Ginkgo Bioworks Holdings (DNA) shares tumbled 26% in the three trading days since the company disclosed plans to chop an estimated 400+ jobs. That’s not so bad considering that the shares have cratered 82.5% in just the past six months, from $1.77 on December 27, 2023.
Ginkgo started the week trading at 42 cents a share, then slid 12% to 37 cents on June 24, the day the company publicly quantified the extent of the job cutbacks it warned it would carry out back in May.
In a regulatory filing, Ginkgo revealed plans to eliminate “at least 35% of its workforce”—which would translate to at least 426 jobs, based on the 1,218 employees it reported as of December 31, 2023, according to its Form 10-K annual report for last year.
The layoffs were completed June 24, Ginkgo co-founder and CEO Jason Kelly posted on X the following day, adding that his company “had to let go of many truly excellent Bioworkers.”
“This was the hardest change we’ve made at @Ginkgo and it’s on myself and leadership for the decisions that led up to it,” Kelly acknowledged.
The job cuts includes 158 positions based in Cambridge, MA (Ginkgo is headquartered in neighboring Boston), and a total 47 positions based in Emeryville, CA, according to Worker Adjustment and Retraining Act (WARN) notices filed in Massachusetts and California, respectively.
Ginkgo stated that it expects to spend at least $12 million in severance and related separation costs related to the job cuts, with additional details to come in its second quarter earnings results, its next quarterly earnings call with analysts, and in an amended regulatory filing.
The workforce reduction came more than a month after Ginkgo on May 9 disclosed a multi-year cost-cutting plan that it warned would include “an expected reduction in labor expenses of at least 25%” and a planned consolidation of certain of its facilities.
That appears to explain why the falloff in Ginkgo stock was less than seen for many companies in the throes of job and cost cutting. Ginkgo shares skidded the rest of the week to 32 cents Tuesday, then 29 cents Wednesday before bouncing back, rising nearly 9% to 31 cents Thursday and up another 12% to 35 cents Friday as of 11:05 a.m. ET.
ARK sells off shares
Another significant reason behind the stock decline was a significant selloff of shares by a longtime investor and public supporter of Ginkgo.
Two electronic transfer funds (ETFs) of ARK Investment Management (ARK Invest)—the high-profile firm led by chief investment officer and portfolio manager Catherine D. (Cathie) Wood—sold off a combined 71,785,189 shares of Ginkgo stock totaling $26,225,932 early this past week.
ARK Innovation ETF (ARKK) and ARK Genomic Revolution ETF (ARKG) sold a combined 41,587,888 shares valued at $17,649,899 on Monday (based on the day’s closing price of 42 cents a share)—followed two days later by the ETFs selling off a combined 30,197,301 shares valued at $8,576,033 (based on Wednesday’s closing share price of 28 cents).
As of Friday, ARKK held 23,187,357 Ginkgo shares with a market value of $7,169,530.78. The fund’s ownership stake in Ginkgo carries a percentage or “weight” of 0.12%, the 34th highest percentage among the 36 companies in which the fund holds shares, ARKK disclosed on its web page.
ARKG held 24,796,421 shares in Ginkgo, with a market value of $7,667,053.37 as of Friday—a weight of 0.6%, the 38th highest percentage among the 42 companies in which the fund holds shares, ARKG disclosed.
ARKK invests in companies that offer “disruptive innovation,” which it defines as the “introduction of a technologically enabled new product or service that potentially changes the way the world works” in fields that include DNA technologies and the “genomic revolution”; automation, robotics, and energy storage; artificial intelligence and the “next generation” Internet; and fintech.
ARKG concentrates on healthcare and other sectors “expected to substantially benefit from extending and enhancing the quality of human and other life.”
Convergence prediction
“The more we unearth the possibilities—the storage possibilities of DNA, the financial industry will understand the convergence of biology and all kinds of technology,” Wood predicted at a panel discussion held during Ginkgo Ferment 2021, a company-sponsored conference. “I don’t think the financial world is ready for what’s about to happen.”
Ginkgo shares have largely freefallen since then, careening 96% from the $11.15 share price the synthetic biology powerhouse commanded when it went public in September 2021. The stock climbed to its all-time high two month later, reaching $15.86 on November 8, 2021.
“Gingko was one of the most hypnotic companies ever to have graced the Boston Biotech ecosystem,” commented Vincent Ling, PhD, in a LinkedIn post that explained he was speaking for himself and not for Takeda Pharmaceutical, where he is senior director, Center for External Innovation.
He noted that when Ginkgo went public on the New York Stock Exchange in 2021, it acquired the former “DNA” ticker of Genentech, a member of the Roche Group.
“Gingko was founded on the audacious premise of synthetic biology on mass scale, lab automation, and revolutionizing life itself … —as a service CRO. As a service business model where molecule IP would be exploited by partners and not by Gingko, it was difficult for many veterans in the industry to imagine discovery upsides akin to those seen in biotechs or pharma,” Ling observed.
