Synthetic biology company Gingko Bioworks goes public via SPAC
Sitting in his living room on a white lounge chair, Ginkgo Bioworks CEO Jason Kelly holds up a worn copy of Michael Crichton. jurassic park. “I was like, I must be pissed off. I did not read jurassic park since I was 12, ”he says.
The proofreading of jurassic park is in honor of the Gingko Bioworks IPO today via a special acquisition company. Ginkgo, which helps other companies program cells to make new organisms, began trading today at $ 11.15 a share on the New York Stock Exchange under the symbol $ DNA. The deal grossed the company $ 1.6 billion for an outrageous valuation of $ 15 billion.
What makes the deal so eye-catching (aside from being one of the biggest PSPCs to date) is that Gingko Bioworks still has little evidence for its business. In the first half of this year, the company generated revenue of $ 88 million. In the same period the previous year, the company only earned $ 31 million. The company is growing, but it is still very far from its supposed value. It is also not known exactly how he will arrive at the Promised Land.
Kelly is somewhat of a hype man for the entire field of synthetic biology and makes comparisons between cell programming and the dawn of the computer age (although he’s not the only one to do so. ). He often refers to Gingko Bioworks laboratories as a platform and the companies with which it contracts as “applications”. The idea is that cells can be programmed to make just about anything. Just as computer programmers write code to create digital products, DNA can also be written and modified to generate something entirely new.
An example of the type of work Gingko does is a bacterial cell he made for biologics company Aldevron. The company needed a better way to produce the vaccinium capping enzyme, a component of mRNA vaccines. Gingko delivered a cell 10 times more efficient at making VCE than the process Aldevron previously used. Gingko is also designing cells that can be used to make better meat without meat, by a company called Motif Foodworks.
During our call, Kelly compared Gingko Bioworks’ stock market debut to Netscape’s (Netscape went public for a year with no indication that it could be profitable). But that’s not a clean comparison, as Gingko has been around for over a decade.
During this time, she has completed few projects, although Kelly notes that it can take one to three years to program cells for a business. In total, Gingko will have 80 client projects on the books for 2021. “You can think of this as the development cycle of the new Apple iOS, which takes a few years,” he says.
Another project that Gingko Bioworks has been working on is to develop the burgeoning field of synthetic biology, in some cases quite literally. For Kelly’s business to be successful, there must be a multitude of businesses large and small in need of her services. That’s why the company has created a series of small businesses that fill this gap. For example, Motif is a spin-out of Gingko Bioworks focused on the development of new plant proteins. Joyn Bio, which was the second company to come out of Gingko, is working on microbes capable of fertilizing farms in a more sustainable way. Allonia, yet another spin-off company, makes compounds to break down waste. Gingko also has an entire fund dedicated to these companies, raising $ 350 million in 2019 for this purpose.
Kelly seems to be launching new businesses almost effortlessly. During the pandemic, he started Concentric by Gingko, a cluster testing company that now has contracts with schools across the country. Kelly says that over the past three months, the company has signed contracts for $ 400 million to perform K-12 testing.
Kelly is far from the only synthetic biology company to make comparisons between writing and editing cells and the dawn of the computer age. But the gadget has been effective in attracting investors. Prior to taking the company public, Gingko raised more than $ 800 million in venture capital at a valuation of $ 4 billion. Part of the reason Kelly wants to go public now is because he thinks investors in general understand the market’s desirability.
“I always felt that private rounds were easier for us because I could just spend more time with these big institutional investors,” he says. “It was just such a thing to educate people. And I think what started to happen is you get hits at the door. “
Successes may be more investment feats than true business icons. While fervor for synthetic biology has amassed as a result of mRNA vaccines and the CRISPR gene editing phenomenon, there are still no behemoths in the category. On health site Stat’s podcast, Read Outloud, Stat reporter Adam Feuerstein reflects, “I wonder how much of that $ 15 billion valuation is just because people think that [Gingko] is a technology company, not primarily a tools company.
Given that Ginkgo will merge with Soaring Eagle Acquisition Corp., a blank check company run by Harry Sloan, the man who went public with online betting company DraftKings, Feuerstein may be on to something. Kelly recognizes that there are big differences between computers and cells. In computers, code and algorithms can provide repeatable results. “You are running the same code [and] every time you get the same result, ”he says. “Biology is not like that.”
At the beginning of jurassic park, when the scientists brought the dinosaurs back from extinction, they make the decision to keep all female dinosaurs so that they cannot reproduce and the population can be controlled. Of course, “life finds a way,” and it turns out that dinosaurs, thanks to a strange twist in biology, can actually reproduce. Science, we learn, is never so easy to control. Likewise, the success of synthetic biology may not exactly replicate the success of the digital economy, at least not in the way we think it is.