Option 1 states that in genetically modified organisms (GMOs), a gene from one organism is isolated and transferred to the cell of another organism. This is correct. GMOs are created by manipulating an organism`s genetic material by introducing genes from a different organism.

Option 2 states that this technique has applications only in plants. This statement is incorrect. While GMOs are commonly associated with plants, they can also be created in animals and microorganisms. Genetic modification techniques can be used to alter the genes of various organisms.

Option 3 states that genes for insect resistance may spread from crop plants to wild plants. This is correct. When GMO crops are planted in close proximity to wild plants, there is a possibility that the modified genes can spread through cross-pollination or other means, potentially affecting the genetic makeup of wild plants.

Option 4 states that to produce a transgenic animal, the novel genes are inserted at a very early stage of development. This is correct. In the production of transgenic animals, the genetic modification is typically done at an early stage, often before the organism reaches maturity.

In conclusion, the statement that is not correct with regard to genetically modified organisms is option 2, which claims that this technique has applications only in plants.