Good day everyone, and welcome to the Intrexon Second Quarter and First-Half 2018 Investor Conference Call. I'd now like to turn the conference over to Steve Harrison. Please go ahead.

Thank you, William. Welcome to Intrexon's second quarter and first-half 2018 investor conference call. I'm Steve Harriso, Vice President of Investor Relations at Intrexon. And I'm joined by Joel Liffmann, Senior Vice President of Finance; Bob Walsh, Senior Vice President of Energy and Fine Chemicals; Thomas Bostick, Intrexo's Chief Operating Officer; and Nir Nimrodi, Intrexo's Chief Business Officer. R.J. Kirk, our CEO, will join us for Q&A. 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. In particular, this afternoon's press release and our discussions may reference certain estimates with respect to our financial performance, including estimates of our revenues and earnings per share for the second quarter and first-half of 2018. 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. On today's call, we will provide an update of our core businesses, highlighting progress over the last quarter with the focus on what we anticipate to near and long-term drivers of shareholder value. The recap will be followed by a Q&A session, which will be led by our CEO, R.J. Kirk. First, however, I would like to invite Joel Liffmann to give us an update with respect to the filing of our quarterly reports.

Thank you, Steve, and good afternoon everyone. As you saw the filing of our Form 8-K this afternoon, we will not be filing our Form 10-Q today as originally expected. Rather we expect over the next few days to be completing the restatement of our first quarter Form 10-Q and then filing our Form 10-Q for the second quarter. The filing delay for the second quarter and restatement of the first quarter are due to our implementation of the Accounting Standards Codification Topic 606 effective January 1, 2018. ASC 606 is a new revenue recognition accounting standard. It requires that we change the way we recognize deferred revenues, which in our case relates to fully refundable, fully non-refundable, and fully collected technology access fees previously recorded and prior to this year recognized on straight line basis. Recently in consultation with our external advisors, we concluded that it's appropriate to provide our technical accounting analysis for certain aspects of ASC 606. As a result, we will be restating our first quarter Form 10-Q, which will result in a significant reduction of deferred revenue and accumulated deficit, and a more modest downward impact on our revenues and earnings. We still need to complete the work on ASC 606, and on a preliminary basis it appears that we will reduce the January 1, 2018 opening balance sheet deferred revenue account by $67 million, resulting in a balance of $210 million. This reduction will of course impact our reported revenues going forward, but I remind all that these area non-cash revenues, and are being recognized over the next several years. As I noted, we expect to file the restated Form 10-Q for the first quarter and the second quarter Form 10-Q sometime over the next few days. In the interim however, we thought it…

Next slide, when thinking about Intrexon it's important to understand the process by which we address global challenges with the precise control of biological systems across microbes, plants, animals, and human cells. At its core, Intrexon works to effectively express and regulate genes in a wide range of cells and organisms for a wide range of applications across a diverse spectrum of large end markets where we believe we can achieve high-performing and significantly differentiated businesses. Next slide, as we review these platforms today, we continue to believe that energy and health will be the key drivers of value this year. While 2019 will be the year when our plant and animal programs have matured in scale to the point where they too will be measurable drivers of shareholder value. I would now like to turn the call over to Bob Walsh for an update on one of our near-term value drivers, the Intrexon Energy Program.

Thanks, Steve. The promise of Intrexon's proprietary and proven methane bioconversion platform is lower operational costs and capital expenditures per ton of product, higher conversion efficiency and ability to scale down as compared to conventional natural gas upgrading technologies. Our process turns natural gas, the lowest cost and most widely available form of carbon, into higher value carbon outputs using a type of bacteria, called methanotroph, that naturally metabolize methane, which is the primary component of natural gas. Next slide, since [indiscernible] oil and gas prices in 2009 a tremendous gasoil [arbitrage] [ph] has emerged from [indiscernible]. Even today, as oil has risen above $65 a barrel, North American natural gas has not broken $3, the equivalent of $18 oil. Although we expect some volatility, the long-term trend remains intact. Next slide, over the past several years the Intrexon team has assembled and fine tuned a genetic toolbox as an approach to methane upgrading. Commercial magnitude of this platform is [immense] [ph]. Our lead product, 2,3 butanediol, which is catalytically converted into synthetic rubber is a $22 billion annual opportunity alone. And the four chemical and two fuel molecules being developed have a combined annual market opportunity in excess of $1 trillion. Synthetic rubber business is also growing [indiscernible] GDP as even electric car require tires. This market opportunity has generated a high level of interest. We can share that our partnership discussions continue to advance. Our plan to break ground on a commercial butadiene plant by the end of the year remains in place. We have narrowed the sites down to two locations with two different partners both with significant existing infrastructure. We're in the process of kicking up engineering for the two sites for further optimization. Site selection was actually challenging given the large number of suitable sites…

