Good afternoon, and welcome to the Intrexon Second Quarter and First Half 2017 Financial Results Conference Call. [Operator Instructions] Please note that today's event is being recorded. I would now like to turn the conference over to Mr. Chris Basta, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon. I am Chris Basta, Vice President of Investor Relations for Intrexon Corporation. Welcome to our second quarter and first half 2017 earnings conference call. Joining me on the call today are Mr. Randal Kirk, Chairman and Chief Executive Officer; Dr. Andrew Last, Chief Operating Officer; Dr. Helen Sabzevari, Senior Vice President, Human Therapeutics; and Mr. Joel Liffmann, Senior Vice President, Finance. Slides that will be presented on the call today can be viewed on the Investors section of our website, dna.com, by clicking on the link for Intrexon Corporation second quarter and first half 2017 financial results conference call. During this conference call, we’ll 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 discussion 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. Now, I would like to turn the call over to Andy Last, Intrexon's Chief Operating Officer. Andy, the floor is yours.

Thank you very much Chris, and good afternoon everybody and thank you for joining our second quarter 2017 earnings call. We appreciate your support and interest in Intrexon. Earlier today, we issued our earnings press release and filed our Form 10-Q. We hope you’ve had the chance to review the reported financial results. Our business remains focused on the industrialization of engineered biofactories to bring superior and environmentally responsible solutions to the commercial marketplace across five verticals; health, energy, food, consumer and the environment. And during the second quarter we continued our momentum in this endeavor. The transition of Precigen into a fully integrated pharmaceutical development company and leading player in gene and cell therapy continues and we are targeting year-end for its completion. This will provide us with a number of options regarding strategic and structural alternatives to maximize shareholder value. The consolidation of health-related assets into Precigen is progressing and the company has accelerated recruiting key personnel and executives. On that note, I would like to welcome Dr. Helen Sabzevari to the call today as the new Senior Vice President of Intrexon Human Therapeutics Division and Head of Research and Development for Precigen. Dr. Sabzevari is internationally recognized for her work in the field of immuno-oncology and has an impressive track record in drug development. She has held senior leadership roles at EMD Serono, the biopharmaceutical business of Merck KGaA; the NCI, and most recently as Founder and CFO of Compass Therapeutics. During her tenure at the EMD Serono as Senior Vice President of immuno-oncology, Dr. Sabzevari brought forward numerous preclinical and clinical assets including what has become one of most promising molecules in immuno-oncology, the anti-PD-L1 antibody avelumab. Prior to EMD Serono, she led translational research programs to deliver novel vaccines and immunotherapy at the NCI. We…

Thank you very much, Andy. Good afternoon, ladies and gentlemen. It’s definitely a privilege to be here at Intrexon. And I just decided to actually share some of my view, and I hope that you don't mind very unscripted and uninhibited with you today, in regard to the vision that we have for Precigen and also the opportunities that exist at this point. As you’re aware, I joined Intrexon in close to a month ago, and obviously have been quite familiar with the platform over the years as I’ve kept my eyes under cutting edge technology. What is different, and for me what was exciting in order to join Intrexon Precigen is really the number of the platform that Intrexon has been able to either internally develop or acquire over the years, this is really unprecedented. I have worked both in big pharma and I have also co-founded Biotech. And I had never seen anything like this. As I came in and I took the deep dive in the number of the programs that Intrexon had started and pushing forward toward the clinic, it became very clear to me and as a result, I was really discussing this with the leadership of the Intrexon that what I was seeing was something that I had never seen previously, either in big pharma or in a Biotech. The reality of the situation was the breadth of the platform, and the evolution of these platforms was shocking to me at this point. The result that I saw and the possibilities to take them forward under the roof of Precigen it’s something unique that neither Biotech is capable of doing it or pharma because of variety of reason which we can go further in our questions and answers. However, one of the aspects that…

