The Zymerger: Ginkgo Acquires Zymergen as the Industrial Biotech Carousel of Slower than Expected Progress Takes Another Spin

by Jim Lane (Biofuels Digest)The Iron Law of Sustainability reasserted itself this morning when Ginkgo BioWorks acquired Zymergen and along with it a vast sea of intellectual property and some tasty business opportunities, for the bargain price of $300 million. It’s just a fraction of the $3 billion valuation that Zymergen achieved at its all time high of $4.8 billion and is far less than the roughly $1.5 billion of capital that Forbes reported the company raising over its lifetime. The transaction is expected to be completed by the first quarter of 2023

What’s the Iron Law of Sustainability?

You can have advantaged materials that are sustainable, affordable or soon, pick two out of three.

Zymergen was in the business of creating sustainable, affordable materials that will appear eventually, but not soon enough for the markets. Their attempts to produce sustainable, immediate products foundered on the Iron Law and, given the lack of go-to big customers, presumably were unaffordable or not sufficiently functionally advantaged. Certainly the partnership with Sumitomo Chemical in 2019 to develop HYALINE electronic films did not deliver, we were told a few months after the IPO, the aimed-for functional advantages in polyimide film.

Ginkgo’s plans and recent advances

Ginkgo plans to integrate Zymergen’s core automation and software technologies for scaling strain engineering capacity into its Foundry, including Zymergen’s machine learning and data science tools for exploring known and unknown genetic design space. Ginkgo customers will also benefit from the expansion of Ginkgo’s library of biological assets (“Codebase”) following the transaction. Meanwhile, Ginkgo will support Zymergen’s plans to support for valuable product pipelines and rapid prototyping capabilities in advanced materials and drug discovery.

Ginkgo Bioworks and Bayer inked their deal to significantly expand its platform capabilities in agricultural biologicals, from discovery to field. Three elements here.

1. Ginkgo will acquire Bayer’s 175,000-square-foot West Sacramento Biologics Research & Development site, team, and internal discovery and lead optimization platform for $83.5 million.

2. Ginkgo will integrate the R&D platform assets from Joyn Bio, a joint-venture between Ginkgo and Leaps by Bayer formed in 2017.

3. As part of a three-year strategic partnership, Ginkgo will provide research services to Bayer in the field of agricultural biologicals with the potential to earn downstream value in the form of royalties on net sales from products developed under the partnership.

In June, Cronos Group and Ginkgo tipped that their cannabinoids project had crossed the third target productivity milestone. It’s an epic quest to produce eight cultured cannabinoids. Cronos hit its target for tetrahydrocannabivarin (THCV), a cannabinoid hypothesized to reduce the appetite-enhancing property of THC. The partnership has been underway since 2018. More on that here.

But we sure like the technology, the targets, the long-term prospects, and Ginkgo we suspect will reap pleasing rewards from the modest investment in the form of a stock swap. I seem to recall that Zymergen dates back to around 2014 and it would have been terrific if the company had another 4-6 years to develop and deploy. READ MORE