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Debra Fiakas is the Managing Director of , an alternative research resource on small capitalization companies in selected industries. This week Darling Ingredients DAR :  NYSE) reported financial results for the quarter ending December 2015, demonstrating management’s collective ability to manage margins in a period of low inflation.  The fourth quarter 2015 top-line was $809.7 million, providing $84.4 million in net income or $0.52 per share.  Revenue was 19.1% lower than the same period last year, but net income increased by 20.7% year-over-year.  Weak commodity prices led to lower sales volumes and selling prices that translated into lower year-over-year revenue.  At the same time the commodity market compression also reduced raw materials costs, increasing profit margins.The Company also benefited from its investment in the Diamond Green Diesel joint venture with Valero (VLO:  NYSE), by capturing value in the fats supply chain that might have otherwise been lost to Darling as an animal fats recycler.  The joint venture is part of Darling fuel ingredients segments, which delivered 8.1% of total sales to the mix in the fourth quarter and an exceptional 37.9% of operating income.Earnings in the December quarter far outpaced expectations for a two-bit bottom line.  It was the first upside surprise delivered by the Company in over a year.  Consequently, under higher than average trading volume, the stock gapped higher in the first day of trading following the earnings announcement and conference call.  The stock gapped higher again in the final day of trading last week, moving well above a line of price resistance that we believed was developed through historic trading volumes at the $11.50 price level.Yet exceptional profit is not the only thing sparking investor interest in Darling Ingredients.  Last week Darling announced a new joint venture with Intrexon Corporation (XON:  NYSE) to develop black soldier flies for fish and poultry feed.  Concurrently, Intrexon acquired EnviroFlight LLC and its proprietary fly husbandry processes as part of the effort to cultivate black soldier fly larvae for fish and poultry feed.  The product is expected to be highly marketable given the merits of larvae over wild fish or other protein by-products for these markets.  Successful introduction of fly larvae as a preferred feed is also expected to reduce threats to fishing waters from over-fishing and pollution.There were numerous questions during the earnings conference call about the joint venture and the apparent expansion of interest on the part of Darling to expand beyond feed by-product recycling to new feed production.  Randall Stuewe related the Darling’s history of work with EnviroFlight as a development partner with the fledgling protein producer.  The relationship has been formalized into a joint venture with EnviroFlight’s new owner, Intrexon.Stuewe stated clearly that population growth is outpacing the ability of pastures and fields to produce enough animal feed protein.  In particular new sustainable sources of protein are needed for poultry and aquaculture to reduce pressures on other feed sources.  Darling has committed approximately $3 million in capital to building a pilot plant for cultivation of black soldier fly larvae.  Although a site has not yet been determined, construction could still begin in 2016.  Ultimately, each production facility could cost between $4 million to $5 million, with additional capital required to begin operation.The black fly project adds a new dimension to Darling Ingredients business model, which has to this point been largely as a recycler of food by-products not as a cultivator of original feed.  Darling Ingredient’s management culture has proven that it is able to handle a wide range of business challenges from tough pricing environments, to large, multi-faceted acquisitions and joint ventures.  There is plenty of reason to have confidence in Darling’s soldiers. Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein. Crystal Equity Research has a Buy rating on DAR and Darling Ingredients is included in the Biofuel Group of the Beach Boys Index of alternative energy developers and producers.


Genetically modified male Aedes aegypti mosquitoes are released in a neighborhood in the city of Piracicaba, Brazil, January 28, 2016. REUTERS/Paulo Whitaker More (Reuters) - U.S. health regulators said a genetically engineered mosquito being used in the fight against Zika will not have a significant impact on the environment, possibly paving the way for the technique to be used in the country. The self-limiting strain of the Aedes aegypti mosquito was developed by Oxitec, the U.K.-subsidiary of U.S. synthetic biology company Intrexon Corp. The male mosquitoes are modified so their offspring will die before reaching adulthood and being able to reproduce. Preliminary findings of an investigational trial by the U.S. Food and Drug Administration conducted in the Florida Keys region ruled that the genetically modified mosquitoes will not have a significant impact on the environment, effectively agreeing with an environmental assessment submitted by Oxitec. The findings come on the heels of rising concern over Zika virus in the United States, with Florida declaring a public health emergency last month. Zika virus, first detected in Africa in the 1940s, was unknown in the Americas until last year when it appeared in northeastern Brazil, where it has been linked to a spike in birth defects in thousands of babies. Florida's warm climate and nearly year-round mosquito season make it particularly vulnerable to spreading, although so far all of the state's cases were acquired abroad, officials have said. "If we do get permission from the FDA to go ahead, we are hoping that we will start running the program sometime in 2016," Oxitec Chief Executive Hadyn Parry said on a media call on Friday. Oxitec, which was spun off from Oxford University, was acquired last year by Intrexon. Efficacy trials in Brazil, Panama, and the Cayman Islands showed that this approach has helped reduce the Aedes aegypti population by more than 90 percent, Oxitec said. Parry added that until now mosquito control techniques in the United States have only been able to reduce population by about 50 percent. However, the concept of wiping out an entire mosquito species also raises ecological questions, as it runs counter to preserving biodiversity. A petition on Change.org by Mila de Mier, a Key West resident, has gathered more than 161,000 supporters, and calls for the FDA to not approve the genetically modified mosquitoes . The public can submit comments on the conclusion for the next 30 days, starting Monday. (http://1.usa.gov/229sDd2) Intrexon's shares closed up 8.5 percent at $37.97 on the New York Stock Exchange on Friday.


