3 Biotech Products Intrexon Wants You to Know About

By Markets Fool.com

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Image source: John Goode/Flickr.

After flying under the radar for the first year of its life as a publicly traded company, next-generation biotech Intrexon has finally snagged investors' attention. In the last six months the company has landed multiple significant healthcare collaborations, made several strategic acquisitions, and announced two big partnerships on a novel therapeutic platform based on CAR-T, which is easily the hottest research area in oncology. The momentum has been reflected in the stock, which has soared 53% since the beginning of 2015 alone.

Yet, while Intrexon has promising potential in healthcare, investors seem to be overlooking the near-term and long-term growth opportunities represented by non-health applications of the company's synthetic biology platform.After all, 90% of product revenue in 2014 was derived "from the sale of pregnant cows, live calves, and livestock used in production", as noted in the company's most recent SEC filing.A further 79% of its service revenue derived from cattle breeding programs. That might come as a surprise to most investors looking at the cancer-fighting potential of Intrexon stock.

Of course, the diversity of the company's opportunities is a good thing, as these three biotech products in development demonstrate.

Non-browning apples
One complaint about genetically modified foods is that the benefits (pest resistance, drought tolerance, disease immunity, and the like) are usually not directed at consumers. It's a fair point, but it's slowly beginning to change with products such as the Arctic Apple, which Intrexon acquired in February.

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What's makes Arctic Apples so special? Simple: they don't turn brown when sliced. You would be forgiven for not seeing how that feat affects you or creates value, but the opportunity could be enormous for Intrexon, its shareholders, and public health in general.

Non-browning apples -- and other fruits or produce -- have the potential to remove the "yuck factor" from healthy eating habits, which could make all the difference in our attempts to get children to eat their fruits and vegetables. This could also make a small but powerful change to fast-food meals, school lunches, and other food applications where visual observation can have a big effect on the perception of freshness.

More good news: the last regulatory hurdles were cleared in the United States and Canada in March. That clears the way for Intrexon to begin offering interested growers the special apple trees for niche applications before growing into larger potential roles, such as supplying the fast-food chain. Although it will take several years before the opportunity bears fruit (literally, it will take two to three years for the trees to produce the first marketable Arctic Apples), investors can expect a market opportunity worth several hundred million dollars. Throw in future value-added fruits in the pipeline, and the potential could easily rival that of a blockbuster cancer drug.

Pre-birth prevention of inherited diseases
In 2013 Intrexon andOvaScience formed a 50/50 joint venture called OxaVon that will develop tools to prevent inheritable diseases carried by parents from being passed onto their children.It might sound like a long-shot application, but most of technology needed already exists today -- and OvaScience is a critical component of the venture.

Tools that prevent diseases from being inherited by children would be a great complimentary product portfolio for OvaScience, which is developing and commercializing next-generation fertility treatments and IVF technologies for women that are struggling to find success with traditional methods. Early results from the company's first product, AUGMENT,have been spectacular, with clinics reporting success rates ranging from 25% to 53% for women with at least three failed IVF treatments. One of the pregnancies witnessed in a recent AUGMENT clinical setting occurred in a woman following seven failed IVF cycles.

Meanwhile, Intrexon could gain access to a very large market thathasn't seen any major innovations in quite some time, which is perhaps the primary reason IVF is costly and often fails. The opportunity could be huge: some estimate the global IVF market could be worth $22 billion by 2020 -- and that doesn't include next-generation technologies and services that aren't on many people's radars today. In addition to human IVF, Intrexon could apply technologies developed in OxaVon to the bovine reproduction technology platform it acquired with Trans Ova in 2014, which allows ranchers to produce more offspring from elite cows (cows with superior traits and features) to increase the value of their livestock. Put another way, whereas agricultural biotechnology applies genetic tools to plants to drive value for farmers, Trans Ova applies biotechnology tools to animals to do the same.

