Intrexon Can Now Clone Your Pet
Just over a year ago, we wrote an article about a synthetic biology company, Intrexon (NYSE:XON), that had just had an IPO the month prior. Highly successful biotech entrepreneur, Randall Kirk the Chairman and Chief Executive Officer of Intrexon, has described Intrexon’s synthetic biology platform as “the best thing he’s seen as a biotech investor in 27 years”. Randall put his money where his mouth is owning just around 64% percent of Intrexon following their IPO. Since we last wrote about Intrexon, the share price is down -7% but the potential of this company continues to increase. Intrexon operates using an “Exclusive Channel Collaboration (ECC)” business model which means they provide exclusive licenses of their platform to other companies in exchange for equity and/or royalties. Intrexon has many potential revenue channels across many applications as seen in their May 2014 list of ECC partnerships:
Intrexon’s synthetic biology platform is industry agnostic, so they are targeting many broad applications such as health, energy, consumer products, environmental solutions, and even food. In the area of food, Intrexon is looking primarily to improve food yields in a variety of ways. Why is this relevant? Because at current rates of population growth and consumption, it is estimated that by 2030 we will need the equivalent of two Earths to meet annual food demand. This can only translate into higher yields. One interesting food related acquisition made recently by Intrexon is Trans Ova Genetics.
Clone Your Big Pets
With 20 locations across the U.S., Sioux County Iowa based Trans Ova Genetics was founded in 1980 to offer advanced reproductive technologies to help breeders multiply the success of their elite cattle. Since then, Trans Ova has become the premier embryo transfer and in-vitro fertilization company for cattle in the United States. Superior genetics for breeding stock are big business. Cows with superior characteristic such as milk production, beef quality, longevity, and health, are so highly valued that they can cost as much as $1 million per cow. Trans Ova also sells cow semen that is gender specific, with up to 90 percent accuracy for producing females, and approximately 88% accuracy when producing males.
Clone Your Small Pets
In 2013, Trans Ova realized revenues of $63 million, almost 3X Intrexon’s 2013 revenues of $23 million. Trans Ova was also profitable in 2013 with net income of $4.2 million in 2013. In March of last year Trans Ova acquired Viagen, a company that provides cloning services for horses, cattle, pigs, goats, sheep, and deer. You can even request that they clone your pet.
Trans Ova Genetics and Intrexon
Rather than engage in an ECC with Trans Ova, Intrexon (NYSE:XON) outright acquired them for consideration of $113 million (30% shares, 70% cash). Intrexon plans to “build upon Trans Ova’s current platform with new capabilities to allow for even higher levels of delivered value to dairy and beef cattle producers”. Why didn’t Intrexon engage in an ECC with Trans Ova? Maybe they feared that Trans Ova could be an acquisition target or that they needed more control to execute on their vision. Either way, it will be interesting to see what synergies can be created with this latest acquisition by Intrexon (NYSE:XON) and more so, what future acquisitions and ECCs they execute on as they continue to expand their synthetic biology platform.
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