Good day everyone, and welcome to the Intrexon Third Quarter 2018 Financial Results Conference Call. [Operator Instructions] I'd now like to turn the conference over to Steven Harrison, Vice President of Investor Relations. Please go ahead.

Welcome to Intrexon's third quarter 2018 investor call. I'm Steve Harriso, Vice President of Investor Relations at Intrexon. And I'm joined by Bob Walsh, Senior Vice President of Energy and Fine Chemicals; Nir Nimrodi, Intrexo's Chief Business Officer; Thomas Bostick, Intrexo's Chief Operating Officer; and Joel Liffmann, Senior Vice President of Finance. R.J. Kirk, our CEO, will join us for Q&A at the end of the call. During this conference call, we will make various forward-looking statements. Investors are cautioned that our forward-looking statements 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 our forward-looking statements. Please read the Safe Harbor Statement contained in the press release as well as Intrexon's most recent SEC filings for a more complete description. This afternoon's press release and our discussions may reference certain non-GAAP financial measures, including adjusted EBITDA and adjusted EBITDA per share. We use these financial measures as a more accurate estimate of our ongoing financial position. Reconciliations to GAAP measures are contained in earnings press release as well as on our investor section on our website. On today's call, we will provide an overview of our core businesses, highlighting progress over the last quarter with the focus on what we anticipate to be near term drivers of shareholder value. The recap will be followed by a financial update from Joel Liffmann and will conclude with a Q&A section, which will be led by our CEO, R.J. Kirk. Next Slide, before we jump into the business update, I would like to begin by highlighting the paradigm that is so unique and exciting to Intrexon. Engineered biology is a largest industrial revolution the planet has ever seen. Intrexon's precision engineering capabilities and the best and brighter scientists make us the technical and industrial leader in the field. The attainable values give us the opportunities to pursue targets that are difficult technologically but promising for global health. At the same time we meet our approach by augmenting our platforms for use across multiple targets. We will be highlighting this throughout today's call. I would now like to Bob Walsh for an update on our energy and fine chemical programs.

Thank you, Steve. Next Slide please. Intrexon's proprietary methane bio conversion platform turns low cost natural gas into higher value fuels and chemicals using a type of bacteria called methanotrophs. These bacteria naturally metabolize methane, which is the primary component of natural gas. Current technologies to upgrade methane into liquid products have both high operating expenses and capital funds in addition to non-scale unofficially. It can be deployed in limited geographies such as the Middle East and Africa. Our approach is designed to enable lower operational cost and capital expenditure per ton of product coupled with high conversion efficiency and the ability to scale down as compared to these technologies. Next Slide please. Intrexon's team has built an optimized genetic tool box for our approach to methane upgrade. The chemical and fuel targets enabled to this platform offer significant market opportunities. Our lead product 2,3 butanediol, commonly called BDO is a precursor to synthetic rubber and a $22 billion market opportunity oil, not to mention the synthetic rubber market is also continuing to evolve. In total, support chemicals into fuel molecules in our pipeline of a combined annual market opportunity in excess of $1 trillion. Next Slide please. Now, I'd like to provide an update on the methane bio conversion platform and speak to our progress against several key objectives. First, in our lead program 2,3 BDO, we are now producing BDO from natural gas and roughly 50% of the theoretical final target yields for commercial scale result. And well above our target yield to slide to side [ph] and break around for a 40,000 ton 2,3 BDO capacity small scale commercial platform, this would result in approximately 26,000 tons from the final products after the catalyst accept to produce P2 dye [ph]. The other programs Isobutanol1, 4 BDO are…

Thank you, Bob. Now moving on to Slide 10, demonstrating the creative ingenuity of our team of team at Precigen, they recently reported data on a multi gene and therapeutic candidate that in appropriate pre-clinical models suggest potential superiority to approve anti-PD-1 checkpoint inhibitors. Further information on the Precigen portfolio and some of the candidates will be addressed in the upcoming Investor Day. I would now like to turn the call over to Nir Nimrodi, who will provide an update on ActoBio and our commercial assets.

