This Analyst Just Tripled Intrexon's Zika Drug Sales Estimates

Intrexon Corp XON faces a large, multi-segment market opportunity, which outweighs near-term pressures related to its 2Q16 results, Wunderlich’s Ryan MacDonald said in a report. He reiterated a Buy rating on the company, with a price target of $50.

Intrexon’s Oxitec business has a population-based pricing model and the company intends to charging $8-$10 per person. In view of this, the estimate for the long-term revenue opportunity has been raised from $500mm to $1.6B-$2.0B, analyst Ryan MacDonald mentioned.

2Q16 Expectations

The EPS estimate for 2Q16 has been reduced from ($0.12) to ($0.27), in view of the performance of the company’s securities portfolio during the quarter, “which includes technology access fees paid to the company in the form of common stock,” MacDonald stated.

“As such, we believe investor focus should remain on the long-term upside in XON's model, rather than our lowered expectations for 2Q EPS,” the analyst commented.

Adjusted Ziopharm ECC

Intrexon announced an amendment to its existing ECC's with ZIOPHARM Oncology Inc. ZIOP in the areas of oncology and GvHD-driven investment in clinical development. As a part of the amended agreement, Intrexon would receive 20 percent of operating profits, as compared to 50 percent on products developed from the two existing ECCs.
Additionally, Intrexon would receive $120mm of preferred stock, which pays a monthly dividend of 1 percent.