Oxitec business

September 2016

Photo: Creative Commons

From its August beginnings as a commercial spin-off from Oxford University's Innovation management subsidiary, 'Oxitec' self-destruct GM mosquitoes have never quite fulfilled early expectations.

Even the rosy vision of an end to major world killers like malaria, and dengue fever didn't manage to sell Oxitec mozzies.

However, Zika virus with its horrific connections to birth defects, provided a much better PR platform to generate the will to spend cash and annihilate mosquitoes at any cost [1].

In the meantime, the rights to Oxford's GM mozzies have been sold into the tender care of US-based Intrexon Corporation, and continue to be mired in controversy.

Intrexon was founded in 1998 by a molecular geneticist. It seems to be a "one-stop-shop" for "biologically-based solutions" a.k.a. "Better DNA". These include Okanagan Speciality Fruits' non-browning GM apples, which growers are shunning to avoid the GM stigma, and a majority share of AquaBounty, developer of fast-growing GM salmon. The latter comes with the belief that approval by two of the most respected regulatory agencies in the world (Canada and America) confirms the safety of the freak fish for human consumption, and that this will somehow make people want to buy them. Some retailers have already announced they won't stock GM salmon.

When Zika virus hit the headlines, Intrexon shares bounced up 100% in three months. In April 2016, however, a firm of investment analysts released a report describing Intrexon's technology platform as an "overhyped, undifferentiated collection of commodity and failed products". It added that "Intrexon has been around for more than 17 years and commercialised effectively zero meaningful commercial products using their own technology". Some other market analysts have been similarly down-beat about the viability of Intrexon products.

While it's CEO insisted "Analysts don't understand our company", the reason could be in the report: "its (Intrexon's) technology is a secret. Nobody can explain exactly what they do ..."

On mosquitoes, the Report points out that the Oxitec theory hasn't been shown to work for dengue fever or malaria, so "who should Zika be any different?"

The cost of GM mosquitoes is significant, long-term and may not be practical. Indeed, the science on whether GM mosquitoes represent a cost-effective intervention against Zika isn't totally positive. If the area to be treated is rich enough, big enough and contains enough pregnant women, the biotech mozzies might be a good investment to reduce the toll of the virus. In some areas, the number of Zika infections that would have to be prevented to make Oxitec mosquitoes cost-effective is greater than the actual population. Also, as the proposed release in Florida Keys has shown, the people in wealthier areas don't actually want to be used as guinea-pigs. The GM mosquito solution, if it works at all, will have market limitations.

Intrexon management declared an operating loss of $147 million in 2015, losing its investors $84 million. Aquabounty alone reported a net loss of $3.9 million for the first half of 2016. The shares of the company analysts don't understand fell nearly 30% on the day of the Report's publication.

OUR COMMENT 

To put this story in perspective, in 1962 after two decades of centrally organised, military-style campaigns to eliminate mosquito breeding sites, almost 20 Latin American countries, including Brazil and all the Central American countries, had all but eradicated their mosquito problem along with the dengue fever and yellow fever they transmit. The current mosquito re-infestation in all these areas has happened because America didn't have the political will to spend the time or money on mosquito control and so remained a reservoir from which the insects, and the infections they carry, returned.

The Intrexon story gives an interesting take on just how tenuous the biotech dreams remain. 

Investment website, The Motley Fool, suggests "investors might be better off focusing on other investment ideas". 

Background:

[1] ZIKA AND SUPER-ZIKA - April 2016

SOURCES:

• Intrexon, www.dna.com
• Oxford University Innovation, http://innovation.ox.ac.uk
• Oxitec, www.oxitec.com
• AquaBounty Starts AquAdvantage Salmon trials in Brazil, Argentina, www.thefishsite.com, 29.07.16
• Lauren McCauley, Florida Keys Residents Resist Controversial GMO Mosquito Trial, www.commondreams.org, 15.08.16
• Jorge A. Alfaro-Murillo, et al., 2016, A Cost-Effectiveness Tool for Informing Policies on Zika Virus Control, PLOS Neglected Tropical Diseases, 20.05.16
• Clair Robinson, GM mosquito firm investigated by lawyers as share price plummets, GM Watch, 26.04.16
• Peter J. Hotez, 2016, Zika in the United States of America and a Fateful 1969 Decision, PLOS Neglected Tropical Diseases, 26.05.16