Good afternoon, and welcome to the Intrexon Fourth Quarter and Year End 2017 Investor Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Tom Shrader, Vice President of Communications and Strategy. Please go ahead.

Okay. Good afternoon, everyone. Welcome to Intrexon's fourth quarter and year end 2017 investor conference call. I’m Tom Shrader, Vice President of Communications and Strategy at Intrexon and I’m joined by Joel Liffmann, Senior Vice President of Finance; and Thomas Bostick, Intrexon’s COO. R.J. Kirk, our CEO will join us for the Q&A session. During this conference call, we’ll 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 our Safe Harbor statement contained in the earnings press release as well as Intrexon’s most recent SEC filings for a more complete description. This afternoon’s press release and our discussion this afternoon 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 our GAAP measures are contained in the earnings press release as well as on the Investors section of our website at www.dna.com. The format of today’s call will include some background along with a review of Intrexon's progress in 2017 by myself and Tom Bostick. We will also recap some events from early 2018. This recap will be followed by a financial update from Joel Liffmann and the call will end with a Q&A session. Next slide. As an overview of two Intrexons here, I'd invite investors to think of Intrexon less in terms of its areas of business focus such as health, food and energy and more in terms of its core expertise, the precise and when necessary regulated expression of genes in a wide collection of host cells and organisms. As…

Thank you, Tom. Healthcare and energy remained important areas for Intrexon but several other programs in the general area of engineered plant and animal cells are important and all advanced nicely in 2017. I’ll quickly review our three core programs in growing better plans. Then I will cover what we view as the natural partners of our programs in agriculture as well as our attempts to protect crops from pests that are increasingly resistant to conventional control mechanisms. Following that overview, I’ll give an update on these programs, including our efforts to protect humans from disease causing pests. Next slide. On the agriculture side of Intrexon, most people are aware of our work with apples, our subsidiary Okanagan Specialty Fruits, now has three approved varieties in non-browning apples and our version of golden delicious apples, Arctic Golden, we sold on a very limited basis in 2017. The differentiating feature in all of these apple varieties is that because they brown much more slowly, they can be sold pre-sliced without preservatives. Our apples are probably the only apples that can be sold this way because other apples turn brown extremely fast on the order of hours rather than weeks. Our 2017 crop was large enough to get controlled consumer feedback that was extremely positive and supports our program and progress to aggressively plant our apples. The second line on this slide is an indication of four other products that are advancing through the development phase. In each case, there is a strong rationale that slowing the browning cycle will lead to a better tasting and more natural alternative. The third line in this slide, shows some data from our second agricultural platform. This technology is an increasingly mature research that we acclaim Botticelli, as like the birth of Venus. No ganic…

Thank you, Tom. The financial results that were reported today reflect a considerable scientific partnering and commercial progress, as Tom Shrader and Tom Bostick just described. I'd like to point out that as we closed out 2017 and implemented our plan to internally develop several of our most promising opportunities, we undertook an analysis of our entire portfolio of ECCs, technologies and other assets. As you'll see in our fourth quarter and year-end results, we terminated an ECC which produced an accelerated recognition of previously deferred revenues. And separately, we recorded an impairment charge against goodwill and intangibles. Each of these are non-recurring and non-cash items, but we may again have accelerated deferred revenue recognition in 2018, should we terminate additional ECCs as we focus our efforts on each of our maturing and our in-house early stage programs. Now, getting to the numbers. First quarter and full-year revenues were $77 million and $231 million respectively, increases of 67% and 21% over the prior year periods. These results include approximately $29 million of revenue recognition from the termination of one of our ECCs which we report as a component of collaboration and licensing revenues which grew by 32% over the prior year. Our Trans Ova business contributed substantially all of our product and service revenues in 2017. And combined, these grew by 14% and 5% in the fourth quarter and full year versus the prior year periods. Throughout 2017, we saw improvements in the Trans Ova business and we continue to have expectations for a high return on the investments we are making in transforming this business from the bovine reproductive service to proprietary product supplier to the dairy and beef cattle industry. Total reported operating expenses, including the impairment charge that I mentioned, for the fourth quarter and full year were $103.5 million and $368.9 million, increases of 32% and 70% over the prior year periods. Excluding the previously discussed impairment loss, adjusted EBITDA for the fourth quarter was a gain of $13.7 million versus the prior year loss of $5.8 million. For the full-year, adjusted EBITDA was a loss of $11.8 million and compared with a loss of $26.6 million in 2016. Our management team is executing against the broad set of opportunities at hand. We are focused and financially disciplined. We ended 2017 with consolidated cash position of approximately $75 million, and we have common and preferred equity securities in our ECC partners with a value of $176 million. In early January, we completed a second carry stock offering, which raised gross proceeds of $86 million. I refer you to the earnings release and 10-K for additional financial information. And we will now open the call up to questions.