Thank you, Steve. Now, for a review of our subsidiary ActoBio therapeutics, the ActoBio platform offers many opportunities to address a range of conditions as it provides unique delivery mechanism of synthesized therapeutics in L. lactis, a microbe used in food production that has a history of safety in humans. On this Slide, you can see how we plan on advancing this platform across gastrointestinal auto immune and systemic diseases. ActoBio is progressing well and it's planned to create a clinically stage pipeline. During the third quarter of this year, ActoBio again derives for two therapies that have been previously partnered with Harvest. By doing so, ActoBio has control over a broader and deeper pipeline and expects to have a total of four products in various clinical development stages by mid-2019. Next Slide, in this slide you can see the key milestones ActoBio recently achieved. Our partner Oragenics continues to enroll patients in the Phase 2b clinical trial for AGO13 for the treatment of oral mucositis, which is one of the most common adverse event associated with cancer chemotherapy. The enrollment goal is a 160 patients in the US and Europe. The Belgian clearance to enroll patients was recently received. Data from this study is expected to be available in late 2019. Our potential disease modification therapy for Type 1 diabetes is advancing well. ActoBio dosed the first patient in late October in the AGO19 Phase 1, 2 study. Type 1 diabetes is a disease which impacts over one million children and adults in the US with no treatment available for the underlying condition. The Phase 1b portion of the trial will deliver AGO19 alone to demonstrate safety and the Phase 2a portion will include the low dose of antiCDC to calm the immune system and stimulate thistle homing in…

Thank you, Nir. I would like to begin with an update on our Botticelli program. The Botticelli platform is a next gen tissue culture technology that replaces cloning without impacting downstream processes and products. It is designed to enable high volume propagation of numerous strains of plants with genetic purity. The ability to rapidly multiply proprietary plant lines in smaller areas offer significant advantages to conventional methods and the ability to generate steroid plants potentially eliminates disease risk associated with cotton. Next Slide, we have demonstrated proof of concept data for high throughput regeneration in two important commercial corps lettuce and tomato and we're further exploring its use for both indoor and broad acre crops. Next Slide, shifting gears I would like to review our self-limiting insect programs. In October we announced that Oxitec a wholly owned subsidiary of Intrexon entered into a second cooperative agreement with Bill & Melinda Gates Foundation to develop a new strain of Oxitec self-limiting friendly mosquitoes. This Anopheles stephensi strain is being designed to combat malaria in India, the Middle East and the Horn of Africa. This project we utilize our Oxitec second generation technology which is designed to reduce pest population and possibly help reverse pesticide resistance in pest insects and locking additional potential value for traditional insecticide companies whose products are losing effectiveness. For Aedes aegypti work which focuses on the factors of dengue, zika and yellow fever, we continue to transition our second generation technology known as 5034. As a remainder the 5034 produces only viable male progeny and new product distribution and commercial modalities are possible. Oxitec is developing a new commercial distribution product and we expect to begin field trials on this product in 2019. We continue to believe that this new technology will provide significant value to insecticide companies, commercial facilities like hotels and resorts, governments looking to extend the life of traditional pesticides that today are becoming increasingly ineffective as well as customers using integrated vector management approaches. I now turn the call over to Joel Liffmann for a financial update.

Thank you, Tom. I'd like to make some brief comments on our financial performance during the third quarter. Third quarter and nine months revenues were $32.4 million and $117.4 million respectively, decreases of 30% and 37% from the prior year periods. In short, our reported revenues reflect the strategic decision made last year to ramp down from the ECC model to the product driven operation s that Bob, Nir and Tom just discussed. These internal programs and platforms represent our most compelling commercial opportunities. Total operating expenses for the quarter were $98.9 million and $286.1 million for the year-do-date period, increases of 8% and 9% over the prior year periods. Research and development expenses are approximately 45% of our total operating cost and reflect the investments we're making in the novel and important programs that my collogues highlighted earlier. Research and development expense increases have been the primary driver of operating expense growth this year as we move closer to commercialization on certain programs and commence new ones. Third quarter adjusted EBITDA was a loss of $28.9 million and compared with a loss of $19.4 million in the year ago period. The year-to-date adjusted EBITDA was a loss of $75.3 million versus $25.5 million in 2017. We began the third quarter with $200 million convertible note offering and ended the quarter with a cash balance of $246.6 million. We also reported common and preferred equity securities in our ECC partners with a value of roughly $163 million. After the close of the quarter, we announced that all of the preferred shares we held since IFM were retired. I refer you to the earnings release and the 10-Q for additional financial information. We'll now open the call up to questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question today will come from Jason Butler of JMP Securities. Please go ahead.

