Ginkgo Bioworks Holdings, Inc. [DNA] Filings

10-Q 1 dna-20230630.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to _________________

Commission File Number: 001-40097

GINKGO BIOWORKS HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware	87-2652913
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
27 Drydock Avenue 8th Floor Boston, MA	02210
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (877) 422-5362

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	DNA	NYSE
Warrants to purchase one share of Class A common stock, each at an exercise price of $11.50 per share	DNA.WS	NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2023, the registrant had 1,600,988,177 shares of Class A common stock, 377,864,805 shares of Class B common stock and 120,000,000 shares of non-voting Class C common stock outstanding.

Cautionary Note Regarding Forward Looking Statements

This report includes forward-looking statements regarding, among other things, the plans, strategies and prospects, both business and financial, of Ginkgo Bioworks Holdings, Inc. (“Ginkgo”). These statements are based on the beliefs and assumptions of the management of Ginkgo. Although Ginkgo believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, Ginkgo cannot assure you that it will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes”, “estimates”, “expects”, “projects”, “forecasts”, “may”, “will”, “should”, “seeks”, “plans”, “scheduled”, “anticipates” or “intends” or similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

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Ginkgo’s ability to raise financing in the future and to comply with restrictive covenants related to long-term indebtedness;

•

Ginkgo’s ability to retain or recruit, or adapt to changes required in, its founders, senior executives, key personnel or directors;

•

factors relating to the business, operations and financial performance of Ginkgo, including:

Ginkgo’s ability to effectively manage its growth;

Ginkgo’s exposure to the volatility and liquidity risks inherent in holding equity interests in certain of its customers;

rapidly changing technology and extensive competition in the synthetic biology industry that could make the products and processes Ginkgo is developing obsolete or non-competitive unless it continues to collaborate on the development of new and improved products and processes and pursue new market opportunities;

Ginkgo’s reliance on its customers to develop, produce and manufacture products using the engineered cells and/or biomanufacturing processes that Ginkgo develops;

the timing and realization of Ginkgo's anticipated sale of certain laboratory equipment;

Ginkgo’s ability to comply with laws and regulations applicable to its business; and

market conditions and global and economic factors beyond Ginkgo’s control;

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intense competition and competitive pressures from other companies worldwide in the industries in which Ginkgo operates;

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litigation, including securities or shareholder litigation, and the ability to adequately protect Ginkgo’s intellectual property rights;

•

the success of Ginkgo’s programs, including Ginkgo's expectations for the future demand of COVID-19 testing in schools, the growth of Ginkgo’s biomonitoring and bioinformatic support services, the growing efficiency and cost advantage of Cell Engineering services, and their potential to contribute revenue, and the relative contribution of Ginkgo’s programs to its future revenue, including the potential for future revenue related to downstream value to be in the form of potential future milestone payments, royalties, and/or equity consideration; and

•

other factors detailed under the section entitled “Risk Factors.”

These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this Quarterly Report on Form 10-Q are more fully described under the heading “Risk Factors” and elsewhere in this report. The risks described under the heading “Risk Factors” are not exhaustive. Other sections of this Quarterly Report on Form 10-Q describe additional factors that could adversely affect the business, financial condition or results of Ginkgo. New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can Ginkgo assess the impact of all such risk factors on the business of Ginkgo, or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements, which speak only as of the date hereof. All forward-looking statements attributable to Ginkgo or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. Ginkgo undertakes no obligation to update or

revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Risk Factors Summary

Investing in our securities involves risks. You should carefully consider the risks described under the heading “Risk Factors” before making a decision to invest in our Class A common stock. If any of these risks actually occur, our business, financial condition and results of operations would likely be materially adversely affected. Some of the risks related to Ginkgo’s business and industry are summarized below. References in the summary below to “we,” “us,” “our” and “the Company” generally refer to Ginkgo.

•

We have a history of net losses. We expect to continue to incur losses for the foreseeable future, and we may never achieve or maintain profitability.

•

We are not, and do not intend to become, regulated as an “investment company” under the Investment Company Act of 1940, as amended (“Investment Company Act”), and if we were deemed an “investment company” under the Investment Company Act, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.

