Executives: Christopher Basta - Vice President, Investor Relations Randal Kirk - Chairman and Chief Executive Officer Joel Liffmann - Senior Vice President, Finance

Analysts: Tom Shrader - Stifel Jason Butler - JMP Tejas Savant - JPMorgan Robert Breza - Wunderlich Andrew D'Silva - Merriman Capital Keith Markey - Griffin Securities. Eric Criscuolo - Mizuho Derik de Bruin - Bank of America

Operator: Good afternoon, and welcome to the Intrexon first quarter 2016 earnings conference call. [Operator Instructions] I would now like to turn the conference over to Christopher Basta. Please go ahead.

Christopher Basta: Thank you, operator. Good afternoon. I am Chris Basta, Vice President of Investor Relations for Intrexon Corporation. Welcome to our first quarter 2016 earnings conference call. Joining me on the call today are Mr. Randal Kirk, Chairman and Chief Executive Officer; and Mr. Joel Liffmann, Senior Vice President, Finance. During this conference call, we will make various forward-looking statements within the meaning of the Safe Harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements, with respect to revenues, earnings, performance, strategies, prospects and other aspects of Intrexon's business are based on current expectations and are subject to risks and uncertainties. A number of factors could cause actual results or outcomes to differ materially from those indicated by such forward-looking statements. Please read the Safe Harbor statement contained in the earnings press release, which was released earlier today and is also available on our website under the Investors link, as well as Intrexon's most recent SEC filings for a more complete description. The press release references and our discussions this afternoon may reference certain non-GAAP financial measures including adjusted EBITDA and adjusted EBITDA per share. Reconciliations to GAAP measures are contained in the earnings press release as well as on the Investors section on our website at www.dna.com. Now, I would like to turn the call over to Joel Liffmann, our Senior Vice President of Finance. Joel, the floor is yours.

