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IPO Report: Intrexon (XON)

By  +Follow August 7, 2013 11:03AM
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Nine other IPOs were scheduled for the week of August 5. The full IPO calendar can be found at IPOpremium.

Intrexon ($XON) is based in Germantown, MD.  XON scheduled a $124 million IPO with a market capitalization of $1.4 billion at a price range mid-point of $15, for Thursday, August 8, 2013.

The price range was set in theS-1 filed July 29, 2013.  The manager and joint manager are J.P. Morgan & Barclays.  The co-managers are Griffin Securities & Mizuho Securities

Summary

XON believes it is a leader in the field of synthetic biology, an emerging and rapidly evolving discipline that applies engineering principles to biological systems.

Q1 '13 $4 million in revenue with a $36 million loss.

One person owns 71%, apparently no venture capitalists, and no collaborators are investors. No patents, yet.

XON is bringing its technology to the market through collaborations, of which there are currently nine. Two are private companies and seven are public. The only large collaborator is Elanco, the animal health division of Eli Lilly and Company (LLY) , $57 billion market capitalization.

The rest are mostly micro cap companies, two of which have contributed stock to XON in return for the technology.

XON has an accumulated deficit of $363 million, and has raised $559 million to-date. Not entirely clear where that $559 million came from.

Valuation

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing Q1 '13

Cap (mm)

Sls

Erngs

BkVlue

TanBV

in IPO

Intrexon ($XON)

$1,410

88.1

-9.8

4.3

5.2

9%

Glossary

Only 9% is being offered on the IPO, a surprisingly small amount for a company that lost $36 million in Q1 '13. XON is IPO'ing at 4.3 times book, which seems reasonable

Conclusion

The rating is buy because if the technology is for real then XON could be a big stock. $559 million has been invested in the past several years, which is an indication some investors have done their due diligence, and 4.3 times book value is in range for this kind of company.

To put the conclusions and observations in context, the following is reorganized, edited, and summarized from the full S-1 referenced above:

Business

XON believes it is a leader in the field of synthetic biology, an emerging and rapidly evolving discipline that applies engineering principles to biological systems.

Synthetic biology aims to engineer gene-based programs or codes to modify cellular function to achieve a desired biological outcome. For example, applications may include the replacement of a defective protein with a functional protein to treat a broad range of human and animal disease states, or the production of multiple proteins through the regulation of several genes in a cell to produce petrochemicals.
Wikipedia.

Using proprietary and complementary technologies, XON designs, builds and regulates gene programs, which are DNA sequences that consist of key genetic components.

A single gene program or a complex, multi-genic program are fabricated and stored within a DNA vector. Vectors are segments of DNA used as a vehicle to transmit genetic information.

DNA vectors can, in turn, be introduced into cells in order to generate a simple or complex cellular system, which are the basic and complex cellular activities that take place within a cell and the interaction of those systems in the greater cellular environment.

It is these genetically modified cell systems that can be used to produce proteins, produce small molecules, or serve as cell-based products, which enable the development of new and improved products and manufacturing processes across a variety of end markets, including healthcare, food, energy and environmental sciences.

Intrexon's synthetic biology capabilities include the ability to precisely control the amount, location and modification of biological molecules to control the function and output of living cells and optimize for desired results at an industrial scale.

Exclusive Channel Collaborations (ECCs)

XON provides expertise in the engineering, creation and modification of gene programs and cellular systems, and collaborators are responsible for providing market and product development expertise, as well as regulatory, sales and marketing capabilities.

Generally, the collaborators compensate XON through payment of technology access fees, royalties, milestones and reimbursement of certain costs.

Nine ECC agreements

XON began entering into ECCs in 2011 and are currently party to nine such agreements.

Under these ECCs, XON is developing products in the fields of healthcare and food. In healthcare, ECCs include programs in oncology, anti-infectives, antibiotics and tissue repair.

In food, XON is working to increase the productivity and nutritional value of salmon and other fish. XON is are also working to establish ECCs in the areas of energy and environmental sciences.

Seven ECC companies are public

Except for Elanco (Eli Lilly division) the companies are all micro caps. The largest market cap is ZIOP, with a market cap of $249 million.