Stung by Scorpion
A far more pointed criticism of Ginkgo’s business model was detailed three years ago in a stinging report by short seller Scorpion Capital. Scorpion denounced Ginkgo as employing “a hocus-pocus business model” and carrying out “a colossal scam.”
“Behind the synthetic biology and ‘Foundry’ hype, Ginkgo is a glorified contract research organization that does commodity yeast strain engineering,” Scorpion Capital contended in October 2021. “Ginkgo is nothing more than a commodity strain engineering CRO, and a crappy one at that according to its own related-party ‘customers.’”
Kelly responded to the Scorpion Capital report with a statement to various news outlets that said in part: “Our focus at Ginkgo is increasing the scale of our platform so we can deliver more cell programs to customers. We were doing that yesterday, we’re doing it today, and we’ll be doing it tomorrow.”
Kelly defended the use by startups of Ginkgo’s platform to launch platforms after securing capital and other resources from the company: “We don’t think that is a problem—starting a biotech company should be as easy as launching a website! We’re happy we make it easy for companies to start on Ginkgo’s platform and hopefully more entrepreneurs hear about our platform.”
“Hire them!”
This week in his post on X, Kelly extolled the virtues of the staffers that Ginkgo laid off.
“People come to Ginkgo because they want to develop new technologies at the very edge of what is possible in biological engineering, DNA design tools, automation, and more these are truly amazing folks with unique skills,” Kelly wrote. “[T]hey are lifelong alumni of Ginkgo and we are very sad to be losing them and you should be very happy to hire them!”
“Ginkgo has been focused over the last couple of weeks on doing right by our departing employees. Now we will be looking forward,” Kelly declared.
“Looking forward” should include even more cost cutting, Kelly was advised Wednesday in a reply on X by @VoodooScientific, a Los Angeles company that has developed the Viriato precision enzyme system for distillers of spirits seeking to enhance the smoothness of their beverages.
“Wishing Ginkgo the best! PLEASE, to give the best chances, slash expenses FAR deeper than whatever you are planning. That’s in your control, revenue isn’t and will be less than you’d think for quite a while. Spend more later, the grand vision can wait,” Voodoo Scientific added on Wednesday.
Last year, Voodoo Scientific joined Ginkgo to launch a partnership designed to help distillers produce ultra-premium spirit products by applying Ginko enzyme services such as ultra-high throughput screening, machine learning-guided protein design, and optimized proprietary bacterial and fungal host strains.
Kelly—who also chairs the U.S. National Security Commission on Emerging Biotechnology—asserted that Ginkgo “remains very well capitalized,” having ended the first quarter with nearly $850M in cash and essentially no debt, staffed with incredible talent and containing an unparalleled aggregation of technology in bioengineering from automation to AI.”
Ginkgo ended Q1 with $840.440 million in cash and cash equivalents, down 11% from the $944.073 million it reported in the year-ago quarter. The company finished the first quarter with a net loss of $165.911 million, improved from a net loss of $204.969 million on revenue that plummeted 53% year-over-year, to $37.944 million from $80.702 million.
Ginkgo has blamed its revenue falloff on an expected ramping down of the portion of its biosecurity business focused on COVID-19 testing in “K-12” elementary and high schools. But the company also saw its cell engineering revenues fall by 18%, to $27.889 million during Q1 this year from $34.096 million in the first three months of 2023.
“I’m deeply thankful for the incredible effort that has gone into building the assets we have today, especially from departing employees, and we will make the most of them as we continue to make biology easier to engineer,” Kelly added.
Leaders & laggards
- Alnylam Pharmaceuticals (ALNY) shares jumped 34.5% on June 24, after the company reported positive topline results from the Phase III HELIOS-B trial (NCT04153149) assessing vutrisiran as a treatment for ATTR amyloidosis with cardiomyopathy (ATTR-CM). Vutrisiran achieved a 28% reduction in the composite of all-cause mortality and recurrent cardiovascular events in the overall population, and a 33% reduction in the monotherapy populations. The study also showed statistically significant improvements across all secondary endpoints in both the overall and monotherapy populations, Alnylam said. Alnylam plans to proceed with global regulatory submissions starting later this year, including filing a supplemental New Drug Application with the FDA using a Priority Review Voucher.
- eFFECTOR Therapeutics (EFTR) shares plunged 76% from $1.17 to 28 cents on June 24, after the company announced that it had terminated its staff and will seek potential strategic alternatives for its development programs as it winds down operations. eFFECTOR also said it will voluntarily request a delisting of its securities and expects them to be delisted in the near term. The company also named Craig R. Jalbert as CEO, president, treasurer, and secretary, as well as the board’s sole member. Last month, eFFECTOR claimed its cash, cash equivalents, and short-term investments totaling $25.4 million (up 38% from $18.4 million on December 31, 2023) were sufficient to fund operations into the first quarter of 2025.