Joel Liffmann: Thank you, Chris. Good afternoon, and thank you for joining our first quarter 2016 earnings call. We certainly appreciate the support and interest from our investors. Earlier today we issued a press release with our first quarter earnings and we filed our 10-Q with the SEC. I hope that you have had the chance to review the reported financial results. We'll go into some detail on each of the following, but I would first like to summarize our first quarter results as follows. One, we made solid progress with our existing exclusive channel collaboration and joint venture programs. Two, we added three new exclusive channel collaborations in the first quarter. Three, we acquired EnviroFlight, which is developing a potentially high growth and sustainable technology in the food sector. Four, we activated our natural gas to isobutanol pilot plant. Fifth, we had positive regulatory developments with our Oxitec subsidiary and with several of our gene therapy programs. And six, throughout all this time, we maintained our capital efficient disciplines. These developments and more, reflect the outstanding contributions for Intrexon's 700-plus employees. I'll now give a brief update on activities and developments within certain of our operating sectors and subsidiaries, beginning with health sector. Intrexon's suite of technologies is enabling a number of gene/cell therapies for our collaborators. Our targets represent a broad set of diseases, including cancer, wet age-related macular degeneration, diabetes, arthritis, rare diseases, metabolic disorders, orphan skin conditions, infectious diseases, tissue repair as well as synthetic biology mediated production of APIs. Importantly, our expanding portfolio of technologies serves as the foundation for robust pipeline of new ECC programs that we are discussing with perspective and existing partners. We will of course support significant deals as they are closed. This year is expected to be a breakout year for our health sector, from the perspective of moving programs into the clinic, in addition to the three clinical trials currently underway. In 2016, and subject to FDA approval, we continue to anticipate up to 7 INDs and clinical trial initiations, with our existing ECC partners utilizing Intrexon's technologies. The first of these programs is FCX-007, developed in conjunction with our collaborator Fibrocell Science. In April, Fibrocell received an allowance from the FDA to initiate its Phase I clinical trial in adults. This was the first gene therapy product candidate using easy to administrator, easy to grow fiberglass cells for the treatment of recessive dystrophic epidermolysis bullosa. Our team at Intrexon deployed a number of technologies to engineer Fibrocell fiberglass into cellular factories that now create functional trimeric-structured collagen VII, which patients with monogenic disease cannot produce. We advanced this much needed product for this debilitating disease into human trials in less than three years since the development work began. The second gene therapy candidate developed by Fibrocell is FCX-013, which received orphan drug designation from the FDA in April. For this program, Intrexon has engineered trans genes, using our UltraVector platform to optimize Fibrocell's fiberglass cells to produce therapeutic biologicals under the control of our proprietary RheoSwitch therapeutic system. This therapy is being developed for linear scleroderma, a chronic autoimmune disease characterized by thickening of the skin and connective tissue. Our approach is the potential to provide a controlled local treatment option for patients, mitigating adverse effects from the typical systemic therapy they currently endure. Fibrocell is advancing this gene therapy into preclinical dose-ranging studies and expect to submit an IND for FCX-013 in 2017. Additionally, during the first quarter we announced a new ECC with Fibrocell for genetically modified fibroblast to treat chronic inflammatory and degenerative joint diseases, including arthritis. Unlike our first two projects with Fibrocell, which are focused on orphan diseases, these disorders impact more than 52 million people in the U.S. alone. Oragenics, another collaborator advancing its products to the clinic, announced positive results last week from a confirmatory animal study, supporting previous findings of safety along with preliminary efficacy in a Phase I(b) clinical trial for the prevention and treatment of oral mucositis, utilizing the ActoBiotics AG013. Oragenics has initiated regulatory as well as CMC activities to further advance the AG013 program, and expect to finalize a Phase II clinical trial protocol in the near future in anticipation of meeting with the FDA. During the first quarter we also expanded the application of our ActoBiotics platform with the formation of Intrexon T1D Partners, a joint venture with a group of external investors. T1D Partners will develop ActoBiotic-based antigen-specific immunotherapy to treat type I diabetes by delivery of therapeutic proteins directly to the gut mucosal tissue through a pill. With respect to our collaborators ZIOPHARM, we continue to be excited by what we see. ZIOPHARM is on target to launch three clinical programs in 2016 in addition to the three ongoing clinical trials. By year's end, the breadth of its oncology platform will be increasingly evident, as we expect active clinical programs in controlled IL-12 gene therapy in breadth in brain cancers, natural killer or NK cells against AML, non-bio CAR T-cell therapies targeting CD-19 for leukemia and lymphomas and viral CAR T-cell therapy for myeloid malignancies. ZIOPHARM also recently announced at the American Society of Gene and Cell Therapy, that its preclinical results provides a strong scientific rationale for evaluating the combination of RheoSwitch controlled expression of IL-12 with an immune checkpoint inhibitor for glioblastoma. ZIOPHARM plans to initiate a combination study of this approach with the MD Anderson Cancer Center this year. With respect to the programs targeting myeloid malignancies in AML, ZIOPHARM has already filed one of those with the Recombinant DNA Advisory Committee, and we look to hear more from our partner on both of these programs as the year progresses. ZIOPHARM's leading effort in the non-viral cell therapy space is the Sleeping Beauty transposon-transposase system for genetically modifying T-cell with application in both CAR T and TCR cell therapies. The low cost and simple manufacturing process for this technology attracted Intrexon to this platform, and our teams are working to further develop this promising technology. The second-generation Sleeping Beauty is designed with an improved stock, expressing a CAR targeting CD19 for leukemia and lymphomas is already in the clinic. And ZIOPHARM recently disclosed at ASGCT, we have further improved the design of this engineered CAR T therapy once again. And pre-clinically the propagation of CAR T-cells after 14 days improved its anti-tumor effect and persistence. At the upcoming ASCO meeting in early June, ZIOPHARM will provide an update on its clinical trials for breast and brain cancer, utilizing Ad-RTS-IL-12. This viral vector was developed by Intrexon and utilizes our proprietary RheoSwitch technology. Ad-RTS-IL-12 is the first gene therapy to enter the clinic with a switch controlling the expression of this powerful IL-12 cytokine. IL-12 is a potent anti-cancer immunocytokine, but also carries potential for significant immune-mediated toxicities. The ability to turn IL-12 expression on and off via an orally-administered pill opens a door to its meaningful therapeutic potential. To date, over 50 patients have been treated in the clinical trials, which as reported have shown local and systemic IL-12 on target anti-cancer activity as well as top reversal of IL-12 toxic effects on immune system through removal of the activating ligand. We look forward to hearing more about the groundbreaking efforts of our collaborators ZIOPHARM with this novel approach to controlled gene therapy. Another program headed towards the clinic utilizing our RheoSwitch platform is our pioneering gene therapy for wet AMD, an estimated $6 billion market that continues to grow. This will be the first gene therapy to control a vector expression in the ocular domain for the treatment of this chronic disease. And this novel approach uses our RheoSwitch technology to control gene expression through an eye drop or an oral pill. Our preclinical studies have shown a positive reduction in laser-induced CNV area of approximately 50%. We're excited to get this patient-friendly solution into the clinic, and expect our joint venture with Sun Pharmaceuticals to file an IND in 2016. Finally, in health, we entered into ECCs with two startups backed by the Harvest Intrexon Enterprise Fund. Through the proprietary technologies of Intrexon, Relieve Genetics will focus on a breakthrough non-opioid gene therapy approach for neuropathic pain, and Exotech Bio will utilize the novel exosome-based platform for delivering therapeutic RNA to treat selected cancer indications. The programs that I just discussed are neither a complete list of our pipeline, nor an exhausted description of the technologies being used in our work. They are however at the front-end of a broad pipeline, headed towards the clinic and conforms our business model, which allows us to avoid the massive ramp in cash burn, typical when entering the clinic with one product, let alone up to 10. At the same time, we've retained a significant economic interest in these programs in the form of milestones, royalties and profit interests. In the food sector, we acquired the business of EnviroFlight. The scalable production of black soldier fly larvae opens the door to plentiful source of high-quality, high-nutrient feed for the aquaculture and livestock industries. We're pursuing this sizable market opportunity in a joint venture with Darling Ingredients Inc., the world's largest publicly traded developer and producer of sustainable, natural ingredients from bio-nutrients. Our majority-owned subsidiary, AquaBounty, the developer of the AquAdvantage Salmon was delayed for one year, because of an act of Congress that now compels the FDA to consider whether this already approved product should somehow be specialty labeled. Whether it is ultimately labeled differently or not, we believe that the AquAdvantage Salmon is the best fish in $14 billion per year sea, and we shall succeed in achieving this healthy, wholesome and more environmentally-friendly fish in supermarkets as soon as possible. Our Okanagan subsidiary continues to make progress in it's preparation towards commercial introduction of its proprietary non-browning apple. Okanagan remains on track to plant roughly 75,000 Arctic apple trees this year with plans and inventory for over 300,000 trees to be planted next year. We believe that Okanagan is implementing one of the most ambitious growing campaigns in the history of the apple industry. The company continues to receive positive feedback from produce buyers, as it prepares for market introduction in 2017. Okanagan also submitted regulatory documents for the new cultivar Arctic Fuji to the USDA and FDA with approvals targeted before the end of this year. In the energy sector, we announced our 500-liter pilot plan for proprietary gas-to-liquids bioconversion is operational. This is an important step in the path towards commercialization of isobutanol from natural gas. We continue to expect to achieve the yield necessary for site selection of the demonstration plant, to begin by the end of the year with our partner Dominion Resources. And we remain on target for potential commercialization of this drop-in fuel in 2018. Also of note, our scientists have engineered and started construction of plasmid vectors to deliver new instruction sets to our methanotrophs to produce 1,4-butanediol also known as 1,4-BDO. This chemical is used to manufacture spandex, polyurethane, plastics as well as polyester. Now, I'd like to take a moment to discuss our subsidiary Oxitec, a company that has pioneered a targeted and innovative approach to control mosquitoes that spread disease as well as for the control of agricultural pests that damage crops. Oxitec's lead vector control program is centered on the dangerous Aedes aegypti mosquito, an invasive species and a principal vector for transmitting a number of difficult diseases namely Zika virus, dengue and chikungunya. We believe that we have the only proven, environmentally-friendly, scalable, vector-control solution for the Aedes aegypti that is ready and available today. Over the past few months Oxitec solution has advanced from a regulatory perspective, having received a special temporary registration from Anvisa in Brazil, as well as a preliminary finding of no significant impact from the U.S. FDA for an investigational field trial in Florida Keys. In addition, Oxitec received a positive recommendation in support of its solution from the World Health Organization, and the Pan American Health Organization declared that it will provide technical support to countries that wish to implement our solution. As disclosed on our last quarterly call, we are engaging with agencies of numerous governments and non-governmental organizations concerning the potential use of Oxitec solution to reduce or eradicate populations of this dangerous insect. Last week, we announced the implementation of a multi-phase project from Cayman Islands, and we expect our ongoing negotiations with relevant authorities and other courtiers to lead to broader adoption in the very near future. Separate from the health pipeline, we recognized the tremendous potential on Oxitec's Crop Protection platform when we acquired the company in 2015. In order to best capitalize on this potential, we last week announced the formation of Intrexon Crop Protection, a wholly-owned subsidiary dedicated to the biological control of agricultural pests and diseases, including insects and fungi. Through the utilization of Oxitec's diverse self-limiting gene platform for insect control as well as our ActoBiotics system for the expression of targeted biologicals, Intrexon Crop Protection's approach is designed to precisely target single pest species, and thereby avoiding many off-target effects of conventional pesticide applications on broader ecosystem. Intrexon Crop Protection fills a meaningful gap in crop protection for high-value products, where existing approaches are increasingly inefficient due to safety of and insect resistance to chemicals as well as pest resistance to GM crops. Improving agricultural productivity in an environmentally friendly manner, while driving value for growers and consumers alike represents a significant opportunity for which we believe Intrexon Crop Protection is well-positioned. Its platform has already led to collaborations with two leading players in the agricultural industry. As stated in our press release today, we intend to spin-off a portion of Intrexon Crop Protection to our shareholders, subject to various conditions, including the registration of the subsidiary pursuant to the Securities Exchange Act of 1934. At this point, we have covered progress made in our health, food and energy sectors and several of our subsidiaries. Based on the work of our teams and our consumer and environmental sectors and our other subsidiaries, I expect to have additional progress to report on in the coming quarters. In addition, as mentioned in our last call, we expect to partner some of our mature-stage assets in 2016 and discussions involving each of Trans Ova, Okanagan, AquaBounty and Oxitec continue. I will close with a few comments on our financials. During the quarter our revenue totaled $43.4 million or an increase of over 28% year-over-year. Adjusted EBITDA was $1.9 million and we recovered 92% of cash operating expenses through technology access fees, cost recovery and product and service revenues. We view growth in our technology access fees a milestone, as a key indicator of our overall success. And as of the first quarter of 2016, these collectively have reached $260 million since inception. With over 30 collaborations, approximately $336 million in cash and equivalents, equity securities with a market value of approximately $61 million, a portfolio of operating subsidiaries with outstanding management teams and business prospects, we exited the first quarter of 2016 with strong momentum and in a solid position to execute our strategies in this year and beyond. With that, we'll open the call for questions-and-answers.