If the technology is to be worth $1.4 billion XON's IPO, then XON should have larger, better known collaborators receiving exclusives.

ZIOPHARM Oncology

Effective January 6, 2011, XON entered into an ECC with ZIOPHARM Oncology, Inc. (ZIOP) , or ZIOPHARM, $249 million market capitalization.

Elanco

Effective November 28, 2011, XON entered into an ECC with Elanco, the animal health division of Eli Lilly and Company (LLY) , $57 billion market capitalization.

Fibrocell

Effective October 5, 2012, we entered into an ECC with Fibrocell Science, Inc. (FCSC) , $130 market capitalization.

Oragenics

Effective June 5, 2012, XON entered into an ECC with Oragenics, Inc. (OGEN) , $86 million market capitalization.

Synthetic Biologics

Effective August 6, 2012, XON entered into an ECC with Synthetic Biologics, Inc. (SYN) , $68 million market cap.

AquaBounty

AquaBounty Technologies, Inc. ($ABTX), $45 million market cap. XON also owns 54% of ABTX, as of Mach 15, 2013.

AmpliPhi

Effective March 29, 2013, XON entered into an ECC with AmpliPhi BioSciences Corp. (APHB) , $11 million market cap. XON received 24 million shares as an upfront access fee.

Soligenix

Effective April 27, 2013, XON entered into an ECC with Soligenix, Inc. ($SNGX), $20 million market cap. XON received 1 million shares as an upfront technology access fee.

XON also entered into agreements with two private companies

Markets

Synthetic biology has applicability across many diverse end markets.

Healthcare

  Therapeutics. Both in human health and animal health, synthetic biology has the potential to enable the development of highly complex biological molecules as well as the ability to regulate complex biological processes, with advantages as compared to traditional therapeutics, both in vivo and ex vivo. It may be possible, for example, to create highly targeted precision therapeutics with few off-target or adverse effects.

  Bioproduction Synthetic biology allows new biologically based manufacturing techniques that have the potential to significantly lower the cost of goods for highly complex biological molecules, including both existing and novel biopharmaceuticals as well as small molecules.

  Diagnostics By utilizing the sensing and reporting capabilities of cells and specific cellular mechanisms, it may be possible to create highly sensitive diagnostics, to report on a patient's health and provide advance warning of changes in the state of the patient's health.

Food

  Food animals By applying its suite of technologies, XON believes it can more rapidly develop livestock with commercially valuable attributes such as enhanced nutritional content, resistance to disease and increased growth efficiency.

  Agriculture XON believes that it can use gene expression and gene regulation technologies to provide highly complex traits related to enhanced nutritional content, product quality and disease resistance.

Energy and chemicals

  Energy XON has already achieved as proof of concept the conversion by engineered bacteria of methane to isobutanol, which is an alternative alcohol-based fuel.

  Chemicals Economically viable alternatives to carbon feed stocks are critical to the future and sustainability of the chemical industry.

Environmental sciences

  Biosensors The biosensor global market is forecasted to exceed $12 billion by 2016 and opportunities exist to capture a portion of this market through design and construction of unique biosensors that leverage XON's suite of proprietary and complementary technologies.

  Bioremediation The global market for microbial and associated bioremediation products is forecasted to reach over $1 billion by 2016. Industrial sources of soil and groundwater contamination present major environmental, policy and health issues because of the adverse effects of contaminants on humans and ecosystems. Bioremediation, which XON believes its technologies have the potential to enable, can provide an environmentally friendly, socially acceptable, effective and economically viable solution.

  Specialty Processes XON believes its suite of proprietary and complementary technologies has the potential to be used to introduce effective solutions for applications such as activated microbial filtration, waterborne pathogen elimination, and de-nitrification of waste and surface water.

XON's approch

The essence of XON's approach is to apply synthetic biology by using an iterative process that is rapid, automated and highly reproducible, in which we:

Design genes of interest and gene programs utilizing knowledge of cellular pathways and protein function;

Build biological molecules, gene programs and their variants to optimize performance of the biological system;

Test gene programs by inserting them into cellular systems and comparing the result(s) to the intended effects; and

Learn by utilizing information gained in our iterative processes to create better DNA vectors and gene programs using a more informed and efficient process to achieve improved outcomes.