We will now begin the question-and-answer session. [Operator Instructions]. And our first question comes from Jason Butler with JMP Securities. Please go ahead.

So, first one -- first question on Xogenex, can you just talk about the goal of the Phase 1 trial in heart failure? For example are you including pharmacodynamic endpoints that could be predictive of clinical benefit?

Hi, Jason. R.J. here. As you can see from the slide that Tom showed you and of course that does come from animal models, but yes we are looking at ejection fraction for example.

Okay, great. And then for…

Nobody is going to do a study like this in healthy normals, right?

Right.

So we will be dealing with significantly impaired patients and of course we expect the Phase 1 to really let us know if it we’re improving our efficacy at least to our satisfaction at that point.

And then the second question on the Botticelli platform. Can you give us any numbers around the improvements in speed of development or yield or essentially how can we quantify what the value add is here? And then can you just confirm is the partnering efforts here separate and distinct to the partnering efforts for Florian?

The answer to the second question is yes, it’s separate and distinct. And the answer to the first question is I can help a little, so from -- in other words, I can’t state what the total value is but I can tell you as a matter of just benchmarking against known methods of propagating plant list without going to seed, we believe we are currently at least in lettuce 150 times faster. Now what does this mean? As Tom mentioned in his comments, there’re really two -- we see two immediate applications to this technology. One is to accelerate for people in agbio, right, people who are developing plant traits, to get results much more quickly. And that’s why we have such broad interest in this technology. It was really what inspired us to create this technology. But once we had it and the results seemed so dramatic, we are still trying to wrap our heads around other ways we used this technology in specialty crops, in which if you think about, let’s use lettuce as an example, so if you are growing lettuce in let’s say hydroponic greenhouse or something like that, controlled environment they call it today, in a controlled environment maybe you get a crop per year, if you can get rid of the requirement to produce seeds and germinate seeds, then you could produce -- you can increase productivity by say 50% in that environment in that crop. And that’s the one, as Tom mentioned, that’s the one on which we have the greatest amount of data. I think we have done over a dozen different species of lettuce. And then we have less mature work in tomatoes. We don't know how many how many crops this technology will work in but we have ongoing programs too to find out.

If I can just add one quick question there. Can you give us any sense of what the time or cost or development hurdles are to test in each one of these new projects as it were and essentially what is the limitation to asking questions for new species?

Afraid I can’t help you. I know that it varies. I know that it varies from species to species Jason. And for some of them, the application and significance is much more than would be the case for others. As I said, in a production platform, obviously this technology to produce corn is useless, right. But to achieve a stable corn trait for one of the companies that is active in that field, we think is highly useful.

Next question is from [Derek D. Bern] with Bank of America Merrill Lynch. Please go ahead.

This is Mike Ryskin on for Derek actually. A couple of questions. First one on the energy platform. You mentioned some key highlights, cash positive yields, and a couple programs, 99% purity into 3 BDO. I was just wondering what the next steps were for these two leading platforms. You talked about partnership discussions ongoing but is there incremental benefit about -- around getting higher yield, is there incremental than incremental benefit around doing higher purity or what’s the focus for this year as you work it out internally to scale up production and higher power plant, bigger plants et cetera?