Operator: [Operator Instructions] Our first question is from Tom Shrader at Stifel.

Tom Shrader: So I guess just kind of in order, how specific are you or how sure are you of the salmon delay? Are you waiting for some legislation or is that an approximate year or?

Randal Kirk: So the reference is to an act of Congress that was actually the spending compromise that I'm sure you read about a few months ago. And by force of law it will expire in one year, but of course Congress could renew it, assuming the President would sign it. It would take both houses. So this was a rider to the appropriations bill, which was sponsored, the rider was sponsored by a senator from the great State of Alaska. And it required the FDA to spend, if you read the text of it, it required the FDA to spend $150,000 to assess, whether our fish should be labeled in some way that's different from other salmon.

Tom Shrader: And then, second question, in the energy partner world, is success in isobutanol and success in 1,4-BDO? Are they highly interrelated? If you get one, is it easy to get the other? I mean, it's a big thing to get enough carbon kind of where you want it to go or are these very independent products, where success of one might not mean success of the other?

Randal Kirk: Well, I wish Bob Walsh were here to answer your question with technical detail. But my understanding, Tom, is that the answer is, it's somewhat both, both answer. In other words, are there early pathways in the process that are common to the mode? Yes. The later pathways are different, obviously. And we have some terrific in silico models, bioinformatic models on this organism, which is what we had before we even began wet wear on this exercise. And I'll say those models have held up very, very well so far. And based on our models, we believe that 1,4-BDO is extremely well chosen target. So I think you visited our facility in South San Francisco, correct?

Tom Shrader: Yes.

Randal Kirk: So we've been hiring there to build out the 1,4-BDO team, but we like all the progress with things so far there. I think what you're really getting is what's our security level overall on the methanotroph bioconversion platform.

Tom Shrader: Yes, sure. I'd love to know where you are in sort of a yield that --

Randal Kirk: We're not going to tell you that. But I can tell you, look, we are not going to choose targets that our models tell us are very, very difficult to achieve. Okay. We're not tilting windows here. When we began the work on the isobutanol, we believe that we would be able to make isobutanol, which of course we are doing. We believe that we could approach a post-theoretical yield in terms of carbon conversion, and that is certainly the case for 1,4-BDO as well.

