NEW YORK – Berkeley Lights CEO Siddhartha Kadia said on Tuesday that the firm is ending its synthetic biology partnership with Ginkgo Bioworks.
"I'm certainly proud of the workflows that Berkeley Lights delivered. However, the agreement no longer supported our profitability goals," Kadia said on a conference call with investors following the release of Berkeley Lights' Q3 financial results, which saw revenues drop 12 percent year over year.
In its Form 10-Q filed with the US Securities and Exchange Commission, the firm wrote that it "determined we would be unable to reach an agreement with Ginkgo on potential changes to such agreement partly due to the limited margin benefit of the existing agreement to us."
Signed in 2019, the multi-year partnership to incorporate Berkeley Lights' Beacon cell analysis platform into Ginkgo's cell engineering foundry was valued at $150 million. Financial and other terms of the deal termination were not disclosed. Ginkgo Bioworks did not immediately respond to request for comment.
On the Q&A portion of the call, Kadia said the partnership was "completely terminated."
The firm is moving through contractually obligated wind-down processes he said, but work has stopped on all previous projects and is not expected to generate any further revenue from Ginkgo.
The move comes as the firm re-evaluates its service-based partnerships as part of its new strategic plan, launched in August. Kadia, who took over as CEO in September 2021, said the firm wants to "dedicate resources only to the highest value projects" and noted that some additional high-throughput functional screening service agreements are also being axed.
Partnerships around adeno-associated virus (AAV) vectors for gene therapy and T-cell receptor discovery are where the firm would like to put its focus, Kadia said, noting that some programs in agrichemicals will also continue. Collaborations with Thermo Fisher Scientific on AAVs and Bayer Crop Sciences are "going very well and are each at different stages of completion," he said. Berkeley Lights plans to share more about future partnerships at an investor day scheduled for later this month, he added.
For the three months ended Sept. 30, the Emeryville, California-based cell analysis firm reported $21.4 million in revenue compared to $24.3 million a year ago, missing the consensus Wall Street estimate of $21.6 million. For context, CFO Mehul Joshi noted on the call that the year-ago quarter was the strongest quarter in company history.
Berkeley Lights' products revenues fell 5 percent to $15.9 million from $16.7 million a year ago, while service revenue fell 28 percent to $5.5 million from $7.6 million.
Platform revenues were $11.8 million, down 17 percent year over year from $14.1 million in Q3 2021. Recurring revenues — including consumables — were $7.0 million, up 48 percent year over year from $4.7 million a year ago, resulting in the "strongest quarter ever" for that revenue segment, Joshi said, driven by pharma customers and growth in service contracts. Partnership revenues were $2.6 million, down 52 percent year over year from $5.5 million.
By region, North America accounted for 44 percent of revenues; Asia-Pacific for 38 percent; and Europe, the Middle East, and Africa for 18 percent.
The firm placed eight instruments in the quarter, including seven capital expenditure purchases and one subscription, bringing the total installed base to 128. Most shipments went to new customers, Kadia noted.
Berkeley Lights' net loss for the quarter was $21.6 million, or $.32 per share, compared to a loss of $20.4 million, or $.30 per share a year ago, missing analysts' average estimate of a $.30 loss per share.
The firm's research and development expenses for the quarter totaled $9.0 million, down 45 percent from $16.2 million a year ago. Sales, general, administrative, and marketing expenses jumped 38 percent to $26.5 million from $19.2 million a year ago.
Berkeley Lights reiterated that it expects full-year 2022 revenue to be approximately in line with 2021 full-year revenues of $84.5 million.
The firm ended the quarter with $120.6 million in cash and cash equivalents and $14.1 million in short-term marketable securities.
In Wednesday morning trading on the Nasdaq, shares of Berkeley Lights were up 6 percent at $2.73.