital asset purchases; Stock-based compensation expense is a noncash expense and may vary significantly based on the timing, size and nature of awards granted and also because the value is determined using formulas which incorporate variables, such as market volatility; Contribution of services by shareholder is a noncash expense which we exclude in evaluating our financial and operating performance; Unrealized appreciation or depreciation in the fair value of securities which we hold in our collaborators may be significantly impacted by market volatility and other factors which are outside of our control in the short term and we intend to hold these securities over the long term; Equity in net loss of affiliate and the gain on such equity investment occurred as a result of our initial investment in AquaBounty in the fourth quarter of 2012 and the subsequent additional investment in the first quarter of 2013 which resulted in a controlling interest by us and the consolidation of the investment. We believe excluding the impact of such losses or gains on these types of strategic investments from our operating results is important to facilitate comparisons between periods; and GAAP requires us to account for our collaborations as multiple-element arrangements. As a result, we defer certain collaboration revenues because certain of our performance obligations cannot be separated and must be accounted for as one unit of accounting. The collaboration revenues that we so defer arise from upfront and milestone payments received from our collaborators, which we recognize over the future performance period even though our right to such consideration is neither contingent on the results of our future performance nor refundable in the event of nonperformance. In order to evaluate our operating performance, our 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 transaction is initially 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. We believe that adjusting for the impact of the change in deferred revenue in this manner is important since it permits us to make quarterly and annual comparisons of our ability to consummate new collaborations or to achieve significant milestones with existing collaborators. Further, we believe it is useful when evaluating our financial and operating performance, generating future operating plans and making strategic decisions about the allocation of capital. Pro forma adjusted EBITDA per share. Our calculations for pro forma adjusted EBITDA per share, basic and diluted, assumes, as of the end of the respective period, the conversion of all outstanding shares of our redeemable convertible preferred stock plus all cumulative dividends payable thereon into shares of common stock as if such conversion had occurred as of the later of (i) the beginning of the period or (ii) the issuance date of those shares. Because all of our shares of redeemable convertible preferred stock and all accrued and cumulative dividends thereon automatically converted into common shares upon the closing of our initial public offering on August 13, 2013, we believe that the inclusion of such shares on an as-converted basis results in a useful metric for our investors, analysts and others when evaluating our results on a comparable basis with other periods. While our management and board of directors believe that this non-GAAP per share metric is useful in evaluating our past adjusted EBITDA results, and may be of use to investors, analysts and others, this information should be considered supplemental in nature and is not meant as a substitute for the per share information prepared in accordance with GAAP. In addition, this non-GAAP per share metric may not be the same as non-GAAP per share metrics presented by other companies. Pro forma adjusted EBITDA per share is not a measure of financial performance under GAAP, and is not intended to represent cash flows per share from operations under GAAP and should not be used as an alternative to net income or loss per share as an indicator of operating performance or to represent cash flows from operating, investing or financing activities as a measure of liquidity. We compensate for the limitations of pro forma adjusted EBITDA per share by using it only to supplement our GAAP results to provide a more complete understanding of the factors and trends affecting our business. Pro forma adjusted EBITDA per share has its limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Continued on next slide … | 