Tom Shrader: And then last question. So the expansion into insects that might be involved in crop protection. Did Oxitec create a lot of these already? Is most of the work here development or you actually still have to draw on board, trying to figure out what insects to engineer?

Randal Kirk: Many of them are quite well along in terms of development. We actually have a deck on our website that details the stage development of several of them, I think maybe six. I think six of them are disclosed. I think as we move forward, we will, and you can expect to see more disclosures around these things. But I believe the medfly, for example, is actually being deployed in the field today. Given the number of times the chemical pesticide industry have claimed that they've defeated the medfly, we're really thrilled about and failed by the way. We're really thrilled about this one. There's quite a bit of peer review published data, for example, is it the diamondback moth, and I think that was field tested out of Cornell, right, if memory serves. And so those data are published that they're quite impressive. This target is an insect that causes between $4 billion and $5 billion worth of damage to the world's lettuce, cabbage and kale crops. And so there are several others. There are actually more than six in total. So I think the short answer to your question is several of them are actually developed to some point, and some of them are actually developed to an advanced level.

Operator: Our next question is from Jason Butler at JMP.

Jason Butler: Just two from me. The first on the wet AMD program, I'm wondering if you can say at this point whether the first clinical trial will be in healthy subjects or patients? And if it's in patients, is there a potential to see any efficacy data from the initial study?

Randal Kirk: We're not at liberty. Remember, this is the joint venture that we have with Sun Pharmaceutical Industries and we're not at liberty today to discuss the clinical trial, the planned clinical trial protocols. What we are telling you is we'll file the IND this year. That's our expectation. I certainly get the relevance of your question, it's an important question. And I look forward to being able to answer it, but today we cannot.

Jason Butler: And then on EnviroFlight, can you talk about what the path here is to commercialization and any color on, any timelines or market sizing you can give?

Randal Kirk: We think this is going to be potentially a very, very large business. So let me sort of setup the situation for -- let's just take one of the markets, and there are several, but obviously the main market as we've discussed is the protein feed supplementation market. What sensitized us to that was our involvement in aquaculture, where overtime, and overtime over last let's say three decades, four decades maybe, you've seen the number one protein feed supplement, which was fish meal, be utterly almost tuck entirely displaced by soy protein. So soy protein cost $0.20 a pound or something. Fish meal, it continues to be in high demand and several of these markets actually require fish meal. Aquaculture is one of those by the way. So you can't really grow salmon, for example, on a diet of 100% soy protein. So still has to be supplemented with some fish meal. And I haven't checked, it's been quite a while since I checked, but I know this sells for dollars per pound today. And that the trend line is for only increased prices, because long story short, look marine extraction is like the ultimate non-bio sustainable practice you could imagine. And I think everybody on the call realize that the number of fish available from the sea is declining so rapidly, it's just horrifying. You could look at it this way, at the present rate of extraction, our children will know fish to be a luxury good, our grandchildren will know fish to be something they see in aquariums and museum, unless we bring technology into the picture. So we've done that on the AquAdvantage side, I mean on the AquaBounty side in terms of producing fish that can be sustainably and industrially produced on land. On the feed side, this actually addresses a critical need, because what I really want you to realize is there is really no good protein feed supplement in between those two price points, okay. There is nothing that nutritively approaches the quality of fish meal, right, that doesn't cost $4 or $5 a pound on its way to $7, $9, $11 per pound. So we discovered EnviroFlight because we actually went hunting. We were looking to see if anybody has figured out how to scale, at very large scale production of insect larvae, because if you check this out, they are not only incredibly proteinaceous, they're also very high on lipid content. And I don't want to get in too much details, it obviously nutritionally is absolutely wonderful thing. In fact, I will tell you that my six year old son and I have actually enjoyed some of these black soldier fly larvae ourselves. We find them completely satisfactory and actually pretty tasty. So we went looking for this and we actually looked at pretty much everybody we could identify in the world who has been working in this field, and we were absolutely amazed by the achievements that have been made industrially at EnviroFlight. You asked about regulatory, so it should be borne in mind that a lot of food ingredient labeling and regulation regards insect parts as an impurity, right. So of course, the question is, what do you have to go through in order to be able to sell this product as a feed supplement? We discovered that EnviroFlight has actually made very, very good progress with several regulatory agencies. Their data dossiers are extremely good. This is another thing by the way that, one reason we wanted to joint venture this with Darling Ingredients is because in order to validate this as a process that you could really scale to huge size with multiple plans around the world to really make this a big business, we wanted to be able to standardize the food input. And so this is not the kind of thing where you could just take restaurants, graphs or something like that, and just drop it into this production environment. You really need to be able to standardize the feed ration for the black soldier fly larvae. And that's one of the key things that Darling brings to this deal. They're very, very adept at this, taking a very heterogeneous mix of psychological inputs and turning it into a very standard output, so really excited about this project, and great business. There are really no other than just building the first big production plant and getting going, there are no technical obstacles in this picture of which we're aware today. Although, we do anticipate that we'll see the normal ones that you could expect to see when you take something to vast industrial scale.

Operator: The next question is from Tycho Peterson with JPMorgan.

Tejas Savant: It's Tejas on for Tycho. So first question here in terms of spinning off crop protection. Can you talk a little bit about just the strategic rationale of doing that and having a separate entity versus the way you were doing it earlier?

