Intrexon Acquires Therapeutic Protein Biofactories

Synthetic biology, while perhaps a bit controversial, is truly an exciting field. In past articles, we’ve highlighted Intrexon (NYSE:XON), a synthetic biology IPO which debuted in 2013 led by successful biotech entrepreneur Randal Kirk. Since that IPO, Intrexon has been doing some interesting things including the acquisition of Trans Ova Genetics which may well lead to the ability for Intrexon to clone your pet. Perhaps of most interest to Intrexon investors is the recent rise in shares which are now hitting new all-time highs and are up +42% year-to-date. Late last week, Intrexon announced another acquisition by acquiring ActoGeniX for $60 million, 30 million in shares and $30 million in cash. ActoGeniX is a Belgian biotech startup with a very novel drug delivery technology that also employs synthetic biology.

About ActoGeniX

ActoGeniX is a Belgium based biotech which was founded in 2006. This 22 employee company has taken in $52 million so far from quite a few European venture capital firms. The Company’s large patent estate encompasses 147 granted patents and 56 pending patent applications.

What is a “Therapeutic Protein Biofactory”?

One challenge we face as retail investors is that of trying to understand disruptive technologies, especially those in the biotech space, in layman’s terms. While the ActoGeniX technology is extremely sophisticated, it can also be quite simply explained. The TopAct™ technology platform developed by ActoGeniX enables the engineering of food-grade bacteria into efficient production and delivery units for therapeutic proteins and peptides. These bacteria-based drug delivery systems are called ActoBiotics™.

What are Therapeutic Proteins?

Therapeutic proteins are proteins that are engineered in the laboratory for pharmaceutical use. Insulin was the first therapeutic protein to be introduced to treat diabetes in the 1920s. Protein-based therapeutics are highly successful with more than 100 genuine (and about the same number of modified) therapeutic proteins approved for clinical use in the European Union and the USA with 2010 sales of $108 billion dollars.

So How Does the TopAct™ Technology Platform Work?

The first step involves using sophisticated genetic techniques to insert a gene, encoding the desired therapeutic protein (or peptide), into the chromosome of a Lactococcus bacterium. Lactococcus bacteria are commonly used in the dairy industry to manufacture fermented dairy products such as cheeses. The genetic modifications made by ActoGeniX also delete a gene essential for survival of the bacterium so that it cannot reproduce irresponsibly. You now have a bacterium that can produce one or more therapeutic proteins and can then be freeze-dried and milled as a dry powder. Pop the dried powder into a capsule, and you now have a new ActoBiotic!

Once consumed by a patient, the ActoBiotic capsule dissolves in the intestinal tract, where it then releases the genetically modified Lactococcus bacteria which becomes metabolically active and starts secreting the therapeutic protein(s). These  ActoBiotics™ can be manufactured by a straightforward production process which is already in use in the food industry. These cheap to produce oral capsules result in greater patient compliance and reduced treatment costs. ActoGenix already has a pipeline of applications for their unique drug delivery system in various stages of clinical development:

ActoGenix_Pipeline

Conclusion

From an investor’s perspective, one of the most appealing characteristics of Intrexon has to be their business model. Through “exclusive channel collaborations (ECCs)” with companies across their four target sectors, Intrexon can commercialize their synthetic biology technologies using the industry expertise, capital, and sales and marketing resources of their collaboration partners. While in this case, Intrexon chose to acquire, the fact that they are diversified across sectors, partners, and revenue channels make this a biotech that is not likely to surprise or disappoint investors with any single unexpected event. We like the business model, the leadership, the revenue growth and most of all the disruptive nature of synthetic biology. We’ll continue to watch Intrexon’s (NYSE:XON) progress and share price appreciation very closely.

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