Intrexon Corporation and Surterra Wellness Partner in $100mm Deal to Advance Commercial Scale Fermentation-based Cannabinoid Production

Exclusive Global Agreement to Transform Surterra’s Ability to Produce Specific Cannabinoids to Meet Growing Demand, Boost Innovation and Product Development

BUDAPEST, Hungary and ATLANTA, June 18, 2019 /PRNewswire/ — Intrexon Corporation (Intrexon) (NASDAQ: XON), a leader in the engineering and industrialization of biology to improve quality of life and health of the planet, and Surterra Wellness (Surterra), one of the fastest growing health and wellness companies in the United States today announced an exclusive global licensing agreement. The companies will join forces to advance Surterra’s cannabinoid production at a reliable, efficient, cost-effective, industrial scale utilizing Intrexon’s proprietary yeast fermentation platform. The $100 million deal, including milestones and royalties, will leverage each company’s expertise to ultimately bring new cannabis products to market to meet growing, and more selective, future consumer demand, with greater supply chain security, in a more consistent, efficient and cost effective way.

Intrexon has scaled its proprietary yeast fermentation process and is on track to realize production of pure cannabinoids at a target cost of goods of <$1,000/kg. With exclusive global access to Intrexon’s technology for microbial production of cannabinoids, Surterra gains a clear research and development roadmap to:

Isolate, produce, and explore the therapeutic benefits of specific, rare cannabinoids and produce them in large quantities at a lower cost.

Improve yield consistency, purity and quality control to meet the future need for large scale, predictable cultivation.

Reduce reliance on conventional indoor and farming cultivation methods for production of cannabinoid concentrates, which are resource intensive to isolate and can lead to quality and quantity variability in end products; transition to a more sustainable, environmentally friendly model.

Focus traditional agricultural grow investment for flower and smokable products.

This significant and strategic investment with Intrexon means Surterra can ramp up our research and development of specific cannabinoids, to ultimately craft cannabinoid products to meet the future demands and needs of our customers. This transformative deal with Intrexon gives us a leading edge as we enter a new paradigm in cannabis, where the industry leaders will be those who have expertise in building global brands and in research and innovation. Imagine a day when technology and science leads to breakthrough cannabis-based therapeutic alternatives to pharmaceuticals that can be made available to consumers globally.

Surterra Chief Executive Officer William “Beau” Wrigley, Jr.

We look forward to working with Intrexon’s world-class scientists as we explore the full possibilities of what technology, science and R&D in cannabis can do to improve the lives of our consumers.

This is the second strategic deal between Surterra and Intrexon in three months, with the first partnership focusing on Intrexon’s Botticelli™ next generation plant propagation technology to improve Surterra’s cannabis plant production efficiency, yield and quality for Surterra’s specific cannabis cultivars in Florida.

Intrexon is thrilled to exclusively partner with Surterra on the fermentation of cannabinoids. They are a transformative leader in the cannabis business, with a management team led by Beau Wrigley, that brings proven expertise in building global companies, iconic brands, and gold-standard operations. Importantly, they share our values, business integrity and long-term view of how this technology can disrupt the future of the cannabis business.

Randal J Kirk, CEO of Intrexon Corporation

Few cannabis companies have the ability to target and produce rare cannabinoids and explore their benefit at a meaningful scale. We believe our partnership can accelerate Surterra’s industry leadership position, as our proprietary platform is poised to cost-effectively produce specific cannabinoids at commercially relevant quantities and open doors for their researchers to fully explore the potential of cannabinoids.

Designed to enable the production of cannabinoids that only are produced today in miniscule amounts in cannabis plants as well as novel cannabinoids, yeast fermentation of cannabinoids provides advantages over conventional plant-based extraction. The booming international cannabis market now demands a longer-term solution to capitalize on the potential benefits of more than 100 known cannabinoids – beyond the common components of THC and CBD – that are present in only trace amounts in cannabis plants. These rare cannabinoids are challenging, time-intensive, and unpredictable to isolate and mass-produce, which has hindered research to understand their full therapeutic and commercial potential.

“Intrexon has a successful history of being an innovator and remains on the cutting edge of multiple industries, including food production, disease treatment and now cannabis. After meeting with RJ and the team, as well as visiting their microbial production lab in Budapest, it was clear we had found our partner for this exciting project. With Intrexon, Surterra will be a leader in bringing to market products featuring rare cannabinoids that are traditionally too challenging to commercialize via agricultural methods, delivering to patients and consumers highly credible natural remedies as we challenge incumbents in the nutraceutical and pharmaceutical space,” said Jay Holmes, Executive Director of Strategy at Surterra Wellness and architect of the deal.

Under the terms of the exclusive worldwide product development and licensing collaboration, Intrexon will be entitled to cash and equity payments in exchange for exclusive access to its technology. Intrexon will receive a $25 million technology access fee – $10 million in cash upfront and $15 million in Surterra common shares (as privately valued). Additionally, Intrexon expects to receive approximately $20 million in R&D expense reimbursement over the next five years, developmental milestones on each cannabinoid developed, and royalties on each cannabinoid commercialized.

Technology

Intrexon’s proprietary yeast strain engineering enables fermentative production of cannabinoids – the compounds in cannabis plants that produce various health and wellness effects – as well as other cannabinoids not found in the plant itself. The proprietary fermentation process develops strains of yeast that can produce a wide spectrum of cannabinoids, including those that are rare and difficult to extract, at large scale. The process introduces plant genes into yeast, screens for best cannabinoid strains for productivity and purity, and isolates those with prized health benefits. The high-throughput technology approach can analyze thousands of yeast strains a week.

About Intrexon Corporation

Intrexon Corporation (NASDAQ: XON) is Powering the Bioindustrial Revolution with Better DNA™ to create biologically-based products that improve the quality of life and the health of the planet through two operating units – Intrexon Health and Intrexon Bioengineering. Intrexon Health is focused on addressing unmet medical needs through a diverse spectrum of therapeutic modalities, including gene and cell therapies, microbial bioproduction, and regenerative medicine. Intrexon Bioengineering seeks to address global challenges across food, agriculture, environmental, and industrial fields by advancing biologically engineered solutions to improve sustainability and efficiency. Our integrated technology suite provides industrial-scale design and development of complex biological systems delivering unprecedented control, quality, function, and performance of living cells. We call our synthetic biology approach Better DNA®, and we invite you to discover more at www.dna.com or follow us on Twitter at @Intrexon, on Facebook, and LinkedIn.

About Surterra Wellness

Surterra Wellness (Surterra) is one of the nation’s fastest growing health and wellness companies. With vertical operations in Florida, Texas and Nevada, and a pending acquisition in Massachusetts, Surterra brings a broad portfolio of high-quality brands to meet the needs of individuals who choose the natural medical relief and wellness enhancing benefits of cannabis products. Surterra offers a wide variety of medical, health and wellness products in multiple delivery options, including vaporizer pens, tinctures, oral sprays, topical creams, time released transdermal patches, softgels, and soon cannabis foods. The company’s brand portfolio includes Surterra Wellness, Florida’s Finest, The Apothecary Shoppe, and now Coral Reefer brands. Surterra’s existing vertically integrated footprint is approaching one million total square feet of cultivation with all major manufacturing and extraction capabilities and a strong R&D and innovation focus. Founded in 2014, Surterra serves thousands of consumers each year. Link: www.surterra.com.

Original press release

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