Randal Kirk: I don't mind sharing some of the strategic rationale. We've actually specifically mentioned it in, I think, in our press release, so I probably won't be able to go beyond the balance of that. But generally, I'm sure you'll appreciate the environment for this field. I know it's not exactly in your normal wheel house. But I think everybody knows that Syngenta is being acquired by ChemChina for $43 billion, Dow is merging with DuPont. Well, I could go down the list of competitors, but I will just say, it's increasingly verified field. What we see systematically and globally is that chemical pesticides are working less and less well every year. The response of producers to a great extent has been to use more of them to compensate. Needless to say, this is not environmentally sound and there is considerable environmental pressure to reduce the applications of these chemical pesticides. There are couple existing pesticides on the market that around the world are being withdrawn from the market due to environmental concerns. And certainly, it would be fair to observe that the chances of someone coming to market with the chemical pesticides in today's regulatory environment are actually pretty low. So against that backdrop -- and then just one other thing, we happen to own by far the most advanced genetically modified insect platform in the world and because of the number of geneticists and entomologists that we have there, we know that the biomarkers for pesticide resistance across these insects species that are agricultural pests and also human disease vectors are very well known today. So we can see genetically what is going on in these insects and they are rapidly developing tolerance to the main pesticides that are being used today. So clearly there is a great demand for high-value biological-based solutions. The path that I think the most sophisticated companies are on is to use some type of RNIA, DS RNIA, for example. In the agricultural field, it is just like the human health field. The issue then become how do you get the RNIA into the appropriate cells at a price that you could afford, so we have that capability because of the ActoBiotics platform, but more importantly, we have a platform based on the self limiting gene technology at Oxitec that we think shows tremendous promise -- marvelous specificity with respect to the target species and environmentally seemingly neutral to every other species. So the opportunity became, do we partner -- and as we have alluded to with, ICP already because of the activities that we have on the ActoBiotics platform and at Oxitec already has two major agricultural partners. The real question looking at our deal queue was do we partner out these opportunities pest-by-pest or would it make sense to actually house them all in one place and put it under price management team in there. So I recognize that it's something of a departure from our normal business model. But frankly, our normal business model has always been qualified by a desire to do what is best for our shareholders. So when we look at the opportunity to put an excellent enterprise team, and by the way we just happen to have one, so this is our plant science team led by Dr. Sekhar Boddupalli, who came to us from Monsanto, who is heading this effort up, and he has got a terrific team there in Davis, California. So the combination of that team plus the agricultural applications of the Oxitec platform, plus the cultural applications of the ActoBiotics platform that we operate out of our lab in Ghent, Belgium; plus frankly some more of it's done by our team at Budapest, really produced a very compelling case to create a standalone business. Because after all, look, the development, the production, the commercialization and the regulatory for each of these are going to be very, very similar in many cases, almost identical. So it's an opportunity to benefit from economies of scale that we wouldn't have if we partnered each pest out separately. So that's what got us thinking in this direction. And once we do that, we realize that -- and the reason I mentioned that the verification of the universe in the entire crop protection space is just so you realize that at the very moment in time when the world demand for crop protection, if at an all-time high, the availability of crop protection technology is declining. The utility of existing crop protection capability currently is declining. So it's a tremendous opportunity to produce a new company and that's what we're taking advantage of.

Tejas Savant: And then one question on Exemplar and the enforcement discretion from the FDA there for the miniswine model, how far away are we from seeing use in clinical trials by a large biopharmaceutical company? What are some of the puts and takes there in getting to that stage? And what does Intrexon or Exemplar need to do to get there?

Joel Liffmann: First, I think you will see publications on our LDLR Yucatan Miniswine in the near future anyway. But you should bear in mind, there're really two businesses here through which Exemplar maybe employed. One is, yes indeed, we can make Yucatan Miniswine sized disease model established disease model, if you like. So where you would want something that is metabolically and maybe in some other respects, more similar to a human to test -- and as comparator to what maybe previously you only have a murine model. And those will be, I think, freely for sale as this pipeline comes to market. The other one I think is really more interesting, which is when you consider that there's something like the numbers approximately 7,600 monogenic diseases that have been chronicled. When you consider that the number of monogenic diseases that have actually been the subject of some sort of therapeutic candidate is in the dozens, I would point out that the reason for that delta often is that these are rare diseases and because they're rare diseases often the phenotype is not fully elucidated, meaning we actually don't know enough about the disease to really figure out a therapy. So I think the other interesting application of this technology is we didn't have an animal that is disturbingly similar to man, and actually create the monogenic disease in the animal and use this to actually elucidate the pathology phenotypically in a way that would not be possible before. And the reason I mentioned this is because these animals we will be making -- and actually we already have one of these, I think, one of these partnerships in play. So I'll tell you, these animals will be made in partnership with a therapeutic developer that has a deep desire to understand the pathology phenotypically. And therefore, you shouldn't necessarily expect to see publications based on these animals. In other words, we have the ability to keep the disease model proprietary, simply in order to elucidate the disease pathology at a level that is superior to what could be demonstrated by buying things that are already published. So we're talking about the custom disease models. And that's a very active part of Exemplar's pipeline.

Tejas Savant: One quick one on energy. I know you spoken a lot about the improvement in yields that you've achieved, and you also talked about the 500 liter pilot plant at the moment. Can you talk about your current output in gallons per day and how you've seen that trend over time? And at what point -- I mean what are sort of the milestones that you're tracking internally before you and Dominion decide to take it to the next level?

Joel Liffmann: So first, quantitatively, we have not disclosed that information and we are not going to. We have always guided to the same milestones however publicly. And these are the ones that Joel commented on during his remarks that when you see Intrexon Energy Partners and Dominion Resources go forward website selection for the world's first commercial plant that should signal to you that we believe that we're in the money. We are not yet there, but we are tracking according to plan and we are very, very excited by what we're seeing. If they were a football game, I would say we are in the red zone. So that's why we can so confidently state that we think that our investors and we tell our Board this, I'm sure you know we think this is true. We believe that we will this year and we're very, very excited about this opportunity. And if you think about it, Tejas, this is very, very close to gasoline. I mean, we talked about it as a drop in fuel and as if it's like ethanol or something like that, that's the not the case. The reality is this is 98% of the energy density of gasoline is no more corrosive, which means it can be shipped, transported in the same way of gasoline. Eventually we could imagine a world -- you can imagine a world in which isobutanol would actually displace gasoline, that wouldn't be our first choice, because everybody would have to get new fuel injectors in order to do that. But we do think that -- and we do know frankly, if you have isobutanol that you produced at a satisfactory cost, you hand it to a gasoline blender to make gasoline, you will get gasoline, and that will be our first market. We think we will be selling gasoline and we'll have a biotech margin on one of the world's largest industrial commodity province.