I’d say higher yield is the goal there. It’s pure enough or we are out for testing but…

Especially once you are in profitability right, then any improvement in yield is pure profit.

Right and also -- and this is actually an important question because as the yields get better the details of the plant change. And so, you don't want to build a plant that’s designed for one yield only to avoid another. So I think there is a lot of information in the fact that we were able to complete the engineering package that tells you how far we are down the line. There is some information in that comment.

So if I could ask a follow-up on that then. So even though you achieved cash positive yields, how long is the runway until you -- I don’t want to say max yield but I know what you are going to say okay this is good enough let’s scale up the plant at this point. Is this a multiyear runway just to achieve on the next several quarters? What’s the remaining upside?

I think we have said we will break ground on a plant this year. So we're not there yet, but we're confident enough that we will be there in 12 months, is I think the best answer I can give.

And then really quickly on the Precigen platform if I could. Appreciate the heightened focus on the multi-genic approach, that’s very interesting. Could you talk about any -- I realized you may not want to disclose this but anything you can say about any multi-genic approaches you are looking at besides the Xogenex heart failure platform?

Yes, absolutely. So as you’ll recall, all of our work in CAR-T is directed toward a point-of-care CAR-T capability, and all of these constructs are multi-genic. Some of them are quite complex. You you'll see more details about these as our partners begin initiating their clinical trials and this is coming up in the very near future. But I can tell you just to give you some idea, each one of our gene programs that we are putting in the human primary T-cells is larger than that which our competitors could manage in an antivirus. So they are all large, they are all more complex. So in order to have -- some of them have multiple switches and multiple open reading frames and we -- it's consistent with what Intrexon always set out to do. We talked about our desire in CAR-T states in 2013. We talked public other than -- and we think we've achieved that. So we have clinical data upcoming and we are looking forward with great excitement to those data because we think that will bear out the predictions that we have and the work we've done over the last several years in the field. But yes, all of these are multi-genic constructs.

And any color on why the graft-versus-host project was canceled?

Focus, it's about focus. I mean we and our partner ZIOPHARM believed that the point-of-care CAR-T is extremely compelling and both companies are very tightly focused within that partnership, very tightly focused on that objective.

[Operator Instructions]. Our next question is from Tycho Peterson with JP Morgan. Please go ahead.

Maybe just following up on the CAR-T discussion. Can you maybe talk about the pipeline for additional similar hospitals deals to the ones you have -- the one you had and how many you think you could sign in the first half of this year for example?

Yes, I can't give an estimate on the second question Tycho. But on the first one, we have term sheets out to other parties right now where we are recording considerable interest. I don't think that people have really realized how significant what we've done here in terms of inverting the business model. So these are leading cancer research and treatment centers, which you can suppose are the ones that are most familiar with the competitors’ product. They are licensing this technology from us and going to bear the cost of these clinical trials. So we suggest that perhaps some of the finest cancer researchers and physicians who examined our data believed that this program is pretty compelling. But again, as I mentioned a couple of minutes ago, it's all about clinical data ultimately and the way we’re looking towards that which is not too far way now.

And then can you talk about I guess the FEL-2 engineering package what that entailed, and you what that implies for the construction of the 40K ton production facility?

Let us get, yes, the phone with Bob Walsh. He will be much better at explaining the details. But he once told me I was the only person who always said no to FEL-2 engineering plan was but I'm not I'm sure that's correct. Let us keep offline. He will take you through the detail. But thanks for the question.

And then last one on OpEx just kind of higher level question as you have moved away from ECC model. Can you talk a little bit about where you are making incremental investments and I guess when we should start to think about royalties in commercial sales starting to kick into the model?