Thank you, Helen. And I’ll move quickly on our financial comments today so we can get your questions. Today we reported second-quarter and six-month revenues of $54.4 million and $107.9 million respectively representing increases of 3.7% and 12.5% over the same period last year. Collaboration and licensing revenues were 52% of total second quarter revenue an increased by 2.5% year-over-year. Product and service revenues increased by 4% as our Trans Ova subsidiary saw an uptick in demand for certain bovine reproduction services. Second quarter SG&A expense was $38.5 million and increase of $8.2 million from a year ago. The increase primarily reflects growth in our employee headcount and legal and professional fees as we grow our company. R&D expense in the second quarter increased by 20% to $34 million as we are continuing to invest in our multiple platform technologies, and as Andy mentioned a number of our partner programs move into preclinical and clinical phases of development. Second quarter adjusted EBITDA was a loss of $1.6 million compared to the prior year loss of $5.4 million. Cash received for research and development services covered 46% and 50% of our cash operating costs excluding operating expenses of consolidated subsidiaries for the second quarter and first half respectively. Total consideration received from all operating sources were approximately 65% of consolidated cash operating expenses in both the second quarter and year-to-date. At the end of the second-quarter our deferred revenues were $285.3 million we had consolidated cash and liquid investment position of $157.2 million and we also held equity securities and preferred stock in our ECC partners valued at approximately $168 million. More detail regarding our results can be found in the 10-Q that we filed earlier today with the SEC. With that I am going to turn it back to the operator for opening up the Q&A line.

[Operator Instructions] Our first question comes from Jason Butler of JMP Securities. Please go ahead.

I have two questions on the healthcare sector. First, I guess a bigger picture question on Precigen. Can you talk a little bit about how you plan to prioritize programs and I guess the strategic options you have for this different programs versus the capital resources that are going to be required for broad pipeline and then I have a follow-up on the CAR-Treg program afterwards.

Hi Jason this is RJ, I am not sure I am following your question. You want to know how we're going to prioritize among our many programs in therapeutics?

Right, and how you're going to decide what strategies to apply to different programs or are you looking at different therapeutic areas, different technologies just broadly how do you determine capital allocation.

So as we have a pretty strict discipline at Intrexon. So as Joel just went over the numbers for you and these numbers are in line with our plan that we’ve had in place for several years. So today is - actually this week is our - celebrates our fourth anniversary as a public company and we always said we wanted to cover really all of our operating expenses with partners money. And that should be roughly allocated according to one half from cost recovery and one half from deal money. And we've been able to sustain that I think since the second quarter of 2014. And so far as we look into the future we think that can remain the case. So with regard to our partner programs, they have dedicated teams really all of our programs are pretty much have dedicated teams in therapeutics and certainly by program type. So it's not really that we have a lot of programs that compete for resources internally. And so long as we can adhere to a conservative financial model the one we have in place and the one we've been living by, we see virtually unlimited ability to expand. So I don't think choosing between them - maybe what you're really getting as which ones would we favor developing internally versus in partnership.

Right, I guess when we’re thinking about Precigen we’re envisaging a broader pipeline of internal programs versus partner programs is that the right way to think about it?

Yes, it is certainly in part, yes. So let me tell you what we're trying to do, we alluded to it in the press release but let me just be very clear about the four things that the team signed onto to complete in the remainder of this year. We don’t to get ahead of ourselves but these are all things that we think we can complete this year. The first thing is a lot of legal and accounting. So with legal to get the assets that are peculiarly healthcare assets into Precigen to get those assets that are actually shared among sectors other than health, to get those licensed over to Precigen with the service agreement in place, I think therefore it’s an ActoBiotics platform as an example of that one. And so that is well underway the financial accounting is looking really good. I was inspired when I thought so it’s an early cut so nothing to publish today, but anyway so all of that is well underway. The second thing is of course to recruit a first-rate enterprise management team is genuinely commensurate to the potential of the most significant gene and cell therapy company on the planet. So in my view when you consider our technologies both by breadth and depth just a number of them the number of platforms that we have right, whether it’s our GS or nonviral transduction the ActoBiotics platform et cetera, et cetera, et cetera. The lead platform going on we don't see anyone who comes anywhere close to Intrexon in terms of technology breadth and I was talking about depth right. We believe fundamentally I think this was covered in our S-1 four years ago fundamentally that the next generation of biotech relies principally on two motives. Number one, being…

Yes, that's really helpful. And maybe if I could just quickly squeeze in Treg question just from a technological perspective are there any key difference between a Treg cell and a factor T-cells that makes it more or less challenging to direct it to a certain antigen?

Right, I think from a perspective of the function as you can imagine they’re quite different. So to identify and this is what I’m extremely proud of the Intrexon team that they have accomplished that. They had to identify a number of the pathways that they had to be either knocked in or knocked out in order to be able to establish a Treg outside of the body obviously. And to bring this now and expand and then we can return it to the patient, so yes there are differences and in their activities and also in their sort of the constructs that they need to be used which as you can imagine at this point we obviously cannot discuss publicly.