Operator: The next question is from Robert Breza at Wunderlich.

Robert Breza: Just quickly, if you think about piggybacking on the last question reaching commercialization on isobutanol, how should we think about reaching kind of real revenue or an inflection point around the Oxitec Zika virus outbreak? There has obviously been a lot of press, in news you've made some significant announcements in terms of approvals. How do we think about that commercialization to an inflection point around revenues of the Zika virus?

Randal Kirk: It is very fair question, Rob. Just as a thought experiment, I would invite you to think along the following lines. If you think about what a recombinant vaccine cost, okay, and if you imagine that, let's say, we could price at around that, okay, on a per person per year basis. And assume that we would like 10-year contracts in the markets in which we deploy, okay. So I think we have an advantage, in this case, over vaccines for the following reasons. At that price point, pick one of the viruses, say, dengue, okay. So assume that our price per person is on par with say, the recombinant dengue vaccine, right. So this means, you'd be hitting all the other arboviruses for free as a payor, right. You would be getting Zika, chikungunya, yellow fever for free. You'd be getting the costs of distribution and administration, obviously, which is far from trivial, for free. You'd be getting 100% compliance effectively for free. And also, you'd be getting all the arboviruses that are yet to come. I mean, I don't know if you read the JAMA article that was published yesterday about the sudden flare-up of yellow fever in Africa. But I can tell you, our team is very, very concerned about this, because the world had never been in worst condition in terms of the footprint of the Aedes aegypti mosquito. So I don't want to be alarmist about this, because we know how this plays out. But the point is getting rid of the disease-vector has been the number one way [technical difficulty] has dealt with these issues in the past. We had malaria I mean -- by the way, I don't know if there's anybody in the call knows it, the original name of the CDC was the Malaria Control Board. That's why it's in Atlanta, okay?

Robert Breza: Okay.

Randal Kirk: How they wiped malaria out of the United States, by getting rid of the disease-vector. It was wiped out of Europe in the 1960s.

Robert Breza: How do we get these government officials off their lazy butts to write a check? I guess that's the real question.

Randal Kirk: So let me tell you where we are right now. We are in our nation's capital, speaking to you now. And while I can't -- I'll just stand by our press release and by Joel's comments in terms of the kinds of dialogues we are having, but I'd just tell you, as compared to this call three months ago doors that were difficult and you wondered if they were even maybe locked, suddenly seem to be swinging our way. Three months ago, I was very frustrated, just as an American citizen I was frustrated. Today, I'm very encouraged. The meeting that I have here in Washington over the next couple of days are with very, very high ranking officials of the U.S. government and several other governments and what we're seeing around worlds now is actually impressing me. And I couldn't say that's three months ago. Three months ago, I was frustrated, you could probably tell. So I do think that people are realizing that that vector control is the solution that they really need that we really need. We firmly believe that we have the only field-proven, tested, environmentally-safe solution, and the reason I compare it to the biotherapeutic is that you would know that it is actually affordable in terms of the benefit that this technology should convey, its quite affordable. So we are really keen on this project and very, very dedicated to this task.

Operator: Next question is from Derik de Bruin at Bank of America Merrill Lynch.

Unidentified Analyst: It's actually Mike online for Derek. I had a quick question for you. My phone have dropped off, I apologize if you answered during the prepared remarks. What was behind the Trans Ova product revenue decrease, you mentioned the lower customer demand. Could you go into more detail about that?

Joel Liffmann: I can't and I'll tell you why. I don't actually pay that close attention to Trans Ova product revenue. Let me remind you why? We didn't acquire Trans Ova, because we just wanted to own that business as such. We acquired Trans Ova because we thought as a marvelous platform upon which we could deploy our technology to drive this business into much greater heights. So the business that's practiced at Trans Ova -- I mean it's a wonderful, wonderful operation and I think David Faber and that entire team do a wonderful job. If you look at them in terms of market share, if you look at them in terms of their accomplishments, the number of ranked bulls in their field that came from their technology, it's like 15 out of 16 year-after-year, so they do a marvelous job. But that alone wasn't the basis for our acquisition here. The basis for acquisition was the realization that among all protein feed animals, the one that needs generic improvement was the cattlemen called genetic gain, okay. The most is the bovine species. I'll remind you that look we pay today about 25% measured in constant dollars of what our grandparents paid for chicken, right. This was done through two means. Number one, genetic standardization and improvement, which was then enabled applications of industrial engineering, because once you have a standardization then you can standardize this, the housing, the transportation, the storage, the food ration, the health regime, the downstream processing can then become automated, needles to say, almost none of that has happened in the bovine species, either in the $180 billion per year beef industry or the $180 billion per year dairy industry. So we saw that as a tremendous opportunity as a vehicle to sell improved genetics. We are working very hard on this. We really think in terms of two scenarios. Scenario one, you could think, and this one we think has a very high probabilities of success in our view. We believe that Trans Ova can become -- and they already are, by the way, responsible for I think more genetic gain in the dairy industry than any other player on the planet. We think we can extend globally and we think we can extend into beef. And we think we can produce greater genetic gain utilizing our technology. If we do that, this was going to be a very, very nice business with a very, very nice margin and revenues that I will always know. So I apologize for not knowing Trans Ova, but I'm just telling you look we saw it as a perfectly adequate business, a good business as it was with a great team. You couple the number one expert in the world at the artisanal practice of producing bovine embryos, right with technology should be a winning combination. Then the one with less probability of success it's more of an outlier, but if we can drive the costs of producing these bovine embryos down and we believe we can. But right now, I can't say we've done it, okay. But we're working on it. We can drive them down to a sufficient price point then this business is not merely a genetics business; it's actually a business that is competing in the field of bovine reproduction. And then that goes to another scenario, which would, call it for what it is, this would be a multibillion dollar business at that point. So this was always our intension at the time we bought this business. I think I've talked about this before. And those are the revenues that I'm interested in. So I will tell you I track the technical and scientific progress along the two scenarios that I just described much more closely than I do Trans Ova's current revenue. I'm just thrilled they don't cause us money, put it that way.