•

Only our employees and directors are entitled to hold shares of Class B common stock (including shares of Class B common stock issued in the future), which have ten votes per share. This limits or precludes other stockholders’ ability to influence the outcome of matters submitted to stockholders for approval, including the election of directors, the approval of certain employee compensation plans, the adoption of certain amendments to our organizational documents and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transactions requiring stockholder approval.

•

Outstanding Class C common stock may have the effect of extending voting power in Class B common stock, and may discourage potential acquisitions of our business and could have an adverse effect on the trading price of Class A common stock.

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We may need substantial additional capital in the future in order to fund our business.

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We have experienced rapid growth and expect our growth to continue, and if we fail to effectively manage our growth, then our business, results of operations, and financial condition could be adversely affected.

•

Our limited operating history makes it difficult to evaluate our current business and future prospects.

•

We currently own and may in the future own equity interests in other operating companies, including certain of our customers, and we may receive non-cash consideration which involves estimations of fair market value. The initial fair market value of the non-cash consideration may decrease after contract inception and the amount of cash proceeds eventually realized may be less than the revenue recognized. Consequently, we have exposure to the volatility and liquidity risks inherent in holding their equity and overall operational and financial performance of these businesses.

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We have in the past, and in the future may continue to pursue strategic acquisitions and investments that are dilutive to our stockholders and that could have an adverse impact on our business if they are unsuccessful.

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We must continue to secure and maintain sufficient and stable supplies of laboratory reagents, consumables, equipment, and laboratory services. We depend on a limited number of suppliers, some of which are single-source suppliers, and contract manufacturers for critical supplies, equipment, and services for research, development, and manufacturing of our products and processes. Our reliance on these third parties exposes us to risks relating to costs, contractual terms, supply, and logistics, and the loss of any one or more of these suppliers or contract manufacturers or their failure to supply us with the necessary supplies, equipment, or services on a timely basis, could cause delays in our research, development, or production capacity and adversely affect our business.

•

We use biological, hazardous, flammable and/or regulated materials that require considerable training, expertise and expense for handling, storage and disposal and may result in claims against us.

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Third parties may use our engineered cells, materials, and organisms and accompanying production processes in ways that could damage our reputation.

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If our customers discontinue their development, production and manufacturing efforts using our engineered cells and/or biomanufacturing processes, our future financial position may be adversely impacted.

•

We are or could become involved in securities or shareholder litigation and other related matters, which could be expensive and time-consuming. Such litigation and related matters could harm our business.

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Our revenue is concentrated in a limited number of customers, some of which are related parties, and our revenue, results of operations, cash flows and reputation in the marketplace may suffer upon the loss of a significant customer.

•

In certain cases, our business partners may have discretion in determining when and whether to make announcements about the status of our collaborations, including about developments and timelines for advancing programs, and the price of our common stock may decline as a result of announcements of unexpected results or developments.

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Uncertainty regarding the demand for passive monitoring programs and biosecurity services could materially adversely affect our business.

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We may be subject to tort liability if the COVID-19 tests we utilize in our testing programs provide inaccurate results.

•

Rapidly changing technology and emerging competition in the synthetic biology industry could make the platform, programs, and products we and our customers are developing obsolete or non-competitive unless we continue to develop our platform and pursue new market opportunities.

•

Ethical, legal and social concerns about genetically modified organisms (“GMOs”) and genetically modified plant or animal cells and genetically modified proteins and biomaterials (collectively, “Genetically Modified Materials”) and their resulting products could limit or prevent the use of products or processes using our technologies, limit public acceptance of such products or processes and limit our revenues.

•

If we are unable to obtain, maintain and defend patents protecting our intellectual property, our competitive position will be harmed. If we are unable to protect the confidentiality of our trade secrets, our business and competitive position will be harmed. We may become involved in lawsuits or other enforcement proceedings to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and potentially unsuccessful.

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We rely on our customers, joint venturers, equity investees and other third parties to deliver timely and accurate information in order to accurately report our financial results in the time frame and manner required by law.

