Intrexon’s Genetically Modified Insect Acquisition

We’ve written quite a few articles about synthetic biology stock Intrexon (NYSE:XON) which has performed strongly since their IPO returning +68% to date. Recently though, XON hasn’t performed well with the stock now down -25% in the past five days and down -15% in yesterday’s trading session on the back of their first-half 2015 results. While the second-quarter results had lots of interesting updates, another announcement made on the same day was even more interesting. XON acquired a company called Oxitec for a total consideration of $160 million.

About Oxitec

Click for company website

Founded in 2002, British company Oxitec has taken in $36.6 million in funding to develop technology from the University of Oxford which is being used to create genetically modified insects. We’ve all heard about GMO or genetically modified foods that generate a great deal of controversy from those who don’t think we should be toying with genetically modifying the food we put in our bodies. Scientists at Oxitec decided that instead of genetically modifying the crops, why not genetically modify the insects instead?

The potential market Oxitec is trying to target is a massive one. According to the Company, between 20% and 40% of potential food production is lost every year to insect pests despite the fact that more than US$8 billion is spent annually on pesticides. Oxitec can, therefore, increase food yields from 20-40% and at the same time save farmers up to $8 billion.

The approach is a very simple one. Through genetic modification, Oxitec creates ‘sterile’ males of the target species. In this way, the population of the target naturally decreases and once the genetically modified males die, no evidence at all of what has happened is left behind. Let’s take for example the diamondback moth, one of the world’s significant agricultural pests, costing farmers billions of dollars every year. Oxitec created a genetically modified male moth. When released to mate with female moths of their own species, these genetically engineered male moths pass on a ‘self-limiting’ gene that prevents the female offspring from reaching adulthood. This reduces the number of reproductive females and the pest population in the release area shrinks.

In addition to the diamondback moth, Oxitec has a pipeline of other insects that are in various stages of development:

Oxitec_Pipeline

You will also see a “public health” category in the above pipeline. The mosquito is one insect that causes a great deal of public health problems. Malaria, the most widespread mosquito-borne disease, affects 350-500 million people each year with dengue fever infecting between 50-100 million. Even people in developed markets are not immune. If you’ve traveled to exotic destinations, then you would have experienced the joy of taking anti-malerials, some of which have the side effect of “psychosis”. Oxitec’s genetically modified sterile male mosquitoes can help control the disease-bearing populations. The Company can easily identify their genetically modified mosquitoes, since all Oxitec insects and their offspring contain a fluorescent protein that can be seen using a special light.

Conclusion

If we step back for a second and think about genetically modifying insects to solve large scale problems that humankind faces, it really sounds like something out of a science fiction novel. While this will no doubt generate controversy about whether or not we should be dabbling in such a powerful technology, the fact is that Intrexon (NYSE:XON) is doing some truly amazing things with synthetic biology.

Here at Nanalyze, we write about tech stocks a lot, but most of our money goes into a dividend growth strategy. Our 30 dividend stocks provide an income which increases every year. Find out how to build your own growing income streams with dividend growth stocks - Quantigence - A Dividend Growth Investing Strategy - freely available to Nanalyze Premium subscribers.

3 thoughts on “Intrexon’s Genetically Modified Insect Acquisition

  1. Hi. I found it very interesting that Google (soon Alphabet ) rolled out its PR machine a few days after the Intrexon aquisition touting it’s entry into the space. Coincidence? I was pondering if perhaps Google had had its eye on Oxitec.

    1. Hi Bruce! Thank you for the comment. Which space did Google announce their entry into which are you referring to in your comment?

Leave a Reply

Your email address will not be published. Required fields are marked *

There’s Plenty of Room at the Bottom

And plenty of insights in our awesome newsletter.

13 Shares
Tweet7
Share6
Share
Reddit
Buffer