Our next question comes from Derik de Bruin of Bank of America. Please go ahead.

This is actually Mike Ryskin on for Derik, a couple quick questions for you one is on the sort of both on the EnviroFlight and the Thrive Agrobiotics. I appreciate the update you gave there. But I was curious if you can talk a little bit more about what the next steps would be beyond scaling up production. Is there something that has to be done in terms of getting approval from the USDA or the EPA potentially? Just wondering what are the barriers for adoption and getting these onto the market. And then second question was on the Oxitec platform. And one area that I noticed you didn’t update on the call was on the Florida Keys potential trials. So I was wondering if you had any news there? Thanks.

This is RJ so first with regard to I think both Thrive and the BSF from EnviroFlight they both do require USDA approvals. The USDA is I think among the science and technology agencies. Fortunately, over the last several years, what we’ve all seen, some reason for both Intrexon and others to, at sometimes be frustrated with some of these agencies. The USDA is actually not one of them. I think that they’re the shining star in terms of genuine science based regulation and consideration. So we're very optimistic. Frankly, if we can’t get USDA approval, we don’t want to market the product anyway. But we’re optimistic about what we're doing in both cases. Some of the regulation I think about for Black Soldier Fly larvae are actually vestigial of the fact that insects are regarded in food as a contaminant. Well, obviously, in this case, we're going to feed these two insectivores, and it's almost purely insects. But – there are regulations pertaining to that. I mean, they flow from the fact that insects originally in food are considered to be a contaminant. Anyway, so we're up for that, we’re very aware of that. Some regulatory filings are in already pertaining to the EnviroFlight product, and more are underway. Your second question related to field trials in the United States.

Yes just an update on the Florida Key trial?

Yes, so as you know, we received finding no significant impact and environmental assessment from the FDA some time ago. The Monroe County, Florida fathers held a referendum. The neighborhood in which the original site was designated voted against deployment of our mosquito, but the rest of the county voted for the deployment of our mosquito. So we're working with the Monroe County officials, the mosquito control district down there to designate another area for that field trial. And we’ll have more to say on this topic in the near future.

Our next question comes from Tom Shrader of Stifel. Please go ahead.

So the GenVec, the adenoviral program, is part of the game here to build in tissue tropisms? Or are you -- are they all going to go to the liver? Just as we try to guess about where you're going to go with this program, what can you tell us? So much of gene therapy is focused on the CNS. Is that a possibility for your approach? Or what can you tell us?

This is RJ, Tom. And then Helen will speak that because she knows more than I do. But in general, the first thing to note about this library of adenoviruses, of course, is that they’re gorilla adenoviruses. So that’s the first thing that really drew us to this. I mean, I think it’s no big secret that we've been trying to acquire GenVec for a few years. And I think it was our third attempt to do so. We've always been drawn to this library because the gorilla adenoviruses should have a considerably reduced, if any, immunogenicity in man. Whereas the other adenoviruses can be expected to encounter a much higher incidence of immunogenicity. Our first objective for a global vector, of course, is to render it gutless so that it should have no immunogenicity right. Now beyond that there many, many possibilities and tissue tropism is definitely something we’re focusing on. With that, I’ll turn it to Helen.

Yes absolutely I think as R.J. mentioned the possibilities with adenoviruses on many different directions brought. I think we alluded to some of the usage in infectious diseases that we would be able to clearly go after some of the chronic infections even, and it’s huge in the field of the cancer vaccine. The possibility of addition of number of gene, and that can expressed simultaneously in this vectors. And this would allow us to create a unique cancer vaccine that can be combined with our other platforms, and it can be either CAR-Ts or with our ActoBiotics as we’re using it in the near future, not only in the autoimmune setting, but also in the gastrointestinal indication. It will offer a huge advantage, actually something that no other companies will have access to at this point.

Consider Tom, just as an example I mean, we’re talking about prophylactic vaccine. The ability to have a gene program that expresses from the antigen that is regulated by the switch so that you can provide boosting, right through application for example of a topical cream or take an oral pill three times. I started out in the vaccine business, and I'll tell you, among vaccine that do reach approval, ultimate efficacy is driven by compliance. And the number one compliance issue is getting those boosters. So the ability – to hand the patient the cream and say, put this on once a week for three more weeks or whatever, is potentially huge in this thing. So we're really excited about the vaccine potential as well.