Great, thanks for taking the questions and thanks for all the color in the prepared comments. First one I know you said that you were going to give more color on the PD-1 candidate at the R&D Day, but can you give us any color on the type of bacteria you're using or any ability to control expression, any just big picture thoughts about the constructs.

Yeah, it's a very good question Jason and I regret that we can't actually provide - we know what it is obviously, but let me just encourage you and everyone to stay tuned for your invitations for Precigen Investor Day. The sample from the Precigen portfolio that we display here was chosen obviously with a lot of talk and discussion between Dr. Sabzevari and myself and the reason I like this particular one is it really shows you the level of thought that - how can I put it, the level of potential achievement that this team - this team has displaying. This is clearly big league stuff. There is a - it's a very significant portfolio. I feel - I visited German town recently, I told the team there that look - I've been closely connected to a number of therapeutic companies that were successful. And in every case I can say, look, it requires good technology, it requires a good team, it requires a good leader I think we have a great leader and great team and great technology in this case. But also some intangible elements and that is so much in evidence at Precigen. I was - I left my most recent being there just completely overwhelmed and I think that you're going to be very pleased at the Investor Day. Can't tell you more about this particular therapeutic candidate here but we did want to show to you just so you - like I said, see you can see the level of ambition and ingenuity that this team is exhibiting.

Okay, great. And then just one question on the cannabinoid platform, just as we think about the potential progress here over 2019 in terms of yield et cetera, can you just maybe compare the challenges you might face versus what you have - the progress you made with the methanotroph [indiscernible]. You are working with yeast, so to scale up, follow a more established path for example with this platform. Thanks.

Yeah, let me ask Bob to respond to this one, he's - this is in his -

Got it, RJ. Thanks, Jason. Yeah, it's a great question and you're right on it. Within yeast a lot of these things don't have recovery and all that. It is great awesome science, they're doing great work, but there is a lot - there is much unknowns as you say and so it's going to - it will be a faster pattern on methanotroph by far. I mean, I think we even said today, we've made great progress there and it's becoming relevant.

Great, thanks for taking the questions.

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

Hi, thanks for taking the questions. So you guys - kind of backing on the last question, as you think about the whole bio conversion platform here 2,3 BDO and other extensions I guess would be the best way to characterize it. How do we think about the site selection first, when does that start to impact revenue and then how do we think about the overall life of Isobutanol portfolio et cetera?

Bob, do you want to take this?

I'm back. Yeah, I'm here. It's a good question. If you think about it it's really continuum that as we move our - as we improve our economics and previously we'd said win the money right on a cash basis on - we take our lab scale results and put it into the economic model and there's progression on 2,3 BDO that we are in site selection that we said, we're not - due to the condition of our negotiations, we did not say anything further. But you start site selection before your - at your final yield because the scientist have lot of great confidence, they're going to continue to look forward and then your - it's a 12 to 15 months process between detailed engineering and all that to get the startup and then you go in a startup mode that takes you a few months to ramp up. So from the time of putting a shovel in the ground to some real revenues is probably a period of roughly 12 to 18 months depending on whether other factors to resource availability and we are very focused on 2, 3 BDO right now. I think that - the way to think about of that. It is a platform and to the extent we prove out to 2, 3 BDO larger scale most of - that facility is a cookie cutter now. It doesn't matter what it makes now from an engineering perspective and so the next molecules whether it's like - like for example, would be able to go to a much larger scale too, so we are very focused on 2, 3 BDO proved out at the small scale commercial plan.

So, this is a follow-up to that from an engineering perspective and like you said putting a shovel in the ground and getting a plan up and running, I would assume and so correct me if I'm wrong here, but I would assume a lot of the products that people will be using within these facilities are going to be somewhat custom-made to move from small scale to large scale. Is that a fair assessment or?

From an engineering perspective, we really try not to invent anything. So a lot of these facilities are in use in different industries, for example, different gas and liquid interchange for example in the fermentation, the recovery process is - I'm a chemical engineer, it hurts me, but it's not rocket. It's not hardcore engineering. It's proven process from an engineering perspective. We are really trying to use as much we can prove technology at scale. The cool science in taming the methanatroph from something that couldn't be done to making 2, 3 BDO is really the answer. And the other beauty is that this really is not a custom product. 2, 3 butanediol, butonedial is synthetic rubber for tires, ADS that's going to an existing large market, yes, you need to be on specification, but you are not inventing some new flubber or something, you go into the large existing market with a lot of existing customers that are large players.