•

We identified material weaknesses in our internal controls over financial reporting and may identify additional material weaknesses in the future. A failure to maintain an effective system of internal control over financial reporting may result in a failure to accurately report our financial results or prevent fraud, which could harm our business and the trading price of our common stock.

•

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

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Failure to comply with federal, state, local and international laws and regulations could lead to substantial penalties and adversely affect our business, our financial condition and results of operations.

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We may incur significant costs complying with such laws and regulations, and failure to comply could expose us to significant liabilities.

•

We may become subject to the comprehensive laws and rules governing billing and payment, noncompliance with which could result in non-payment or recoupment of overpayments for our services or other sanctions.

•

We and our laboratory partners are subject to a variety of laboratory testing standards, compliance with which is an expensive and time-consuming process, and any failure to comply could result in substantial penalties and disruptions to our business.

•

We are engaged in certain research activities involving controlled substances, including cannabinoids and other chemical intermediates, the making, use, sale, importation, exportation, and distribution of which may be subject to significant regulation by the U.S. Drug Enforcement Administration (“DEA”) and other regulatory agencies.

•

Significant disruptions to our and our service providers’ information technology systems or data security incidents could result in significant financial, legal, regulatory, business and reputational harm to us.

iii

Table of Contents


		Page

PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41

PART II.	OTHER INFORMATION	43

Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	80
Item 3.	Defaults Upon Senior Securities	80
Item 4.	Mine Safety Disclosures	80
Item 5.	Other Information	80
Item 6.	Exhibits	81
Signatures		82

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Ginkgo Bioworks Holdings, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except per share data)


	As of June 30,			As of December 31,
	2023			2022
Assets
Current assets:
Cash and cash equivalents	$	1,105,787		$	1,315,792
Accounts receivable, net		68,019			80,907
Accounts receivable - related parties		899			1,558
Inventory, net		391			4,364
Prepaid expenses and other current assets		48,357			47,458
Total current assets		1,223,453			1,450,079
Property, plant, and equipment, net		294,244			314,773
Operating lease right-of-use assets		391,430			400,762
Investments		119,944			112,188
Equity method investments		1,120			1,543
Intangible assets, net		105,033			111,041
Goodwill		58,829			60,210
Other non-current assets		97,946			88,725
Total assets	$	2,291,999		$	2,539,321
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	13,630		$	10,451
Deferred revenue (includes $2,672 and $10,309 from related parties)		39,223			47,817
Accrued expenses and other current liabilities		110,478			114,694
Total current liabilities		163,331			172,962
Non-current liabilities:
Deferred revenue, net of current portion (includes $131,107 and $131,188 from related parties)		179,903			174,767
Operating lease liabilities, non-current		410,938			413,256
Warrant liabilities		14,146			10,868
Other non-current liabilities		20,096			31,191
Total liabilities		788,414			803,044
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 200,000 shares authorized; none issued		—			—
Common stock, $0.0001 par value (Note 6)		196			190
Additional paid-in capital		6,280,632			6,136,378
Accumulated deficit		(4,775,943	)		(4,397,659	)
Accumulated other comprehensive loss		(1,300	)		(2,632	)
Total stockholders’ equity		1,503,585			1,736,277
Total liabilities and stockholders’ equity	$	2,291,999		$	2,539,321

The accompanying notes are an integral part of these condensed consolidated financial statements.