And quickly in the fish purchase, is this the tip of the iceberg for your manufacturing? Or just I think based on what you said, this would -- this plant could cover 0.5% of the market. Is this -- do you expect many more purchases like this? Or is this a CapEx-intensive business? Just what you can say about the build-out in fish.

So first of all bear in mind, this is a majority-owned subsidiary AquaBounty. They have their own financials they’ve their own shares that trade on NASDAQ and so forth. We do not expect them to have to pony up whatever they provided on this particular exercise at all times as they advanced their plans. I don't want to get out ahead of AquaBounty in terms of sort of setting the course, but of course, we’re very familiar with them. The necessity here, of course, Tom is to demonstrate that the scalable operation of an RAS system that is designed for these particular fish produces the sort of economics that we believe should be displayed. And those economics will drive I think a lot of opportunity for worldwide expansion of this opportunity, worldwide expansion of this fish which we believe is superior. But I have to confess to you, the main thing that really excites me, of course, getting this plant is extremely exciting, but I'm tremendously excited by the fact that today Canadian diners are actually enjoying this fish. Now, it's not in hugely financial significant, doesn’t have huge financial significance today. But Tom, you know how many people and for how many years told us this would never ever happen. And let me remind you and our other investors that we acquired our nearly half interest in, our initial ownership position in AquaBounty for $6 million and so we’re feeling pretty vindicated. We saw it, others didn't. We were told by many, many people that it would never ever happen, and it did happen. And so it’s making me feel, along with our energy programs and some other things, we are growing on in therapeutics and so we’re pretty vindicated that our view of the future and like I was talking a few moments ago, Biotech 2.0 I mean look almost every day we see increasing vindication of the view that was really set forth in our S-1 four years ago. It’s about multi-genetics, it’s about – ability to induce and regulate expression in real-time like we do with IL-12 today so we’re feeling pretty vindicated. And so we think it’s a hugely vindicating move. The press since Friday, I think AquaBounty released this news Friday that Canadian diners are now enjoying this fish, has been I would say 95% positive. A newspaper in Fairbanks, Alaska published today an extremely favorable article. And of course Alaska is the state of the senator that has been our most local opponent. So anyways, we’re just feeling really about this. Like I couldn’t resist the temptation to brag to you, Tom.

Our next question comes from Tycho Peterson of JPMorgan. Please go ahead.

RJ, question on energy maybe to kick it off. You called out last quarter, a technical hurdle. Has that been overcome? And if any commentary on timelines for the broader energy transaction, the hiring of Moelis just curious as to how that process is going?.

As Andy mentioned in his remarks, Tycho, we continue to work with what we believe to be the most significant remaining challenge on isobutanol, but let's put this in perspective. First of all, this was a program that was partnered. We sold a 50% interest in this program to cover everything we thought would be required to reach success. We’re not there yet, but we are still within budget too. So it's not like we're actually spending Intrexon shareholder capital toward this object. But now let’s really put it in perspective. Isobutanol is potentially a replacement for gasoline. We always talk about it as a fuel additive in the numbers we publish, we say oh, it could be $80 billion et cetera. That has a fuel additive, but if you really look at it look it’s 98% of energy density of gasoline. It is less caustic, it is cleaner. So it can move in the same transport system and if you handed it to a gas blender, now I’m talking about outside the United States now, so outside of the regulatory regime that we operate within in the United States. If you handed isobutanol to a gas blender at low price, moderately cost isobutanol to a gas blender, he would think that he has the best starting material that he’d ever received. In fact, he’d then be able to use his gunkiest, cheapest stock in order to formulate ASTM gasoline. So we think that the ultimate market for this particular molecule is in an astronomic range. And so well worth the effort so while it is true that we are not yet we’re not declaring that we have a victory in isobutanol. Our team believes that we’re very close and they continue to struggle with what they believe to be the last remaining hurdle. At the same time, to get the second part of your question, as we reported on our last call, we are very much in the money in commercial with commercially significant yields on two very significant multibillion-dollar molecules. And led us to hire -- we’ve named the banker I think publicly, right? Moelis and Company – to potentially partner the entire platform, that process is now underway with across the world. And like the British say, Andy, watch this space. We will have more on this later.

And then as we think about both AquaBounty and the Arctic Apple, I’m just curious on a couple of things here. Pipeline for follow-on manual products, you mentioned a few in the slide. When could we see developments there and then pricing, I guess the salmon's being priced at kind of market rate, is that right about 5.30 per pound and should we assume similar pricing on the Apple?

