Intrexon Forms Second Collaboration for its Natural Gas Bioconversion Platform

Intrexon Corporation XON, a leader in synthetic biology, today announced the formation of Intrexon Energy Partners II (IEP II), a joint venture with a select group of external investors, to produce 1,4-butanediol (BDO), a key chemical intermediate with a global market value exceeding $5 billion that is used to manufacture spandex, polyurethane, plastics, as well as polyester. This is Intrexon's second partnership utilizing the Company's proprietary gas-to-liquids bioconversion platform to generate high-value products from natural gas, the most inexpensive source of industrially usable carbon for fermentation today. Intrexon Corporation logo. "As an intermediate used in the manufacture of multiple industrial compounds, plastics, and fibers, the market demand for 1,4-butanediol is significant, despite the costly and energy intensive processes currently used for its production," said Robert F. Walsh, Senior Vice President, Head of Intrexon's Energy Sector and Industrial Products Division. "With the knowledge framework in place to optimize microbial engineering and fermentation, we believe our methanotroph bioconversion approach will reduce energy use, production costs, and waste while producing a single high value product." Through Intrexon's advanced suite of technologies, methanotrophs that naturally consume methane have already been engineered to produce isobutanol as well as farnesene. Production of BDO within these microbes follows similar metabolic pathways enabling translation of the Company's unique know-how and proprietary genetic technologies to achieve commercial-scale production of this valuable chemical along an accelerated timeline. Intrexon's approach may result in significant economic advantages in the production of BDO. Traditional methods require multi-step catalytic processes with high energy and hydrogen inputs. In contrast, the Company's bioengineering of methanotrophs will create BDO through a cost-effective, single-step fermentation process. Additionally through its superior yield potential versus other microbes and utilization of low-cost natural gas feedstock for fermentation, Intrexon's methanotroph bioconversion platform has the potential to drive industry-leading margins for the fuels and chemicals it produces including BDO. "IEP II will synergize with our ongoing isobutanol program within our earlier-formed Intrexon Energy Partners joint venture. Each of these programs highlights the strength and flexibility of our underlying bioconversion platform in generating varied compounds from a single low cost carbon feedstock," said Randal J. Kirk, Chairman and Chief Executive Officer of Intrexon. "Establishing additional ventures that leverage our technology leadership positions while retaining significant participating economics for our shareholders remains an important business goal for Intrexon, especially since we continue to note increasing efficiencies with scale at this point in our growth trajectory. Our capital efficient business model and strong balance sheet enable us to co-invest in some of these opportunities without the necessity of selling any additional shares, a prospect that we do not entertain for the foreseeable future." Through an Exclusive Channel Collaboration (ECC) agreement, Intrexon will receive a technology access fee of $18 million. IEP II will be responsible for all costs related to the development, manufacture, approval and commercialization of the product. Intrexon owns a 50% interest in the new venture.