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Player Avatar TSIF (99.96) Submitted: 5/11/2014 6:30:06 PM : Outperform Start Price: $13.22 XON Score: +54.09

Intrexon is a spec play for me. It IPO'd in September 2013 at $23 and hit $35 in January riding the "biopharm bubble".
It dropped hard when the bubble defated and caught a higher tailwind on a report on one of it's segments in early May.

IIntrexon is not an easy company to "figure out". I think it has "confused" the market. It has multiple segments that on the surface don't appear related. When it prints a news release on one segment, it gets branded as "this is what it does", I do/don't like that.

I debated in one forum with someone who seemed to think they did "synthetic fuels" and had no moat. When the news hit that "engineered salmon" could face state by state regulation, it's AquaBounty Technologies division came in the news. Acquaculture was a 75 Ton, $135B (YES, B, BILLION) industry in 2012 and is growing. A one gene differentation can produce Salmon that grow at twice the rate of wild and that are sterile. States that depend on salmon state concern for "cloned" salmon and the risk they could harm wild salmon. The salmon have a gene difference and are not "cloned", and again are sterile. The first farm is "inland highland Panama"...yep a threat to Atlantic salmon That debate aside.

The point is that Intrexon is trying to become all things "dna". The salmon was the most likely revenue stream other than licensing. It participates in stage product portfolio -- spanning health care, energy, food, and environmental applications. It's website is DNA.COM, not biofuels.com or engiineeredsalmon.com.

Due to confusion Interxon sold off heavy as it rode the biopharm index down with many others that were forward priced but virtually no supporting revenue.

It's hard to tell what the future holds, it could be huge, but it could take time. Valuing a company with this many facets is difficult. I was watching its' drop, it went from $15 to $13 Friday, (5/9/14) on heavy voluem and the knife edge was pointing right at me. I reached out at $13 and rarely for me, the knife turned and Intrexon closed the day on a high near $16 on 2X average volume.

I can't use metrics to justify this call, at this point, it's a spec play, and you can read all the literature and all the opinions and I would challenge you to call it anything but a spec play.

63% is owned by one fund. I could see much more selling on the long road, or some segments might produce "good news". If you play it, scale in, set limits, but try to understand "what you are playing". Don't be fooled by a segment report.

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Member Avatar TMFBlacknGold (98.80) Submitted: 5/29/2014 11:01:12 AM
Recs: 2

Good stuff, TSIF. As you've stated (and what you mean to say), Intrexon is an organism company. Intrexon intends to make money by engineering biology in an efficient and predictable manner to create novel products in energy, health care, environmental services, and nutrition. The label of "organism company" is difficult to digest for many investors because the industry is new and, well, largely all pipeline products at the moment. The other players in this space are Ginkgo Bioworks, Synthace, and Zymergen. However, Intrexon differs (currently) by wanting to own the products in creates with mostly smaller companies, rather than just collect royalties down the road.

I tend to think of Amyris as an organism company given its capabilities, but it's pursuing a more vertically integrated business by also owning production facilities. That's proving costly at the moment, but there are advantages to be had as well.

While I don't think the market is ready to understand the organism industry just yet, I believe most of the selling has occurred with the ending of lock-up periods for executives and early investors. The run-ups occurred almost exactly up to the lock-up period end, at which point the stock tanked. There are also some questionable press releases from Intrexon. For instance, I cannot find Agilis Therapeutics anywhere. It could very well exist, but it isn't the only company to vanish after Intrexon issued a press release.

That being said, Intrexon's technology is real and valuable (I've discussed it with the company and others in the industry), but investors must realize that this is a super long-term story. It will take quite some time to build consistent and reliable revenue.

More on the organism industry:
http://www.fool.com/investing/general/2014/03/02/how-designer-microbes-and-the-organism-industry-wi.aspx

Maxx Chatsko

Member Avatar TSIF (99.96) Submitted: 5/29/2014 5:33:42 PM
Recs: 0

Thank you for the comments and additions Maxx. Looks to me like it might be getting a little frothy after the run-up, but again, it's valuation is difficult to determine. The lack of monetization will keep it rocky. I hadn't timed out the Lock-up expiration. That must have timed with the bad "salmon news".

The additional clarity is appreciated.

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