A Strong Synthetic Biology IPO by Intrexon
In an earlier article titled “What is synthetic biology” we discussed the promising future of a disruptive technology that could potentially revolutionize life as we know it. One company that claims to be a leader in synthetic biology, Intrexon, just had an IPO last month.
With a net worth of 2.4 billion from the past sales of his companies New River Pharmaceuticals and Clinical Data, Randall Kirk is the Chairman and Chief Executive Officer of Intrexon, a company he describes as the best thing he’s seen as a biotech investor in 27 years. Randall has put his money where his mouth is now owning 100 million shares or around 64% percent of the company following the IPO. According to Crunchbase the Intrexon was founded in 1998 with $437 million in backing so far from Mr. Kirk himself, Newva Capital Partners, New River Management, Third Security, and other undisclosed investors. Mr Kirk also happens to be the Senior Managing Director and CEO of Third Security. Intrexon currently has 148 employees.
In early August the Company offered around 1o million shares for $16 dollars apiece in their IPO. At the end of the first trading day the share price closed at $24.73 up 54%. The share price briefly traded at above $30 before settling to just under $22 per share where it sits today giving the company a current market cap of 2.04 billion:
While Intrexon has been classified as a biotech IPO, they actually stated in May 2013 their intent to diversify across 4 sectors with their technology platform; Health, Food, Energy, and Environment. The S-1 states they are currently developing products in the fields of healthcare and food.
The company’s platform contains 4 components:
- The ULTRAVECTOR Platform
Dynamic library of modular components allowing for customizable, complex transgene assembly
- Antibody Discovery
Allows for antigen targeting using “fully human” monoclonal and polyclonal antibodies
- Cell Identification and Purification
Ability to specifically target and work with cells of interest
- Cell System Informatics
Fuels faster design of new gene targets or product pathways
The Company’s business model is to establish exclusive channel collaborations (ECCs) with companies across their four target sectors so that their technologies can be commercialized using the industry expertise, capital, and sales and marketing resources of their collaboration partners. Nearly all of the company’s current revenues are “collaboration revenues” which are driven by their 9 established ECCs, 5 public and 4 private. These ECCs and their respective focuses are as follows:
- Aquabounty: Startup which is developing a salmon with a single molecular modification that can grow twice as fast
- Elanco: Animal health division of Eli Lily which has licensed the company’s technology for drug candidates
- Oragenics (NYSEMKT:OGEN): Developing lantibiotics for the treatment of infectious diseases
- Fibrocell (NYSEMKT:FCSC): Focused on developing skin and tissue rejuvenation products
- AmpliPhi: Developing bacteriophage-based antibacterial therapies to treat drug resistant infections
- Genopaver: Developing products in the field of the fermentative production of alkaloids
- ZIOPHARM Oncology (NASDAQ:ZIOP): Developing DNA-targeted cancer treatments with at least one product in Phase 2 clinical trials
- Synthetic Biologics (NYSEMKT:SYN): In preclinical development with a series of monoclonal anitbody therapies for treatment of infectious diseases
- Soligenix (OTCBB:SNGX): Producing new treatments for spinal muscular atrophy
This “ECC business model” is similar to the “intel inside’ approach that allows the company to diversify their revenue streams, to target multiple sectors and applications effectively without losing their core focus, and to significantly reduce the capital required to commercialize products.
2012 revenues were $13.7 million with 99% of revenues coming from ECCs a breakdown of which can be seen below (in thousands):
Losses for 2012 were just over 103 million bringing the Company’s accumulated deficit to around 363 million. Total operating expenses for 2012 were around $89 million. According to the S-1, the adjusted pro forma cash on hand was around 256 million as of March 31 2013.
For a 2 billion dollar market cap company with a deficit of $363 million and 2012 revenues of only $13.7 million, investors have placed a great deal of confidence in Mr. Kirk’s ability to turn Intrexon into another great success story.
Are you paying too much in transaction fees to your broker? Check out a brokerage firm called Zacks Trade that's offering $1 trades for U.S. stocks and options until 2020. After that, you'll pay just $3 a trade or a penny a share, whichever is greater. It's one of the cheapest brokers out there and you can also trade stocks on foreign stock exchanges. Trade US stocks and options for as low as $1 per order until 2020.