As a result of its approach, XON has developed extensive knowledge about many classes of DNA components and the rules governing their expression and activity. XON has also assembled an inventory of these DNA components that XON can use to rationally construct unique vectors rapidly and with predictable outcomes. The knowledge embedded in XON's DNA database allows XON to create single gene and highly complex multigenic gene programs (an individual gene program containing multiple genes).

Integrated technologies

To support the design-build-test-learn approach, XON developed a unique suite of technologies. These technologies are complementary in nature and share the following key characteristics:

Platform neutral - outcome oriented.

Knowledge driven.

Rationally designed. XON's knowledge of biological systems and components allows XON to design, build and select gene programs and predict the probable outcome of these programs.

Capable of complexity. XON's technologies enable the design and precise control of complex biological molecules and multigenic gene programs.

Industrial scale. XON uses engineering principles and automation to enable products based on synthetic biology that are commercially viable.

Intellectual property

XON seeks patent protection for its platform technologies.

Competition

XON does not believe that it has any direct competitors who provide similar technologies which fully enable the commercialization of products developed using synthetic biology across a broad spectrum of biologically based industries. As a result, XON believes its competition is more indirect and general in nature, and falls into three broad categories:

• Synthetic biology service providers
There are companies that have competing technologies for individual pieces of XONs suite of complementary technologies. XON believes the following companies engage in the manufacture of DNA componentry: DNA 2.0, Inc., Blue Heron Biotech, LLC and Life Technologies Corporation. Another portion of our proprietary technology includes development of fully human monoclonal antibodies.

XON's technology utilizes advanced methods of stimulating antibody production in naïve human B-cells in vitro and specifically selecting those cells which produce antibodies that can bind a desired target, such as human toxins, tumor cells or microbial pathogens.

XON believes the following companies engage in the manufacture of human or human-like monoclonal antibodies: AbD SeroTec (a Bio-Rad Laboratories, Inc. company), Alexion Pharmaceuticals, Inc., XOMA Corporation, Genmab US, Inc., MorphoSys AG, NovImmune SA, Société Des Systèmes Biologiques, or BIOTEM, Adimab, LLC, ProMab Biotechnologies, Inc., Abpro, Inc., AIIM Therapeutics and Open Monoclonal Technology, Inc.

• Industrial companies who may develop their own approach to synthetic biology. Large biopharmaceutical companies, energy companies, and ag-bio companies may pursue a proprietary synthetic biology strategy.

• Industrial companies who may develop competing products using other technologies. Large biopharmaceutical companies pursue other technologies for drug development, and large ag-bio companies pursue other technologies for the development of genetically modified crops.

5% stockholder pre-IPO

Randal J. Kirk, 71%

Use of proceeds

XON expects to net $113.5 million from its IPO.

