NEW YORK – Ginkgo Bioworks is seeing uptake of its cell engineering services in the pharmaceutical industry, which could offer revenue growth at a time when smaller companies are less likely to engage in cash-upfront deals."It is the most valuable and fastest-growing market for us in terms of new programs, but it's also the newest market for Ginkgo," CEO and Cofounder Jason Kelly told investors on a conference call on Wednesday following the release of the firm's Q4 and 2022 financial results.
The Boston-based synthetic biology and biosecurity firm reported 96 active cell engineering programs as of the fourth quarter of 2022, 34 of which are with biopharma customers, up from 15 biopharma cell programs out of 60 in the prior-year period.
Ginkgo's Q4 revenues fell 34 percent year over year due to reduced school-based COVID-19 testing, while its full-year revenues grew 52 percent, driven by biosecurity revenues.
The company said it started 20 new cell programs in the fourth quarter and 59 in 2022, compared to 31 in 2021. "The bulk of that program growth was driven by our penetration into the biopharma and agriculture industries," Kelly said. "This is awesome to see. These industries have large biotech R&D budgets, and they have some of the most valuable products in biotechnology."
Kelly said he plans to continue to grow the pharmaceutical customer list this year. For full-year 2023, Ginkgo expects total revenue of at least $275 million, with cell engineering revenue, formerly reported as "foundry revenue," of at least $175 million. That would represent a 21 percent increase over full-year 2022 cell engineering revenues of 143.7 million. Ginkgo also expects to add 100 new cell programs in 2023.
The deals are coming now because previously, Ginkgo didn't have the data available to convince pharma companies to outsource manufacturing or discovery research to the firm. "Five years ago, our platform wasn't differentiated enough to overcome the internal scale of biopharma R&D groups," Kelly said. Now, the firm has signed deals and generated data across multiple pharmaceutical modalities, from cell therapy to small molecules. "And once we get a first deal with a biopharma company, we can often expand within that organization," he said. "We're seeing this."
Ginkgo also noted that it has added 6,600 square feet of Biosafety Level 2 lab space at its Boston headquarters to expand its mammalian foundry platform and "provide significant runway to support new program additions in the pharma & biotech vertical."
Despite the expansion in pharma deals, Ginkgo's revenues in Q4 fell compared to the year-ago quarter. In the three months ended Dec. 31, Ginkgo booked $98.3 million in revenues, down from $148.5 million in Q4 of 2021 but beating the consensus Wall Street estimate of $88.7 million.
Foundry revenues were $53.3 million, up 56 percent from $34.2 million in Q4 2021. Biosecurity service revenues from the firm's Concentric subsidiary, which provides testing services, were $32.6 million, down 69 percent from $105.9 million a year ago, while biosecurity product revenues were $12.4 million, up 48 percent from $8.4 million.
Ginkgo's net loss for the quarter totaled $174.2 million, or $.10 per share, compared to a net loss of $1.6 billion, or $1.10 per share. In Q4 2021, beating the consensus Wall Street estimate of a $.21 loss per share. The number of weighted average shares of common stock used to compute net loss per share was approximately 1.85 billion in Q4, compared to 1.53 billion the previous year.
R&D expenses for the quarter were $181.2 million, down 81 percent from $985.0 million in the year-ago quarter, driven by stock-based compensation. Excluding stock-based compensation, R&D expenses totaled $113 million, more than double the $55 million in the prior-year period. G&A expenses were $121.4 million, down 84 percent from $781.6 million in Q4 of 2021. Excluding stock-based compensation, G&A expenses were $78 million, double the $39 million in the prior-year period.
For full-year 2022, Ginkgo reported revenues of $477.7 million, up 52 percent from $313.8 million in the prior year, in line with preliminary results announced in January and beating the average analyst estimate of $471.3 million.
Foundry revenues for the year were $143.7 million, up 27 percent from $113.0 million in 2021. Biosecurity services revenues were $298.6 million, up 68 percent from $177.8 million in 2021, while biosecurity product revenues were $35.5 million, up 54 percent from $23.0 million.
Ginkgo Bioworks' net loss for 2022 totaled $2.1 billion, or $1.25 per share, compared to a net loss of $1.83 billion, or $1.39 per share, in 2021, beating the consensus Wall Street estimate of a $1.39 loss per share. The number of weighted average shares of common stock used to compute net loss per share was approximately 1.68 billion in 2022, compared to approximately 1.36 billion in 2021.
The firm reported $1.05 billion in R&D expenses for the year, compared to $1.15 billion in 2021, driven by stock-based compensation expenses. Excluding stock-based compensation, R&D expenses totaled $314 million, up 43 percent from $219 million in 2021.
G&A expenses were $1.43 billion, compared to $863.0 million in the prior year, driven by stock-based compensation expenses. Excluding tock-based compensation, G&A expenses were $228 million, more than double the $106 million in 2021.
As of Dec. 31, Ginkgo had $1.32 billion in cash and cash equivalents.
For full-year 2023, Ginkgo expects biosecurity revenues of $100 million or more, with nearly half of these coming from emerging product lines "that are more recurring in nature, such as federal and international partnerships supporting pathogen monitoring and biosecurity infrastructure development," Kelly said.
In Thursday morning trading on the New York Stock Exchange, shares of Ginkgo Bioworks were down 4 percent at $1.35.