Thank you, Bob. Before I take you through some of our human therapeutic programs I would like to announce that Dr. Helen Sabzevari, President of Precigen will host an Analyst Day in Germantown, Maryland in Q4. At this meeting Dr. Sabzevari will provide an in-depth review and update of our cell and gene based therapeutic programs. We're excited for Dr. Sabzevari to expand on these programs in Q4 and will make details available in the coming weeks. Next slide, now for a review of our subsidiary ActoBio Therapeutics; the ActoBio platform offers many opportunities to address a range of conditions as it provides a unique delivery mechanism of synthesized therapeutics [inolactis] [ph] a microbe used in food production that has a history of safety in humans, further the construction of the treatment can be done with limited genetic modifications and allows for scale. Next slide; on this slide, you can see how we plan on advancing this platform across gastrointestinal, autoimmune and systemic diseases. ActoBio is progressing well with its plan to create the broadest and most advanced clinically stage pipeline of micro based therapies and we expect to partner either programs, the company itself, or both in the near future. A few updates on the Acto pipeline. The safety data on the first patients is complete in the Phase 2 clinical trial for AG013 in the treatment of oral mucositis, 24 patients were randomly allocated to the study and 19 of those patients completed the safety evaluation for oral mucositis which is one of the most common adverse events associated with cancer chemotherapy. Oragenics our partner is now planning to begin enrolling the remaining 160 patients. Data from this study is expected to be available in Q3, 2019. Dosing of the first patient is imminent for AG019, Phase 1b2a…

Thank you, Tom. I will now take your through some of our programs and enterprises that are dedicated to food, animals, and agriculture. Next slide please, to-date we have planted approximately 900,000 arctic apple trees on 590 acres of orchards. This growth is in line with our expectations with plans to plant an estimated 1 million more trees in the spring of 2019. This aggressive planting rate is one of the largest planting campaigns undertaken by any company to-date. Okanagan Specialty Fruits launched sliced fresh apples in the fourth quarter of 2017 with the limited supply of fruit. Consumer reception to the apples has been very favorable. We expect to harvest approximately 10 times more apples this fall as we did in 2017. This is going to allow us to increase our product presence to an anticipated 1,000 retail stores for an estimated six months period, beginning the last quarter of this year. This is the function of trees maturing to three years, the age in which they begin to produce viable fruit. Once mature, these trees can produce apples for up to 25 years. For this reason, as well as our plants growth and trees planting, we expect this to turn into a meaningful contributor with $30 million to $35 million in revenues in 2020 and ramping very nicely thereafter into a considerable business. This forecast is higher than our original plan. Thanks to the progress we have been making in our orchards. This fall's larger volume will give us our best as to-date of the power of the arctic apple to capture a significant share of the 500 million sliced apple opportunity in the U.S. and even grow it. As a reminder, we also continue to advance non-browning traits in avocadoes, pears, cherries, and lettuce. Next slide please,…

And we will now begin the question-and-answer session. [Operator Instructions] And the first questioner today will be Jason Butler with JMP Securities. Please go ahead.

And thanks for taking the questions. First, just following on from the plants and animals theme, can you maybe give us an update on the Botticelli program, and then just remind us what you think that the TAM for the Exemplar Genetics MiniSwines are? Thanks.

