The synthetic biology sector, which seeks to create new biological parts, devices, and systems, or to redesign systems that are already found in nature, is still an emerging space. Probably the most widely known company is Ginkgo Bioworks, which uses its platform to program cells on behalf of its customers.
"These 'cell programs' are designed to enable biological production of products as diverse as novel therapeutics, key food ingredients, and chemicals currently derived from petroleum. We have worked on cell programs in end markets as diverse as specialty chemicals, agriculture, food, consumer products, and pharmaceuticals," the company wrote in a filing with the SEC.
"Biology did not evolve by end market. All of these applications run on cells which have a common code—DNA—and a common programming platform can enable all of them. Because of this shared platform, we are able to drive scale and learning efficiencies while maintaining flexibility and diversity in our program areas. Ultimately, customers come to us because they believe we maximize the probability of successfully developing their products."
The company's revenue is broken down into two streams: Foundry and Biosecurity.
Foundry revenue
Foundry is made up of research and development services performed under collaboration and license agreements relating to Ginkgo's cell programming platform. That platform includes two assets: the Foundry, its biology lab facilities, which is enabled by investment in proprietary workflows, custom software, robotic automation, and data science and analytics, and its Codebase, a collection of biological “parts” and a database of biological data used to program cells.
Foundry revenue comes through the execution of license and collaboration agreements, in which customers obtain license rights to the company's technology and intellectual property so that they can develop and commercialize engineered organisms. Under these agreements, Ginkgo Bioworks typically provides its customers with R&D services for cell programming.
"Our customers obtain license rights to the output of our services, which are primarily the optimized strains or cell lines, in order to manufacture and commercialize products derived from that licensed strain or cell line," the company wrote.
Ginkgo receives usage fees, which are upfront payments made when the agreement is consummated, or other fixed payments, reimbursement for costs incurred for R&D services, and milestone payments, which are paid when specified technical criteria are achieved.
The company also gets money from downstream value share payments, including milestone payments, royalties on sales of engineered organisms that come from the collaboration or licensing agreement, and royalties related to cost of goods sold.
Foundry revenue also includes transactions with Platform Ventures, in which Ginkgo partners with multinationals and financial investors to form new ventures in identified market segments with potential to benefit from synthetic biology. In exchange for an equity position in the venture, the company contributes license rights to its cell programming technology and intellectual property, as well as R&D services for which we receive cash payments for our costs incurred, plus a margin.
Finally, it consists of Structured Partnerships, which allow Ginkgo to partner with early stage synthetic biology product companies to adopt its Foundry as their cell programming R&D platform, as well as with existing entities that have what the company calls "complementary assets for high potential synthetic biology applications in a large-scale, multi-program collaboration."
Foundry revenue was $113 million in 2021, up 91% from $59.2 million in 2020. In its most recent quarter, Ginkgo Bioworks made $24.7 million from in Foundry revenue, or 37% of its total $66.4 million in Q3 revenue.
Biosecurity revenue
The other revenue arm, Biosecurity, consists of COVID-19 testing products and services, which are primarily provided to public health authorities.
Ginkgo launched its commercial offering of COVID-19 testing products and services for businesses, academic institutions, and other organizations in the second quarter of 2020, and revenue is made from sales of test kits and testing and reporting services fees.
Product revenue comes from the sale of lateral flow assay (“LFA”) diagnostic test kits, polymerase chain reaction (“PCR”) sample collection kits and pooled test kits, all of which it sells to its customers on a standalone basis. The company generates service revenue from the sale of its end-to-end COVID-19 testing services, which includes sample collection kits, physician authorizations, onsite test administration, outsourced laboratory PCR analysis, and access to results reported through a web-based portal.
In 2021, Gingko made $200.8 million from its Biosecurity revenue arm, up from just $17.4 million in 2020, of which $23 million was from product and $177.8 million from services. In the most recent quarter, it made a total of $41.7 million from this stream, $5.1 million was from product, and $36.5 million was from services. That was 60% of total revenue.
Ginkgo Bioworks went public via SPAC in 2021 at $11.15 apiece. It is now trading at $1.88 per share.
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