No, you should not. So it's always been our objective to see, and I believe that this is the stated by Dr. Stotish at AquaBounty to really see the AquaBounty salmon for what it is which is nutritionally identical to a wild type salmon. Noted with the chief differences being, it will be grown closer to market. So it will be fresher. It won’t have antibiotics and vaccines on it and it will be free of sea lice. So if you want both things, then you probably won't like this salmon. But really it should be, we've always imagined that the salmon should really be regarded, just as the FDA said in their ultimate report, it’s nutritionally without any noticeable difference. In the case of the Arctic Apple however, there’s one of the reasons we're really looking forward to this fall’s harvest because as Andy mentioned in his comments, we’ll be doing some very deep market research to test what kind of price premium this Apple should come in. So unlike the salmon we do believe that the pre-sliced Arctic Apple will deserve what the people in AgBio are called a trade premium. And we’ll be in a better position to model I can tell you that on the numbers that Andy provided during his comments these were based on the absolute minimal price premium that we're capable of imagining. I think the market research could turn out to support a larger price premium in which case our profitability will be higher than what we projected.

And then last one could you get EnviroFlight’s revenues next year I know you’re scaling up production I am just curious as to when think that started to impact the P&L?

We should start to see some small revenue building next year, but we’re not going to make any projections on those numbers quite yet analyst we want to get the plant up running secure the customer contracts and then have a good time reporting the results as we move forward.

Our next question comes from Robert Breza of Northland Capital Markets. Please go ahead.

Maybe just as a follow-up to the prior analyst RJ as you think about the energy platform longer-term do you think about anticipating spinning that out as a individual asset per se I mean how do you think about the energy platform longer term?

Yes, it’s a really good question and I could tell you when Bob Walsh and his team produced the data that showed us that we really have a technical success on two of these significant molecules. As I think I may have mentioned on the last call the first thing I told our Board I'm not smart enough to figure out the answer of the question you just asked. So we better get some people who are smarter than we are. So that's the reason initial reason we hired Melissa and company then we later worked out with them and talked to some people in the industry. We later transitioned to a transaction-based engagement for more or less because we clearly see both options on the table. So let me answer and thank you for the question because it's a really good one. So there is a potential we really have two markets we look at their two markets for partners one is major chemical companies we’re talking worldwide class chemical companies. And the other would be IOCs international oil companies who have access to a lot of gas. In the former class it stands to reason that some of them could be more interested in particular chemical than the other. So for example if they have some complementary assets and skills, that they have already a large market share. If you look at something like 1,4 BDO I think they're only for significant but there are only really four companies I think in the world that make that stuff four or five. So some of them are pretty rarefied already and so it’s unlike that somebody else could really look at 1,4 BDO and say I got to have that. So I think what we're likely to see in…

The next question comes from Keith Markey of Griffin Securities. Please go ahead.

I just had one question, I was wondering if you might be able to give us an update on through Type 1 diabetes program?

You know, thanks Keith for the question but because of some ongoing developments in this program, I'm going to have to pass. I will say this program is under very active discussion and we have some moving parts we can say, but because of the moving pieces I’d rather defer on this question for now.

You just stayed tuned you’ll get it.

And this concludes our question and answer session. I would like to turn the conference back over to Mr. RJ Kirk Chairman and CEO for any closing remarks.

Thank you. Well as I've observed this is our fourth anniversary as a public company. It hasn't always been fun, I know it has always been fun for our public shareholders who expected our stocks is going to go up every week. And that said, I have to tell you I think that are intrinsic value today is an all-time high. I’ve stated in full recognition of the fact that our market capital - our market - I think share price in the summer of 2015 was in the high 60s. But we as a management team and I know I'm speaking correctly on behalf of our Board, we focus on intrinsic value. And we do it knowing that look a company that is based on doing world first instance things can't expect in a world that that loves conventionality right. And only likes novelty if it's being done by someone who is 90% conventional. It's the new thing for them for General Motors and we made like a new cars better than the old car but it's a car still. So we understand the world in which we operate, we knew when we went public four years ago that it would likely be the case for many years that our market capitalization would be less than what we adjust to be are intrinsic value. But there were some benefits by being a public company that we have reaped, we still believe that those are valid. So we like being a public company, but I just want to acknowledge I know that it has at times been painful for some of our public shareholders. All that said, I'm very comforted when I look at companies like Amazon and Netscape. And I see that these companies their share prices really didn't…

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.