Proceeds are allocated to further business development efforts to consummate new collaboration agreements with new companies across various commercial divisions, and for working capital and other general corporate purposes.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for XON
HotKeyTrading
22 Oct 14 13:00:05
Upgraded: $AVIV $UAN $FRO $SDT $CPT $BRKR $INTU $NLNK $CUDA $SSI $ARO $PDM $FICO $EXEL $XON http://t.co/XQITF0lRKD #finance #nasdaq #spy
Media Sentiment
22 Oct 14 12:05:28
$XON received a new alert. Find out why at http://t.co/5udYd0Ofs6 #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 533
Analyst Ratings
22 Oct 14 12:03:25
Intrexon Corp upgraded by Zacks to neutral. $19.20 PT. http://t.co/YcOE32RNwc $XON #XON
Ticker Report
22 Oct 14 11:58:13
Intrexon Corp Upgraded to Neutral by Zacks $XON http://t.co/HxmvFJdczl
US Banking News
22 Oct 14 11:57:06
Intrexon Corp Upgraded to “Neutral” at Zacks $XON http://t.co/x29ugfxKZr
US Consumer News
22 Oct 14 11:50:18
Intrexon Corp upgraded by Zacks to neutral. $19.20 PT. http://t.co/P8jOfiPlFi $XON #XON
WKRB News
22 Oct 14 11:44:34
Intrexon Corp Upgraded at Zacks $XON http://t.co/m35otL2hCm
Stephen McLean
22 Oct 14 08:44:31
@jonfortt @AceMetier @CNBC ok I get that but when $XON was in that spot the feed wasn't a constant stream of $XON products & new highs, ect
Me Likeitalot
22 Oct 14 07:53:29
$XON Looking better of late - maybe due to Loeb not subtracting from position? Did not hear anything for sure; still, price is quite low.
Daily Contracts
22 Oct 14 07:39:01
Real-Time feed of company contracts, original agreements and executive updates from Intrexon Corp $XON http://t.co/g1aFcFmig0
biotech 2050
21 Oct 14 07:54:50
@Melikeitalot thinking aloud, if $ZIOP is neg. a deal, and $ZIOP and $XON have same directors with inside info, can $XON buy $ZIOP shares??
biotech 2050
21 Oct 14 07:31:51
@Melikeitalot see page 35 of the June reporting by $XON (mid page) http://t.co/WMReYCxp4B
biotech 2050
21 Oct 14 07:30:27
@Melikeitalot in Nov, $XON will have to make the quarterely reporting and would have to disclose this info in the notes to the financials
Me Likeitalot
21 Oct 14 07:28:07
@Biotech2050 $ZIOP $XON Sure, but they would not tell us right away if so.
biotech 2050
21 Oct 14 07:20:32
@Melikeitalot what i really want to know is if $XON bought any of the 19M$ share commitment in $ZIOP at these low prices; and if not, why
biotech 2050
21 Oct 14 07:13:22
@Melikeitalot with $ZIOP $XON $TGTX $HALO one must have patience, stamina, perseverance, persistance, & self persuasion to hold on & relax:)
biotech 2050
21 Oct 14 02:47:13
@TravisMKnight @DinoPerlman I think $ziop is going to be slowly taken back over by $xon and Third Security - I am long on both
Gotham City Capital
21 Oct 14 02:47:12
@Biotech2050 @DinoPerlman $XON Chart Pretty Nice..
Gotham City Capital
21 Oct 14 02:46:38
$XON Forming Bullish Consolidation Above TL Support. Watching. http://t.co/bDWCWHnhuI
biotech 2050
21 Oct 14 02:46:00
@TravisMKnight @DinoPerlman third Security owns 17.8% of $ziop and $xon owns 16.4% + commitment to buy $19m worth of shares = 7.7m at CMP
biotech 2050
20 Oct 14 21:04:38
RT @809trader: @cornel6m @BioWino $XON commitment to buy $ziop shares on page 35 http://t.co/KxP1zzy3Mg
nixon786
20 Oct 14 16:46:06
RT @Biotech2050: @Biotech2050 $xon to buy 19M$ shares of $ziop still to be executed
Me Likeitalot
20 Oct 14 15:38:46
RT @809trader: @cornel6m @BioWino $XON commitment to buy $ziop shares on page 35 http://t.co/KxP1zzy3Mg
Americanbulls
20 Oct 14 14:59:11
$XON may go up 22% if the bull pattern is confirmed. Chk confirmation [50%] @ http://t.co/t0CCurenQC. Buy level:18.3650.
809trader
20 Oct 14 14:00:50
@cornel6m @BioWino $XON commitment to buy $ziop shares on page 35 http://t.co/KxP1zzy3Mg
biotech 2050
