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Ginkgo Bioworks CEO Plans 'Major Changes' as Q1 Revenues Tank 53 Percent on Ramp Down of COVID Testing


NEW YORK – Ginkgo Bioworks said on Thursday after the close of the market that it is planning to reduce labor expenses by at least 25 percent, including through layoffs, after its first quarter revenues fell 53 percent year over year.

"Ginkgo is an increasingly important part of the biotech ecosystem, and we are taking decisive action to keep it that way," Jason Kelly, CEO and cofounder of Ginkgo, said in a statement. "We've demonstrated that we can serve a large number of diverse programs on a common platform, but I'm disappointed in our revenues in Q1."

"Today we're going to be announcing major changes to how we do our work at Ginkgo," Kelly added on a conference call with investors following the release of results. "We want to simplify both our technology back-end, ultimately consolidating to a single automation platform and simplify on the front-end."

Ginkgo plans to change its dealmaking strategy "to give customers IP reuse rights and, in many cases, not include downstream value share," he said. "There'll be some exceptions where we are bringing a lot of product-relevant background IP. … Our hope is this will speed dealmaking as we spend huge amounts of time negotiating these IP terms. It also allows us to scale the number of deals we do without needing to scale legal and financial resources due to reduced deal complexity."

Ginkgo is also offering access to its automated lab infrastructure as a service, which Kelly predicted would allow the firm to tap into "everyday R&D budget," rather than money set aside for research partnerships.

The decline in revenues was partly expected, due to ramp-down in K-12 school-based COVID-19 testing in its biosecurity business, but it also included an 18 percent decrease in cell engineering revenues.

Ginkgo said it has formulated a plan to reduce annualized run rate operating expenses by $200 million by mid-2025. "We expect at least half of that savings target to be achieved … by the fourth quarter of this year," CFO Mark Dmytruk said. In addition to layoffs, it will consolidate its Foundry operations into a small number of core facilities. "If successful, including assumptions around the ability to terminate and/or sublease excess space, Ginkgo could reduce its physical footprint and associated expenses by up to 60 percent," the firm said in a statement.

For the three months ended March 31, Boston-based Ginkgo reported $38 million in revenues compared to $81 million in the year-ago period, missing the consensus Wall Street estimate of $46 million.

Revenues from the company's cell engineering business were $27.9 million, down 18 percent from $34.1 million in Q1 2023. The firm added 17 new cell programs, up 31 percent over the prior-year period, and supported a total of 140 active programs, a 44 percent increase year over year. Cell engineering services revenue, which excludes downstream value share, was down 15 percent compared to the prior year, Dmytruk said, driven by a decrease in revenue from early-stage customers, partially offset by growth from larger customers.

Biosecurity service revenues were $10.1 million, down 70 percent from $34.9 million a year ago. Meanwhile, the firm recorded no biosecurity product revenues compared to $11.7 million a year ago.

Ginkgo Bioworks' net loss for the quarter totaled $165.9 million, or $.08 per share, compared to a loss of $205.0 million, or $.11 per share, in Q1 2023, and in line with the consensus Wall Street estimate.

The company reported $136.5 million in R&D expenses for the quarter, down from $162.6 million a year ago. SG&A expenses were $70.3 million, down from $111.4 million a year ago.

Ginkgo ended Q1 with $840.4 million in cash and cash equivalents and $46.8 million in restricted cash.

Ginkgo updated its 2024 guidance to total revenue in the range of $170 million to $190 million, with cell engineering service revenue in the range of $120 million to $140 million and biosecurity revenue of at least $50 million.

In Friday morning trading on the New York Stock Exchange, Ginkgo's shares were down 15 percent to $.79.