Hi, Jason. Yes, sure. Well, first, with Botticelli, our initial application of this technology, as you may recall from a couple of quarters ago when we first talked about it, is lettuce. And we mentioned earlier that we're working on non-browning lettuce. So if you put the two together, you can realize that we're using Botticelli to accelerate development in non-browning lettuce. I can tell you so far we're working in 11 different genotypes of lettuce. We like all the data that we're seeing and we think this could really be significant in terms of improving its shelf life. We've also been working on tomatoes. All of our data there are exceeding that -- yes, we believe that anyone has ever produced by, very consistently, 20X or something like -- you know, it [indiscernible]. And we are currently squared off with some very large companies that produce in grow houses tomatoes around the world at very large volume. So stay tuned for that. I think some people may recall that when we first talk about Botticelli, the social media kind of lit up the next day on an opportunity that we hadn't thought of, but when we described the technology suddenly people were calling us the day after our conference call saying, "Have you guys thought about using this in cannabis?" So the answer was no, we had not thought of that, but we've given it a lot of thought since. And we've learned from the top companies growing cannabis in the world today in markets, where it's legal to do so, that Botticelli looks like a very, very promising enabler of that rapidly-evolving consumer and medical industry. So we are very active in negotiations with some of these companies now. And again, just stay tuned, but we're very excited about the process. There are other costs that we're working on right now in terms of proof of concept, and we'll be providing more details on these as the data becomes available. What was the second question?

The TAM for Exemplar?

It's really hard to say, Jason. When you think about the size of Charles River Labs, for example, which does -- I think around $500 million a quarter, I don't know how much of that is in their mouse models, but I'm pretty sure it's the majority of it, and then when you consider for therapeutic developers what the predictability or the predicted value of rodent experiments in therapeutic disease models really is, as compared with our [indiscernible] MiniSwine. We think this has a very, very good market. The real high value-add component though is that we're engineering -- we're confident we have the only FDA-approved genetically-engineered pigs thus far on the market, and we continue to develop custom disease models with therapeutic companies that have significant appetite to obtain superior knowledge of the phenotype side of a disease. And so that business is really going well. I don't think I can estimate the TAM today. It's already growing, as was just alluded to, as Nir just mentioned. It's growing faster than we thought it would, and we're getting a lot of interest. What's really intriguing the heck out of me though now is the amount of interest we have in using our engineering of these pigs, which remember, these pigs, they grow up to be about the same size as a human being. And so, now we're engineering these pigs in the field of regenerative medicine. We have a couple of partnerships already, and some more that are in negotiation now. And so, we find this part as -- Nir, what do you call it, as value vector or something. We find that really intriguing. So it's really, I think, going to be two businesses. One is -- well, you can look at it as three. There will be standard disease models in which we'll sell the pig, right. Then there will be custom disease models in which we could operate basically like a CRO and actually perform the work for a therapeutic company in pigs that had to engineer it with a particular human disease. And then, the third element is to use all of these technologies, including our genetic engineering of these pigs to produce cells and again potentially even organs for transplantation. So it could be quite vast, but we [indiscernible] that. I'm just thrilled it's going to be profitable this year, so it's tracking very nicely, but thanks for the question.

Great. And then if I can, just one big picture question, R. J., looking to be -- well, it does connect between the enthusiasm of you and the team versus -- and the progress you're making versus the traditional milestones, investors look for in value. So, can you maybe talk about how you think about continuing to incentivize innovation internally versus getting rewarded for that externally? And in that context, how does that impact how you think about the business structure with the changes you've made in the last 12 months, capital structure, and access to capital? Thanks.

That's a mighty big question, Jason. I'll just mention two things briefly about. One is, I realized more than anyone because I hear a lot from our shareholders, maybe Steve hears from more of them, but we speak with our shareholders very frequently. And I think what they are really looking for is for us to drive something across the goal line in terms of a big attainment that really punches through commercially. And that's our primary focus. We've called 2018 the year of energy and health, and I think we've got a quarter-and-a-half left in 2018. I think we're going to deliver on both of those promises for 2018. A success of that type, Bob told you the latest numbers on 2,3 BDO. In my opinion, that product alone is worth more than the market capitalization of Intrexon. So I think that share price and capital formation capabilities for the company will sort out in the near-term once we produce such a success. The second part of your question is one that we've been working on for a couple of years, and I think we've already given some advice about how we're going to proceed. And that is we realize that Intrexon as being a broadly distributed genetic engineering company, of course, it's really more than just genetic engineering; if you think about Botticelli and EnviroFlight, and so it's really -- when we say engineered biology, it's the application of principals of industrial engineering to biology more generally. But certainly includes biology. And when you think about it broadly, we realize that we fly in the face of the existing pools of capital and standard industrial taxonomy. I think the world likes to see therapeutic companies that are therapeutic companies as such. And certainly the pharmaceutical industry has evolved…

Okay, that's helpful. Thanks for the color, R.J.