Just maybe one other follow-up, as you look at Okanagan, this is not for you, Bob, I guess, sorry, take you off track, but as you look at Okanagan, you mentioned kind of doubling the capacity of trees going from 1 million to 2 million. What are the early signs of demand that you are seeing that I mean obviously I've tasted the apples have some grade [ph]. So I mean I know the product, but you still have to convince consumers, retailers, et cetera or this kind of trying to dig into what other additional insight you might have seen that maybe we don't know?

Hi, this is Nir. Thanks for your question. What customers up until now seem to like the most about the project is the fact that it tastes better. It lasts longer and it doesn't brown. So the message is very simple. It resonates well with the customers. The very few that ask questions about how we have designed the product receive the answer very, very well. They actually appreciate the transparency and the confidence in which we are describing the advantage of the product. So we are quite confident that the product will continue to meet high demand. And currently I wish we had more products. We are totally constrained by the supply and not by the demand.

Well, put some miracle [indiscernible]

We are working on the quantity.

We are working hard on the quantity. The planting campaign thus far is probably the most aggressive that any company has ever taken with any - and it's only going to intensify next year.

It sounds great. Thank you, gentlemen.

Thanks, Robert.

[Operator Instructions] The next question will come from Derik de Bruin of Bank of America Merrill Lynch. Please go ahead.

Thanks. This is Mike Riskin [ph]on the line for Derik. I want to continue on that last topic, the . Okanagan apples. Last quarter you sort of gave us an updated time line and progression for the ramp and you talked about $30 million to $35 million in revenues in 2020 up from the original $20 million. I just want an update on how you are tracking towards that and if you could extrapolate anything for 2019. You talked about GenVec's expansion. So is it fair to think that we could see $10 million to $15 million in revenues in 2019 then?

We did not provide guidance for next year intentionally. We wanted - first of all, three months ago, we wanted to confirm the productivity goals we have. Next year obviously we should generate many more apples. The reason we, however, provided guidance for 2020 and not earlier is because the ramp up is really very steep. The trees are still young and we are planting more this year than we did in the last two years combined. So we would refrain from providing specific guidance for next year. But we reiterate our assumption for 2020 with more confidence.

Okay. That's helpful. And then you mentioned this is something that we have talked about for some time the shift from the ECC-driven model to the product development model. But as you do that obviously you are going to incur higher costs and if you look at some of the cash burn and the net loss attributable to Intrexon, it continues to grow as you invest in these platforms. How do you develop the balance sheet and where you are and do you foresee any additional need to raise capital as you continue to invest in these platforms?

Yeah, we are very comfortable with our current capital position. Everything that we are doing, I think I mentioned that in the press release by the way, this in the press release which is this has long been our plan and our wish and our goal to become a company that is product-based and I am thrilled with our current portfolio and their prospects on these products and remember it's not that we said that we are not interested in partnering. What we said was that we are very interested in partnering, mature platforms and products because the value of those partnerships is obviously orders of magnitude larger, the value of a partnership doing that. The other thing is if you got something really great, then you can literally exact. You can be more selective in the partnering process and you can look for partners who bring more to the table than just money. People who bring infrastructure like as Bob discussed on the methane bioconversion platform partnering. Obviously a major energy company any of the ones we are currently in discussions with, they bring a lot to the table in terms of infrastructure and capability beyond the financial contribution. So we always planned on making this transition. We are very excited about the rate at which we are making it. And we are content with our current capital position.

We move on to the next question then. Our next question will come from Darrel Weber, a private investor. Please go ahead.

Thanks for taking my call. I just have a couple of questions here. Starting off with the Cannabinoid, do you believe we are at a point where we are scalable of any of the ideas you guys are working on? And so is this something that is partnerable in the near term? Turning to Botticelli I saw you had some news today on tomato when you can expand and what that means as far as the business and is there interest with Botticelli with respect to cannabis there is a male plant, there is a female plant, so maybe if you could talk about that a little bit. And lastly, you talked about organ transplants, you're going to have the first - treat that with an organ what would be the proof of concept, where it's going to be and what kind of market is that it's very exciting? Thank you.