Genetically modified male Aedes aegypti mosquitoes are released in a neighborhood in the city of Piracicaba, Brazil, January 28, 2016. REUTERS/Paulo Whitaker More (Reuters) - U.S. health regulators said a genetically engineered mosquito being used in the fight against Zika will not have a significant impact on the environment, possibly paving the way for the technique to be used in the country. The self-limiting strain of the Aedes aegypti mosquito was developed by Oxitec, the U.K.-subsidiary of U.S. synthetic biology company Intrexon Corp. The male mosquitoes are modified so their offspring will die before reaching adulthood and being able to reproduce. The FDA agreed with an environmental assessment submitted by Oxitec, saying preliminary findings suggested that the genetically modified mosquitoes will not have a significant impact on the environment. Oxitec is proposing to conduct an investigational trial, designed to evaluate the effectiveness of its mosquitoes, in the Florida Keys region. The findings come on the heels of rising concern over Zika virus in the United States, with Florida declaring a public health emergency last month. Zika virus, first detected in Africa in the 1940s, was unknown in the Americas until last year when it appeared in northeastern Brazil, where it has been linked to a spike in birth defects in thousands of babies. Florida's warm climate and nearly year-round mosquito season make it particularly vulnerable to spreading, although so far all of the state's cases were acquired abroad, officials have said. "If we do get permission from the FDA to go ahead, we are hoping that we will start running the program sometime in 2016," Oxitec Chief Executive Hadyn Parry said on a media call on Friday. Oxitec, which was spun off from Oxford University, was acquired last year by Intrexon. Efficacy trials in Brazil, Panama, and the Cayman Islands showed that this approach has helped reduce the Aedes aegypti population by more than 90 percent, Oxitec said. Parry added that until now mosquito control techniques in the United States have only been able to reduce population by about 50 percent. However, the concept of wiping out an entire mosquito species also raises ecological questions, as it runs counter to preserving biodiversity. A petition on Change.org by Mila de Mier, a Key West resident, has gathered more than 161,000 supporters, and calls for the FDA to not approve the genetically modified mosquitoes . The public can submit comments on the conclusion for the next 30 days, starting Monday. (http://1.usa.gov/229sDd2) Intrexon's shares closed up 8.5 percent at $37.97 on the New York Stock Exchange on Friday.