Operator: The next question is from Andrew D'Silva at Merriman Capital.

Andrew D'Silva: Just a couple of quick questions, just wanted to piggyback actually on the Trans Ova genetics question, can you provide an update with how you're progressing with increasing the yield of supreme cow embryos and are you reaching the milestones that you initially thought out when you acquired it?

Randal Kirk: I'd rather not talk about that today. We've rather actually achieve the milestones and bring things to market and tell you about it that that's okay.

Operator: The next question is from Keith Markey at Griffin Securities.

Keith Markey: So I have two. It sounds very much like you're moving forward on an international basis with the Oxitec mosquitoes and might be able to get significant business very soon. So I was wondering can you expand your capacity above and beyond what your white paper on Oxitec that was recently published talked more trying to put this year and into 2017.

Randal Kirk: Well, yes. In two ways, I just want to look at my colleagues here to see if they have second-gen technology. So one of the ways, I can't discuss. But there is another thing that you should be reminded. The technology, the overall, in terms of a global footprint does scale pretty well, in the case of the Aedes aegypti mosquito. This wouldn't be the case for other case of mosquitoes, but there is a very fortunate fact with that relates to the Aedes aegypti mosquito, and that is that the eggs have viability for four months. So what this will enable us to do is, as we scale globally is to have a big egg production facility, right. And then on a local basis, or I should say, regional basis have eclosion and release down locally. Today, so far we've been doing, except every place in except one market, that's Cayman, was actually done on the basis I just described. So with the sole exception of that case, we have actually done local productions and eclosion and release. So there are some global economies when we create a factory that will produce the eggs. All of the eggs require in one location.

Keith Markey: The question I had was based upon regulatory decisions of other products, I was wondering if you might be able to give us a reasonable timeline for final testing and commercialization of the product such as the diamondback moth?

Randal Kirk: So these are regulated by FDA under the INAD, so it's the same regulation that applies to our mosquito. I believe that's true. It's the same sort of regulation that applies to the OX513A mosquito, concerning which the FDA recently published a finding of no significant impact. So it's all is a fairly established animal drug approval process.

Operator: The next question is from Eric Criscuolo of Mizuho.

Eric Criscuolo: I didn't hear anything about the API programs in the script or I didn't see it in the press release. So could you maybe provide some commentary onto where those are and how they are progressing?

Randal Kirk: Absolutely. So again, we have partnered -- the ones that are partnered, right, which is all ones we have at the mature state, we can't comment. I believe we previously have disclosed that we've made a cell line delivery to one of our partners, so we've actually completed our work. With respect to a very major undertaking we're making, I think very, very good progress and our partner has -- I know that our partners is extremely pleased, but I'm trying to think about what we can say in terms of timing. Let's get back to you on that one, although, I didn't give you enough specificity, which I'm talking about. One of them, I don't mind telling you, one of them actually is, I do know something about, because it was deliberately chosen for its sheer technical complexity and the size of total addressable market. And that one I do know the timing. We anticipate having some news out on -- and this one was originally done, it was commissioned. We actually started to work on -- does anybody remember about two years ago. And this one was deliberately chosen because to our knowledge this would represent the most synthetic biology undertaken by any one to our knowledge. And we expect to have data out on this one. I think we're currently targeting September.

Operator: The next question is from Derik de Bruin at Bank of America.

Derik de Bruin: Just I had a quick follow-up from earlier. You're talking about the works on in the Florida keys with the FDA finding no significant impact. And also the commercialization in [indiscernible] and the Cayman Islands that you announced just last week, I believe, noticing a trend that the two active runs of Oxitec being in the Cayman Islands and in Brazil, both of those locations had fire fuel trials. I'm just wondering how much that factors into your ability to negotiate commercial agreements, so that you have the trial set in that specific area? Is that just a coincidence or is that something that you think is really tangible boost to your negotiations and your conversations with government officials? And should we expect something similar going down the road from the Florida field trial?

Randal Kirk: That's a really good question. I think your question really has two faces. And I think one of them I can definitely validate, which is, obviously on the regulatory side, it certainly gives those countries more confidence, because they actually participated in the field trial. And so if you look at our work in Panama, for example, in which our scientist have published with their scientist of Gorgas institute, and they worked hand-in-hand on the field trial itself. This was the case in the Caymans between our scientists and the scientist of MRCU in Cayman. So, yes, I think in terms of early regulatory approvals, certainly it does help that people on their side of the deal have got firsthand experience. We're really looking at all the issues upfront, so we help to design the experiments in order to address the questions they had and so forth. Going forward, however, I don't believe this is the case. So we have numerous parties now who are looking at the data that we've generated in other markets. They are not asking us to replicate. Well, frankly, I don't mean this in any discouraging way, anybody can maybe listening here in town. The only country for which that would be applicable is the United States, in which they may want to just look at data produced within the United States. And I think everybody who knows the world of therapeutics knows how largely that is true, a sort of an American thing. But around the world, it's not nurtured to any significant degree. So I think what you say to is certainly true in terms of regulatory approvals in the early markets, the early adopters. It does give us a leg-up there. In terms of commercial dealing, other than dealing a desire to be as cooperative as we can with partners, with whom the Oxitec team has been working in some cases for years, there is really no commercial aspect to it. We're not really going to give much of an early adopter premium, because we know that other countries will just look at that price and it will come back to haunt us. So in generally we've got our ideas about pricing pretty much lined up with the way I described them earlier. If you think about the cost of a recombinant vaccine, you could think something in that ballpark. And then you readily realize the many advantages of this technology over a vaccine approach.