And our next questioner today will be Tycho Peterson with JP Morgan. Please go ahead.

Hey, thanks. One for, maybe Bob, just on the planned [ph] scale-up, you mentioned getting close to signing a partner there. Can you maybe talk as to how you think about the economics, you talked about $75 million cost, will they pick up most of that or how do you think about the split? And is the %25 million in EBITDA what you're committing to for 2020?

Thanks, Tycho, that's a good question. Couple of different ways to think about scale-up, and I think there's two different -- yes, as you know we're going down two different paths. One is the activity we hade going on with [indiscernible] on strategic partnership, and looking at that as -- it was different capital formation around it. The other thing that we have talked about in the past, and you and I have talked about [indiscernible] February-March, is what we previously talked about is more of a toll processing arrangement with the third-party that is Colony Energy Business, where they build on operators to maintain, and we give them a return of capital. We take all the commodity risk, which is [indiscernible] talked about, it's really the commodity risk. That also has the benefit of a co-location, which is where we are keen on, because as I mentioned, the 75 million of the Greenfield basis if we had to build the roads, the rails, everything associated with that. There is no [indiscernible] infrastructure. So that has the benefit of adding that infrastructure. So in some ways, you are using other people's money. You have to pay return of their capital, but you gain efficiencies in a sense of operational and capital efficiency. So that's kind of the scale-up. Does that help, Tycho?

It does. And then the contracts you're deciding, these are kind of five to 10-year take or pay type contracts with the end customer. Is that right?

Yes. [Indiscernible] contracts, yes, they're five to 10-year take or pay monthly contracted, monthly negotiated prices.

Okay. And then, I guess back over to healthcare for a minute, R. J. can you just comment if there is any update on Fibrocell following in from safety data we saw for FCX-007?

I don't think we have anything to offer beyond that what John Maslowski and the folks at Fibrocell have provided publicly, Tycho.

Okay. And then, I think you are also talking about making opioid collaboration there with Epimeron, can you maybe comment on that?

It's Bob again, Tycho.

Yes.

Yes. We had been, and I think we most recently we announced that the collaboration with Epimeron producing novel enzyme that they brought out a plan that actually causes the -- allows us to make [indiscernible], and I think we are patent-protected. We really wanted to have that. So it allows us to get the [indiscernible] which is base for the opioids from that. We have always made great progress on it, and we're in a lot of discussions on it too. So it's quite exciting that we are the first ones to get there from to eliminate the poppies and a lot of the issues that come around obviously from certain countries, and also just the cost of production predictability.

All right. Last one from me, just on Trans Ova on the raiser [ph] technology, how far away do you think that is from being commercialized?

We as intimated we really want to see the offspring of the animals we have created, the raiser animals we have created. So in pigs, it's you know, maybe happier, and in these [indiscernible] we have both -- well, we have two variety -- you know, somewhat longer.

Okay. Thank you.

And our next questioner today will be Robert Breza with Northland Capital Markets. Please go ahead.

Hi, thanks for taking my questions. R. J., most of my questions have been asked, but not to get too technical, but your [indiscernible] trade, so…

I did eventually find honest employment there, Robert.

And so, as you think about these negotiations that you are in the two partners, have you moved beyond the letter of intent stage to contract negotiations, or where are you at from a legal standpoint of you to like get this locked and loaded for -- by the end of the year?

Well, I'm not sure which process you are referring to, but the answer will be same regardless of the process, because in any one of these processes, we probably have people at different stages. And I don't want something to hear on this call, you know, that they are either in the front door or in the rear. So they are all in front. But the real answer to your question is we are at a variety of stages with a variety of partners on a variety of projects.

