{"id":97775,"date":"2021-10-06T07:17:00","date_gmt":"2021-10-06T05:17:00","guid":{"rendered":"http:\/\/rss.nova-institut.net\/public.php?url=https%3A%2F%2Fwww.biofuelsdigest.com%2Fbdigest%2F2021%2F09%2F20%2Fginkgo-bioworks-raises-1-6-billion-in-nyse-debut%2F"},"modified":"2021-10-06T12:26:27","modified_gmt":"2021-10-06T10:26:27","slug":"ginkgo-bioworks-valued-at-15b-begins-trading-today-heres-how-their-business-works","status":"publish","type":"post","link":"https:\/\/renewable-carbon.eu\/news\/ginkgo-bioworks-valued-at-15b-begins-trading-today-heres-how-their-business-works\/","title":{"rendered":"Ginkgo Bioworks, valued at $15B, begins trading today: Here\u2019s how their business works"},"content":{"rendered":"\n\n\n

Ginkgo\u2019s market debut is one of the largest in biotech history. It\u2019s expected to raise about $1.6 billion for the company. It\u2019s also one of the biggest SPAC deals done to date \u2014 Ginkgo is going public through a merger with Soaring Eagle Acquisition Corp., which was announced in May. <\/strong><\/p>\n\n\n\n

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Ginkgo BioWorks’ Logo<\/figcaption><\/figure><\/div>\n\n\n\n

Shares opened at $11.15 each<\/a> this morning under the ticker DNA \u2014 biotech dieharders will recognize it as the former ticker<\/a> used by Genentech. <\/p>\n\n\n\n

The exterior of the NYSE is decked out in Ginkgo d\u00e9cor. The imagery is clearly sporting Jurassic Park themes, as MIT Tech Review\u2019s Antonio Regalado pointed out<\/a>. It\u2019s probably intentional: Jason Kelly, the CEO of Ginkgo Bioworks, has been re-reading \u201cJurassic Park\u201d this week, he tells TechCrunch. <\/p>\n\n\n\n

The d\u00e9cor also sports a company motto: \u201cGrow everything.\u201d<\/p>\n\n\n\n

Ginkgo was founded in 2009, and now bills itself as a synthetic biology platform. That\u2019s essentially premised on the idea that one day, we\u2019ll use cells to \u201cgrow everything,\u201d and Ginkgo\u2019s plan is to be that platform used to do that growing. <\/p>\n\n\n\n

Kelly, who often uses language borrowed from computing to describe his company, likens DNA to code. Ginkgo, he says, aims to \u201cprogram cells like you can program computers.\u201d Ultimately, those cells can be used to make stuff<\/em>: like fragrances, flavors, materials, drugs or food products. <\/p>\n\n\n\n

The biggest lingering question over Ginkgo, ever since the SPAC deal was announced, has centered on its massively high valuation. When Moderna, now a household name thanks to its COVID-19 vaccines, went public in 2018, the company was valued at $7.5 billion<\/a>. Ginkgo\u2019s valuation is double that number. <\/p>\n\n\n\n

\u201cI think that surprises people to be honest,\u201d Kelly says. <\/p>\n\n\n\n

How is Ginkgo going to make money? <\/strong><\/h3>\n\n\n\n

Ginkgo\u2019s massive valuation seems even starker when you look at its existing revenues. SEC documents show that the company pulled in $77 million<\/a> in revenue in 2020, which increased to about $88 million in the first six months of 2021 (per an August investor call<\/a>). The company has also reported losses<\/a>: including $126.6 million in December 2020 and $119.3 million in 2019. <\/p>\n\n\n\n

Ginkgo is aiming to increase revenue a significant amount in 2021. SEC documents initially noted that the company aimed to draw about $150 million in revenue in 2021, but the August earning call updated that total for the year to over $175 million. <\/p>\n\n\n\n

Ginkgo aims to make money in two ways: first it contracts with manufacturers during the research and development phase (i.e. while the company works out how to manufacture a cell that spits out a certain fragrance, bio-based nylon or meatless burger). That process happens in Ginkgo\u2019s \u201cfoundry,\u201d a massive factory for bioengineering projects. <\/p>\n\n\n\n

This source of money is already starting to flow. Ginkgo reported $59 million in foundry revenue for 2020, and anticipates $100 million in 2021, per the August investor call<\/a>. <\/p>\n\n\n\n