The Oxitec mosquito developed by Intrexon is not technically a "gene drive," but cuts down on the population of mosquitoes by introducing altered males whose offspring cannot survive (AFP Photo/Nelson Almeida) Honolulu (AFP) - Scientific techniques that can wipe out invasive species or alter mosquitoes' ability to carry disease are pushing ahead, raising concerns about the ethics of permanently changing the natural world, experts say. This fast-moving field of science -- which involves changing the biology of creatures by interfering with their DNA -- is increasingly being debated not only for human health purposes, but also in conservation circles. Perhaps the most controversial type of research is known as a "gene drive," which ensures that a certain trait is passed down from parent to offspring. It eventually leads to genetic changes throughout the entire species. Projects being considered include one to release altered mice on islands that will only bear male offspring, ensuring an end to future generations, scientists said at the International Union for Conservation of Nature (IUCN) World Conservation Congress. Another idea is to save endangered birds on the Hawaiian islands by releasing altered mosquitoes that cannot carry avian malaria. The Oxitec mosquito developed by Intrexon is not technically a "gene drive," but cuts down on the population of mosquitoes by introducing altered males whose offspring cannot survive. Proponents of gene drive technology say it eliminates the need for polluting pesticides, and could offer a more effective remedy against invasive species than any tool on hand. But opponents fear the impacts of permanently altering life forms on Earth and its unknown -- and likely irreversible -- impact on creatures and ecosystems. Kevin Esvelt, an assistant professor at the Massachusetts Institute of Technology (MIT), is among the first scientists to propose using gene-editing, or CRISPR technology, to alter species. He is also one of the most cautious voices on its potential uses. "As a scientist who worked on it, I am particularly concerned because we scientists are ultimately morally responsible for all the consequences of our work," Esvelt said at a panel discussion at the IUCN meeting in Honolulu. "It should be a requirement that no one gets to build a gene drive or any technology designed to alter the shared environment in a laboratory without making their proposals public first," he said. "If something goes wrong in the laboratory, it can affect people outside the laboratory," Esvelt added. "That means if you do it behind closed doors -- as is traditional in science -- then you are not giving people a voice in a decision that might affect them." He also said the current regulatory environment is "all based around release. And not really stringent enough, frankly, if you ask me." But others at the same panel called for quick action to preserve imperiled species before they disappear forever due to invasive species and diseases. "One of the scariest things of working in conservation in Hawaii is there is no way to save these birds from malaria," said Chris Farmer, Hawaii program director of the American Bird Conservancy. A total of 38 forest birds in Hawaii have gone extinct already due in large part to avian diseases, and 21 of the remaining 32 species are at risk, experts say. By not exploring new technologies, "we are choosing to let these species go extinct," Farmer said. Another speaker on the panel, Anthony James, professor of microbiology and molecular genetics at the University of California Irvine School of Medicine, said time is of the essence. "You have heard the urgency in the voices of my colleagues here worried about the birds and the trees," he said. "One of the key things that is going to be important for this technology is the ability to get these genes out in a very rapid way in the population." According to Floyd Reed, a scientist at the University of Hawaii who is working on a project to alter Culex mosquitoes which transmit avian malaria to birds, gene drive technologies are incredibly diverse. Some could theoretically spread from a single small release and genetically transform an entire species, he told AFP via email. "These should be treated extremely cautiously. And there are other types of population modification genetic technology that are safer, geographically self limiting, and reversible."


Genetically modified male Aedes aegypti mosquitoes are released in a neighborhood in the city of Piracicaba, Brazil, January 28, 2016. REUTERS/Paulo Whitaker More (Reuters) - U.S. health regulators said a genetically engineered mosquito being used in the fight against Zika will not have a significant impact on the environment, possibly paving the way for the technique to be used in the country. The self-limiting strain of the Aedes aegypti mosquito was developed by Oxitec, the U.K.-subsidiary of U.S. synthetic biology company Intrexon Corp. The male mosquitoes are modified so their offspring will die before reaching adulthood and being able to reproduce. Preliminary findings of an investigational trial by the U.S. Food and Drug Administration conducted in the Florida Keys region ruled that the genetically modified mosquitoes will not have a significant impact on the environment, effectively agreeing with an environmental assessment submitted by Oxitec. The findings come on the heels of rising concern over Zika virus in the United States, with Florida declaring a public health emergency last month. Zika virus, first detected in Africa in the 1940s, was unknown in the Americas until last year when it appeared in northeastern Brazil, where it has been linked to a spike in birth defects in thousands of babies. Florida's warm climate and nearly year-round mosquito season make it particularly vulnerable to spreading, although so far all of the state's cases were acquired abroad, officials have said. "If we do get permission from the FDA to go ahead, we are hoping that we will start running the program sometime in 2016," Oxitec Chief Executive Hadyn Parry said on a media call on Friday. Oxitec, which was spun off from Oxford University, was acquired last year by Intrexon. Efficacy trials in Brazil, Panama, and the Cayman Islands showed that this approach has helped reduce the Aedes aegypti population by more than 90 percent, Oxitec said. Parry added that until now mosquito control techniques in the United States have only been able to reduce population by about 50 percent. However, the concept of wiping out an entire mosquito species also raises ecological questions, as it runs counter to preserving biodiversity. A petition on Change.org by Mila de Mier, a Key West resident, has gathered more than 161,000 supporters, and calls for the FDA to not approve the genetically modified mosquitoes . The public can submit comments on the conclusion for the next 30 days, starting Monday. (http://1.usa.gov/229sDd2) Intrexon's shares closed up 8.5 percent at $37.97 on the New York Stock Exchange on Friday.

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