20 Oct 14 13:52:37
@Biotech2050 $xon to buy 19M$ shares of $ziop still to be executed
biotech 2050
20 Oct 14 13:50:43
$XON commitment to buy $ziop shares on page 35 http://t.co/WMReYCxp4B
809trader
20 Oct 14 12:51:36
@cornel6m @BioWino $xon said that they will buy $19 million of $ziop, maybe they did...who knows
luckypete
20 Oct 14 10:55:45
@adatherton It is very Complex $IBM and $XON represent almost 19% of Giant ETF for DJI $UDOW, Funds required to keep NAV up to 80% in stocks
GLOBAL NEWS DEPOT
20 Oct 14 10:34:39
RT @RatingsNetwork: Want the latest upgrades & downgrades for $CTRL $IMPR $REXR $XON $FI? Checkout ARN Daily http://t.co/nSJuDsYidj
Analyst Ratings
20 Oct 14 10:33:16
Want the latest upgrades & downgrades for $CTRL $IMPR $REXR $XON $FI? Checkout ARN Daily http://t.co/nSJuDsYidj
Me Likeitalot
20 Oct 14 10:17:53
@Biotech2050 $XON $ZIOP Agreed, maybe somebody needs to lay off of the wacky weed or something, and do something.
Me Likeitalot
20 Oct 14 10:17:06
@Biotech2050 $ZIOP $XON Today looks like a good day to buy! Or just sell the company to someone that would appreciate it more!....lol.
biotech 2050
20 Oct 14 10:15:50
@Melikeitalot if $XON does not buy at these prices, then something is not making sense
biotech 2050
20 Oct 14 10:15:00
@Melikeitalot $XON has a commitment to buy $19M worth of $ZIOP shares which at these prices equals 7.75M shares (7.7% of float)
Me Likeitalot
20 Oct 14 10:12:24
$ZIOP Much room for Third Security to increase their holdings (now $72 mill worth) as compared to some $1.5 Bill worth owned of $XON (<wow!)
Gotham City Capital
19 Oct 14 18:43:27
RT @Biotech2050: @TravisMKnight keep your eye on $CELG 10/23 & GED-301 $GILD 10/28 $NPSP 10/24 hopefuly #NATPARA #PDUFA $HALO $ZIOP $XON $T…
biotech 2050
19 Oct 14 03:47:29
@TravisMKnight keep your eye on $CELG 10/23 & GED-301 $GILD 10/28 $NPSP 10/24 hopefuly #NATPARA #PDUFA $HALO $ZIOP $XON $TGTX @UEGMedia
biotech 2050
19 Oct 14 03:41:42
Spectacular yacht race - Middle Sea Rolex 2014 Long $CELG $GILD $HALO $NPSP $DYAX $PTX $ZIOP $XON $TGTX $CRMD Enjoy http://t.co/XfdMetq82t
Me Likeitalot
17 Oct 14 11:08:25
$XON Down a buck fifty in 2 days as no seriously bullish long is selling....oh yeah, it must be options expiration....lol. Low volume too.
Me Likeitalot
17 Oct 14 09:13:01
$ZIOP Looney Tunes ~ crazy people taking penny profits on a cheap stock....lol. $XON waiting for Intrexon to rocket higher too in no time
Me Likeitalot
17 Oct 14 09:10:50
RT @TravisMKnight: @Biotech2050 I gotta take a look at $XON too one of these days.. Lotta smart ppl like this company..
Gotham City Capital
17 Oct 14 01:46:56
@Biotech2050 I gotta take a look at $XON too one of these days.. Lotta smart ppl like this company..
biotech 2050
17 Oct 14 01:45:37
@TravisMKnight $gild $halo $ptx $xon $ziop $tgtx $crmd $dyax
equities.com
16 Oct 14 23:07:31
Intrexon (XON) Drops 5.42% on October 16 $XON http://t.co/RBTlubyitI
Colin Macleod
16 Oct 14 19:49:05
4 Nice Looking Bearish Harami Patterns to watch for intra-day short plays Friday http://t.co/QIGDckSnaM $MNKD $FNV $MDXC $XON
Me Likeitalot
16 Oct 14 11:34:12
$XON Sellers already? Still huge gap to the upside, and wow $ZIOP could be one easy triple or higher in no time, if all pans out as expected
equities.com
16 Oct 14 11:25:54
Mitigating Risks in Biotechs $MKGAY $teva $BIIB $SYN $ASTM $dndn $FCSC $XON $SNGX $RXII $unis http://t.co/xhUKpchcWB
Daily Contracts
16 Oct 14 07:47:01
Real-Time feed of company contracts, original agreements and executive updates from Intrexon Corp $XON http://t.co/g1aFcFmig0
Kevin Dubuc
16 Oct 14 07:06:00
.@ReformedBroker somewhere in Omaha, Buffett is salivating w/ $55bn and $XON & $SCTY tanking. Time to go elephant hunting
				
				
By  +Follow August 7, 2013 11:03AM
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