Thanks, Darryl. I think it was three questions. I'll skip to first one because I think Bob Walsh really already answered that in terms of the scalability of the Cannabinoid expression platform. But let me move on to Botticelli. So Intrexon, this is one of those examples. I'm so happy we have this one in fact, because as I've said for years and you've heard me say this for years, Darryl, when you have a company that is doing a bunch of world first instance very, very ambitious projects that we believe the result of which is ultimately inevitable, I mean even given our belief that the result is inevitable, if not by us then by someone. The real issue becomes how long is it going to take you to do that and so we hedge against that as Steve mentioned in his remarks, we hedge against that by doing several things, many things actually in parallel, because we know that some of them will take longer than we would like, but some of them may actually have a much more accelerated pathway to commercialization, so with regard to methane bioconversion platform, I will say one of the things I am proudest of in Intrexon is that we stuck with that platform, we believed in it, we saw that it ought to be achievable the first, I mean, I think the highest praise to Bob Walsh and his team there in south San Francisco because it was a very difficult work. As Bob mentioned in his comments, the prior literature actually said you couldn't engineer this organism. I mean there were a lot of professors who believed that and a lot of literature that indicated that obviously we've been very successful in doing so and the team has done a…

Hi, RJ you're right, we cannot disclose more information about this particular collaboration. However, if you think about the use of our capabilities in the regenerative medicine, you can use our MiniSwine pigs and our ability to genetically modify them to produce both cells that could be used for human therapeutics and complete organs. We are pursuing both approaches right now and both collaboration. The market potential for each would be quite high, obviously higher in the organs but also in the cell area. So stay tuned and we'll share more information in the future.

Great. Just one last follow-up back to Botticelli, could you explain Botticelli to the audience in a clear fashion, I think, [indiscernible] Because in the field there is some confusion as to what the Botticelli really is. Maybe if you could expand on that in layman's terms possibly?

Yeah. So unfortunately it is technical, Darrel and I'm not really sure how to –but I can tell you what the result is. What we've demonstrated on the Botticelli platform is that we began with certain tissues are always seeded out plants and turn those into many genetically identical plants, bypassing the need to actually go to seed and germinate the seed. So it was originally developed by our team frankly as a research tool because it would enable if you were developing a trait, it would enable you to shrink the time that is required to do that from, say, five years down to two years. What we realized once they've demonstrated, what they showed us the data on what they had achieved initially in lettuce. What we realized was it is certainly interesting from that perspective and should really be useful to practically anyone who is developing traits in plants. At least until we find out that it doesn't work in some plants, but we haven't experienced that yet. The direct to market idea is to provide it as an alternative to propagation and plant propagation is a huge industry despite its costs and this we think gives us an ability to introduce a lot of efficiency. Furthermore with regard to plants that are inherently genetically variable and that's most of them, they are all genetically variable to some extent but some are more so than others. This gives the producer the ability to standardize his product. So, for example, in cannabis and hemp, we are particularly interested because that - those plants are genetically unstable and which means they require constant breathing in order to maintain a certain level of output or whatever it is you are seeking to have whether it's some industrial CBD or what have you. And this will enable us to actually standardize the plant for a producer. So it should, it should allow us to do that. And so we are very excited about it and as I mentioned, the large-scale growers that we are in discussions with are very excited as well. But thanks for the question.

Perfect. Thank you so much.

This will conclude our question-and-answer session. I would like to turn the conference back over to R. J. Kirk for any closing remarks.

Oh, I forgot the closing remarks. I mean I forgot to think about it in advance, but let me just thank once again our very patient shareholders. I'll mention that short a while ago I bought about $100 million worth of stock that's near our currently traded price and I don't do things for show. My confidence in the ultimate success and even the near-term success this company has never been higher, if share price aside, if you told me at the time of our IPO, so 63 months ago that we would be sitting here and you showed me this conference call and the 10-Q that was filed today and the press release that was issued today, being in that time machine that you take me forward 63 months to see this, I will just tell you today, where we are today, the achievements that we made would vastly exceed my most optimistic expectations at the time of our IPO. So I think the company has been very, very successful programmatically. It's not a darling of investors because it's not a simple story. It's not a story that simpletons can easily understand. I'm not putting anyone down, but I am just, it's not a story that it's simply understood. Let me put it that way. And frankly a lot of investors are very time-constraint and it actually takes time to understand Intrexon. I am not going to apologize for that because it's inherent to the strategy that we embarked on, i.e. as I mentioned earlier in order to succeed, in order to have the belief in our own survival. We had to be targeting multiple applications of our synthetic biology in parallel. Today I am very glad we did that. But my point is, it doesn't convey in a…

This conference is now concluded. Thank you for attending today's presentation. And you may now disconnect your lines.