Operator: This concludes our question-and-answer session. I would like to turn the conference back to R. J. Kirk for closing remarks. End of Q&A

Randal Kirk: Well, thanks once again. I always find these exercises to be a little bit constrained, because we have to build them based on news flow. And I find this regrettable, because I just want to underscore a chief point about this company. The company's business was actually founded on the idea that we want to really maximize. We want to have the lushest portfolio of back-end commercial economics across as many industries and many products, products that we really believe in, products that we truly believe will be valuable as many as possible. And that's the focus of this business. So when it comes down to this call, and by the way, no criticism of the callers, in fact most of the questions we receive today actually did related to developmental progress. So it shows that at least people on this call kind of get it. But I just want to say, but I am constrained because I can't really talk at much about developmental progress outside of the things that we've disclosed. So I'll just come back to the sort of the lead-up point, and it's the reputation frankly of the point that we made three months ago, which is, we have always intended 2016 to be a breakout year for this company. And what I mean by that is, across these three tracks that we've talked about, number one, of course, we're going to continue to see growth. We're going to continue to see financial growth along the lines we've described, and operating under the financial discipline that Joel I think very ably described. The second thing is you will see the first instances this year and they will be across a broad array of undertakings. Projects that were initiated inside of Intrexon and you will see this year. We've always targeted this year. And we're very excited about what will people say over the course of this year and see data come in. Am I might thrilled with every development program that we have, of course not. We have projects, this isn't the FDA, is it Don? We have projects that are probably six months behind, frankly, and these pain us greatly. In fact, my job is to inflict some of that pain. So they do pain us greatly. There are others that are very much on track and there are others yet that are actually ahead of schedule. We work very, very hard. I think I kind of pointed this out, with the majority of our efforts and the majority of the efforts of our entire team, the majority of frankly the number of employees are totally devoted to these efforts. So we've been building to this year for a long time. And then nothing was mentioned today I think other than Joel's remarks. But over the course of the development of this company, we have acquired some very significant commercial stage assets. And when I think about Intrexon late at night, and I think about the multiple scenarios that exist for our developmental stage programs and so forth, I have to tell you, I get excited about some and I get frustrated about others, but I'm always excited by the fact that we seem to be, in my view, substantially undergirded by things that are already proven. The fact that we saw the value of an Oxitec that we saw the value of an Arctic apple, but we saw the value of an AquAdvantage salmon is great. We didn't invent that stuff anymore than Genentech invented half of the maps for which they became famous. It happens to be the case that when you're doing something as conscientiously and as devotedly, as this team is doing, if you're not becoming pretty expert at assessing the other guy's stuff in that field, there's something wrong. So we will definitely continue to -- if we come across something like in EnviroFlight, we're definitely always going to do that. So when I look at the mature stage things we have, and frankly EnviroFlight is almost at that level, Arctic apple. When we had Investor Day we passed out Arctic apples, we do this at every opportunity. I have never seen anybody yet who doesn't love them. I was on CNBC a few weeks ago and I think they aired the wrong segment, right. And what I mean by that is, okay, so I am up there talking with Meg and Melissa, I think her name is. But thereafter, I got to pass those Arctic apples around to the enormously to the anchors and the bald guys on Shark Tank and all the crew and so forth. Anyway, my point is, I wish they had filmed that part, because if I wanted to air something, I would want to air that, which is that I haven't seen anybody yet try Arctic apple who doesn't totally flip, right. It's fantastic. And if you think about the fact that every apple you've ever eaten is a clone, these aren't things that just grow wild. We cloned them all, right. So you'd have to ask yourself, so what is the significance of this technology? Well, the significance potentially is that this will completely revolutionalize the entire worldwide apple industry. There is no cultivar of apple that will not be better, if it's an Arctic apple. So what is that worth? We'll gee, we'll see what kind of management team we have, right, that when possessed of that advantage, we'll see how we execute, but I can tell you we think its very, very significant. So the thing that kind of that really gives me pause late at night and gives me comfort, I should say, among all the challenges that we have and so forth, is when I think about the number of genuinely matured stage assets, the fact that we can, and you'll see some of these things occurring over the rest of this year, that we don't have to build out massive world wide infrastructure. There are already people out there with massive worldwide infrastructure, sort of low-value add inputs. And so we think we can approach businesses like salmon and apples, like a genuine biotech company, and as I mentioned earlier gasoline, like a genuine biotech company. And if we can turn those products into biotech products and keep a biotech kind of return with a biotech kind of margin, that's what we're about and I'm very, very excited about that. So finally, let me just comment, I have got to congratulate this team. With the recent distractions we've had, I mean, you can imagine what my email was on a recent event couple of weeks ago out to the people, which was, listen, just everybody continue, just continue, just do what you're doing right, because the only way that we could ever lose this contest is if we allow this to distract us in anyway. So I can tell you there is nobody here who is distracted. We are completely excited. This is the most fervent group of people, I've ever known in any company. I have not been into every company, I'm sure at some point, [ph] Bill Gates to Steve Ballmer and Nathan Myhrvold were quite fervent, I just wasn't there, but I'll say in my experience this is the most dedicated and fervent group of people I've ever seen. And I'm really, really happy about that. Thanks.

Operator: This concludes our conference for today. Thank you for attending. You may now disconnect.