Precigen Inc. (PGEN)

[celtic]

Updated Griffin report - post earnings
Food and Healthcare Likely to Carry 2015
Several collaborators will advance human therapeutics into
clinical trials this year. Overall, Intrexon figures that about 10
products developed with its assistance will be in testing. Ziopharm
alone will likely account for at least half of them and two other
companies, Fibrocell Science and Synthetic Biologics, will have
one each. Another therapy that was mentioned was developed as
part of the Sun Pharma joint venture in ophthalmology. Recently
acquired ActoGenix has two clinical-stage programs involving
genetically modified bacteria for oral mucositis and inflammatory
bowel disease, which will probably be partnered soon.
A pending acquisition will expand Intrexon’s presence in
the food sector… The Company has agreed to pay $41 million
for Okanagan Specialty Fruits, including $10 million in cash and
the remainder in XON stock. The deal, which should close by
June, will bring two approved, non-browning apple varieties into
the product line and add three similar genetically modified fruit
programs to the R&D pipeline. Note that we do not expect
revenues from Okanagan until 2017.
…while Trans Ova should drive revenues this year. This
subsidiary, which was acquired last August, will likely generate
close to $100 million in revenue from its dairy and cattle
embryo sales and in vitro fertilization services. Demand, which
is seasonally strongest in the June quarter, is growing at a rapid
pace.
Intrexon closed 2014 on a pleasant note. Fourth-quarter
revenues benefited from $15.1 million in sales and service
revenues from Trans Ova in its first full quarter with the
Company. The other major contributor was $13 million in
collaboration revenues. Operating expenses were generally in
line with expectations. The profit margin on product and service
revenues, which were generated largely by Trans Ova, amounted
to 29% during the seasonally weak December interim. R&D costs
increased 41%, to $59 million, while selling and administrative
expenses jumped 61%, to $64 million, due largely to acquisitions.
Overall, the operating loss increased modestly from year-toyear,
to $19 million. More than offsetting that was unrealized
appreciation in stocks of the Company’s collaborators, which
resulted in a $0.19-a-share profit in the quarter.
We are maintaining our BUY recommendation on Intrexon
shares and our $65 price target.

http://www.griffinsecurities.com/viewpdf.php?docid=959