Ginkgo Bioworks Holdings, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands, except per share data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022 (as adjusted)*			2023			2022 (as adjusted)*
Cell Engineering revenue (1)	$	45,283		$	44,242		$	79,379		$	65,730
Biosecurity revenue:
Product		10,788			3,887			22,454			17,834
Service		24,497			96,489			59,437			229,459
Total revenue		80,568			144,618			161,270			313,023
Costs and operating expenses:
Cost of Biosecurity product revenue		2,034			2,444			6,575			10,539
Cost of Biosecurity service revenue		16,062			61,467			33,896			138,804
Research and development		144,282			290,059			306,921			613,635
General and administrative		102,341			438,427			213,774			873,195
Total operating expenses		264,719			792,397			561,166			1,636,173
Loss from operations		(184,151	)		(647,779	)		(399,896	)		(1,323,150	)
Other income (expense):
Interest income, net		14,349			2,264			28,894			2,441
Loss on equity method investments		(67	)		(10,166	)		(1,516	)		(31,053	)
Loss on investments		(2,121	)		(38,673	)		(8,491	)		(38,223	)
Change in fair value of warrant liabilities		(4,482	)		23,509			(3,278	)		108,544
Gain on deconsolidation of subsidiary		—			—			—			15,900
Other income, net		3,224			230			6,152			2,149
Total other income (expense), net		10,903			(22,836	)		21,761			59,758
Loss before income taxes		(173,248	)		(670,615	)		(378,135	)		(1,263,392	)
Income tax expense (benefit)		67			(45	)		149			(229	)
Net loss		(173,315	)		(670,570	)		(378,284	)		(1,263,163	)
Loss attributable to non-controlling interest		—			(1,745	)		—			(3,833	)
Net loss attributable to Ginkgo Bioworks Holdings, Inc. stockholders	$	(173,315	)	$	(668,825	)	$	(378,284	)	$	(1,259,330	)
Net loss per share attributable to Ginkgo Bioworks Holdings, Inc. common stockholders, basic and diluted	$	(0.09	)	$	(0.41	)	$	(0.20	)	$	(0.78	)
Weighted average common shares outstanding, basic and diluted		1,933,437			1,620,704			1,924,251			1,614,138
Comprehensive loss:
Net loss	$	(173,315	)	$	(670,570	)	$	(378,284	)	$	(1,263,163	)
Other comprehensive income (loss):
Foreign currency translation adjustment		314			(3,141	)		1,332			(3,781	)
Total other comprehensive income (loss)		314			(3,141	)		1,332			(3,781	)
Comprehensive loss	$	(173,001	)	$	(673,711	)	$	(376,952	)	$	(1,266,944	)

* As adjusted to reflect the impact of the adoption of Accounting Standards Codification Topic 842, Leases (“ASC 842”) as of January 1, 2022. See Note 1 for a summary of the adjustments.

(1) Includes related party revenue of $6,507 and $7,973 for the three months ended June 30, 2023 and 2022, respectively, and $11,212 and $21,501 for the six months ended June 30, 2023 and 2022, respectively.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Ginkgo Bioworks Holdings, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(in thousands)


	Three Months Ended June 30, 2023
	Common Stock
	Shares			Amount		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance as of March 31, 2023		1,933,880		$	194	$	6,211,634		$	(4,602,628	)	$	(1,614	)	$	1,607,586
Issuance of common stock upon exercise or vesting of equity awards		15,995			2		470			—			—			472
Tax withholdings related to net share settlement of equity awards		(14	)		—		(23	)		—			—			(23	)
Issuance of common stock for asset acquisition		2,820			—		3,581			—			—			3,581
Issuance of common stock in exchange for services		2,023			—		2,500			—			—			2,500
Stock-based compensation expense and other		—			—		62,470			—			—			62,470
Foreign currency translation		—			—		—			—			314			314
Net loss		—			—		—			(173,315	)		—			(173,315	)
Balance as of June 30, 2023		1,954,704		$	196	$	6,280,632		$	(4,775,943	)	$	(1,300	)

Ginkgo Bioworks Holdings, Inc. [DNA] Filings
Ginkgo Bioworks Holdings, Inc. [DNA-WT] Filings
10-Q	[2023-08-09]
10-Q	[2023-05-10]
10-K	[2023-03-13]
10-Q	[2022-11-14]
S-1	[2022-09-07]
10-Q	[2022-08-15]
10-Q	[2022-05-16]
S-1	[2022-04-05]
10-K	[2022-03-29]
S-1	[2021-11-24]
10-Q	[2021-11-15]
10-Q	[2021-08-16]
S-1	[2021-08-11]
10-Q	[2021-05-24]
S-1	[2020-12-23]

Ginkgo Bioworks Holdings, Inc. [DNA] Filings

Ginkgo Bioworks Holdings, Inc. [DNA-WT] Filings