Okay. But do you kind of have at least like a letter of intent understanding of how things are going to progress, is that fair?

Can you repeat the question? I'm not sure I followed it.

You have a letter of intent kind of how things are going to progress, and like a general understanding?

Yes. So we are certainly circulating term sheets, and we have delivered some definitive agreements as well. I'm not sure I'm really getting the gist of your question. As I mentioned, I think we will be where we wanted to be at the beginning of this year on energy -- by the end of this year, and I think you will see some significant developments at each of our therapeutic companies as well in the remainder of this year, and let's not forget our partners iPharm [ph], which I watch it pretty closely if I were you, because we are pretty excited about what was going on there as well.

Fair enough. Thanks, gentlemen.

And our next questioner will be Derik de Bruin with Bank of America Merrill Lynch. Please go ahead.

Hi, guys. This is Mike Ryskin on for Derik. Thanks for taking the call. I wanted to follow-up on a couple of points you mentioned on Okanagan Specialty Fruits update, on the artic apples you mentioned you increased the 2020 revenue forecast. In the past you have talked about 20 million in 2020, and then ramping over time as the planting space grows, with final number of 500 million in 2026, and you know, 50% gross margins, EBITDA, et cetera. Just curious the bump from 20 million to 30 million, does that flow through to the later year, or is this more about you got more apples down this year or you know, essentially I'm asking is what is the secured [ph] 2026 numbers?

That's a great question, Derik. And I'm happy to provide the answer, because it actually is the productivity per tree exceeded our original estimate. So it does flow through the later years.

All right, thank you, that's helpful. And then a follow-up on the unverified opportunity, just curious there, can you talk a little bit more about who your customers are going to be, how that's progressing, and any kind of revenue estimate or ballpark you can give us, you know, you talked about the 900 metric ton scaling to 3,200, just give us something to size that opportunity.

Yes. So unfortunately I can't give you any detail about that. We are closing, as you know, we are 50-50 joint venture partner, EnviroFlight with Darling Ingredients, and we closely coordinate messaging with them. So I can tell you that what we disclosed today in terms of the nameplate [indiscernible] and what we disclosed today in terms of the nameplate and so forth, obviously we have discussions with them. Beyond that, I don't think we are able to disclose, although we did allude to the fact that the order book is looking really good. What just fascinates me about this entire project is that every component has a market even what they call the [indiscernible], which is truly the waste product of [indiscernible] billions of Black Soldier Fly [indiscernible] that has a very attractive market. And so, we are able to sell a lot of components out of this production stream. And because of that, we are happy to have the partner we have, because Darling has a lot of expertise in really figuring out that the appropriate product mix and pricing and so forth that's really rotating for a living. So we are really excited about this project.

All right, thank you.

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

Well, I don't really have much to say. I think as we have indicated, we are very squared off right now on -- we have recognized our responsibilities. We're very square off on executing. And I think we will do so. So meanwhile, we do have exciting things coming up in other fields that we will be talking about more in the future. We don't call 2019 year of plants and animals for nothing. I have mentioned -- I was in a meeting with a senior U.S. government official, and I was surprised about how much he knew about Intrexon. And then I learned that he told me 75% of the files they have for genetically engineered animals were ours. I never really thought about it from a regulator perspective before, but if you really combine, if you think about all the insects, pigs, fish and et cetera, et cetera, you know, it's really quite impressive. And it's a genuine position of industrial leadership, and just what we always hoped to obtain, an encouragement. And certainly we want to see that turn into big business. So, just back to the original point, it's sentimentally about business. So, this is a company that I think as I had indicated in the press release, has a really long display of tremendous potential and leadership in the field of synthetic biology. But I'm a business person, first and last, we've got wonderful technologists in this company, in fact about 70% of the people in this company work in R&D. Our big wish right now is that a lot of [indiscernible] people help us turn a lot of these projects into businesses, and half of the order is energy and health. And that's our principal focus. We spent not only the majority of our time in those two areas, but also the majority of company's resources of really every type this year [indiscernible]. So, stay tuned, and thank you very much for your interest.

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