This revenue, though, isn\u2019t covering the full costs of Ginkgo\u2019s operations, according to the information shared by the company in SEC documents. It is covering an increasing share, though, and as Ginkgo scales up its platform, costs will come down. Based on fees alone, Kelly projects Ginkgo will break even by 2024 or 2025. <\/p>\n\n\n\n

The second type of revenue comes from royalties, milestone payments or, in some cases, equity stakes in the companies that go on to sell products, like fragrances or meatless burgers, made using Ginkgo\u2019s facilities or know-how. It\u2019s this source of income that will make up the vast majority of the company\u2019s future worth, according to its expectations. <\/p>\n\n\n\n

Once the product is made and marketed by another company, it requires little to no more work on Ginkgo\u2019s part \u2014 all the company does is collect cash. <\/p>\n\n\n\n

The company is often hesitant to incorporate these earnings into projections, because they rely on other companies bringing products to market. That means it\u2019s hard to know for sure when these downstream payments will emerge. \u201cIn our models, we are very sensitive that, at the end of the day, they\u2019re not our products. I cannot predict when Roche might bring a drug to market and give me my milestones,\u201d says Kelly. <\/p>\n\n\n\n

Kelly says there\u2019s evidence this model will start to work in the near-term. <\/p>\n\n\n\n

Ginkgo earned a \u201cbolus\u201d milestone payment of 1.5 million shares<\/a> of The Cronos Group, a cannabis company, for developing a commercially viable, lab-grown rare cannabinoid called CBG for commercial use (there are seven more in strains development, says Kelly). These milestone payments (in cash or shares) are earned when a company achieves some predetermined goal using Ginkgo\u2019s platform. <\/p>\n\n\n\n

Ginkgo has also worked with Aldevron to manufacture an enzyme<\/a> critical to the production of mRNA vaccines, and plans to collect royalty payments from that relationship \u2014 though no foundry fees were collected from this project. <\/p>\n\n\n\n

Finally, Ginkgo has negotiated an equity stake in Motif Foodworks<\/a>, a spinout company based on its technology. That company has so far raised about $226 million, and will aim to launch a lab-grown beef product developed at Ginkgo\u2019s foundry, paying Ginkgo the aforementioned foundry fees already for this contribution.<\/p>\n\n\n\n

\u201cThe biggest value driver\u201d of Ginkgo, according to Kelly <\/strong><\/h3>\n\n\n\n

This rich source of cash will depend a lot on the outside contractor\u2019s ability to manufacture and sell products made using Ginkgo\u2019s platform. This opens the company up to some risk that\u2019s beyond its control. Maybe, for instance, it turns people don\u2019t want bio-manufactured meat as much as many anticipated \u2014 that means some types of downstream payments may not materialize. <\/p>\n\n\n\n

Kelly says he\u2019s not particularly worried about this. Even if one particular program fails, he\u2019s planning on having so many programs running that one or two are bound to succeed. <\/p>\n\n\n\n

\u201cI\u2019m just sorta like: some will work, some won\u2019t work. Some will take a year, some will take three years. It doesn\u2019t really matter, as long as everybody is working with us,\u201d he says. \u201cApple doesn\u2019t stress about what apps are going to be the next big app in the app store,\u201d he continues.  <\/p>\n\n\n\n

One key metric to watch for Ginkgo going forward will be how many new cell programs they\u2019re managing to close. So far, Ginkgo has added 30 programs this year, says Kelly. Last year, there were 50 programs. <\/p>\n\n\n\n

Remember: Some of the projects are Ginkgo spinouts, like Motif Foodworks, not customers that come to the platform on their own. And historically, the number of companies Ginkgo has partnered with has been a point of criticism. Per SEC documents, the majority of revenue came from two large partners in 2020 \u2014 though Kelly told Business Insider<\/a> that this was a pandemic-related downturn. <\/p>\n\n\n\n

The more programs Ginkgo has, the more it becomes insulated from the success or failure of any one product. Plus it\u2019s a sign that people are at least using the \u201capp store\u201d for biology. <\/p>\n\n\n\n

\u201cThe biggest value driver of Ginkgo is how quickly we add programs,\u201d Kelly says.<\/p>\n\n\n\n

About TechCrunch<\/a><\/h3>\n\n\n\n

About Ginkgo BioWorks<\/a><\/h3>\n","protected":false},"excerpt":{"rendered":"

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