Sure, yes. So, I think what you will see initially Tycho and what we think is really going to be the big driver we hope to be and expect to be the big driver for us financially in 2018 is transaction money. And what I mean by that is, look, we publicly announced we have four partnering programs on mature platforms underway at the current time. And so, I think the first thing we would expect because our target in each of these cases would be to achieve something like a joint venture, so I think the first thing you would see would be the transaction money from these. But some of them are actually commercializable now, and as they’re mature, and so stay tuned.

And our next question is from Alex Schwartz with Stifel. Please go ahead.

My first question was with your point-of-care CAR-T trial. Approximately how many cells do you infused back into the patients so we have pretty good sense of how many cells your competitors are infusing into their patients? How many are you looking to infuse? And any sense of how long your membrane bound IL-15 cells are persistent in comparison to the competitor cells?

I don’t believe we disclose the data related to the second question. But I am sure you -- the fact that you posed a question at all means I think you rest one of the chief implications. And your first -- the first part of your question, improve that you do. Obviously we are not doing ex-vivo cell expansion. So the cell number is considerably smaller, and that’s because our membrane bound IL-15 we think will drive sufficient cell proliferation in-vivo to do the job. So, the dose is and we’ve -- I don’t think we have disclosed what it will be but it will be orders of magnitude less than that is used by the current players.

And then just on your energy platform. So congrats on achieving cash positive yields of 2, 3 BDO and isobutyraldehyde. Maybe can I just pose a question a little bit differently, where are you in terms of yields achieved as a percentage of your targeted yields for these products? And then secondly, you previously talked about maybe some isobutanol technical hurdles. Looking at slide 17, the isobutanol trend continues to go up. Have you ever come out and maybe just an update there please?

Yes. So, first with regards with isobutanol, we are not where we want to be. We press the bulb all the time for -- to tell us that we are solidly in the money on isobutanol. And look we are very conservative and Bob is even more so. So, for example we calculate the constant natural gas in each of our financial calculations at the [HH] index price. Even though it’s quite obvious you can buy natural gas on a forward contract at considerably less than that. But -- so using $3 per million btu and as the cost of the input, we are not yet where we want to be on isobutanol. The team is showing I think very recently a very positive trend on the main technical hurdles that they have been working on. But we are not in a position today to provide numbers on that. I forgot the first part of your question. Oh yes, in relation is theoretical, yes. So we're close enough that we think that we're going to actually get very, very close to see, which is very exciting. Please bear in mind that the total -- the overall objects of the methane bioconversion platform is to turn these large commodities into genuine biotech products with genuine biotech gross margins. And that’s our objective. And so, when we say that we're in the money on something, we don't mean you know by a trivial amount. It’s highly significant. It’s extremely, extremely compelling, in my view. And that’s the reason we think we're right for partnering.

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Okay. Well, first let me say that as usual I have to comment on the team. I mean we have a phrase about tap dancing, tap dancing all the way to the office and so the first thing I’d like to do is just express my gratitude for place we occupied today, the place interest on occupied. The team that we have on our board today which is by far the best team I've ever worked with. Our Board which I would contend is potentially, well, I just -- I can’t imagine how they could be better as they are highly supportive and extremely accomplished and very, very helpful to all of us, our scientists. Some of the work that you saw in the presentation today and bear in mind we are not showing everything we are doing as I mentioned in my little attribution in the press release. We really like the fact that we've achieved this inflection in our evolution so that we don't have to partner in a very public way early stage programs and then talk about those. So we're doing a lot of early stage work now. And some of this I think is extremely compelling and some of it will simply have to await data. At Precigen, for example, we show a pipeline slide and I think the title is disclosed targets. Well, that’s done with our knowledge that we have candidates that are in development now that were only initiated a couple of months ago that we expect to see in the clinic if everything continues to go the way it’s going. So we expect to see in the clinic this year. So all of these achievements are telling me that our scientific team of nearly 700 people working in our labs is…

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.