Recently, Ginkgo Bioworks (client registration required) announced the acquisition of DNA synthesis provider Gen9 (client registration required) for an undisclosed amount of cash and stock. Ginkgo will integrate into its existing Bioworks facilities Gen9’s BioFab platform, which includes its chip-based oligo synthesis process, Agilent Technologies’ Oligonucleotide Library Synthesis (OLS) pool, and proprietary software/informatic tools for DNA design and error correction. Along with all related equipment and intellectual property (IP) of up to 125 patents pending, the acquisition also includes Gen9’s full-time staff on production and R&D, but not the management, sales, and customer service teams.
Given the sudden announcement, we spoke with Ginkgo Bioworks’ CEO, Jason Kelly, for additional insight into the acquisition and summarized a few key takeaways below:
- Acquiring Gen9 accelerates Ginkgo Bioworks’ strain development timeline by approximately 30% – In June 2016, Ginkgo Bioworks had raised $100 million in a Series C round and announced plans to purchase about 600 million base pairs (bp) of DNA from San Francisco-based Twist Bioscience (client registration required) and Boston-based Gen9. Although Ginkgo Bioworks was a high-priority customer for Twist Bioscience and Gen9, the company likely had to compete with the strong industry demand for synthesized DNA leading to potential delays in delivered DNA fragments. Jason said that bringing Gen9’s DNA synthesis capabilities in-house roughly cut timelines to build large pieces of DNA by 50%. “That’s not always the bottlenecking step in projects, but it is many times – especially at the beginning. We expect to cut times for delivering strains to customers by around 30%,” he said.
- First product using Ginkgo Bioworks’ engineered strain is now on the market – Despite Ginkgo Bioworks’ rapid growth in funding, partners, customers, and talent acquisition, our biggest point of scrutiny is the lack of commercial products on the market. One of Ginkgo Bioworks’ first customers and strategic partners is French flavors and fragrances (F&F) supplier Robertet. There are currently eight or nine different F&F ingredients in the product pipeline with Robertet, including rose oil. Jason said that starting in 2017, one of these ingredients will now be on the market generating sales for Robertet and subsequent royalty revenue for Ginkgo Bioworks. It’s been a long time coming, but a first commercialized product using one of Ginkgo Bioworks’ engineered strains represents a positive step in an area that lacks a lot of visibility for the company. We expect more announcements this year for other products in the pipeline with other major customers like Ajinomoto.
- Strategic partnerships continue to be crucial for commercialization – 2016 was a big year for Ginkgo Bioworks announcing important strategic partnerships with ex-competitors Amyris and Genomatica (client registration required for both) in June and September, respectively, which brings in downstream fermentation expertise for scaling-up engineered strains. Ginkgo Bioworks also publicly disclosed Cargill and Archer Daniel Midland (ADM) as customers in September. Jason explained that acquiring Gen9 does not affect relationships with other third-party DNA synthesis suppliers: “We’re still going to buy a ton of DNA from Twist Bioscience. The big motivation to bring the Gen9 platform in-house was speed of turn-around on constructs.” This extensive partnership portfolio continues to be one of Ginkgo Bioworks’ strongest competitive advantages as it draws expertise from specialists at every stage of the value chain, starting from DNA supply, strain engineering, scale-up, and product commercialization (see figure below):
For Ginkgo Bioworks, acquiring Gen9 was great timing, but also swift execution expedited by an existing partnership and close proximity (both companies are headquartered in Boston). Additionally, Gen9’s expertise in synthesizing long fragments of double-stranded DNA – up to 10,000 base pairs – fits extremely well with Ginkgo Bioworks’ technology and strategy of engineering entire pathways. As product and strain development speeds become an increasingly important competitive factor in the synbio space, we may start to see additional acquisitions this year. Currently, the industry is fragmented with various third-party DNA synthesis companies like Twist Bioscience and ATUM ([previously DNA2.0] client registration required), as well as some new players to the scene like Synthomics and Molecular Assemblies. Readers should closely watch for consolidation of companies in the synbio space – for example, a very likely acquisition candidate for Zymergen is Arzeda (client registration required) for its computational enzyme and pathway design capabilities. Both companies have partnered since March 2016, and bringing Arzeda in-house could be a similar scenario for Zymergen to accelerate upstream bottlenecks of rapidly creating strain variants for screening.
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By: Victor Oh