While there is no relationship between OxaVon and AUGMENT, the results for the latter point to a promising future for potential treatments and products. Selecting human embryos based upon their genetic profile could ensure babies aren't born with debilitating or fatal inheritable diseases such as Huntington's disease. Don't think it's possible? Consider the following selection from a recent MIT Technology Review article reviewing the state of engineering humans and human embryos:

OvaScience has been collecting, and studying, what it believes are egg stem cells from the outer layer of women's ovaries. The company has not yet perfected its stem-cell technology -- it has not reported that the eggs it grows in the lab are viable -- but [David Sinclair of Harvard Medical School and advisor to OvaScience] predicted that functional eggs were "a when, and not an if." Once the technology works, he said, infertile women will be able to produce hundreds of eggs, and maybe hundreds of embryos. Using DNA sequencing to analyze their genes, they could pick among them for the healthiest ones.

..."We think the new technologies with genome editing will allow it to be used on individuals who aren't just interested in using IVF to have children but have healthier children as well, if there is a genetic disease in their family," Sinclair told the investors. He gave the example of Huntington's disease, caused by a gene that will trigger a fatal brain condition even in someone who inherits only one copy of it. Sinclair said gene editing could be used to remove the lethal gene defect from an egg cell. His goal, and that of OvaScience, is to "correct those mutations before we generate your child," he said. "It's still experimental, but there is no reason to expect it won't be possible in coming years."

How close is such a reality? For now, the world's leading scientists have called for a global moratorium on designer babies until the risks and medical benefits can be better understood and controlled, but it seems likely the technology will be safely and responsibly commercialized at some point in the future. Intrexon and OvaScience are good bets to be first in line.

Methane-eating bacteria
The petrochemical industry is pouring money into manufacturing facilities that use the components of natural gas (methane, ethane, propane, and so on) to make useful, everyday chemicals. Why? Using natural gas as a feedstock is often cheaper than using petroleum and petroleum derivatives, which translates into lower production costs and higher margins. But the petrochemical industry isn't alone in eyeing the economic advantages of natural gas for chemical manufacturing.

By now you can probably see where this is going: Intrexon is engineering bacteria that eat methane and produce valuable building-block chemicals such as farnesene and isobutanol. (The company is using strains that naturally consume methane, but enhancing their abilities to produce specific chemicals.)

As it turns out, methane is cost competitive with sugar, which is the primary input for biochemicals, or chemicals made from industrial fermentation (example: ethanol). In the chart below, consider the cost of sugar (blue) and natural gas (red) on an energy basis plotted against the cost of methane corrected for carbon content (green).

Source: IndexMundi, NASDAQ, author.

While methane-eating bacteria are still in the early stages of development, the potential opportunities are huge. Farnesene can be converted into everything from cosmetics to jet fuel to fragrances, while isobutanol can be processed into plastics and fuel additives, among other things. Additionally, using methane instead of sugar could allow biochemicals to be produced in areas that lack access to cheap or abundant agricultural sugars and/or have cheap and abundant natural gas reserves. Regions such as Texas, the Arctic, offshore drilling rigs, and (eventually) a Mars colony.

What does it mean for investors?
Perhaps the craziest part of this list is what it doesn't include: fast-growing Atlantic salmon, enhanced cattle, a living-art and toy company, and a pet-cloning service, among other things. Additionally, Intrexon's technology actually isn't a part of any products yet on the market, which were acquired from platforms that predate the company's platform (although next-generation products and versions will likely be enhanced with Intrexon's synthetic biology tools). The point investors need to consider is that the company's potential growth opportunities extend far beyond headline-hogging healthcare applications and cancer drugs.

The article 3 Biotech Products Intrexon Wants You to Know About originally appeared on Fool.com.

Maxx Chatsko has no position in any stocks mentioned. Check out hispersonal portfolio,CAPS page,previous writingfor The Motley Fool, and follow him on Twitter to keep up with developments in the synthetic biology field.The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.